WASHINGTON—The National Conference of Insurance Legislators Sunday passed a resolution supporting a model law dealing with unclaimed property policies, but only after an apparent two-day mad scramble by industry lobbyists and lawyers that resulted in major changes to the original proposed model law.
At the same time, officials of the American Council of Life Insurers said problems remain, and that they will likely seek changes in the proposed model as state legislatures start to deal with the issue starting in January.
Whit Cornman, an ACLI official, said smaller insurers regard the proposed model as a “setback” because it mandates use of the Social Security Death Master File, or its equivalent.
Many insurers, especially smaller insurers, don’t use the DMF, Cornman said.
An industry lawyer who declined to be named because she represents clients caught up in the probe said the original model law proposed at the start of the NCOIL meeting was a “ disaster.”
The original model law was inconsistent with unclaimed property laws and unfair claims practices law; adopting the methodology for doing DMF matches required by the New York Department of Financial Services in its July request for information, the lawyer said.
This is inconsistent with the software being used by Verus, which is examining the files of insurers in 38 states after being armed with state police powers by insurance regulators in those states.
For example, the lawyer said, the original NCOIL model adopts date of death as dormancy trigger, which is not in the unclaimed property laws; and giving beneficiaries only 45 days to file a claim, without any empirical evidence of average time it takes beneficiaries to file claims.
The lawyer said industry has not reviewed the final version, and cautioned that major concerns may remain. The lawyer said whether industry will support the model law will have to await a comprehensive analysis of it.
NCOIL’s executive committee adopted the revised model Sunday, during the conclusion of its annual meeting in Santa Fe.
It came only two days after NCOIL’s Life Insurance & Financial Planning Committee amended and then approved the model, which had only been drafted a few weeks earlier.
The revised model would require life insurers to match Social Security death master file records, or an equally comprehensive service, with in-force life insurance policies and retained asset accounts each quarter.
The model law also calls for timely insurer efforts to confirm an insured or account holder’s death, locate any beneficiaries, and provide claims forms and instructions.