Keane's Unclaimed Property Blog

A Summary of Recent Life Insurance Beneficiary Search Regulations

In recent months, four states (AL, KY, MD, NY) have adopted new life insurance beneficiary search regulations. These regulations stem from the National Conference of Insurance Legislators (NCOIL) Model Unclaimed Life Insurance Benefits Act passed in November of 2011 which requires periodic comparisons of in-force policies against a database such as the Social Security Administration’s Death Master File (DMF) to first determine which policy owners are no longer living.  The NCOIL model act was developed in response to a series of audits which pointed to a discrepancy between the way some life insurance companies were treating annuities and life insurance policies.

Specifically, the NCOIL model requires insurers to:

  • Compare in-force life insurance policies and retained asset accounts against the DMF or comparable source
  • Research and locate beneficiaries of the deceased policy holders
  • Provide the necessary claim forms to the beneficiaries that are located, and
  • Escheat life insurance benefits to the appropriate state treasury department if they are unsuccessful at finding the beneficiaries

While the foundations of each piece of legislation are similar, there are some differences between the five. The section below highlights the unique elements of each state’s life insurance policy review and beneficiary search requirements. 

Alabama HB 126 (Proposed 2/22/12, Passed 5/15/12)

  • Search Death Master File every three years
  • First search must take place between 6/1/2014 and 1/1/2017
  • Effective 1/1/2014

Kentucky HB 135 (Proposed 12/16/11, Passed 4/13/12)

  • Search Death Master File on a quarterly basis
  • Effective 1/1/2013

Maryland SB 77 (Proposed 1/16/12, Passed 5/2/12)

  • Search Death Master File on a semi-annual basis
  • Maryland Insurance Commissioner is authorized to adopt new regulations
  • Effective 10/1/2013

New York (Proposed 4/16/12, Passed 5/14/12)

  • Regulation passed via Emergency Measure of NY Governor and Department of Financial Services
  • Search Death Master File on a quarterly basis
  • Requires additional beneficiary information to be captured when new policies are sold to facilitate beneficiary location and the payment of benefits
  • Cross-reference policies with consumer requests received through
  • On an annual basis, insurers must provide the State Comptroller the total number of policies for which they were unable to locate a beneficiary
  • Effective 30 Days after filing with the Secretary of State

It is worth mentioning that Tennessee also proposed an NCOIL-based law (HB 2283) which would have required a quarterly search of the DMF. However, this bill was not passed.

Life insurers that operate in any of the states above should take notice of these new regulations and identify policies and procedures to ensure that they remain in compliance. Aside from simply performing the mandated comparisons, insurers need to have processes in place to quickly analyze policy data and locate beneficiaries so they can facilitate claims and prevent account proceeds from escheating to the state.

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