WASHINGTON BUREAU — An arm of the National Conference of Insurance Legislators (NCOIL) wants to respond to concerns about life insurers’ unclaimed practices by updating NCOIL’s 2010 Beneficiaries’ Bill of Rights Model.
Members of the NCOIL Life Insurance & Financial Planning Committee approved that approach Friday in Newport, R.I., at the group’s summer meeting.
California Controller John Chiang created a wave of interest in life insurance unclaimed property by announcing that a contract auditor, Verus Financial L.L.C., Waterbury, Conn., had helped identify about $20 million in unclaimed property at just one life insurer and was conducting similar reviews of about 20 other insurers.
The committee hopes to have revisions to the bill of rights model ready for a presentation to the NCOIL executive committee in November.
Robert Damron, the immediate past president at NCOIL, Troy, N.Y., and a Democratic state representative from Kentucky, has proposed the amendments.
The amendments would 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).
Insurers would have to check the Social Security Death Master File both to find beneficiaries and pay any unclaimed benefits.
Damron is also proposing changes to the existing model law that would require insurers to use the same review procedures for both annuities and life insurance and–if a beneficiary were not found within 45 days–to remit unclaimed proceeds to states, subject to a dormancy period that would begin when a dead
owner or dead account holder was first identified.
Most states require insurers to turn funds in dormant accounts over to the state after a dormancy period of 3 to 4 years.
“Updating the [NCOIL] model will ensure that carriers fulfill their obligations to policyholders and payments to beneficiaries,” Damron says in a statement about the proposed changes.
An RAA is an account similar to a checking account that a life insurer uses to provide life insurance death benefits.
Executives from MetLife Inc., New York (NYSE:MET), reported during recent hearings in Florida on “asymmetrical” unclaimed property practices — or use of the Death Master File to find dead annuity benefits receipients but not dead life insurance policyholders — that MetLife is holding about $12 billion in RAA assets.
RAAs have come up in discussions of unclaimed property because consumer advocates and others have asked whether life policy beneficiaries are aware of all of the death benefits remaining in the RAAs.
Other unclaimed property coverage from National Underwriter Life & Health:
- Moody’s: Unclaimed Property Probes Could Cost Hundreds of Millions
- Unclaimed Property: New York Requires Use of Death Master File
- Unclaimed Property: California Regulators Share Authority with Verus
- Opening the Vault
- California Regulators: When Did You Computerize Your Records, and When Did You Sweep Them?
- McCarty: Unclaimed Property Probe Could Bring in “North of $1 Billion”
- Hancock Negotiates Unclaimed Property Settlement
- Keller Rohrback Seeks Consumers with Unclaimed Property Concerns
- States Form Task Force, Hire Verus to Look at Unclaimed Property Procedures
- Dozens of States Eye Life Claims Procedures