Bill to Amend Florida’s Unclaimed Property Act Regarding Unclaimed Insurance Benefits Moves to Senate Floor

Insurance   |   Life, Annuity, and Retirement Litigation   |   Financial Services Regulatory   |   Property & Casualty Insurance   |   Life, Annuity, and Retirement Solutions   |   January 25, 2016

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On January 19, the Florida Senate Banking and Insurance Committee approved a Senate bill (“SB 966”) that would modify Florida’s existing Unclaimed Property Act (the “Act”) requirements regarding unclaimed insurance benefits. The bill would substantially impact insurers’ unclaimed property reporting and remittance requirements for life insurance and annuity death benefits as well as monies held in retained asset accounts.

Material differences between SB 966 and the existing Act include the following:

  • SB 966 institutes a requirement for periodic searches of the United States Social Security Administration Death Master File (DMF).
  • SB 966 creates a presumption that a person is deceased if “indicated” by a DMF match, including by a fuzzy match.
  • SB 966 presumes any funds held or owing under any life policy or annuity contract are escheatable five years after the insured’s date of death (if unclaimed during that period), as contrasted with the current dormancy trigger under the Act (i.e., funds are “due and payable” according to the insurer’s records).
  • SB 966 also adds a new dormancy trigger by explicitly providing that an insurance policy or annuity contract is “deemed matured” upon reaching its maturity date..

The Committee vote on SB 966 originally had been scheduled for January 11, 2016, but that vote was delayed after industry representatives voiced opposition. In particular, the proposed bill raises the following operational and legal concerns:

  • The use of a date of death dormancy trigger conflicts with Florida Statute § 627.461, which requires insurance policy forms to provide that “when a policy becomes a claim by the death of the insured, settlement shall be made upon receipt of due proof of death and surrender of the policy.”
  • SB 966 operates retroactively, requiring the review of all policies active from January 1, 1992 going forward, which unconstitutionally impairs existing contracts that require the submission of due proof of death and surrender of the policy to settle a claim.
  • SB 966 requires insurers to account for “common variations in data … which would otherwise preclude an exact match” without specifying any “fuzzy match” standards. This arguably makes SB 966 unconstitutionally vague, with industry representatives also asserting a similar constitutional infirmity on the basis that SB 966 relies on any combination of match results, including date of birth, name, and address, to trigger a presumption of death.

SB 966 will be considered by the Florida Senate as a whole. In the meantime, we understand that the Florida Insurance Counsel is actively engaging the DFS to address industry concerns inherent in this bill. However, the bill is supported by Florida's Chief Financial Officer, Jeff Atwater, and a companion bill has also been introduced in the house

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