Posted on Tuesday, 21st February 2012 by Keane Unclaimed Property Team

In the past month, the State of Alabama has pre-filed a new Unclaimed Property bill that would affect the escheatment of insurance benefits. Alabama HB 126 would enact legislation similar to the National Conference of Insurance Legislators (NCOIL) Unclaimed Life Insurance Benefits Act, making them the fourth state to propose such a measure, after Kentucky, Tennessee, and Maryland.

Alabama is the latest state to propose legislation similar to the NCOIL Model.

Alabama HB 126 was pre-filed on February 2^nd, and proposes legislation almost identical to the other three states listed above. The details of this act have been previously outlined on this blog. In summary, the NCOIL Unclaimed Life Insurance Benefits Act mandates that Life Insurance companies perform a comparison between in-force life insurance policies and retained asset accounts against the United States Social Security Administration’s Death Master File (DMF) or any other database or service that is at least as comprehensive as the DMF. If a match is identified, the insurer must perform a good-faith effort to confirm the death and determine if benefits are due. A second good-faith search is required to locate any beneficiaries and provide necessary claims forms and instructions if there are benefits are to be paid. In the event that benefits go unclaimed, the model act provides policies for life insurers to notify state treasury departments and escheat the funds appropriately.

We will continue to monitor this bill and similar legislation that impacts the life insurance industry, as additional states are likely to adopt the NCOIL Unclaimed Life Insurance Benefits Act in the coming months. Visit our blog and our unclaimed property newsletter, Keanotes for additional news and insight.

Posted on Friday, 3rd February 2012 by Keane Unclaimed Property Team

Maryland recently became the third state to propose legislation similar to the NCOIL Model Unclaimed Life Insurance Benefits Act, requiring insurance companies to conduct Death Master File (DMF) searches to proactively identify deceased policy owners. Meanwhile, a US Representative has introduced a bill to Congress that would prevent the Social Security Administration (SSA) from making the information in the DMF public. As a result, the House of Representatives conducted a panel hearing this week to discuss the validity and proper use of the DMF. The DMF and its use continue to be a point of discussion, and various opinions are sure to be heard in the coming weeks.

“While the Death Master File is certainly a valuable source of information, it should not be treated as gospel. The SSA itself has noted that there is incorrect information contained within the DMF,” said Keane’s Chief Compliance Officer, Debbie Zumoff. “Just because you get a positive hit when searching an owner’s SSN in the Death Master File does not mean you should move forward with a definitive action on the account or policy. Another step of research or due diligence is always recommended to truly verify that the person is deceased.”

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Posted on Wednesday, 25th January 2012 by Keane Unclaimed Property Team

The recent settlement between Prudential and 19 states resolved auditors’ inquiries into use of the Death Master File (DMF) and guidelines on beneficiary location for deceased policy owners. While Prudential is the second life insurance company to agree to such a settlement, they will not pay a fine and have denied any wrongdoing.

In the official agreement release, Prudential notes that “in view of the complex issues raised,” there is “the probability that long-term litigation and/or administrative proceedings would be required to resolve the disputes.” As a result of the settlement, Prudential has agreed to enhance its unclaimed property policies to include incomplete or missing social security numbers, transposed letters in first and last names, or transposed digits in birth dates and social security numbers. Prudential’s Chief Communications Officer, Robert DeFillippo, noted that these improvements “will supplement Prudential’s extensive prior efforts” to identify decedents and locate beneficiaries of life insurance policies. Read More »

Posted on Friday, 20th January 2012 by Keane Unclaimed Property Team

In recent months, the life insurance industry has experienced an increased level of scrutiny, as two individual states have proposed legislation that mandates stronger beneficiary location requirements, as well as the use of the Social Security Administration Death Master File (DMF) to identify deceased policy holders and potential decedents. Despite many proposals and discussions, there is still debate around the question of when an insurer is obligated to pay out any benefits. However, insurers such as John Hancock and Prudential have reached settlements with various states to establish a process for identifying deceased owners and paying out policies to the beneficiaries who had not previously contacted the insurers. If unable to locate beneficiaries within the allotted timeframes, the companies are required to report the policy proceeds to the states as unclaimed property.

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Posted on Friday, 13th January 2012 by Keane Unclaimed Property Team

A second state has now introduced a bill proposing periodic death master file searches and more routine life insurance beneficiary location. In what is likely the beginning of a trend, Tennessee has proposed rules similar to those found in the Model Unclaimed Life Insurance Benefits Act recently adopted by the National Conference of Insurance Legislators.  Specifically, on January 10, 2012, the Tennessee legislature filed House Bill 2283 proposing the Unclaimed Life Insurance Benefits Act. The provisions contained within this bill are almost identical to those found in the recently proposed Kentucky bill. To summarize, here are the key points of Tennessee HB 2283:

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Posted on Wednesday, 21st December 2011 by Keane Unclaimed Property Team

On December 16, 2011, Kentucky Representative Robert R. Damron proposed a new law known as the Unclaimed Life Insurance Benefits Act. The proposed law would impose requirements on life insurance companies similar to those found in the model law passed by the National Conference of Insurance Legislators (NCOIL) at the end of November – which requires life insurers to match Social Security Death Master File (DMF) records, or an equally comprehensive service, with in-force life insurance policies and retained asset accounts (RAAs) each quarter.

Kentucky’s proposed law includes the following requirements:

• Like NCOIL’s model law, life insurance companies would be required to perform a comparison between its in-force life insurance policies and RAAs against the DMF, or equally comprehensive service. This comparison must be performed on a quarterly basis at minimum.
• If during this process, the life insurance company identifies a match with one of its insureds, they must complete a good faith, documented effort to confirm the death and determine whether benefits are due. This must be done within 90 days.
• If benefits are due, the insurer must use good faith efforts to locate the beneficiary(ies) and provide appropriate claim forms or instructions on how to make a claim. When permitted by law, the life insurance company may disclose some personal information about the insured or beneficiary to help identify other potential beneficiaries or entitled heirs. Life insurance companies would not be permitted to charge insureds, account holders, or beneficiaries any fees associated with the search or verification processes.
• The benefits from a life insurance policy or RAA (plus any applicable accrued interest) would be payable to the designated beneficiaries or account owners. In the event that they cannot be found, the benefits would escheat to the state as unclaimed property.

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Posted on Wednesday, 23rd November 2011 by Keane Unclaimed Property Team

On Sunday, November 20, the National Conference of Insurance Legislators (NCOIL) passed a resolution supporting a model law dealing with unclaimed property policies for insurers and mandating use of the Social Security Death Master File (DMF). This resolution comes on the heels of NCOIL’s July announcement proposing changes to the life insurance industry as a result of the findings of the Verus audits, which revealed discrepancies between the way life insurers were treating annuity obligations and the pay out of life insurance death benefits.

The final, revised model will require life insurers to match DMF records, or an equally comprehensive service, with in-force life insurance policies and retained asset accounts each quarter. It also calls for timely insurer efforts to confirm an insured or account holder’s death, locate any beneficiaries, and provide claims forms and instructions. In the event that benefits go unclaimed, the model act provides clear procedures for life insurers to notify state treasury departments and escheat the funds, per unclaimed property laws.

Insurers have faced mounting pressure in recent months as state attorneys general and comptrollers are increasingly becoming more involved with the issue out of apparent concern that state insurance regulators aren’t being aggressive enough with their actions.

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Posted on Friday, 30th September 2011 by Keane Unclaimed Property Team

Throughout the past few months we have been writing about how the life insurance industry has come under intense scrutiny by state and regulatory agencies regarding compliance with unclaimed property laws and alleged failure to proactively search for beneficiaries entitled to proceeds from life policies. Specific industry practices under the microscope revolve around how companies actively monitor the Social Security Death Master File (DMF), proactively notify a beneficiary of their policy benefits and if they report policies as unclaimed property if the beneficiary is not located.

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Posted on Wednesday, 20th July 2011 by Keane Unclaimed Property Team

This week, members of the National Conference of Insurance Legislators’ (NCOIL) Life Insurance & Financial Planning Committee announced they are revising the 2010 Beneficiaries’ Bill of Rights Model to require insurers to periodically check the Social Security Death Master File database to identify dead life insurance policy holders and dead owners of retained asset accounts (RAA). This move comes on the heels of the audits by Verus Financial, which at least 35 states have joined to investigate unclaimed property handling practices at life insurance companies.  The committee is also considering making changes to the existing model law that would require insurers to use the same review procedures for both annuities and life insurance.

In the same vein, it was recently announced that New York state insurance regulators are ordering life insurers to use the Social Security Death Master File for insurers who may have died and report on the effectiveness of the search. This requirement is being issued as a result of recent reports alleging that some life insurers have been using the Death Master File to try to locate annuity benefits recipients who have died – but have not been using the database to try to find life insurance policy insureds who have died.

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Posted on Wednesday, 25th May 2011 by Keane Unclaimed Property Team

With states continuing to enforce the rules of unclaimed property, insurance companies are the clear current focus. The insurance website Life and Health National Underwriter reported last Wednesday that the Florida Office of Insurance Regulation (FOIR) had announced a settlement agreement with John Hancock Life Insurance Company.  As we shared in an earlier blog, this settlement stems from the recent audits by Verus Financial LLC of many insurance companies on behalf of as many as 37 states. Verus and the states are looking into the practices of some insurance companies regarding how claims settlements are handled with respect to annuity contracts, life policies and retained asset accounts. Read More »