On Sunday August 14, 2016 CBS Sixty Minutes re-broadcast a report on life insurance companies not informing beneficiaries when an insured is known to be deceased with a death benefit available. It appears that Illinois’ legislature has done something about the situation but the Governor has yet to sign the bill even though the bill was sent to his office on June 27, 2016.
This editorial was originally published in June. The actual legislation HR 4633 is shown below the editorial.
Their View: Rauner should sign life insurance bill
New Act
215 ILCS 5/424
from Ch. 73, par. 1031
Synopsis As Introduced
Creates the Unclaimed Life Insurance Benefits Act. Provides that the purpose of the Act is to require all authorized insurers regulated by the Department of Insurance to undertake good faith efforts, as specified in the Act, to locate and pay beneficiaries' proceeds under unclaimed life insurance policies, annuity contracts, and retained asset accounts issued in the State or remit such proceeds as unclaimed property to the appropriate jurisdiction if the beneficiaries are unable to be located or paid. Requires insurers to implement the certain policies and procedures for performing a comparison of its policies, annuity contracts, and retained asset accounts against the United States Social Security Administration's Death Master File. Provides that failure to meet any requirement of the Act is an unfair trade practice under the Illinois Insurance Code, and amends the Illinois Insurance Code to make a corresponding change.
Senate Committee Amendment No. 1
Replaces everything after the enacting clause. Reinserts the provisions of the engrossed bill with the following changes: Makes changes to provisions setting forth the purpose of the Act. Requires insurers to complete an initial comparison of its records with the Death Master File by December 31, 2017 and then on a semi-annual basis thereafter. Provides that in the event that one of the insurer's lines of business conducts a search for matches more frequently than semi-annually, then all lines of the insurer's business shall conduct searches for matches with the same frequency. Removes provisions concerning partial matches. Makes changes to the procedure for potential matches and searches an insurer must perform. Provides that nothing in the Act shall be construed to amend, modify, or supersede the Uniform Disposition of Unclaimed Property Act. Requires the Department of Insurance to develop and implement a lost policy finder to assist requesters with locating unclaimed life insurance benefits. Provides that the Department may limit an insurer's Death Master File comparisons to the insurer's electronic searchable files or approve a plan and timeline for conversion of the insurer's files to searchable electronic files upon a demonstration of hardship by the insurer. Removes and makes changes to certain definitions. Changes various references from "insureds" to "insureds, annuitants, and retained asset account holders." Makes other changes.
Full Text of HB4633
Introduced Engrossed Enrolled
Senate Amendment 001
Printer-Friendly Version PDF Bill Status
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1AN ACT concerning business.
2Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4Section 1. Short title. This Act may be cited as the
5Unclaimed Life Insurance Benefits Act.
6Section 5. Purpose. This Act shall require recognition of
7the Uniform Disposition of Unclaimed Property Act and require
8the complete and proper disclosure, transparency, and
9accountability relating to any method of payment for life
10insurance, annuity, or retained asset agreement death
11benefits.
12Section 10. Definitions. As used in this Act:
13"Annuity contract" does not include an annuity contract
14used to fund an employment-based retirement plan or program
15where (1) the insurer does not perform the record keeping
16services or (2) the insurer is not committed by the terms of
17the annuity contract to pay death benefits to the beneficiaries
18of specific plan participants.
19"Date of death" means the date on which an insured, annuity
20owner, or retained asset account holder died.
21"Date of death notice" means the date the insurer first has
22notice of the date of death of an insured, annuity owner, or
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1retained asset account holder. "Date of death notice" includes,
2but is not limited to, the date the insurer received
3information or gained knowledge of a Death Master File match or
4any other source or record maintained or located in insurer
5records of the death of an insured, annuity owner, or retained
6asset account holder.
7"Death Master File" means the United States Social Security
8Administration's Death Master File or any other database or
9service that is at least as comprehensive as the United States
10Social Security Administration's Death Master File for
11determining that a person has reportedly died.
12"Death Master File match" means a match of the social
13security number or the name and date of birth of an insured,
14annuity owner, or retained asset account holder resulting from
15a search of the Death Master File.
16"Department" means the Department of Insurance.
17"Lost policy finder" means a service made available by the
18Department on its website or otherwise developed by the
19Department to assist consumers with locating unclaimed life
20insurance benefits.
21"Policy" means any policy or certificate of life insurance
22that provides a death benefit. "Policy" does not include any
23policy or certificate of credit life or accidental death
24insurance or health coverages, including, but not limited to,
25disability and long-term care arising from the reported death
26of a person insured under the coverage, or any policy issued to
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1a group master policyholder for which the insurer does not
2provide record keeping services.
3"Record keeping services" means services provided under
4circumstances in which the insurer has agreed with a group
5policy or annuity contract customer to be responsible for
6obtaining, maintaining, and administering its own or its
7agents' systems information about each individual insured
8under an insured's group insurance contract, or a line of
9coverage thereunder, including, but not limited to, the
10following: (1) social security number or name and date of
11birth, (2) beneficiary designation information, (3) coverage
12eligibility, (4) benefit amount, and (5) premium payment
13status.
14"Retained asset account" means any mechanism whereby the
15settlement of proceeds payable under a policy or annuity
16contract is accomplished by the insurer or an entity acting on
17behalf of the insurer depositing the proceeds into an account
18with check or draft writing privileges, where those proceeds
19are retained by the insurer or its agent pursuant to a
20supplementary contract not involving annuity benefits other
21than death benefits.
22Section 15. Insurer conduct.
23(a) An insurer shall initially perform a comparison of its
24insureds', annuitants', and retained asset account holders'
25in-force policies, annuity contracts, and retained asset
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1accounts by using the full Death Master File. The initial
2comparison shall be completed on or before December 31, 2017,
3unless extended by the Department pursuant to administrative
4rule. Thereafter, an insurer shall perform a comparison on at
5least a semi-annual basis using the Death Master File update
6files for comparisons to identify potential matches of its
7insureds, annuitants, and retained asset account holders. In
8the event that one of the insurer's lines of business conducts
9a search for matches of its insureds, annuitants, and retained
10asset account holders against the Death Master File at
11intervals more frequently than semi-annually, then all lines of
12the insurer's business shall conduct searches for matches
13against the Death Master File with the same frequency.
14An insured, an annuitant, or a retained asset account
15holder is presumed dead if the date of his or her death is
16indicated by the comparison required in this subsection (a),
17unless the insurer has competent and substantial evidence that
18the person is living, including, but not limited to, a contact
19made by the insurer with the person or his or her legal
20representative.
21For those potential matches identified as a result of a
22Death Master File match, the insurer shall within 120 days
23after the date of death notice, if the insurer has not been
24contacted by a beneficiary, determine whether benefits are due
25in accordance with the applicable policy or contract and, if
26benefits are due in accordance with the applicable policy or
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1contract:
2(1) use good faith efforts, which shall be documented
3by the insurer, to locate the beneficiary or beneficiaries;
4the Department shall establish by administrative rule
5minimum standards for what constitutes good faith efforts
6to locate a beneficiary, which shall include: (A) searching
7insurer records; (B) the appropriate use of First Class
8United States mail, e-mail addresses, and telephone calls;
9and (C) reasonable efforts by insurers to obtain updated
10contact information for the beneficiary or beneficiaries;
11good faith efforts shall not include additional attempts to
12contact the beneficiary at an address already confirmed not
13to be current; and
14(2) provide the appropriate claims forms or
15instructions to the beneficiary or beneficiaries to make a
16claim, including the need to provide an official death
17certificate if applicable under the policy or annuity
18contract.
19(b) Insurers shall implement procedures to account for the
20following when conducting searches of the Death Master File:
21(1) common nicknames, initials used in lieu of a first
22or middle name, use of a middle name, compound first and
23middle names, and interchanged first and middle names;
24(2) compound last names, maiden or married names, and
25hyphens, blank spaces, or apostrophes in last names;
26(3) transposition of the "month" and "date" portions of
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1the date of birth; and
2(4) incomplete social security numbers.
3(c) To the extent permitted by law, an insurer may disclose
4the minimum necessary personal information about the insured,
5annuity owner, retained asset account holder, or beneficiary to
6a person whom the insurer reasonably believes may be able to
7assist the insurer with locating the beneficiary or a person
8otherwise entitled to payment of the claims proceeds.
9(d) An insurer or its service provider shall not charge any
10beneficiary or other authorized representative for any fees or
11costs associated with a Death Master File search or
12verification of a Death Master File match conducted pursuant to
13this Act.
14(e) The benefits from a policy, annuity contract, or a
15retained asset account, plus any applicable accrued interest,
16shall first be payable to the designated beneficiaries or
17owners and, in the event the beneficiaries or owners cannot be
18found, shall be reported and delivered to the State Treasurer
19pursuant to the Uniform Disposition of Unclaimed Property Act.
20Nothing in this subsection (e) is intended to alter the amounts
21reportable under the existing provisions of the Uniform
22Disposition of Unclaimed Property Act or to allow the
23imposition of additional statutory interest under Article XIV
24of the Illinois Insurance Code.
25(f) Failure to meet any requirement of this Section with
26such frequency as to constitute a general business practice is
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1a violation of Section 424 of the Illinois Insurance Code.
2Nothing in this Section shall be construed to create or imply a
3private cause of action for a violation of this Section.
4Section 20. Uniform Disposition of Unclaimed Property Act.
5Nothing in this Act shall be construed to amend, modify, or
6supersede the Uniform Disposition of Unclaimed Property Act,
7including the authority of the State Treasurer to examine the
8records of any person if the State Treasurer has reason to
9believe that such person has failed to report property that
10should have been reported pursuant to the Uniform Disposition
11of Unclaimed Property Act.
12Section 25. Lost policy finder.
13(a) The Department shall develop and implement a lost
14policy finder to assist requesters with locating unclaimed life
15insurance benefits. The lost policy finder shall be available
16online and via other means. The Department shall assist a
17requester with using the lost policy finder, including
18informing the requester of the information that an insurer may
19need to facilitate responding to the request.
20(b) As soon as practicable, but no later than 30 days after
21receiving a request from a requester via the lost policy
22finder, the Department shall:
23(1) forward the request to all insurers deemed
24necessary by the Department in order to successfully
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1respond to the request; and
2(2) inform the requester that the Department received
3the request and forwarded the request to all insurers
4deemed necessary by the Department in order to successfully
5respond to the request.
6(c) Upon receiving a request forwarded by the Department
7through a lost policy finder, an insurer shall search for
8policies and any accounts subject to this Act that insure the
9life of or are owned by an individual named as the decedent in
10the request forwarded by the Department.
11(d) Within 30 days after receiving the request referenced
12in subsection (b) of this Section, or within 45 days after
13receiving the request where the insurer contracts with another
14entity to maintain the insurer's records, the insurer shall:
15(1) report to the Department through the lost policy
16finder the findings of the search conducted pursuant to
17subsection (c) of this Section;
18(2) for each identified policy and account insuring the
19life of, or owned by, the individual named as the decedent
20in the request, provide to a requester who is:
21(A) also the beneficiary of record on the
22identified policy or account, the information
23necessary to make a claim pursuant to the terms of the
24policy or account; and
25(B) not the beneficiary of record on the identified
26policy or account, the requested information to the
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1extent permissible to be disclosed in accordance with
2any applicable law, rule, or regulation and take such
3other steps necessary to facilitate the payment of any
4benefit that may be due under the identified policy or
5account.
6(e) The Department shall, within 30 days after receiving
7from all insurers the information required in item (1) of
8subsection (d) of this Section, inform the requester of the
9results of the search.
10(f) When a beneficiary identified in subsection (d) of this
11Section submits a claim or claims to an insurer, the insurer
12shall process such claim or claims and make prompt payments and
13distributions in accordance with all applicable laws, rules,
14and regulations.
15(g) Within 30 days after the final disposition of the
16request, an insurer shall report to the Department through the
17lost policy finder any benefits paid and any other information
18requested by the Department.
19Section 30. Administrative rules.
20(a) The Department shall adopt rules to administer and
21implement this Act.
22(b) The Department may limit an insurer's Death Master File
23comparisons required under Section 15 of this Act to the
24insurer's electronic searchable files or approve a plan and
25timeline for conversion of the insurer's files to searchable
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1electronic files upon a demonstration of hardship by the
2insurer.
3Section 35. Application. The provisions of this Act apply
4to policies, annuity contracts, and retained asset accounts in
5force on or after the effective date of this Act.
6Section 40. The Illinois Insurance Code is amended by
7changing Section 424 as follows:
8(215 ILCS 5/424) (from Ch. 73, par. 1031)
9Sec. 424. Unfair methods of competition and unfair or
10deceptive acts or practices defined. The following are hereby
11defined as unfair methods of competition and unfair and
12deceptive acts or practices in the business of insurance:
13(1) The commission by any person of any one or more of
14the acts defined or prohibited by Sections 134, 143.24c,
15147, 148, 149, 151, 155.22, 155.22a, 155.42, 236, 237, 364,
16and 469 of this Code.
17(2) Entering into any agreement to commit, or by any
18concerted action committing, any act of boycott, coercion
19or intimidation resulting in or tending to result in
20unreasonable restraint of, or monopoly in, the business of
21insurance.
22(3) Making or permitting, in the case of insurance of
23the types enumerated in Classes 1, 2, and 3 of Section 4,
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1any unfair discrimination between individuals or risks of
2the same class or of essentially the same hazard and
3expense element because of the race, color, religion, or
4national origin of such insurance risks or applicants. The
5application of this Article to the types of insurance
6enumerated in Class 1 of Section 4 shall in no way limit,
7reduce, or impair the protections and remedies already
8provided for by Sections 236 and 364 of this Code or any
9other provision of this Code.
10(4) Engaging in any of the acts or practices defined in
11or prohibited by Sections 154.5 through 154.8 of this Code.
12(5) Making or charging any rate for insurance against
13losses arising from the use or ownership of a motor vehicle
14which requires a higher premium of any person by reason of
15his physical disability, race, color, religion, or
16national origin.
17(6) Failing to meet any requirement of the Unclaimed
18Life Insurance Benefits Act with such frequency as to
19constitute a general business practice.
20(Source: P.A. 99-143, eff. 7-27-15.)
