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 Thursday, 14th April 2011 by Keane Unclaimed Property Team

We’ve seen the word “escheatment” achieve a new level of notoriety over the past several months, and it’s largely due to the recent wave of unclaimed property penalties and notices that have been sent out by the State of California Controller’s office.

These interest assessment notices are the result of a recent internal review by the Controller’s office to identify “past due” property that had been reported and was included on the unclaimed property reports filed since 2007. Read More »

Posted on Thursday, 22nd October 2009 by Keane Unclaimed Property Team

When we discuss state escheat laws in our quarterly newsletter, or when you see news regarding them in the media, it typically centers on companies’ obligation to comply or the increasing rate of state unclaimed property audits.

However, the The State of Pennsylvania and State Treasurer Rob McCord issued a press release on October 8 on a completely different point. McCord informed PA companies that they may be able to collect unclaimed property that is owed to their business. Specifically, he suggested that “social service agencies, schools, and local governments across the Commonwealth that are strapped for cash can put their money back in their wallets through Pennsylvania’s Unclaimed Property Program.”

Treasurer McCord’s outreach directly relates to Pennsylvania’s protracted budget issues. If you’re not living in Pennsylvania right now, you’re probably happily unaware of the turmoil and debate that surrounded the state budget. While it appears that that the State’s budget woes have finally been resolved, it continues to create major issues for companies and organizations dependent on state budget dollars. Large cuts mean that companies and organizations will likely pursue unclaimed assets in the hope of accessing much needed resources.

The Treasurer’s unclaimed property cause is well intentioned. State escheat laws and unclaimed property are often seen consumer issues, but the fact is that there are a large amount of corporate and organizational assets that are reported to every state each year which sit unclaimed. It’s not just a PA issue.

For those that have taken note of Mr. McCord’s press release, I’d like to offer both encouragement and caution if they are looking to collect unclaimed property. There is definitely money to be claimed, but there are risks involved that you should understand before you make a claim.

First and foremost, it’s the law to be in compliance with state unclaimed property law. So, for those looking to benefit from the assets held by the state, the right thing to do is to first ensure you are in compliance. It is important to note that not all states have a direct connect between compliance and recovery, but for those states that do, be aware of a potential audit if you are not in compliance.

If the state finds that the party looking to recover is not in compliance, instead of retrieving much needed assets and capital, a company may find itself facing hefty fines and audit costs. We see this nationwide in the Corporate Asset Recovery area of Keane Unclaimed Property.

Once you are in compliance it is certainly within reason to request your assets. As more and more businesses have adopted unclaimed property reporting and remittance requirements as part of their normal compliance activities, opportunities are being created for compliant firms to capitalize on cash being held in state unclaimed property offices. Just as your organization reports funds owed to outside corporate entities such as vendors, business partners and affiliates, other firms are reporting your property to the states as unclaimed.

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Posted on Wednesday, 21st October 2009 by Keane Unclaimed Property Team

An interesting article regarding state escheatment rules is circulating today. It is just the latest front in the States’ continuing battle to collect unclaimed and abandoned property.

Covered here by the Los Angles Times, the short version of the story is this – there are some $16.7 billion in war bonds from World War II that are classified as “unclaimed property.” Right now, those assets reside with the Treasury Department at the Federal level. The States believe that these assets should escheat to be held at the state level, and six states are suing to claim these unclaimed assets as their own.

Move past the significant issues here regarding State versus Federal power. The core issue here is money.
As I’ve discussed in past posts, unclaimed property offers an attractive source of revenue for states, particularly as many of them face budget issues through the economic downturn. The State of Delaware even lists abandoned property as its third largest revenue source in its budget projections.

Not surprisingly, the unclaimed assets represented by the war bonds are just as attractive to the cash strapped Federal Government.

This situation is a vivid illustration of how states are willing to go to great lengths to collect unclaimed and abandoned property. From auditing businesses and organizations for how and what they report (and levying fines in a number of cases), to pursuing legal action, they remain very driven.

The lawsuit is a strong reminder to businesses to review their unclaimed property and reporting, ensure they are in compliance with all state escheatment rules, and protect themselves from unnecessary risk and compliance issues.

Be sure of one thing, these assets are an attractive form of revenue right now, and in this case, both the Federal and State Governments are willing to do legal battle over it.

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Posted on Tuesday, 29th September 2009 by Keane Unclaimed Property Team

I recently learned about some interesting statistics regarding Delaware’s abandoned property law that helps illustrate what unclaimed property means to state budgets. It also shows why companies are facing an increased risk of unclaimed or abandoned property audit.

This is an issue I have discussed in the past - as the states face tighter budgets and decreasing revenue, they have looked to other sources, like unclaimed property reporting and audit proceeds, to help make up the difference. It is a risk that can have a material impact on your company’s cash flow and financial well-being.

My colleague at Keane Unclaimed Property, Laura Lane, shared with me the information that was recently disclosed by the Delaware Economic and Financial Advisory Council (DEFAC). DEFAC meets six times a year to set forecasts for the State’s finances and shares the minutes of those meetings online.

The minutes of the the June 15, 2009 meeting were recently posted and contain some interesting insights into how the abandoned property law impacts the state budget. For example, for the fiscal year ended June 30, 2010, the forecast for “Abandoned Property” increased from $330 million to $350 million. Additionally, the minutes indicate that the $20 million increase is attributable to the settlement of ONE large case. Large indeed!

This makes unclaimed property or abandoned property the third largest source of revenue for the State of Delaware. It is not just a large contributor to the state’s revenue – its one of THE largest and most significant.

It’s a harsh reality for companies that are incorporated in Delaware – the ones that are most at risk. It’s not clear exactly where the state thinks the money will come from, but it is difficult to imagine that they could maintain and grow the amount of money collected year-over-year without continuing to aggressively enforce their statutes through audits (and assessing fines and penalties). This is a clear illustration of why companies must be well prepared by reporting properly on an annual basis and ensuring that they have identified and corrected any accounting practices that would raise the eyebrows of the auditors.

While you may not be aware of your vulnerabilities, the states are. They’re so confident that it’s in the budget.

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