2013 -- H 5452 SUBSTITUTE A

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LC01266/SUB A

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO INSURANCE -- UNCLAIMED LIFE INSURANCE BENEFITS ACT

     Introduced By: Representatives Kennedy, San Bento, Valencia, Naughton, and O`Grady

     Date Introduced: February 14, 2013

     Referred To: House Corporations

It is enacted by the General Assembly as follows:

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

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adding thereto the following chapter:

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     CHAPTER 77

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UNCLAIMED LIFE INSURANCE BENEFITS ACT

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     27-77-1. Short title. -- This chapter shall be known as and may be cited as the

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“Unclaimed Life Insurance Benefits Act”.

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     27-77-2. Purpose. -- By enacting this chapter, it is the intent of the general assembly to

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require the complete and proper disclosure, transparency, and accountability relating to any

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method of payment for life insurance death benefits regulated by the state.

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     27-77-3. Definitions. -- As used in this chapter:

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     (1) "Death master file" means the United States social security administration's death

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master file or any other database or service that is at least as comprehensive as the United States

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social security administration's death master file for determining that a person has reportedly

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died.

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     (2) "Death master file match" means a search of the death master file that results in a

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match of the social security number or the name and date of birth of an insured, annuity owner, or

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retained asset account holder.

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     (3) "Policy" means any policy or certificate of life insurance that provides a death benefit.

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The term "policy" shall not include any policy or certificate of life insurance that provides a death

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benefit under an employee benefit plan:

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     (i) Subject to the employee retirement income security act of 1974 [29 USC 1002], as

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periodically amended; or

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     (ii) Under any Federal employee benefit program; or

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

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contract or prearrangement; or

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     (iv) Any policy or certificate of credit life or accidental death insurance.

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     (4) "Contract" means an annuity contract. The term "contract" shall not include an

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annuity used to fund an employment-based retirement plan or program where the insurer is not

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committed by terms of the annuity contract to pay death benefits to the beneficiaries of specific

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plan participants.

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     27-77-4. Insurer conduct. -- (a) An insurer shall perform a comparison of its insureds'

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in-force life insurance policies and retained asset accounts issued for delivery in this state against

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a death master file, on at least a semi-annual basis, to identify potential matches of its insureds.

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After the initial comparison, an insurer shall perform a comparison of the insurer's in-force life

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insurance policies against the revised death master file, on at least a semi-annual basis, to

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indentify the potential matches of the insurer's insureds. For those potential matches identified as

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a result of a death master file match, the insurer shall:

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     (1) Within ninety (90) days of a death master file match:

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

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death of the insured or retained asset account holder against other available records and

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information;

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     (ii) Review its records to determine whether the deceased insured or retained asset

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account holder had purchased any other products with the insurer; and

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     (iii) Determine whether benefits are due in accordance with the applicable policy or

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contract. If the insurer determines that benefits are due in accordance with the applicable policy

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or contract, the insurer shall:

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     (A) Use good faith efforts, which shall be documented by the insurer, to locate the

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beneficiary or beneficiaries; and

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     (B) Provide the appropriate claims forms or instructions to the beneficiary or

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beneficiaries to make a claim including the need to provide an official death certificate, if

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applicable under the policy or contract.

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     (b) An insurer shall implement procedures to account for:

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     (1) Common nicknames, initials used in lieu of a first or middle name, use of a middle

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name, compound first and middle names, and interchanged first and middle names;

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     (2) Compound last names, maiden or married names, and hyphens, blank spaces or

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apostrophes in last names;

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

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     (4) Incomplete social security numbers.

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     (c) With respect to group life insurance, insurers are required to confirm the possible

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death of an insured when the insurers maintain at least the following information of those covered

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under a policy or certificate:

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     (1) Social Security number or name and date of birth;

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     (2) Beneficiary designation information;

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     (3) Coverage eligibility;

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     (4) Benefit amount; and

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     (5) Premium payment status.

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

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

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be able to assist the insurer locate the beneficiary or a person otherwise entitled to payment of the

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claims proceeds.

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     (e) An insurer or its service provider shall not charge insureds, account holders, or

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beneficiaries for any fees or costs associated with a search or verification conducted pursuant to

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this section.

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     (f) The benefits from a life insurance policy or a retained asset account, plus any

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

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

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property pursuant to the applicable state law, including, but not limited to, chapter 33-21.1

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("Unclaimed tangible and intangible property").

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     (g) Nothing in this chapter shall be construed to limit the responsibility of an insurer with

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respect to requirements of chapter 33-21.1-7 ("Funds owing under life insurance policies") or

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absolve the insurer of penalties enumerated in section 33-21.1-34 ("Interest and penalties") for

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failure to comply.

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     (h) In the event that any resolution agreement or a voluntary disclosure agreement

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between an insurer and the state's unclaimed property administrator conflicts with this chapter,

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the terms of the agreement shall supersede this chapter.

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

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     (1) Limiting an insurer's death master file comparisons required under section 27-77-4 to

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the insurer's electronically searchable files or approving a plan and timeline for conversion of the

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insurer's files to electronic searchable files;

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     (2) Exempting an insurer from the death master file comparisons required under section

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27-77-4 or permitting an insurer to perform such comparisons less frequently than semi-annually

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upon a demonstration of financial hardship by the insurer; or

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

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the commissioner.

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     27-77-5. Penalties. -- A violation of this chapter shall subject the insurer to penalties as

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determined appropriate in accordance with section 42-14-16 ("Insurance Administrative

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Penalties").

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     SECTION 2. This act shall take effect on January 1, 2014.

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LC01266/SUB A

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO INSURANCE -- UNCLAIMED LIFE INSURANCE BENEFITS ACT

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     This act would create the unclaimed life insurance benefits act. The act would place an

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affirmative duty on insurers to seek out claimants under life insurance policies and to notify the

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department of business regulation of such efforts when the insurer cannot find an appropriate

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beneficiary or payee under the policy.

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     This act would take effect on January 1, 2014.

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LC01266/SUB A

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