The New York Department of Financial Services has issued a mandate requiring New York life insurers to search the U.S. Social Security Administration’s Death Master File every three months in order to find beneficiaries of the recently deceased who are unaware they are eligible for benefits.
Announced on Monday, the regulation is a result of a DFS inquiry last year that investigated policies for which no claims had been made. The initiative netted 32,715 payments of $262.2 million to consumers nationwide, including 7,525 payments totaling $95.9 million to New Yorkers.
“It became clear that in many cases beneficiaries were not putting in claims because they didn’t know about the policy, so people weren’t getting the benefits that somebody paid to see them get,” said David Neustadt, spokesperson for the New York State Department of Financial Services.
Policies go unpaid when family members are unaware of the existence of a life insurance policy or if they lack sufficient information to file a claim with the insurance company.
Under the new rule, insurers that have sold a policy are required to request more detailed beneficiary information, such as social security number and address, and to cross-check consumer requests received through the state’s Lost Policy Finder.
New York is the first state to order the cross-check policy.
Whether the search requirement increases the workload of life insurers is only a matter of a computer check, according to Neustadt.
“We found insurers that also sold annuities were already using the list to see if an annuity holder had died so that they could to stop making payments on annuity,” Neustadt said. “You’re talking about doing the same computer check for life insurance policies. It’s a reasonable and right thing to do.”
The new regulation also requires insurers to submit the number of unpaid policies in which they are unable to find the beneficiary annually to the Office of the State Comptroller.
Juliette Fairley writes for Insurance Networking News, a SourceMedia publication.
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