senate Bill S2756

Clarifies certain provisions relating to unclaimed life insurance benefits

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 23 / Jan / 2013
    • REFERRED TO INSURANCE
  • 11 / Feb / 2013
    • 1ST REPORT CAL.53
  • 12 / Feb / 2013
    • 2ND REPORT CAL.
  • 27 / Feb / 2013
    • ADVANCED TO THIRD READING
  • 11 / Mar / 2013
    • SUBSTITUTED BY A1831

Summary

Clarifies certain provisions relating to unclaimed life insurance benefits.

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Bill Details

See Assembly Version of this Bill:
A1831
Versions:
S2756
Legislative Cycle:
2013-2014
Law Section:
Insurance Law
Laws Affected:
Amd ยง3213-a, Ins L

Sponsor Memo

BILL NUMBER:S2756

TITLE OF BILL: An act to amend the insurance law, in relation to
unclaimed life insurance benefits, relating to clarifying certain
provisions

PURPOSE: The purpose of this bill is to amend chapter 495 of the laws
of 2012 to clarify the statutory procedures for life insurers to
perform regular cross-checks of their life insurance policies and
accounts against the Social Security Administration's Death Master
File and make good faith efforts to locate beneficiaries

SUMMARY OF PROVISIONS: This chapter amendment would: 1) clarify that
chapter 495 applies to any account set up by the insurer or any other
settlement option that relates to the manner of distribution of a
policy's benefits; 2) require that the cross-checks be performed using
the social security of the insured or account holder or, where the
social security number is not known, the name and date of birth of the
insured; 3) clarify that insurers must take all necessary steps to
have their affiliates and third party administrators perform the
cross- checks; 4) require an insurer to accept an alternate proof of
loss if the beneficiary cannot obtain a death certificate; 5) clarify
that chapter 495 does not apply to group policies administered by the
group policyholder only when the insurer does not maintain or control
the necessary records containing; and 6) provide that insurers who use
a third party administrator will have 45 days to respond to inquiries
made through the Department of Financial Services' lost policy finder

JUSTIFICATION: The intent of chapter 495 was to establish the
requirement that life insurers perform an ongoing review of their
policies and accounts against the U.S. Social Security
Administration's death master file in order to identify potential
beneficiaries where the insured or account holder is deceased and
where the beneficiary has not filed a claim. This chapter amendment
clarifies and modifies the statutory procedures that insurers must
follow in order to ensure that insurers identify and locate the
greatest number of beneficiaries possible

LEGISLATIVE HISTORY: New bill

FISCAL IMPLICATIONS: None

EFFECTIVE DATE: This act shall take effect on the same date and in the
same manner as Chapter 495 of the Laws of 2012 takes effect

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  2756

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            January 23, 2013
                               ___________

Introduced  by  Sen.  SEWARD -- read twice and ordered printed, and when
  printed to be committed to the Committee on Insurance

AN ACT to amend the insurance law, in relation to unclaimed life  insur-
  ance benefits, relating to clarifying certain provisions

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 3213-a of the insurance law, as  added  by  chapter
495 of the laws of 2012, is amended to read as follows:
  S [3213-a] 3240. Unclaimed benefits. (a) Definitions. For the purposes
of this section:
  (1)  "Account" means: (A) any mechanism, whether denoted as a retained
asset account or otherwise, whereby the settlement of  proceeds  payable
to  a  beneficiary  under  a policy is accomplished by the insurer or an
entity acting on behalf of the insurer [where the proceeds are  retained
by  the  insurer  pursuant  to  a  supplementary  contract]  PLACING THE
PROCEEDS INTO AN ACCOUNT WHERE THE INSURER RETAINS  THOSE  PROCEEDS  AND
THE  BENEFICIARY HAS CHECK OR DRAFT WRITING PRIVILEGES; OR (B) ANY OTHER
SETTLEMENT OPTION RELATING TO THE MANNER OF DISTRIBUTION OF THE PROCEEDS
PAYABLE UNDER A POLICY.
  (2) "Death index" means the death master file maintained by the United
States social security administration or any other database  or  service
that is at least as comprehensive as the death master file maintained by
the  United States social security administration and that is acceptable
to the superintendent.
  (3) "Insured" [includes] MEANS an individual covered by a policy or an
annuitant when the annuity contract provides for benefits to be paid  or
other monies to be distributed upon the death of the annuitant.
  (4)  "Insurer"  means  a  life  insurance company or fraternal benefit
society.
  (5) "Lost policy finder" means a service made available by the depart-
ment on its website or otherwise developed by the superintendent  either

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD05840-01-3

S. 2756                             2

on  his  or  her  own  or in conjunction with other state regulators, to
assist consumers [in] WITH locating unclaimed life insurance benefits.
  (6)  "Policy"  means a life insurance policy[, including policies that
have lapsed or been terminated,]; AN annuity contract[, or];  a  certif-
icate under a life insurance policy or annuity contract[,]; or a certif-
icate issued by a fraternal benefit society[,]; under which benefits are
to  be  paid  upon the death of the insured, INCLUDING A POLICY THAT HAS
LAPSED OR BEEN TERMINATED.
  (b) Applicability. (1) This section shall apply to A POLICY:
  [(1) Every policy] (A) issued by a domestic insurer  and  any  account
established under or as a result of such policy; [and] OR
  [(2)  Every policy] (B) delivered or issued for delivery in [New York]
THIS STATE by an authorized foreign insurer and any account  established
under or as a result of such policy.
  [(3)] (2) Notwithstanding [paragraphs] PARAGRAPH one [and two] of this
subsection[,]:
  (A)  with respect to a policy delivered or issued for delivery outside
this state, a domestic insurer may, in lieu of the requirements of  this
section,  implement procedures that meet the minimum requirements of the
state in which the INSURER DELIVERED OR ISSUED THE policy [was delivered
or issued], provided that the superintendent [concludes] DETERMINES that
such other requirements are no less favorable to the [policyowner] POLI-
CY OWNER and beneficiary than those required by this section[.]; AND
  [(4) Notwithstanding the provisions of paragraphs one and two of  this
subsection,]  (B) this section shall not apply to A lapsed or terminated
[policies] POLICY with no benefits  payable  that  [were]  WAS  searched
within the [three hundred sixty-five days] EIGHTEEN MONTHS preceding the
effective  date  of  this  section or that [were] WAS searched more than
eighteen months prior to the most recent search conducted by the  insur-
er.
  (c)  Identifying information. (1) Except as set forth in paragraph two
of this subsection, at no later than policy delivery or  the  establish-
ment  of an account and upon any change of insured, owner, ACCOUNT HOLD-
ER, or beneficiary, [every] AN insurer shall request information  suffi-
cient to ensure that all benefits or other monies are distributed to the
appropriate  persons  upon  the  death of the insured or account holder,
including, at a minimum, the name, address, social security number, date
of birth, and telephone number of every owner, ACCOUNT HOLDER,  insured,
and beneficiary of such policy or account, as applicable.
  (2)  Where an insurer issues a policy or provides for an account based
on data received directly from an insured's employer,  the  insurer  may
obtain  the  beneficiary  information described in paragraph one of this
subsection BY COMMUNICATING WITH THE INSURED after  receiving  the  data
from the insured's employer.
  (d)  Standards  for  cross-checking  policies.  (1) [Every] AN insurer
shall use the death  index  to  cross-check  every  policy  and  account
subject  to  this  section  no less frequently than quarterly, except as
specified in subsection (g) of this section. An insurer may perform  the
cross-check  using the updates made to the death index since the date of
the last cross-check performed by the insurer, provided that the insurer
performs the cross-check using the entire death index at  least  once  a
year. The superintendent may promulgate rules and regulations that allow
an  insurer to perform the cross-checks less frequently than quarterly[,
provided, however, the insurer must  not  be  allowed  to  perform  such
cross-checks] BUT NOT less FREQUENTLY than semi-annually.

S. 2756                             3

  (2)  The  cross-checks  shall  be  performed using: (A) the INSURED OR
ACCOUNT HOLDER'S social security number; OR  (B) WHERE THE INSURER  DOES
NOT  KNOW  THE  INSURED  OR ACCOUNT HOLDER'S SOCIAL SECURITY NUMBER, the
name[,] and date of birth of the insured or account holder.
  (3)  If  an  insurer  only has a partial name, social security number,
date of birth, or a combination thereof, of the insured or account hold-
er under a policy or account, THEN the insurer shall use  the  available
information to perform the cross-check.
  (4)  [Every]  AN  insurer  shall  implement  reasonable  procedures to
account for common variations in data that would otherwise  preclude  an
exact match with a death index.
  (e) Multiple policy search procedures. (1) Upon receiving notification
of  the death of an insured or account holder or in the event of a match
made by a death index cross-check pursuant to  subsection  (d)  of  this
section, an insurer shall search every policy or account subject to this
section  to  determine  whether  the  insurer  has any other policies or
accounts for the insured or account holder.
  (2) [Every] AN insurer that receives a notification of  the  death  of
[the]  AN  insured or account holder, or identifies a death index match,
shall notify each United States affiliate, PARENT,  OR  SUBSIDIARY,  and
any entity [that] WITH WHICH the insurer contracts [with which] THAT may
maintain  OR CONTROL records relating to policies OR ACCOUNTS covered by
this section, of the notification or verified death  index  match[,  who
shall  then  perform  the  search  required  by  paragraph  one  of this
subsection]. AN INSURER SHALL TAKE ALL  STEPS  NECESSARY  TO  HAVE  EACH
AFFILIATE,  PARENT,  SUBSIDIARY,  OR  OTHER  ENTITY  PERFORM  THE SEARCH
REQUIRED BY PARAGRAPH ONE OF THIS SUBSECTION.
  (f) Standards for locating claimants. (1)  [Every]  AN  insurer  shall
establish  procedures  to  reasonably confirm the death of an insured or
account holder and begin to  locate  beneficiaries  within  ninety  days
after  the  identification  of  a  potential match made by a death index
cross-check or  by  a  search  conducted  by  the  insurer  pursuant  to
subsection  (e)  of this section. If the insurer cannot locate benefici-
aries within ninety days after the identification of a potential  match,
THEN  the  insurer  shall continue to search for beneficiaries until the
benefits escheat [to the] IN ACCORDANCE WITH APPLICABLE state LAW.
  (2) Once the beneficiary or beneficiaries under the policy or  account
have been located, the insurer shall provide to the beneficiary or bene-
ficiaries  the  information  necessary  to  make a claim pursuant to the
terms of the policy or account. The insurer shall process all claims and
make prompt payments and distributions in accordance with all applicable
laws, rules, and regulations.
  (3) Nothing herein shall prevent an insurer from  requiring  satisfac-
tory  proof  of  loss,  such  as a death certificate, for the purpose of
verifying the death of the  insured,  PROVIDED  THAT  IF  A  BENEFICIARY
CANNOT  OBTAIN  A  DEATH  CERTIFICATE,  THEN  AN INSURER SHALL ACCEPT AN
ALTERNATE FORM OF SATISFACTORY PROOF OF LOSS.
  (g) This section shall not apply to:
  (1) A group [policies] POLICY ADMINISTERED BY THE  GROUP  POLICYHOLDER
where  the  insurer  does  not  maintain  OR CONTROL THE records [on its
administrative systems] containing the information necessary  to  comply
with the requirements of this section; OR
  (2)  [any policy or certificate that provides a death benefit under an
employee benefit, government or church plan subject  to  or  as  defined
under the Employee Retirement Income Security Act of 1974 (29 USC 1002),
as periodically amended, or under any Federal employee benefit program;

S. 2756                             4

  (3)]  any  other  circumstance  as determined to be appropriate by the
superintendent IN A REGULATION.
  (h)  Lost  policy  finder.  (1)  The  superintendent shall develop and
implement a lost policy finder to assist requestors [in]  WITH  locating
unclaimed  life  insurance  benefits.  The  lost  policy finder shall be
available online and via other means, including but not limited  to  the
department's toll free telephone number. The superintendent shall assist
a  requestor [in] WITH using the lost policy finder, including informing
the requestor of [what] THE information an insurer may need  to  facili-
tate responding to the request.
  (2)  As  soon  as  practicable,  but  no  later than thirty days after
receiving a request from a requestor via the  lost  policy  finder,  the
superintendent shall:
  [(i)]  (A) forward the request to all insurers deemed necessary by the
superintendent in order to  successfully  respond  to  the  [consumer's]
request; and
  [(ii)]  (B)  inform  the  requestor in writing that the SUPERINTENDENT
RECEIVED THE request [has been received] and forwarded  THE  REQUEST  to
all insurers deemed necessary by the superintendent in order to success-
fully respond to the request.
  (3) Upon receiving a request forwarded by the superintendent through a
lost  policy  finder  [application], [every] AN insurer shall search for
policies and any accounts subject to this section that insure  the  life
of,  or are owned by, an individual named as the decedent in the request
forwarded by the superintendent.
  (4) Within thirty days of receiving the request  referenced  in  para-
graph two of this subsection, OR WITHIN FORTY-FIVE DAYS OF RECEIVING THE
REQUEST  WHERE THE INSURER CONTRACTS WITH ANOTHER ENTITY TO MAINTAIN THE
INSURER'S RECORDS, the insurer shall:
  [(i)] (A) report to the superintendent through the lost policy  finder
the findings of the search conducted pursuant to paragraph three of this
subsection;
  [(ii)]  (B)  for  each identified policy and account insuring the life
of, or owned by, the [named insured] INDIVIDUAL NAMED AS THE DECEDENT IN
THE REQUEST, provide to a requestor who is:
  (I) also the beneficiary of record on the identified policy or account
the information necessary to make a claim pursuant to the terms  of  the
policy or account; AND
  [(iii) for each identified policy and account insuring the life of, or
owned by, the named insured, provide to a requestor who is]
  (II) not the beneficiary of record on the identified policy or account
the  requested  information to the extent permissible to be disclosed in
accordance with any applicable law, rule, [and] OR regulation  and  [to]
take such other steps necessary to facilitate the payment of any benefit
that may be due under the identified policy or account[; and].
  (5) The superintendent shall, within thirty days of receiving from all
insurers the information required in subparagraph [(i)] (A) of paragraph
four  of  this  subsection,  inform  the requestor of the results of the
search.
  (6) When a beneficiary identified in paragraph four of this subsection
submits a claim or claims to an insurer, the insurer shall process  such
CLAIM OR claims and make prompt payments and distributions in accordance
with all applicable laws, rules, and regulations.
  (7)  Within thirty days of the final disposition of the request, [the]
AN insurer shall report to the superintendent through  the  lost  policy

S. 2756                             5

finder  any  benefits  paid  and  any other information requested by the
superintendent.
  (8)  [Every]  AN  insurer shall establish procedures to electronically
receive the lost policy finder  [application]  request  from,  and  make
reports  to,  the  superintendent  as provided for in this section. When
transmitted electronically, the date that  the  superintendent  forwards
the  request  shall  be  deemed to be the date of receipt by the insurer
[unless]; PROVIDED, HOWEVER, THAT IF  the  [day]  DATE  is  a  Saturday,
Sunday,  or  a public holiday, as defined in section [twenty-five] TWEN-
TY-FOUR of the general construction law [and, in such  case],  THEN  the
date  of  receipt  shall  be as provided in section twenty-five-a of the
general construction law.  The superintendent may promulgate  rules  and
regulations  that  allow  an  insurer to apply for an exemption from the
requirement that  it  electronically  receive  the  lost  policy  finder
[application]  request AND REPORT ANY BENEFITS PAID OR OTHER INFORMATION
THE SUPERINTENDENT REQUESTS PURSUANT TO SECTION THREE HUNDRED SIXTEEN OF
THIS CHAPTER.
  (i) Reports. [Every] AN insurer subject to this section shall  include
in  the  report  required under section seven hundred three of the aban-
doned property law any information on unclaimed benefits due pursuant to
this section AND the number of policies and accounts  that  the  insurer
has  identified  pursuant  to  this  section for the prior calendar year
under which any outstanding monies have not been paid or distributed  by
December thirty-first of such year, except potential matches still being
investigated  pursuant  to  paragraph  one  of  subsection  (f)  of this
section.  A copy of the report ALSO  shall  [also]  be  filed  with  the
superintendent.
  (j) The superintendent is authorized to promulgate any rules and regu-
lations necessary to implement the provisions of this section in accord-
ance with the provisions of the state administrative procedure act.
  S  2.  This  act  shall  take  effect on the same date and in the same
manner as chapter 495 of the laws of 2012, takes effect.

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