On July 5, 2011, the New York State Insurance Department directed all licensed life insurers to report how many death benefits they have not paid because they did not use the official government list of deaths to identify policyholders. Insurers were directed to “immediately” begin identifying deceased policyholders and determine whether benefits were made. The Department is also working on a regulation to make the requirement permanent.
Noting that many insures do not analyze death data to determine if benefits are payable, the Department is now requiring all 172 licensed life insurers and fraternal benefit societies to make use of “available data.” Later, it specifically referenced the Social Security Death Master file. Insurers must also report on their success in finding and making payments to beneficiaries, and report on the effectiveness of their current procedures.
The Department noted the concern to amend unfair claims practices and require life insurers to obtain more detailed policyholder information to ease in identified deceased insureds. It also is concerned that in instances where no claim has been filed even though there has been a death, the company may continue to deduct premiums from the account value, even to the point of exhaustion. The funds may also sit dormant but available to the insurer to invest, while beneficiaries remain unpaid.
In the notification to the insurers, the Department of Insurance required insurers to complete the first stage of the process by September 30, 2011. The first state consists of a summary of cross-check procedures used by the insurer and the results, as well as a list of the benefits paid as a result of the system.
The second state requires the insurers to provide an updated report detailing the actions each has taken to find matches and determine if death benefits are owed. A subsequent report is required when all matches have been investigated and benefits paid. The final report is due by March 31, 2012, with progress reports due on the last day of each month from October to February.
A copy of the New York Department of Insurance Press Release can be located here
Sarah Delaney and Joseph Oliva