Devin Hartley
Volume 19
Issue 2
PUBLISHED
Spring 2013
Abstract
This note examines whether insurers are violating state unclaimed property statutes and unfair claims settlement practices statutes by failing to take affirmative steps to locate and pay beneficiaries of life insurance policies or, alternatively, by failing to escheat the proceeds to the state. It shows that the current claims settlement practices of the nation’s largest insurers do indeed violate these statutes. Specifically, the insurance industry has used the Social Security Administration’s Death Master File (DMF) to identify deceased annuitants and terminate annuity payments but has failed to use the same technology to identify deceased insureds and pay beneficiaries. Additionally, this note describes the industry’s reaction to regulatory scrutiny of its claims settlement practices and predicts a paradigm shift from an industry that pays beneficiaries only upon the filing of a claim to one that proactively seeks to identify deceased insureds and pay out the associated benefits.