Goings on in the Life Insurance Sector

Christa DeOliveira Christa DeOliveira, CIA, CCEP

There have been some interesting developments of late in the life insurance sector, both with legislation and regulations. While these developments are not directly a part of unclaimed property, they are still significant and are indirectly tied to unclaimed property.

This year several laws have been proposed requiring searches using the Social Security Death Master File, SSDMF, also sometimes referred to as the Social Security Death Index, SSDI. A few of these laws are based on the model law, entitled, Model Unclaimed Life Insurance Benefits Act. This act was proposed by the National Conference of Insurance Legislators, NCOIL. The states that have proposed the legislation include: Alabama (HB 126, was delivered to the Governor on May 10, 2012, and its disposition is currently pending); Kentucky (HB 135, was signed by the Governor on April 11, 2012, and is effective January 1, 2013); and Tennessee (HB 2283 & SB 2554, neither have passed yet).

Some of the provisions in the model act include conducting a search comparing insureds of in force policies and retained asset accounts against the SSDMF identifying matches. Initially it was proposed for quarterly; however, it has subsequently been reduced to semi-annually. For any potential matches identified in the search process there are requirements to confirm the death of the insured and make efforts to find beneficiaries and assist them in claiming any applicable policies. Incidentally, the act also touches on policy information which would be necessary to complete a successful search, such as SSN, complete name, date of birth, beneficiary designation, etc.

Two other states also have proposed legislation requiring searches using the SSDMF, although they have not followed the NCOIL model act. Both of these pieces of legislation would require searching the SSDMF. The states include Maryland (SB 77, which was signed on May 2, 2012, and becomes effective on October 1, 2013) and New York (AB 9845, which was recently introduced and has not yet progressed).

Additionally, New York has recently expanded its insurance regulations to require cross-checking life insurance policies with the SSDI. The frequency should be at least quarterly with provisions outlined of when more frequent searches would be required. The regulations requires for key information to be captured when a policy is sold and cross referencing policies with requests received through the state’s new lost policy finder, www.NYPolicyFinder.com. Insurance Regulation 200, 11 NYCRR 226, can be viewed in its entirety at www.dfs.ny.gov/insurance/r_emergy/re200t.pdf. It becomes effective June 13, 2012.

Given New York’s new regulation, it will be interesting to see if AB 9845 progresses. Furthermore, it will be interesting to watch the current pending legislation and to see if any more states put forth similar bills.

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