Illinois General Assembly - Full Text of SB2396
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Full Text of SB2396  99th General Assembly




State of Illinois
2015 and 2016


Introduced 2/3/2016, by Sen. John G. Mulroe


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

    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.

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SB2396LRB099 18216 JLS 44478 b

1    AN ACT concerning business.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 1. Short title. This Act may be cited as the
5Unclaimed Life Insurance Benefits Act.
6    Section 5. Purpose. This Act shall require all authorized
7insurers regulated by the Department of Insurance to undertake
8good faith efforts, as specified in this Act, to locate and pay
9beneficiaries' proceeds under unclaimed life insurance
10policies, annuity contracts, and retained asset accounts
11issued in this State.
12    Section 10. Definitions. In this Act:
13    "Account holder" means the owner of a retained asset
15    "Annuity contract" means a fixed or variable annuity
16contract other than a fixed or variable annuity contract issued
17(1) in connection with an employment-based plan subject to the
18federal Employee Retirement Income Security Act of 1974 or (2)
19to fund an employment-based retirement plan, including any
20deferred compensation plans.
21    "Annuity contract owner" means the owner of an annuity



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1    "Beneficiary" or "beneficiaries" means the party or
2parties entitled or contingently entitled to receive the
3proceeds from a policy, an annuity contract, or a retained
4asset account.
5    "Date of death" means the date on which an insured died.
6    "Date of death notice" means the date the insurer first has
7notice of the date of death of an insured. "Date of death
8notice" includes, but is not limited to, the date the insurer
9received information or gained knowledge of a Death Master File
10match or any other source or record maintained or located in
11insurer records of the death of an insured.
12    "Death Master File" means the United States Social Security
13Administration's Death Master File or any other database or
14service that is at least as comprehensive as the United States
15Social Security Administration's Death Master File for
16determining that a person has reportedly died.
17    "Death Master File match" means a search of the Death
18Master File that results in a match of the social security
19number or the name and date of birth of an insured.
20    "Insured" means an individual identified in a policy,
21retained asset account, or annuity contract whose death
22entitles a beneficiary or other person to file a claim for, or
23otherwise receive proceeds in accordance with the terms of the
24policy, retained asset account, or annuity contract.
25    "Insurer records" means information regarding in-force and
26certain lapsed policies, annuity contracts, and retained asset



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1accounts maintained on the insurer's administrative systems or
2the administrative systems of any third-party retained by the
3insurer. "Insurer records" does not include (1) such
4information maintained by a group life insurance customer or
5other third-party retained by the group customer or (2) lapsed
6policies that have been compared against the Death Master File
7within the 18 months following the lapse date of the applicable
9    "Policy" means any individual life insurance policy,
10endowment policy, or group life insurance policy or certificate
11of life insurance for which the insurer performs recordkeeping
12services and provides a death benefit. "Policy" does not
13include credit or mortgage life insurance policies or
14certificates issued thereunder, other group life insurance
15policies or certificates issued thereunder where the insurer
16does not perform recordkeeping, or any benefits payable under
17accidental death or health coverages including, but not limited
18to, disability and long-term care arising from the reported
19death of a person insured under such coverage.
20    "Proceeds" means the benefits payable under a policy,
21annuity contract, or retained asset account of the insurer.
22    "Recordkeeping" means maintaining the information
23contained in the insurers records necessary to process a claim
24including, without limitation, the insured's full name,
25address, date of birth, telephone number, social security
26number, coverage eligibility, premium payment status, benefit



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1amount, and beneficiary information including, without
2limitation, the beneficiary's full name, address, date of
3birth, telephone number, and social security number.
4    "Retained asset account" means any mechanism whereby the
5settlement of proceeds payable under a policy or individual
6annuity contract including, but not limited to, the payment of
7cash surrender value is accomplished by the insurer or an
8entity acting on behalf of the insurer establishing an account
9with check or draft-writing privileges, where those proceeds
10are retained by the insurer, pursuant to a supplementary
11contract not involving annuity benefits.
12    "Thorough search" means good faith efforts to identify a
13beneficiary, determine a current address for the beneficiary,
14and contact the beneficiary. At a minimum, a thorough search
15shall include:
16        (1) attempting to identify and obtain contact
17    information for beneficiaries by searching all insurer
18    records, online search and locator tools, and other sources
19    including, without limitation, records of agents or
20    producers appointed by the insurer and associated with the
21    policy, death certificates, or funeral home records;
22        (2) at least 2 attempts to contact the beneficiary in
23    writing at the last known address maintained in the insurer
24    records, or, if the proceeds are $100 or less, at least one
25    attempt to contact the beneficiary in writing at the last
26    known address maintained in the insurer records;



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1        (3) at least 2 attempts to contact the beneficiary by
2    telephone;
3        (4) an attempt to contact the beneficiary by e-mail;
4        (5) use of a national online search or locator tool to
5    attempt to locate a more updated or accurate mailing
6    address if mail sent to the beneficiary is returned
7    undeliverable; and
8        (6) at least 2 attempts to contact the beneficiary in
9    writing at the address found by that search or locator
10    tool.
11    In the event that the beneficiary is unknown or there is no
12last known address for the beneficiary, the insurer shall use
13the last known address for the insured maintained in the
14insurer records in conducting a thorough search. A thorough
15search shall not include additional attempts to contact the
16beneficiary at an address already confirmed not to be current.
17    Section 15. Insurer conduct.
18    (a) An insurer shall implement the following policies and
19procedures for performing a comparison of its policies, annuity
20contracts, and retained asset accounts against the Death Master
22        (1) The insurer shall compare all insureds of its
23    policies, annuity contracts, and retained asset accounts
24    in its insurer records against the complete Death Master
25    File annually, and against any updates to the Death Master



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1    File at least quarterly thereafter. The insurer shall have
2    no responsibility for errors, omissions, or delays in
3    information contained in the Death Master File or any
4    update files.
5        (2) If the insurer has only a partial name, social
6    security number, date of birth, or a combination thereof in
7    the insurer records for the insured, then the insurer shall
8    use the available information in performing the
9    comparisons against the Death Master File.
10        (3) The insurer shall implement reasonable procedures
11    to account for common variations in data that would
12    otherwise preclude an exact match against the Death Master
13    File. At a minimum, the insurer shall implement procedures
14    to account for: (i) common nicknames, initials used in lieu
15    of a first or middle name, use of a middle name, compound
16    first and middle names, and interchanged first and middle
17    names; (ii) compound last names, maiden or married names,
18    and hyphens, blank spaces, or apostrophes in last names;
19    (iii) transposition of the month and date portions of the
20    date of birth; and (iv) incomplete social security numbers.
21        (4) For each Death Master File match, the insurer shall
22    identify any proceeds under the policy, annuity contract,
23    or retained asset account.
24        (5) Within 120 days after the receipt of a date of
25    death notice, if the insurer has not been contacted by a
26    beneficiary, the insurer shall promptly commence a



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1    thorough search, which shall be completed within one year
2    after the date of death notice.
3        (6) The insurer shall maintain documentation of all of
4    its thorough search efforts.
5        (7) In the event that one of the insurer's lines of
6    business conducts a search for matches of its insureds
7    against the Death Master File at intervals more frequently
8    than quarterly, then all lines of the insurer's business
9    shall conduct searches for matches against the Death Master
10    File with the same frequency.
11        (8) In the event that the insurer is able to contact
12    the beneficiary as a result of a thorough search, the
13    insurer shall provide the appropriate claim forms or
14    instructions to the beneficiary to make a claim, including
15    instructions as to the need to provide an official death
16    certificate, if consistent with law and the policy, annuity
17    contract, or retained asset account. The insurer may
18    require satisfactory confirmation of death, including a
19    death certificate, as due proof of death, before proceeds
20    are paid to a beneficiary or a beneficiary's legal
21    representative, if consistent with applicable law and the
22    policy, annuity contract, or retained asset account.
23        (9) In the event the insurer fails to locate a
24    beneficiary following a thorough search, the insurer shall
25    report and remit the proceeds in accordance with the
26    Uniform Disposition of Unclaimed Property Act.



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1        (10) The obligation to conduct a thorough search shall
2    not abrogate the obligation of the insurer to complete any
3    due diligence within the timeframe required by any
4    applicable law.
5    Nothing in this Section shall be construed to supersede the
6insurer's right to maintain effective procedures and resources
7to deter and investigate fraudulent insurance acts as required
8by applicable law.
9    (b) To the extent permitted under applicable law, the
10insurer may disclose the minimum necessary personal
11information about an insured or beneficiary to a person whom
12the insurer reasonably believes may be able to assist the
13insurer to locate the insured or beneficiary or a person
14otherwise entitled to payment of the proceeds, provided that
15the insurer shall not implement policies or practices that will
16or may diminish the rights of or amounts of proceeds due to
17beneficiaries under its policies, annuity contracts, or
18retained asset accounts.
19    (c) An insurer or its service provider shall not charge
20insureds, annuity contract owners, account holders, or
21beneficiaries for any fees or costs associated with a search or
22verification conducted pursuant to this Section.
23    Section 20. Rulemaking authority. The Department of
24Insurance may adopt rules to administer and implement this Act.



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1    Section 25. Application. The requirements imposed by this
2Act apply to all life insurance policies, annuity contracts,
3and retained asset accounts in force on the effective date of
4this Act and to all life insurance policies, annuity contracts,
5and retained asset accounts created or entered into on and
6after that date.
7    Section 90. Severability. The provisions of this Act are
8severable under Section 1.31 of the Statute on Statutes.
9    Section 95. The Illinois Insurance Code is amended by
10changing Section 424 as follows:
11    (215 ILCS 5/424)  (from Ch. 73, par. 1031)
12    Sec. 424. Unfair methods of competition and unfair or
13deceptive acts or practices defined. The following are hereby
14defined as unfair methods of competition and unfair and
15deceptive acts or practices in the business of insurance:
16        (1) The commission by any person of any one or more of
17    the acts defined or prohibited by Sections 134, 143.24c,
18    147, 148, 149, 151, 155.22, 155.22a, 155.42, 236, 237, 364,
19    and 469 of this Code.
20        (2) Entering into any agreement to commit, or by any
21    concerted action committing, any act of boycott, coercion
22    or intimidation resulting in or tending to result in
23    unreasonable restraint of, or monopoly in, the business of



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1    insurance.
2        (3) Making or permitting, in the case of insurance of
3    the types enumerated in Classes 1, 2, and 3 of Section 4,
4    any unfair discrimination between individuals or risks of
5    the same class or of essentially the same hazard and
6    expense element because of the race, color, religion, or
7    national origin of such insurance risks or applicants. The
8    application of this Article to the types of insurance
9    enumerated in Class 1 of Section 4 shall in no way limit,
10    reduce, or impair the protections and remedies already
11    provided for by Sections 236 and 364 of this Code or any
12    other provision of this Code.
13        (4) Engaging in any of the acts or practices defined in
14    or prohibited by Sections 154.5 through 154.8 of this Code.
15        (5) Making or charging any rate for insurance against
16    losses arising from the use or ownership of a motor vehicle
17    which requires a higher premium of any person by reason of
18    his physical disability, race, color, religion, or
19    national origin.
20        (6) Failing to meet any requirement of the Unclaimed
21    Life Insurance Benefits Act with such frequency as to
22    constitute a general business practice.
23(Source: P.A. 99-143, eff. 7-27-15.)