(Adds Lincoln Financial comment and details from order.)
By Suzanne Barlyn and Sweta Singh
March 7 (Reuters) - Insurer Lincoln Financial Group has paid $50.7 million to policyholders for lost insurance claims as part of a settlement, New York State’s financial regulator said on Tuesday.
The settlement between Lincoln and the New York State Department of Financial Services (NYDFS) also includes a fine of $1.5 million for unfair claims settlement practices, the regulator said in its consent order.
The problems began after Lincoln’s 2006 merger with Jefferson-Pilot Corp and continued for at least eight years, according to the order. Numerous “technical issues” caused Lincoln to lose track of a large number of life insurance policies nationwide, the regulator said.
“Lincoln self-reported the issues to the New York Department of Financial Services, and all claims related to this matter have since been resolved,” a Lincoln spokesman said in a statement.
“We have taken additional steps to ensure that similar issues will not arise in the future,” the spokesman said.
Lincoln reported the “extensive claims backlog” to New York and other states in April 2015, according to the order.
Thousands of beneficiaries of New York policy holders “received interrupted or no communication from Lincoln or received payments that were weeks, months or even years late,” the regulator said.
Lincoln failed to follow up in timely fashion with claimants and also failed to locate beneficiaries or attempt to contact them when the insurer had reason to believe that an insured person had died, the regulator said.
Lincoln told the New York regulator that it has since introduced measures to prevent a recurrence of the problem, including hiring additional staff and updating computer policies, according to the order. (Reporting by Sweta Singh in Bengaluru; Editing by Anil D‘Silva and Frances Kerry)