UCP Legislation

Presented By:John R. Camillo

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Unclaimed Property Basics Life insurance or annuity proceeds that are unclaimed after dormancy

trigger and dormancy period are escheated to the state

“Dormancy Period” is the time that property remains dormant before escheated

“Dormancy trigger” is when property becomes inactive; defined by statute

Dormancy Triggers Utilized for Reporting Over Past 70 + YearsPolicy claim – “Due Proof of Death”

Maturity

If no claim, limiting age

If no claim, “knowledge of death” (19 states)

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UCP And The Life Insurance Industry

State Treasurers and Third-Party Auditors“Asymmetric” Use of Social Security Death Master

FilePerceived by Media and some regulators as an

Unfair Claim Practice Act NAIC Task Force

Organized in late 2010, began work in early 2011Response to Asymmetric Use of DMF for Annuities“Top 40”

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NCOIL Unclaimed Property Model Act Requires an insurer to perform a comparison of its in-force life

insurance policies and retained asset accounts against the SSDMF, or a similar data base, on at least a “quarterly” basis. [amended 7/15/12 to provide for matching on a “semi-annual” basis.]

“Death Master File Match” is defined as a match of the social security number or the name and date of birth of an insured, annuity owner or retained asset account holder.

Must complete a good faith effort to confirm the death of insured and determine whether benefits are due w/n 90 days.

Failure to comply constitutes a violation of states’ unfair trade/business practices.

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2012 DMF LegislationStatute NCOIL

Match CriteriaMatchingFrequency

Fuzzy LanguageIncluded

90 DaysTo Confirm

Matches

Effective Date

KY-HB135 Yes Quarterly No Yes, using “good faith” effort

01/01/13

MD-S77 Yes Semi Annual Yes * Yes, using “good faith” effort

10/01/13

AL-HB126 Yes Every 3 years No Yes, using “commercially

reasonable” efforts

01/01/14

NY-SB2756A1831**

Yes Quarterly No Yes, using “good faith” efforts

06/17/13

TN Yes Quarterly Yes Yes, using “good faith” efforts

Did Not Pass

*An insurer shall perform a comparison of its insureds’ in-force life insurance policies and retained asset accounts against a death master file… “using criteria reasonably designed to identify potential matches of its insureds.” ** Amended in 2013 to add lapsed and terminated policies to the list of policies which must be included in searches. Also requires an insurer to accept an alternative proof of loss if the beneficiary cannot obtain a death certificate.

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2013 DMF LegislationStatute NCOIL

Match CriteriaMatchingFrequency

Fuzzy LanguageIncluded

90 DaysTo Confirm Matches

Effective Date

Al-192 Yes Once every three years

No Yes, using “commercially reasonable” efforts

01/1/16

MA-H20 Yes Semi Annual No Yes, using “good faith” effort

Pending

MT-SB34 Yes Semi Annual No Yes, using “reasonable” effort

01/01/14

NV-SB226 Yes Semi Annual Yes* Yes, using “reasonable” efforts

07/01/14

NM-S312 Yes Semi Annual No Yes, using “good faith” efforts

07/01/13

ND-HB1171 Yes Semi Annual Yes* W/I 12 mos., using a “good faith” effort

08/01/13

RI-H5442 Yes Semi Annual Yes* Yes, using “good faith” effort

Did Not Pass

VT-H95 Yes Semi Annual No Yes, using “good faith” effort

09/01/13

* Insurer shall adopt reasonable procedures to account for common variations on data, such as names, initials, transpositions and incomplete social security nos.

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Legislative Outcomes

NCOIL Model – Retroactive Only (KY, MD, MT, ND, NY, VT)

Prospective Only (AL) Prospective Only for Companies That Have

Never Used the DMF (NM) Insurance Commissioner Given Discretion to

Grant Exemptions (ND, NV, RI)

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Trade Association Positions

ACLI

LIC

NALC

American Fraternal Alliance

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Legal Challenges to NCOIL Statutes On 11/08/12 Kemper filed Declaratory Judgment Action in KY

State Court challenging constitutionality of the retroactive provisions of KY Statute.

On 07/05/13 Kemper filed a similar Declaratory Judgment Action in Circuit Court of Maryland challenging the retroactive provisions of the MD Statute.

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Litigation Developments Andrews v. Nationwide- Ohio Court of Appeals

Ferngold v. John Hancock (D. Mass. August 19, 2013)

Total Asset Recovery Services, LLC v. MetLife, Inc. (Fla. Cir. Ct. August 20, 2013)

Chiang v. ANICO and Kemper

West Virginia Litigation against 69 Insurance Companies

Declaratory Judgment Actions brought by Kemper against Illinois, California, Florida, and Pennsylvania Insurance Departments.

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Up Next-2014 Legislative Session

Legislative Landscape continues to evolve. More Unclaimed Property Bills are likely to be

introduced in 2014.Retroactive Version of NCOIL ModelProspective Version of NCOIL Model