HB4633eng 99TH GENERAL ASSEMBLY

HB4633 Engrossed LRB099 18214 JLS 44479 b

AN ACT concerning business.

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 this State.

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.

"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.

"Date of death" means the date on which an insured 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 or gained knowledge of a Death Master File match or any other source or record maintained or located in insurer records of the death of an insured.

"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 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.

"Insurer records" means information regarding in-force and certain lapsed policies, annuity contracts, and retained asset accounts maintained on the insurer's administrative systems or the administrative systems of any third-party retained by the insurer. "Insurer records" does not include (1) such information maintained by a group life insurance customer or other third-party retained by the group customer or (2) lapsed policies that have been compared against the Death Master File within the 18 months following the lapse date of the applicable policy.

"Policy" means any individual life insurance policy, 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, 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 insurers records necessary to process a claim including, without limitation, the insured's full name, address, date of birth, telephone number, social security number, coverage eligibility, premium payment status, benefit amount, and beneficiary 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:

(1) attempting to identify and obtain contact information for beneficiaries by searching all insurer records, online search and locator tools, and other sources including, without limitation, records of agents or producers appointed by the insurer and associated with the policy, death certificates, or funeral home records;

(2) 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;

(3) at least 2 attempts to contact the beneficiary by telephone;

(4) an attempt to contact the beneficiary by e-mail;

(5) 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; and

(6) at least 2 attempts to contact the beneficiary in writing at the address found by that search or locator tool.

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 address for the insured maintained in the insurer records in conducting a thorough search. A thorough search shall not include additional attempts to contact the beneficiary at an address already confirmed not to be current.

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. At a minimum, the insurer shall implement procedures to account for: (i) 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; (ii) compound last names, maiden or married names, and hyphens, blank spaces, or apostrophes in last names; (iii) transposition of the month and date portions of the date of birth; and (iv) incomplete social security numbers.

(4) For each Death Master File match, the insurer shall identify any proceeds under the policy, annuity contract, or retained asset account.

(5) Within 120 days after the receipt of a date of death notice, if the insurer has not been contacted by a beneficiary, the insurer shall promptly commence a thorough search, which shall be completed within one year after the date of death notice.

(6) The insurer shall maintain documentation of all of its thorough search efforts.

(7) 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.

(8) 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.

(9) In the event the insurer fails to locate a beneficiary following a thorough search, the insurer shall report and remit the proceeds in accordance with the Uniform Disposition of Unclaimed Property Act.

(10) 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.

Section 20. Rulemaking authority. The Department of Insurance may adopt rules to administer and implement this Act.

Section 25. Application. The requirements imposed by this Act apply to all life insurance policies, annuity contracts, and retained asset accounts in force on the effective date of this Act and to all life insurance policies, annuity contracts, and retained asset accounts created or entered into on and after that date.

Section 90. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

Section 95. 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 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 disability, race, color, religion, or national origin.

(6) Failing to meet any requirement of the Unclaimed Life Insurance Benefits Act with such frequency as to constitute a general business practice.

(Source: P.A. 99-143, eff. 7-27-15.)