Life insurance companies subject to strict requirements under new law

If you happened to watch the television news program 60 Minutes this past weekend, there’s a good chance you caught the eye-opening segment detailing how many insurance companies are wrongfully failing to pay out life insurance benefits to beneficiaries and how Florida Insurance Commissioner Kevin McCarty is leading the national charge to rectify this.

As it happens, his efforts appear to have paid dividends here in the Sunshine State, as Governor Rick Scott signed a new bill into law last week that will hold insurance companies that sell life insurance policies in the state to exacting standards going forward.

The law is designed to combat what one of its sponsors — Rep. Bill Hager (R-Delray Beach) — claims is the unscrupulous practice of insurance companies actively searching the death records for annuity recipients as payment of these benefits stops upon their demise, yet failing to exercise the same diligence in identifying policyholders who have passed and whose unclaimed benefits can be paid to beneficiaries.

The law’s requirements, which take effect immediately and mirror those of a 2011 settlement the state reached with over 20 insurance companies, call for the following:

• Insurance companies are required to compare records of all life insurance policies from 1992 to the present with the Social Security Death Master File, a practice that must continue going forward.
• In the event a match is made, insurance companies must then attempt to contact the named beneficiaries and, if these efforts prove unsuccessful after five years, the policy funds must be turned over to Florida Bureau of Unclaimed Property.
• The agency would continue to try to contact the beneficiaries and, if these efforts prove unsuccessful after three years, the policy funds would then be transferred into the state’s Education Trust Fund. However, the policy funds would remain listed on the bureau’s website and could be claimed in perpetuity.

“Today’s new law makes sure all life insurance companies doing business in Florida will abide by the same guidelines in their searches for beneficiaries, meaning more life insurance benefits will be discovered and returned to their rightful owners where they belong,” said McCarty of the measure, which some experts have predicted could see up to $1 billion in benefits paid out.

If an insurance company has unjustly denied or delayed the benefits of a life insurance policy, please consider speaking with an experienced legal professional to learn more about your options.

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