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Life Health > Life Insurance

Unclaimed property back on NAIC agenda

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The National Association of Insurance Commissioners’ (NAIC) Life Insurance and Annuity Committee plans to reopen debate Friday over whether the NAIC should develop guidance aimed at ensuring what the industry calls “fair and uniform” practices in dealing with insurer compliance with unclaimed property laws.

The standing committee will take up the issue at the request of Nebraska Insurance Director Bruce Ramge. In a letter to the panel, Ramge said the NAIC should immediately begin a formal discussion on life insurers’ use of the Death Master File (DMF) or similar databases used for identifying unclaimed death benefits.

The letter has the support of the American Council of Life Insurers (ACLI). It has been asking the NAIC to take up the issue for several months. Whit Cornman, a spokesman for the ACLI, said it agrees with Ramge’s request that the NAIC and interested parties begin “a dialogue on the issue.”

The issue came up, with ACLI support, at an Executive Committee conference call 10 days ago. But, after an hour of private talks to which an estimated 177 interested parties listening to the conference call were not privy to, the panel decided to delay adoption until 2014 a “charge” for the (A) committee to consider whether to provide guidance on the uniform use of the DMF for life insurers.

That means the status quo, enforcement actions by various state insurance commissioners and state treasurers will continue.

For example, earlier this week California Controller John Chiang filed a countersuit to a suit filed Oct. 30 by Thrivent Financial for Lutherans. The suits deal with a 14-month-long battle over what records Thrivent has to produce for Chiang regarding the records of its life insurance policyholders.

Chiang wants to determine whether Thrivent paid off claims on policies Thrivent issued to customers in California, or, in the alternative, turned over the proceeds to the state.   

Most of the nation’s large insurers have settled with state regulators and treasurers over the issue, and now Chiang and some state insurance regulators have expanded the probe to smaller insurers.

“I am convinced that the time has come for the NAIC to establish guidance regarding this matter,” Ramge said in a Nov. 4 letter to Life Committee Chair and Tennessee Commissioner Julie Mix McPeak, chair of the Life Insurance and Annuity Committee. The panel meets by conference call to discuss that and numerous other issues Friday.

Ramge, who says he has been closely involved with market conduct and market regulation since 1984, warned against further delay in the development of guidelines, creating a situation where there is a free-for-all among states of non-uniform measures.

Moreover, a “lack of guidance creates uncertainty for insurers, regulators and consumers alike,” he wrote in the Nov. 4 letter.

The unclaimed property issue was set to get the NAIC’s focus as a group, as state actions have been varied, myriad and unpredictable to insurers. However, discussion has been pushed off by the NAIC Executive Committee in a closed meeting until the new leadership is in place.

Ramge is trying to get his fellow regulators to take action by persuading them that a charge to the NAIC could be developed without hobbling the states’ ability to continue to take enforcement action against insurers for non-compliance with unclaimed property laws and rules. 

 The fines or settlements against life insurers for their DFA practices are a source of revenue for states. 


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