Disposition of Insurance Allotment Payments

Abstract

This audit was requested by the Under Secretary of Defense for Personnel and Readiness. The request was prompted by action taken by the Florida Department of Insurance against two life insurance companies that had received large numbers of insurance allotments from Service members through their servicing Defense Finance and Accounting Service (DFAS) sites. The insurance companies were required to return or escheat $4.65 million that they had received over a 20-year period for canceled or non-existing insurance policies. The DoD military pay system includes an allotment process that permits active duty and retired Service members to direct a portion of their pay to third parties. Payments for life, health, and other insurance premiums are valid allotments. According to data for July through September 2000, DFAS distributed about $25 million each month for approximately 350,000 insurance allotments. Although more than 400 insurance companies received allotments from DFAS during that period, 29 companies received more than 80 percent of the insurance allotment funds. Allotment payments are sent to insurance companies by DFAS with a list of the individuals for whom the allotments apply. The insurance companies compare the list against their account records to identify unmatched allotments. Unmatched allotments are those allotments received by an insurance company for which the company does not have an insurance policy in effect or pending. Unmatched allotments can be further divided into two major types allotments for canceled insurance policies and allotments for which the company has no record of a past, present, or pending relationship with the payer, also known as non-existing insurance policies.

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Document Details

Document Type
Technical Report
Publication Date
Jun 21, 2001
Accession Number
ADA391966

Entities

People

  • Betsy Brilliant
  • Michael A. Joseph
  • R. T. Briggs
  • Shelton R. Young
  • W. S. Malcolm

Organizations

  • Office of the Inspector General, U.S. Department of Defense

Tags

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  • Human Systems

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  • Accounting
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Readers

  • Defense Financial Management and Audit.
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  • Medical or Health Care Field.