Bill Text: TX HB1243 | 2017-2018 | 85th Legislature | Comm Sub
Bill Title: Relating to the identification and handling of unclaimed life insurance and annuity contract proceeds.
Spectrum: Partisan Bill (Republican 3-0)
Status: (Introduced - Dead) 2017-05-05 - Laid on the table subject to call [HB1243 Detail]
Download: Texas-2017-HB1243-Comm_Sub.html
85R16412 SMT-F | |||
By: Smithee, et al. | H.B. No. 1243 | ||
Substitute the following for H.B. No. 1243: | |||
By: Phillips | C.S.H.B. No. 1243 |
|
||
|
||
relating to the identification and handling of unclaimed life | ||
insurance and annuity contract proceeds. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Chapter 1109, Insurance Code, is amended by | ||
adding Subchapter A-1 to read as follows: | ||
SUBCHAPTER A-1. DEATH MASTER FILE SEARCH; IDENTIFICATION OF | ||
UNCLAIMED PROCEEDS | ||
Sec. 1109.010. DEFINITIONS. In this subchapter: | ||
(1) "Annuity contract" means an annuity contract | ||
issued in this state. The term does not include an annuity used to | ||
fund an employment-based retirement plan or program for which the | ||
insurer: | ||
(A) does not perform the recordkeeping services; | ||
or | ||
(B) is not committed by the terms of the annuity | ||
contract to pay death benefits to the beneficiaries of specific | ||
plan participants. | ||
(2) "Death Master File" means: | ||
(A) the United States Social Security | ||
Administration's Death Master File; or | ||
(B) any other database or service that is at | ||
least as comprehensive as the United States Social Security | ||
Administration's Death Master File for determining whether a person | ||
is dead. | ||
(3) "Death Master File match" means a match of the | ||
social security number or the name and date of birth of an insured | ||
or retained asset account holder resulting from a search of the | ||
Death Master File. | ||
(4) "Life insurance policy" means a policy or | ||
certificate of life insurance issued in this state that provides a | ||
death benefit. The term does not include: | ||
(A) a policy or certificate of life insurance | ||
that provides a death benefit under an employee benefit plan that | ||
is: | ||
(i) subject to the Employee Retirement | ||
Income Security Act of 1974 (29 U.S.C. Section 1001 et seq.); or | ||
(ii) under any federal employee benefit | ||
program; | ||
(B) a policy or certificate of life insurance | ||
that is used to fund a pre-need funeral contract or prearrangement; | ||
(C) a policy or certificate of credit life or | ||
accidental death insurance; or | ||
(D) a policy issued to a group master | ||
policyholder for which the insurer does not provide recordkeeping | ||
services. | ||
(5) "Recordkeeping services" means services provided | ||
by an insurer, under an agreement with a group policy or contract | ||
holder, to obtain, maintain, and administer in the insurer's or the | ||
insurer's agents' systems the following information about each | ||
individual insured under the group policy or contract or a line of | ||
coverage under that policy or contract: | ||
(A) the social security number or name and date | ||
of birth of the insured; | ||
(B) beneficiary designation information; | ||
(C) coverage eligibility; | ||
(D) benefit amount; and | ||
(E) premium payment status. | ||
(6) "Retained asset account" means a mechanism by | ||
which the proceeds payable under a life insurance policy or annuity | ||
contract are settled by the insurer or an entity acting on behalf of | ||
the insurer by depositing the proceeds into an account with check or | ||
draft writing privileges, where those proceeds are retained by the | ||
insurer or the insurer's agent, under a supplementary contract not | ||
involving annuity contract benefits other than death benefits. | ||
Sec. 1109.011. IDENTIFICATION OF DEATH MASTER FILE MATCHES. | ||
(a) An insurer shall compare its in-force life insurance policies, | ||
annuity contracts, and retained asset accounts against a Death | ||
Master File at least semiannually to identify potential Death | ||
Master File matches. The insurer shall perform the first | ||
comparison of a policy, contract, or account against a full Death | ||
Master File and thereafter against Death Master File update files | ||
to identify potential Death Master File matches. | ||
(b) An insurer shall first conduct the comparison required | ||
by Subsection (a) electronically to the extent the insurer's | ||
records are available in electronic format, and then using the most | ||
easily accessible insurer records for any records that are not | ||
available electronically. | ||
(c) Each subsequent comparison made under this section | ||
shall include all in-force life insurance policies, annuity | ||
contracts, and retained asset accounts and any policies, contracts, | ||
or accounts that have lapsed since the previous comparison. | ||
(d) An insurer shall implement procedures for conducting | ||
comparisons under this section to account for: | ||
(1) common nicknames, initials used in lieu of a first | ||
or middle name, use of a middle name, compound first and middle | ||
names, and interchanged first and middle names; | ||
(2) compound last names, maiden or married names, and | ||
hyphens, blank spaces, or apostrophes in last names; | ||
(3) transposition of the month and date portions of | ||
the date of birth; and | ||
(4) an incomplete social security number. | ||
Sec. 1109.012. DUTIES REGARDING DEATH MASTER FILE MATCH. | ||
(a) For each Death Master File match, the insurer shall, not later | ||
than the 90th day after the date the insurer identifies the match: | ||
(1) complete a documented good faith effort to confirm | ||
the death of the insured or retained asset account holder against | ||
other available records and information; | ||
(2) review the insurer's records to determine whether | ||
the deceased individual had purchased or was otherwise covered by | ||
any of the insurer's other products; and | ||
(3) determine whether proceeds may be due in | ||
accordance with the applicable policy or contract or terms | ||
governing the applicable account. | ||
(b) For group life insurance or a group annuity contract, an | ||
insurer is required to confirm the possible death of an insured or | ||
retained asset account holder under this section only if the | ||
insurer provides recordkeeping services for the group policy or | ||
group annuity contract. | ||
(c) If the insurer determines under Subsection (a)(3) that | ||
proceeds may be due and a beneficiary or other authorized | ||
representative has not communicated with the insurer on or before | ||
the 90th day after the date the insurer identifies a Death Master | ||
File match, the insurer shall: | ||
(1) complete a documented good faith effort to locate | ||
and contact each beneficiary or other authorized representative on | ||
the relevant policy, contract, or account; and | ||
(2) provide to the beneficiary or authorized | ||
representative the appropriate claim forms, instructions, or | ||
information to make a claim, including information about any need | ||
to provide an official death certificate or show proof of death | ||
under the applicable policy or contract or terms governing the | ||
applicable account. | ||
(d) If an insurer is unable to confirm the death of an | ||
insured or retained asset account holder after the insurer | ||
identifies a Death Master File match, the insurer may consider the | ||
relevant policy, contract, or account to remain in force according | ||
to its terms. | ||
(e) To the extent permitted by law, the insurer may disclose | ||
minimum necessary personal information about the insured, retained | ||
asset account holder, or beneficiary to a person the insurer | ||
reasonably believes may be able to assist the insurer in locating a | ||
person entitled to payment of the claim proceeds. | ||
(f) An insurer or the insurer's service provider may not | ||
charge an insured, retained asset account holder, beneficiary, or | ||
authorized representative any fees or costs associated with | ||
conducting a Death Master File comparison under this subchapter or | ||
verifying a Death Master File match under this subchapter. | ||
Sec. 1109.013. PRESUMPTION OF UNCLAIMED PROCEEDS; REPORT | ||
AND DELIVERY OF PROCEEDS. (a) The proceeds of a life insurance | ||
policy, annuity contract, or retained asset account, and any | ||
accrued contractual interest, are first payable to each designated | ||
beneficiary or owner as provided by the applicable policy or | ||
contract or terms governing the applicable account. | ||
(b) If a Death Master File match is confirmed, the proceeds | ||
of the relevant policy, contract, or account are considered | ||
unclaimed proceeds for purposes of this chapter on the third | ||
anniversary of the date on which, according to the insurer's | ||
records, the insurer completed a good faith effort as required by | ||
Section 1109.012(c) that failed to locate a beneficiary or | ||
authorized representative if the proceeds remain unpaid and no | ||
beneficiary or authorized representative has submitted a claim for | ||
the proceeds to the insurer before that date. | ||
(c) An insurer shall report unclaimed proceeds as required | ||
by Section 1109.051. | ||
(d) An insurer shall deliver unclaimed proceeds to the | ||
comptroller as required by Section 1109.052. | ||
(e) For purposes of this section, unclaimed proceeds do not | ||
include any statutory interest under Section 1103.104. | ||
Sec. 1109.014. RULEMAKING AUTHORITY. The commissioner may | ||
adopt rules to implement this subchapter. | ||
Sec. 1109.015. AUTHORITY TO ISSUE CERTAIN ORDERS. The | ||
commissioner may issue an order: | ||
(1) limiting the Death Master File comparisons | ||
required by this subchapter to only those files the insurer | ||
maintains in searchable electronic format or approving a plan and | ||
timeline for an insurer to convert the insurer's files to | ||
searchable electronic format; | ||
(2) exempting an insurer from the Death Master File | ||
comparisons required by this subchapter or permitting an insurer to | ||
perform the comparisons less frequently than required by this | ||
subchapter on a showing of hardship to the insurer; or | ||
(3) permitting an insurer to phase in compliance with | ||
this subchapter according to a plan and timeline approved by the | ||
commissioner. | ||
Sec. 1109.016. AUTHORITY TO REQUEST DEATH CERTIFICATE. | ||
Nothing in this subchapter limits an insurer's right to request a | ||
death certificate as part of a claim validation process. | ||
SECTION 2. Subchapter A-1, Chapter 1109, Insurance Code, as | ||
added by this Act, applies only to an insurance policy or annuity | ||
contract delivered, issued for delivery, or renewed on or after | ||
January 1, 2018, or a retained asset account established in | ||
connection with the insurance policy or annuity contract. An | ||
insurance policy or annuity contract delivered, issued for | ||
delivery, or renewed before that date, or a retained asset account | ||
established in connection with the insurance policy or annuity | ||
contract, is governed by the law as it existed immediately before | ||
the effective date of this Act, and that law is continued in effect | ||
for that purpose. | ||
SECTION 3. This Act takes effect September 1, 2017. |