On Sunday, November 20, the National Conference of Insurance Legislators (NCOIL) passed a resolution supporting a model law dealing with unclaimed property policies for insurers and mandating use of the Social Security Death Master File (DMF). This resolution comes on the heels of NCOIL’s July announcement proposing changes to the life insurance industry as a result of the findings of the Verus audits, which revealed discrepancies between the way life insurers were treating annuity obligations and the pay out of life insurance death benefits.
The final, revised model will require life insurers to match DMF records, or an equally comprehensive service, with in-force life insurance policies and retained asset accounts each quarter. It also calls for timely insurer efforts to confirm an insured or account holder’s death, locate any beneficiaries, and provide claims forms and instructions. In the event that benefits go unclaimed, the model act provides clear procedures for life insurers to notify state treasury departments and escheat the funds, per unclaimed property laws.
Insurers have faced mounting pressure in recent months as state attorneys general and comptrollers are increasingly becoming more involved with the issue out of apparent concern that state insurance regulators aren’t being aggressive enough with their actions.
On Tuesday, Florida’s insurance commissioner and incoming president of the National Association of Insurance Commissioners (NAIC) announced that the organization would be developing a response to NCOIL’s resolution. Many within the organization believe that this resolution will cause confusion with state unclaimed property laws, which also deal with the reconciliation and reporting of unclaimed funds. In fact, a spokesman for the American Council of Life Insurers (ACLI) noted that unclaimed property requirements across the country are unclear.
NCOIL’s model law must still be approved by the states – whose goal is to ensure that insurers complete regulatory and unclaimed property audits – who are concerned that insurance companies will try to use the NCOIL model as justification for pushing the states to drop ongoing regulatory and unclaimed property audits.
The NCOIL model directly impacts unclaimed property compliance and regulations for the insurance industry, and we will continue to follow this issue and provide updates as the states begin their review and response to this resolution.