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 Wednesday, 4th January 2012 by Keane Unclaimed Property Team

On January 1, 2012, Delaware published two proposed unclaimed property regulations numbered 959 and 965.  The first details new due diligence requirements, the second sets forth, in detail, audit appeals procedures.

Regulation 965 is titled, “Regulation on Practice and Procedure for Establishing Running of the Full Period of Dormancy for Certain Securities and Related Property.”  While the title purports to address the abandonment of securities property, the regulation, in fact, seeks to create a brand new obligation to perform due diligence in Delaware with respect only to “Securities and Related Property.”

“Securities and Related Property” is defined to mean Property that consists of:

1. Intangible ownership interests in corporations, whether or not represented by a stock certificate, bonds and other securities
2. Dividends, cash, stock and other distributions made (or attempted to be made) by issuers of securities in respect of the securities issued
3. Certificates of membership in a corporation or association
4. Funds deposited by a Holder with fiscal agents or fiduciaries for payment to Owners of dividends, coupon interest and liquidation value of stocks and bonds
5. Funds to redeem stocks and bonds

The new due diligence obligation does not include non-securities related properties or general ledger items.  As such, it appears that this is an effort on the part of Delaware regulators to respond to the backlash caused by the wave of Kelmar (Delaware initiated) audits across the securities arena over the past 18 months.

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Posted on Wednesday, 28th December 2011 by Keane Unclaimed Property Team

This past year, the State of New York instituted a small change to its Unclaimed Property Handbook.  Through their rounds of unclaimed property audits within the mutual fund industry, it has come to light that this seemingly minor change will have a significant impact on accounts with a Dividend Reinvest option. More specifically, this update to the unclaimed property handbook results in accounts becoming eligible for escheatment based upon three (3) years of inactivity as soon as the two (2) SEC Rule 17Ad-17 mandated searches are completed. The State of New York no longer requires a full two (2) year period of return mail. This may accelerate Dividend Reinvestment reporting by as much as 2 years.

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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 Monday, 10th October 2011 by Keane Unclaimed Property Team

L-R, Val Jundt, Keane Managing Director Consulting & Advisory Services with Frederick Stollsteimer, Director of Unclaimed Property and Lindsay Caldonetti, Holder Compliance Specialist for the Commonwealth of PA

With the regulatory landscape constantly changing and evolving, unclaimed property compliance reporting is becoming more complex than ever for businesses and financial institutions. In order to keep businesses aware of these changes and to ensure that they are knowledgeable about the reporting process, Keane partnered with the Pennsylvania Treasury Department to host an Unclaimed Property Compliance Forum at the Courtyard Marriott in Philadelphia.

The forum, led by Valerie M. Jundt, Managing Director of Keane’s National Consulting & Advisory Services group and representatives from the Pennsylvania Treasury Department’s Bureau of Unclaimed Property, focused on unclaimed property compliance requirements and regulatory updates with additional emphasis on businesses incorporated in Pennsylvania, New Jersey and Delaware. Topics covered in the forum included new laws impacting 2011-2012 compliance reporting, current trends in multi-state audits, industry-specific hot-buttons, best practices for tracking and reuniting owners with their funds, implementing sufficient policies and procedures, and reporting requirements and compliance challenges unique to Pennsylvania.

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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 Thursday, 8th September 2011 by Keane Unclaimed Property Team

By Pamela Wentz, Senior Manager & Valerie Jundt, Managing Director – Keane Unclaimed Property Consulting & Advisory Services Group

As state budget deficits continue to grow, so does the importance of unclaimed property. Unclaimed property audits are occurring more frequently than ever before due in large part to the fiscal crises in many states. The main reason why is because it’s an easy way to raise revenue without imposing tax hikes on residents. In fact, the total value of unclaimed property in states’ custody is approximately 40 billion – and less than half will be reunited with its rightful owner.

At many companies, however, the topic of unclaimed property is one that often flies under the radar – even in the oil and gas industry. Unclaimed property can take the form of cash, stock certificates, uncashed checks, benefit plans, etc., however in the oil and gas industry, mineral proceeds, credit balances and suspense accounts are the big-ticket areas.  With the rise in the number of unclaimed property audits taking place, state auditors are getting more savvy about who to target and where to look for non-compliance.  Additionally, the methodologies utilized can be challenging for even the most compliant companies. The result is huge interest assessments and potential penalties at the expense of the company – and potential fallout among shareholders.

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