SB1783 99TH GENERAL ASSEMBLY

LRB099 07630 MLM 27761 b

99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
SB1783

Introduced 2/20/2015, by Sen. William R. Haine

SYNOPSIS AS INTRODUCED:

New Act
215 ILCS 5/424	from Ch. 73, par. 1031

Creates the Unclaimed Life Insurance Benefits Act. Provides that insurers with life insurance policies, annuity contracts, or retained asset accounts shall compare those accounts to the Social Security Administration's Death Master File or similar database on at least a semi-annual basis. Provides that within 90 days of finding a Death Master File match, the insurer shall complete a good faith effort to confirm the death of the insured or retained asset account holder, and to determine whether benefits are due and, if so, to locate beneficiaries and provide the appropriate forms or instructions. Provides that benefits from a policy, annuity contract, or a retained asset account, plus any applicable accrued contractual interest shall first be payable to the designated beneficiaries or owners and, in the event the beneficiaries or owners cannot be found, shall escheat pursuant to the Uniform Disposition of Unclaimed Property Act, and requires insurers to contact the Treasurer pursuant to the Uniform Disposition of Unclaimed Property Act. Provides that failures to meet the requirements of the Act with such frequency as to constitute a general business practice is a violation of provisions of the Illinois Insurance Code concerning unfair methods of competition and unfair or deceptive acts or practices. Makes conforming changes in the Illinois Insurance Code.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning insurance.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Unclaimed Life Insurance Benefits Act.

Section 5. Purpose. This Act shall require recognition of the Uniform Disposition of Unclaimed Property Act and require the complete and proper disclosure, transparency, and accountability relating to any method of payment for life insurance, annuity, or retained asset agreement death benefits.

Section 10. Definitions. As used in this Act:

"Annuity contract" shall not include an annuity contract used to fund an employment-based retirement plan or program where (1) the insurer does not perform the record keeping services or (2) the insurer is not committed by the terms of the annuity contract to pay death benefits to the beneficiaries of specific plan participants.

"Death Master File" means the United States Social Security Administration's Death Master File or any other database or service that is at least as comprehensive as the United States Social Security Administration's Death Master File for determining that a person has reportedly died.

"Death Master File match" means a search of the Death Master File that results in a match of the social security number or the name and date of birth of an insured, annuity owner, or retained asset account holder.

"Policy" means any policy or certificate of life insurance that provides a death benefit. "Policy" does not include (1) any policy or certificate of life insurance that provides a death benefit under an employee benefit plan subject to the federal Employee Retirement Income Security Act of 1974, as periodically amended, or under any federal employee benefit program, (2) any policy or certificate of life insurance that is used to fund a pre-need funeral contract or prearrangement, (3) any policy or certificate of credit life or accidental death insurance, or (4) any policy issued to a group master policyholder for which the insurer does not provide record keeping services.

"Record keeping services" means those circumstances under which the insurer has agreed with a group policy or annuity contract customer to be responsible for obtaining, maintaining, and administering in its own or its agents' systems information about each individual insured under an insured's group insurance contract (or a line of coverage thereunder), at least the following information: (1) social security number or name and date of birth, and (2) beneficiary designation information, (3) coverage eligibility, (4) benefit amount, and (5) premium payment status.

"Retained asset account" means any mechanism whereby the settlement of proceeds payable under a policy or annuity contract is accomplished by the insurer or an entity acting on behalf of the insurer depositing the proceeds into an account with check or draft writing privileges, where those proceeds are retained by the insurer or its agent, pursuant to a supplementary contract not involving annuity benefits other than death benefits.

Section 15. Insurer conduct.

(a) An insurer shall perform a comparison of its insureds' in-force policies, annuity contracts, and retained asset accounts against a Death Master File on at least a semi-annual basis by using the full Death Master File once and thereafter using the Death Master File update files for future comparisons to identify potential matches of its insureds. For those potential matches identified as a result of a Death Master File match, the insurer shall:

(1) within 90 days of a Death Master File match:

(A) complete a good faith effort, which shall be documented by the insurer, to confirm the death of the insured or retained asset account holder against other available records and information; and

(B) determine whether benefits are due in accordance with the applicable policy or contract and, if benefits are due in accordance with the applicable policy or contract:

(i) use good faith efforts, which shall be documented by the insurer, to locate the beneficiary or beneficiaries; and

(ii) provide the appropriate claims forms or instructions to the beneficiary or beneficiaries to make a claim, including the need to provide an official death certificate, if applicable under the policy or annuity contract; and

(2) with respect to group life insurance, confirm the possible death of an insured when the insurers maintain at least the following information of those covered under a policy or certificate: social security number or name and date of birth, beneficiary designation information, coverage eligibility, benefit amount, and premium payment status.

(b) Insurers shall implement procedures to account for the following when conducting searches of the Death Master File:

(1) common nicknames, initials used in lieu of a first or middle name, use of a middle name, compound first and middle names, and interchanged first and middle names;

(2) compound last names, maiden or married names, and hyphens, blank spaces, or apostrophes in last names;

(3) transposition of the "month" and "date" portions of the date of birth; and

(4) incomplete social security numbers.

(c) To the extent permitted by law, an insurer may disclose the minimum necessary personal information about the insured or beneficiary to a person who the insurer reasonably believes may be able to assist the insurer locate the beneficiary or a person otherwise entitled to payment of the claims proceeds.

(d) An insurer or its service provider shall not charge any beneficiary or other authorized representative for any fees or costs associated with a Death Master File search or verification of a Death Master File match conducted pursuant to this Act.

(e) The benefits from a policy, annuity contract, or a retained asset account, plus any applicable accrued contractual interest shall first be payable to the designated beneficiaries or owners and, in the event the beneficiaries or owners cannot be found, shall escheat pursuant to the Uniform Disposition of Unclaimed Property Act. Interest payable under Article XIV of the Illinois Insurance Code shall not be payable as unclaimed property under the Uniform Disposition of Unclaimed Property Act.

(f) An insurer shall notify the Treasurer pursuant to the Uniform Disposition of Unclaimed Property Act upon the expiration of the statutory time period for escheat that:

(1) a policy or annuity contract beneficiary or retained asset account holder has not submitted a claim with the insurer; and

(2) the insurer has complied with subsection (a) of this Section and has been unable, after good faith efforts documented by the insurer, to contact the retained asset account holder, beneficiary, or beneficiaries.

(g) Upon such notice, an insurer shall immediately submit the unclaimed policy, annuity contract benefits, or unclaimed retained asset accounts, plus any applicable accrued interest, to the Treasurer pursuant to the Uniform Disposition of Unclaimed Property Act.

(h) Failure to meet any requirement of this Section with such frequency as to constitute a general business practice is a violation of Section 424 of the Illinois Insurance Code. Nothing in this Section shall be construed to create or imply a private cause of action for a violation of this Section.

Section 20. The Illinois Insurance Code is amended by changing Section 424 as follows:

(215 ILCS 5/424) (from Ch. 73, par. 1031)

Sec. 424. Unfair methods of competition and unfair or deceptive acts or practices defined. The following are hereby defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance:

(1) The commission by any person of any one or more of the acts defined or prohibited by Sections 134, 143.24c, 147, 148, 149, 151, 155.22, 155.22a, 155.42, 236, 237, 364, and 469 of this Code.

(2) Entering into any agreement to commit, or by any concerted action committing, any act of boycott, coercion or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance.

(3) Making or permitting, in the case of insurance of the types enumerated in Classes 1, 2, and 3 of Section 4, any unfair discrimination between individuals or risks of the same class or of essentially the same hazard and expense element because of the race, color, religion, or national origin of such insurance risks or applicants. The application of this Article to the types of insurance enumerated in Class 1 of Section 4 shall in no way limit, reduce, or impair the protections and remedies already provided for by Sections 236 and 364 of this Code or any other provision of this Code.

(4) Engaging in any of the acts or practices defined in or prohibited by Sections 154.5 through 154.8 of this Code.

(5) Making or charging any rate for insurance against losses arising from the use or ownership of a motor vehicle which requires a higher premium of any person by reason of his physical handicap, race, color, religion, or national origin.

(6) Failing to meet any requirement of the Unclaimed Life Insurance Benefits Act with such frequency as to constitute a general business practice.

(Source: P.A. 97-527, eff. 8-23-11.)