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Ask not for whom the Death List tolls – unless you’re ‘certified’

Fri Feb 21st, 2014 on     Insurance Law,    

The Social Security Death Master File is in the news again. Florida is an old friend to the DMF, having led the posse of states challenging the use of the file by life insurance companies. As we have discussed before — in our Oct. 12, 2012, post, for example — life insurers had regularly checked the DMF to make sure they were not paying annuities to people who had passed away, but the same insurers had much less frequently checked the list to make sure they were paying life insurance benefits to named beneficiaries in a timely manner. As a result, millions of dollars went undistributed to rightful heirs while the insurance companies collected interest on the unpaid monies.

Over the past few years, Florida and other states have called insurers out on the practices, eventually entering into settlement agreements with a number of companies. Each settlement has required the insurer to develop procedures to check the DMF; they have accepted, in some cases grudgingly, their responsibility to make due diligence a matter of routine where the DMF is concerned.

It was, then, a bit alarming for insurers and regulators alike to note that the U.S. Department of Commerce is developing a certification process for users of the DMF. When the rules are finished, only individuals with this certification will have access to the list and will have only so much time to do so. What’s more, access will no longer be free of charge.

Remember that life insurance companies are not the only ones who use the DMF. Common users include banks and credit agencies, pension administrators, medical researchers, genealogy services and, of course, scammers and identity thieves.

It’s the last two, of course, that offer insight into the federal government’s push for the new rules, but the insurance industry is not sure that certification is the right way to go. We’ll discuss that further in our next post.

Source: Insurance News Net, “Proposal Could Limit Access To Death File,” Linda Koco, Feb. 17, 2014 

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