In the past month, the State of Alabama has pre-filed a new Unclaimed Property bill that would affect the escheatment of insurance benefits. Alabama HB 126 would enact legislation similar to the National Conference of Insurance Legislators (NCOIL) Unclaimed Life Insurance Benefits Act, making them the fourth state to propose such a measure, after Kentucky, Tennessee, and Maryland.
Alabama HB 126 was pre-filed on February 2nd, and proposes legislation almost identical to the other three states listed above. The details of this act have been previously outlined on this blog. In summary, the NCOIL Unclaimed Life Insurance Benefits Act mandates that Life Insurance companies perform a comparison between in-force life insurance policies and retained asset accounts against the United States Social Security Administration’s Death Master File (DMF) or any other database or service that is at least as comprehensive as the DMF. If a match is identified, the insurer must perform a good-faith effort to confirm the death and determine if benefits are due. A second good-faith search is required to locate any beneficiaries and provide necessary claims forms and instructions if there are benefits are to be paid. In the event that benefits go unclaimed, the model act provides policies for life insurers to notify state treasury departments and escheat the funds appropriately.
We will continue to monitor this bill and similar legislation that impacts the life insurance industry, as additional states are likely to adopt the NCOIL Unclaimed Life Insurance Benefits Act in the coming months. Visit our blog and our unclaimed property newsletter, Keanotes for additional news and insight.
Alabama Unclaimed Property Update:
The Alabama Legislature passed HB 126 on May 15, 2012. As a result, life insurers are required to perform a comparison between in-force life insurance policies and retained asset accounts against the DMF for the first time beginning June 1, 2014 and have the comparison completed by January 1, 2017. Thereafter, an insurer must maintain a program to perform the comparison at least once every three years. Insurers must also complete the searches outlined above in the event that a potential match is identified.