Bill Text: IL SB3660 | 2013-2014 | 98th General Assembly | Introduced

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Bill Title: Creates the Unclaimed Life Insurance Benefits Act. Provides that the purpose of the Act is to require all authorized insurers regulated by the Department of Insurance to undertake good faith efforts, as specified in the Act, to locate and pay beneficiaries' proceeds under unclaimed life insurance policies, annuity contracts, and retained asset accounts issued in the State or remit such proceeds as unclaimed property to the appropriate jurisdiction if the beneficiaries are unable to be located or paid. Requires insurers to implement the certain policies and procedures for performing a comparison of its policies, annuity contracts, and retained asset accounts against the United States Social Security Administration's Death Master File. Provides that failure to meet any requirement of the Act is an unfair trade practice under the Illinois Insurance Code, and amends the Illinois Insurance Code to make a corresponding change. Effective immediately.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2015-01-13 - Session Sine Die [SB3660 Detail]

Download: Illinois-2013-SB3660-Introduced.html

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98TH GENERAL ASSEMBLY State of Illinois 2013 and 2014 SB3660 Introduced 5/19/2014, by Sen. William R. Haine SYNOPSIS AS INTRODUCED:
New Act
215 ILCS 5/424 from Ch. 73, par. 1031
Creates the Unclaimed Life Insurance Benefits Act. Provides that the purpose of the Act is to require all authorized insurers regulated by the Department of Insurance to undertake good faith efforts, as specified in the Act, to locate and pay beneficiaries' proceeds under unclaimed life insurance policies, annuity contracts, and retained asset accounts issued in the State or remit such proceeds as unclaimed property to the appropriate jurisdiction if the beneficiaries are unable to be located or paid. Requires insurers to implement the certain policies and procedures for performing a comparison of its policies, annuity contracts, and retained asset accounts against the United States Social Security Administration's Death Master File. Provides that failure to meet any requirement of the Act is an unfair trade practice under the Illinois Insurance Code, and amends the Illinois Insurance Code to make a corresponding change. Effective immediately.
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A BILL FOR
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AN ACT concerning regulation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the
Unclaimed Life Insurance Benefits Act.
Section 5. Purpose. This Act shall require all authorized
insurers regulated by the Department of Insurance to undertake
good faith efforts, as specified in this Act, to locate and pay
beneficiaries' proceeds under unclaimed life insurance
policies, annuity contracts, and retained asset accounts
issued in the State or remit such proceeds as unclaimed
property to the appropriate jurisdiction if the beneficiaries
are unable to be located or paid.
Section 10. Definitions. In this Act:
"Account holder" means the owner of a retained asset
account.
"Annuity contract" means a fixed or variable annuity
contract other than a fixed or variable annuity contract issued
(1) in connection with an employment-based plan subject to the
federal Employee Retirement Income Security Act of 1974 or (2)
to fund an employment-based retirement plan, including any
deferred compensation plans.

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"Annuity contract owner" means the owner of an annuity
contract.
"Beneficiary" or "beneficiaries" means the party or
parties entitled or contingently entitled to receive the
proceeds from a policy, an annuity contract, or a retained
asset account.
"Insurer records" means in-force and certain lapsed
policies and annuity contract and retained asset account
information maintained on the insurer's administrative systems
or the administrative systems of any third-party retained by
the insurer, as opposed to such information being maintained by
a group life insurance customer or some other third-party
retained by the group customer. "Insurer records" does not
include lapsed policies that have been compared against the
Death Master File for 18 months following the lapse date of the
applicable policy.
"Date of death" means the date on which an insured has
died.
"Date of death notice" means the date the insurer first has
notice of the date of death of an insured. "Date of death
notice" includes, but is not limited to, the date the insurer
received information of a Death Master File match or any other
source or record maintained or located in insurer records.
"Death Master File" means the United States Social Security
Administration's Death Master File or any other database or
service that is at least as comprehensive as the United States

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Social Security Administration's Death Master File for
determining that a person has reportedly died.
"Death Master File match" means a search of the Death
Master File that results in a match of the Social Security
number or the name and date of birth of an insured.
"Insured" means an individual identified in a policy,
retained asset account, or annuity contract whose death
entitles a beneficiary or other person to file a claim for, or
otherwise receive proceeds in accordance with, the terms of the
policy, retained asset account, or annuity contract.
"Policy" means any individual life insurance policy or
endowment policy or group life insurance policy or certificate
of life insurance for which the insurer performs recordkeeping
services and provides a death benefit. "Policy" does not
include credit or mortgage life insurance policies or
certificates issued thereunder, other group life insurance
policies or certificates issued thereunder where the insurer
does not perform recordkeeping functions, or any benefits
payable under accidental death or health coverages, including,
but not limited to, disability and long-term care arising from
the reported death of a person insured under such coverage.
"Proceeds" means the benefits payable under a policy,
annuity contract, or retained asset account of the insurer.
"Recordkeeping" means maintaining the information
contained in the insurer's records necessary to process a
claim, including without limitation, the insured's full name,

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address, date of birth, telephone number, Social Security
number, coverage eligibility, premium payment status, benefit
amount, and beneficiary's information, including without
limitation, the beneficiary's full name, address, date of
birth, telephone number, and Social Security Number.
"Retained asset account" means any mechanism whereby the
settlement of proceeds payable under a policy or individual
annuity contract, including, but not limited to, the payment of
cash surrender value, is accomplished by the insurer or an
entity acting on behalf of the insurer establishing an account
with check or draft-writing privileges, where those proceeds
are retained by the insurer, pursuant to a supplementary
contract not involving annuity benefits.
"Thorough search" means good faith efforts to identify a
beneficiary, determine a current address for the beneficiary,
and contact the beneficiary. At a minimum, a thorough search
shall include (i) at least 2 attempts to contact the
beneficiary in writing at the last known address maintained in
the insurer records, or, if the proceeds are $100 or less, at
least one attempt to contact the beneficiary in writing at the
last known address maintained in the insurer records and (ii)
use of a national online search or locator tool to attempt to
locate a more updated or accurate mailing address if mail sent
to the beneficiary is returned undeliverable. In the event that
the beneficiary is unknown or there is no last known address
for the beneficiary, the insurer shall use the last known

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address for the insured maintained in the insurer records in
conducting a thorough search. The insurer shall maintain
documentation of all of its thorough search efforts.
Section 15. Insurer conduct.
(a) An insurer shall implement the following policies and
procedures for performing a comparison of its policies, annuity
contracts, and retained asset accounts against the Death Master
File:
(1) The insurer shall compare all insureds of its
policies, annuity contracts, and retained asset accounts
in its insurer records against the complete Death Master
File annually, and against any updates to the Death Master
File at least quarterly thereafter. The insurer shall have
no responsibility for errors, omissions, or delays in
information contained in the Death Master File or any
update files.
(2) If the insurer has only a partial name, Social
Security number, date of birth, or a combination thereof in
the insurer records for the insured, then the insurer shall
use the available information in performing the
comparisons against the Death Master File.
(3) The insurer shall implement reasonable procedures
to account for common variations in data that would
otherwise preclude an exact match against the Death Master
File.

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(4) For each Death Master File match, the insurer shall
identify any proceeds under the policy, annuity contract,
or retained asset account.
(5) If the insurer identifies proceeds and the insurer
has not been contacted by a beneficiary within 120 days
after the date of death, then the insurer shall promptly
commence a thorough search, which shall be completed within
one year after the date of death notice.
(6) In the event that one of the insurer's lines of
business conducts a search for matches of its insureds
against the Death Master File at intervals more frequently
than quarterly, then all lines of the insurer's business
shall conduct searches for matches against the Death Master
File with the same frequency.
(7) In the event that the insurer is able to contact
the beneficiary as a result of a thorough search, the
insurer shall provide the appropriate claim forms or
instructions to the beneficiary to make a claim, including
instructions as to the need to provide an official death
certificate, if consistent with law and the policy, annuity
contract, or retained asset account. The insurer may
require satisfactory confirmation of death, including a
death certificate, as due proof of death, before proceeds
are paid to a beneficiary or a beneficiary's legal
representative, if consistent with applicable law and the
policy, annuity contract, or retained asset account.

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(8) If the beneficiary cannot be located by a thorough
search, the insurer shall report and remit the proceeds as
unclaimed property to the affected jurisdictions in
accordance with the unclaimed property laws of the affected
jurisdiction. The obligation to conduct a thorough search
shall not abrogate the obligation of the insurer to
complete any due diligence within the timeframe required by
any applicable law.
Nothing in this Section shall be construed to supersede the
insurer's right to maintain effective procedures and resources
to deter and investigate fraudulent insurance acts as required
by applicable law.
(b) To the extent permitted under applicable law, the
insurer may disclose the minimum necessary personal
information about an insured or beneficiary to a person whom
the insurer reasonably believes may be able to assist the
insurer to locate the insured or beneficiary or a person
otherwise entitled to payment of the proceeds, provided that
the insurer shall not implement policies or practices that will
or may diminish the rights of or amounts of proceeds due to
beneficiaries under its policies, annuity contracts, or
retained asset accounts.
(c) An insurer or its service provider shall not charge
insureds, annuity contract owners, account holders, or
beneficiaries for any fees or costs associated with a search or
verification conducted pursuant to this Section.

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Section 20. Unfair trade practices. Failure to meet any
requirement of this Act is an unfair trade practice under
Section 424 of the Illinois Insurance Code.
Section 25. Rulemaking authority. The Department of
Insurance may adopt rules to administer this Act.
Section 90. The Illinois Insurance Code is amended by
changing Section 424 as follows:
(215 ILCS 5/424) (from Ch. 73, par. 1031)
Sec. 424. Unfair methods of competition and unfair or
deceptive acts or practices defined. The following are hereby
defined as unfair methods of competition and unfair and
deceptive acts or practices in the business of insurance:
(1) The commission by any person of any one or more of the
acts defined or prohibited by Sections 134, 143.24c, 147, 148,
149, 151, 155.22, 155.22a, 155.42, 236, 237, 364, and 469 of
this Code.
(2) Entering into any agreement to commit, or by any
concerted action committing, any act of boycott, coercion or
intimidation resulting in or tending to result in unreasonable
restraint of, or monopoly in, the business of insurance.
(3) Making or permitting, in the case of insurance of the
types enumerated in Classes 1, 2, and 3 of Section 4, any

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unfair discrimination between individuals or risks of the same
class or of essentially the same hazard and expense element
because of the race, color, religion, or national origin of
such insurance risks or applicants. The application of this
Article to the types of insurance enumerated in Class 1 of
Section 4 shall in no way limit, reduce, or impair the
protections and remedies already provided for by Sections 236
and 364 of this Code or any other provision of this Code.
(4) Engaging in any of the acts or practices defined in or
prohibited by Sections 154.5 through 154.8 of this Code.
(5) Making or charging any rate for insurance against
losses arising from the use or ownership of a motor vehicle
which requires a higher premium of any person by reason of his
physical handicap, race, color, religion, or national origin.
(6) Failing to meet any requirement of the Unclaimed Life
Insurance Benefits Act.
(Source: P.A. 97-527, eff. 8-23-11.)
Section 99. Effective date. This Act takes effect upon
becoming law.