On Friday, March 7, 2014, the National Conference of Insurance Legislators’ (NCOIL) Unclaimed Property Task Force (Task Force) met in-person at NCOIL’s spring meeting. Led by the Task Force’s Co-Chair George Keiser (ND), the meeting focused on the top issues affecting unclaimed insurance, annuity, and retained asset account benefits, potential structural changes to the Model Unclaimed Life Insurance Benefits Act (Model Act) in relation to those issues, and the need for increased uniformity in insurance laws across the states.
Co-Chair Keiser opened the discussion by outlining the top structural issues that he believes the Task Force needs to address in order to create a more uniform and effective Model Act. These issues are:
- Whether the Model Act should be applied retrospectively versus prospectively. This question centers on whether a retrospective application of the Model Act violates the Contract Clause of the U.S. Constitution as well as state constitutions.
- The effect of the Bipartisan Budget Act of 2013 on insurers’ access to the death master file (DMF). Specifically, a provision in the Bipartisan Budget Act requires that entities seeking access to the DMF complete a certification process. Until that process is in place, starting March 26, 2014, insurers may no longer have full access to the DMF, and it is unclear if and when full access will be restored to insurers. Because the Model Act requires that insurers run searches against the DMF, the Bipartisan Budget Act may render insurers unable to fully comply with the Model Act where it has been implemented by state law.
- Integration of the Model Act with the National Association of Insurance Commissioners’ (NAIC) Unfair Trade Practices Act, which has been adopted in most states.
- The scope of the Model Act’s DMF search requirements. Particularly, whether insurers should be required to perform a reconciliation of their entire in-force business against the DMF only once or with greater frequency.
- The proper scope of exclusions and exemptions in the Model Act.
- The definition of “knowledge” of death in the Model Act such that the term is consistent with insurance codes.
- The use of contingency fee auditors in unclaimed property examinations.
- The cost burden of the Model Act on small and mid-sized companies. In particular, whether the Model Act should allow the insurance regulator to exercise discretion in order to limit or phase-in compliance with the law for small companies that may be financially burdened by the law.
Co-Chair Keiser’s list was drawn from a list of top issues proposed by the Task Force’s Advisory Council (Advisory Council) after the Task Force’s last meeting.
After discussion, Co-Chair Keiser stated that the process of making changes to the Model Act would continue to move forward. He invited interested parties to submit proposed changes to the Model Act within 30 days. All changes should be submitted in mark-up form to NCOIL. The NCOIL staff will prepare them for the next meeting, where the Task Force will walk through the changes.
While the meeting’s primary focus was on the structural changes to the Model Act, Representative Greg Wren (AL), NCOIL’s current president, also took the time to commend the Task Force for its work up to this point. Representative Wren praised the collaborative approach that the Task Force has taken in addressing the issue of unclaimed property. He noted that the Model Act has been adopted and introduced in a number of states, largely due to the Task Force’s inclusion of major stakeholders in its discussions. He stated that the Task Force has successfully brought together regulators, administrators, industry participants, and consumer groups, building a strong coalition around the issue of unclaimed property. To date, the Model Act framework has been enacted in nine states (AL, KY, MD, MT, ND, NM, NV, NY, VT) and is pending in nine others (GA, IN, IA, LA, MA, OK, PA, RI, TN).