Florida Readies Legislation Requiring Life Insurers to Intensify Efforts to Find Beneficiaries
March 1, 2016 by Dennis Gorski, managing editor-online, BestWeek: Dennis.Gorski@ambest.com
TALLAHASSEE, Fla. – Wide-ranging legislation aimed at speeding up death benefit payments to life insurance beneficiaries is making progress in both the Florida House and Senate.
The Senate version, filed by state Sen. Lizbeth Benacquisto of Ft. Myers, has already cleared three committee hearings and is on the docket for a full hearing next week, Senate records show. Its companion House bill, from Rep. Bill Hager of Delray Beach, cleared its final committee hearing Feb. 25, according to Ashley Carr, communications director for Florida’s Chief Financial Officer, Jeff Atwater. The House bill has not been scheduled for a hearing before the full chamber.
If enacted, the bills would have a rear-view mirror on payments owed all the way back to 1992, instead of only forward-looking from when new policies are sold.
It would also require all Florida residents to be paid benefits, regardless of where the policy was sold. “Some states only recognize policies sold in their state,” she said.
Florida is the latest state to take action against life insurers regarding efforts to find beneficiaries of life policies. Carr said the insurers would be required to step up their efforts and to utilize the Social Security Administration’s Death Master File, among other resources, to track down and pay beneficiaries.
“We’ve already settled with 20 life companies so far, representing about 70% of market share in Florida,” she said. She added the state has collected about $480 million in unpaid benefits to life beneficiaries. About $310 million has been paid to Florida beneficiaries directly from insurance companies, she said, while about $172 million has gone to the state’s unclaimed property program. “Of that we’ve given out $51 million to beneficiaries,” Carr said.
She said another 20 have yet to settle, representing 18.8% of market share in the Sunshine State, according to records from Atwater’s office.
Carr noted cases where life companies moved to immediately stop annuity payments, while at the same time letting death payments go unpaid, allegedly because payees couldn’t be located. She said she found the insurers’ position “astounding.”
An attempt to reach the American Council of Life Insurers for comment was unsuccessful.
Atwater is one of the principal forces behind the proposed legislation. In an essay to state news editors Feb. 19, Atwater said his office had “discovered a systemic practice within the life insurance industry in which many companies are sitting on billions of dollars in overdue, unpaid life insurance benefits. Why? Their excuses are endless but it boils down to pure greed.”
Carr said the state began looking into the issue about five years ago along with Insurance Commissioner Kevin McCarty.
She praised two insurers — MassMutual and USAA — that were “already doing the right thing” using the Death Master File before state auditors arrived. “No settlement agreement was necessary,” she said. The two companies represent about 3.2% of Florida market share combined, records show.
California, North Dakota, New Hampshire and Pennsylvania have joined Florida in leading a national investigation of life insurers’ practices (Best’s News Service, Dec. 17, 2015).
“By not paying money to the named beneficiary, it remains inside company vaults earning the company millions in interest each year,” Atwater said. “It’s my duty to protect consumers when we discover disturbing practices like this.”
