Some companies still fighting
Four life insurance companies have decided to take their objections all the way to the Florida Supreme Court over a state law that requires them to search their records back to 1992 to determine if any policyholders have passed away and failed to receive death benefit payouts.
United Insurance Company of America, The Reliable Life Insurance Company, Mutual Savings Life Insurance Company and Reserve National Insurance Company are appealing an appellate court decision earlier this summer that upheld SB 966, passed by the Florida Legislature in 2016. The law requires life insurance companies to actively determine when their policyholders have died and to contact beneficiaries to arrange payouts. The law applied the requirement retroactively back to 1992, which is what the companies object to, claiming going back so far in time violates their due-process rights.
The law was deemed necessary to take care of the rest of the life insurance companies doing business in Florida that had failed to sign regulatory agreements to do so voluntarily. A 2009 market conduct investigation by the Florida Office of Insurance Regulation revealed that many life insurance companies were routinely using the Social Security Death Master File to identify policyholders who died for the purpose of stopping their annuity payments, yet weren’t doing the same to pay rightly-owed death benefits.
That led to a multi-state investigation of Life Claim Settlement Practices by the National Association of Insurance Commissioners targeting the 40 largest insurance groups, which comprise more than 92% of the market for life and annuity products nationwide. The resulting claim settlement agreements have resulted in the return of more than $8.7 billion to beneficiaries and another $3.25 billion in benefits delivered to the states, who continue efforts aimed at locating and paying the beneficiaries. To date, Florida has regulatory settlement agreements with 27 life insurance companies.
LMA Newsletter of 9-14-20
