New York Adopts Version of Unclaimed Life Insurance Benefits Act
In December 2012, New York Governor Andrew M. Cuomo approved a new law designed to address alleged shortcomings in the business practices of life insurance companies with respect to locating and paying beneficiaries of unclaimed death benefits. The law, which becomes effective June 17, 2013, is based upon the National Conference of Insurance Legislators’ model Unclaimed Life Insurance Benefits Act (“ULIBA”).
Among other things, New York’s version of the ULIBA requires life insurance companies to compare both in-force and lapsed or terminated life insurance policies against the Social Security Administration’s Death Master File, or an equally comprehensive database, on at least a quarterly basis. In the event that an insurer identifies a potential match with an insured, the insurer must attempt to confirm the death of the insured and, within 90 days, begin to locate beneficiaries. Once one or more beneficiaries are located, the insurer is required to provide each beneficiary with the information necessary to make a claim pursuant to the terms of the applicable policy. If the insurer cannot locate any beneficiaries within 90 days, it is obligated to continue to search until the property escheats to the state pursuant to existing unclaimed property laws.
The New York law goes a step further than the model act by requiring the Department of Financial Services to develop and implement a “Lost Policy Finder” program, which will allow citizens to make online and toll-free telephone requests for information regarding unclaimed life insurance benefits. Insurers will have 30 days from receipt of such requests to search for information and respond.
Three other states — Kentucky, Maryland, and Alabama — adopted versions of the model ULIBA in 2012. In another six states — Montana, Massachusetts, North Dakota, Vermont, New Mexico, and Rhode Island — legislation is currently pending.
For additional information about the impact of unclaimed property laws on life insurance companies, please contact Bob Laurie.