2014 -- S 2056

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LC003184

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO INSURANCE - UNCLAIMED LIFE INSURANCE BENEFITS

     Introduced By: Senator Roger Picard

     Date Introduced: January 21, 2014

     Referred To: Senate Commerce

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 27 of the General Laws entitled "INSURANCE" is hereby amended

by adding thereto the following chapter:

CHAPTER 4.01

UNCLAIMED LIFE INSURANCE BENEFITS ACT

     27-4.01-1. Short Title. – This chapter shall be known and may be cited as the

“Unclaimed Life Insurance Benefits Act.”

     27-4.01-2. Purpose. – This chapter shall require recognition of the escheat or unclaimed

property laws of the state of Rhode Island and require the complete and proper disclosure,

transparency, and accountability relating to any method of payment for life insurance death

benefits regulated by the state’s insurance department; provided, however, neither the insurance

commissioner nor the treasurer of this state shall promulgate regulations or issue bulletins that

impose, or interpret this chapter to impose additional duties and obligations on insurers, beyond

those set forth in this chapter, or otherwise attempt to expand the requirements of this chapter.

     27-4.01-3. Definitions. –

     (1) “Account Owner” means the owner of a retained asset account who is a resident of

this state.

     (2) “Annuity” means an annuity contract issued in this state. The term “annuity” shall not

include any annuity contract used to fund an employment-based retirement plan or program

where the insurer takes direction from the plan sponsor and plan administrator.

     (3) “Asymmetric Conduct” means an insurer’s use of a death master file in connection

with its annuities, but not in connection with its policies.

     (4) “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.

     (5) “Death master file match” means a search of the death master file that results in a

match of a person’s name and social security number, or the name and date of birth.

     (6) “Insurer” means a life insurance company as defined under chapters 27-1 and 27-2.

     (7) “Knowledge of Death” shall, for purposes of this chapter and § 33-21.1-1, mean:

     (i) Receipt of an original or valid copy of a certified death certificate; or

     (ii) A death master file match validated by a secondary source by the insurer.

     (8) “Person” means the policy owner, insured, annuitant, or account owner, as applicable

under the policy, annuity, or retained asset account subject to this chapter.

     (9) “Policy” means any policy or certificate of life insurance issued in this state. The term

“policy” shall not include: (i) Any policy or certificate of life insurance that provides a death

benefit under an employee benefit plan subject to the employee retirement income security act of

1974 (29 USC 1002), as periodically amended, or under any federal employee benefit program;

(ii) Any policy or certificate of life insurance that is used to fund a preneed funeral contract or

prearrangement; (iii) Any policy or certificate of credit life or accidental death insurance; or (iv)

Any policy issued to a group master policyholder for which the insurer does not provide record

keeping services.

     (10) “Record Keeping Services” means those circumstances under which the insurer has

agreed with a group policy holder to be responsible for obtaining, maintaining and administering

in its own systems information about each individual insured under an insured’s group insurance

contract (or a line of coverage thereunder), at least the following information:

     (i) Social security number or name and date of birth;

     (ii) Beneficiary designation information;

     (iii) Coverage eligibility;

     (iv) Benefit amount; and

     (v) Premium payment status.

     27-4.01-4. Insurer Conduct. – (a) An insurer shall perform a comparison of its in-force

policies, annuities and retained asset accounts issued in this state against a death master file, on at

least a semi-annual basis, to identify potential death master file matches.

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     (1) An insurer may comply with the requirements of this section by using the full death

master file once annually and using the death master file update files for the remaining

comparisons in that year.

     (2) Nothing in this section shall limit the insurer from requesting a valid death certificate

as part of any claims validation process.

     (b) If an insurer learns of the possible death of a person, through a death master file

match or otherwise, then the insurer shall within ninety (90) days:

     (1) Complete a good faith effort, which shall be documented by the insurer, to confirm

the death of the person against other available records and information;

     (2) Review its records to determine whether the deceased person had purchased any other

products with the insurer;

     (3) Determine whether benefits may be due in accordance with any applicable policy,

annuity or retained asset account; and

     (4) If the beneficiary or other authorized representative has not communicated with the

insurer within the ninety (90) day period, take reasonable steps, which shall be documented by

the insurer, to locate and contact the beneficiary or beneficiaries or other authorized

representative on any such policy, annuity or retained asset account, including, but not limited to,

sending the beneficiary information regarding the insurer’s claims process, including the need to

provide an official death certificate if applicable under the policy, annuity or retained asset

account.

     (5) In the event the insurer is unable to confirm the death of a person following a death

master file match, an insurer may consider such policy, annuity or retained asset account to be in-

force in accordance with its terms.

     (c) An insurer that has not engaged in asymmetric conduct shall not be required to do the

comparison under this section or take the steps described in this section with respect to policies,

annuities or retained asset accounts issued and delivered prior to the effective date of this act.

     (d) To the extent permitted by law, an insurer may disclose minimum necessary personal

information about a person or beneficiary to a person who the insurer reasonably believes may be

able to assist the insurer in locating the beneficiary or a person otherwise entitled to payment of

the claims proceeds.

     (e) 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 section.

     (f) The benefits from a policy, annuity or retained asset account, plus any applicable

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accrued contractual interest shall first be payable to the designated beneficiaries or owners and in

the event said beneficiaries or owners cannot be found, shall escheat to the state as unclaimed

property pursuant to § 33-2.1-7(a). Interest payable under § 27-4-26 shall not be payable as

unclaimed property under § 33-21.1-7(a).

     (g) The insurance commissioner may adopt such rules and regulations as may be

reasonably necessary to implement the provisions of this section.

     (h) The insurance commissioner may, in his or her reasonable discretion, make an order:

     (1) Limiting an insurer’s death master file comparisons required under § 27-4.01(2) to the

insurer’s electronic searchable files or approving a plan and timeline for conversion of the

insurer’s files to electronic searchable files;

     (2) Exempting an insurer from the death master file comparisons required under § 27-

4.01(a) or permitting an insurer to perform such comparisons less frequently than semi-annually

upon a demonstration of financial hardship by the insurer; or

     (3) Phasing-in compliance with this section according to a plan timeline approved by the

commissioner.

     (i) Failure to meet any requirement of this section with such frequency as to constitute a

general business practice is a violation of § 6-13.1-1. Nothing herein shall be construed to create

or imply a private cause of action for a violation of this section deee.

     27-4.01-5. Insurer Unclaimed Property Reporting. –

     In the event that an insurer: (1) Has identified a person as deceased through a death

master file match through a search described in §27-4.01(a) above or other information source;

     (2) Has validated such information through a secondary information source; and

     (3) Is unable to locate a beneficiary located in Rhode Island under the policy, annuity or

retained asset account after conducting reasonable search efforts during the period of up to one

year after the insurer’s validation of the death master file match, or if no beneficiary, if the

person, as applicable for unclaimed reporting purposes, has a last known address in this state,

then the insurer is authorized to report and remit proceeds of such policy, annuity or retained

asset account due to the state on an early reporting basis, without further notice or consent by the

state, after attempting to contact such beneficiary pursuant to the provisions of chapter 21.1 of

title 33. Once reported and proceeds remitted, the insurer shall be relieved and indemnified from

any and all additional liability to any person relating to the proceeds reported and remitted,

including, but not limited to, any liability under the provisions of chapter 21.1 of title 33 for all

proceeds reported and remitted to the state pursuant to this section. This indemnification from

liability shall be in addition to any other protections provided by law.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO INSURANCE - UNCLAIMED LIFE INSURANCE BENEFITS

***

     This act would require recognition of the escheat or unclaimed property statutes of the

state of Rhode Island and require the complete and proper disclosure, transparency, and

accountability relating to any method of payment for life insurance death benefits.

     This act would take effect upon passage.

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