SB274: Bill Text

LRB-3544/1

AJM:klm

2017 - 2018 LEGISLATURE

2017 Senate BILL 274

May 25, 2017 - Introduced by Senators Craig, Wirch, Harsdorf, Nass and Olsen, cosponsored by Representatives Jacque, Duchow, R. Brooks, Genrich, Murphy, Thiesfeldt and Tusler. Referred to Committee on Insurance, Housing and Trade.

SB274,1,2 An Act to create 632.63 of the statutes; relating to: life insurance and annuity benefits.

Analysis by the Legislative Reference Bureau

This bill implements the Model Unclaimed Life Insurance Benefits Act prepared by the National Conference of Insurance Legislators. Generally, the bill addresses the obligations of an insurer providing life insurance policies, annuities, or retained asset accounts with respect to identifying insureds who have died and their beneficiaries.

Under the bill, an insurer is required to compare the records of its life insurance policies, annuity contracts, or retained asset accounts with the federal Social Security Administration's Death Master File. The bill specifies the conditions under which a potential match between those records and the Death Master File occurs. The bill specifies that when a potential match occurs, the insurer must, within 90 days, complete a good faith effort, documented by the insurer, to validate the death of the insured or retained asset account holder against other available records or information. The insurer must then determine whether benefits are owed under the policy or contract and, if so, use good faith efforts to locate any beneficiaries and provide those beneficiaries claims forms and instructions for making a claim. With respect to group life insurance policies, insurers are only required to compare its records with the Death Master File if the insurer maintains certain information regarding the life insurance policy. The bill also requires insurers to implement procedures to account for discrepancies in records, such as compound last names or transposed months and dates in dates of birth. Finally, the bill prohibits an insurer from charging a beneficiary any fees or costs associated with comparing its records or verifying a match with the Death Master File.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB274,1 Section 1 . 632.63 of the statutes is created to read:

SB274,2,3 632.63 Unclaimed life insurance and annuities. (1) Definitions. In this section:

SB274,2,8 (a) “Contract” means an annuity contract. “Contract” shall not include an annuity used to fund an employment-based retirement plan or program where the insurer does not perform the record-keeping services or the insurer is not committed by terms of the annuity contract to pay death benefits to the beneficiaries of specific plan participants.

SB274,2,12 (b) “Death master file” means the federal social security administration's death master file or any other database or service that is at least as comprehensive as the federal social security administration's death master file for determining that a person has reportedly died.

SB274,2,15 (c) “Death master file match” means a search of the death master file that results in a match of a person's name and social security number or the name and date of birth.

SB274,2,16 (d) “Knowledge of death” means one of the following:

SB274,2,17 1. Receipt of an original or valid copy of a certified death certificate.

SB274,2,19 2. A death master file match validated by the insurer in accordance with sub. (2) (a) 1. a.

SB274,2,21 (e) “Person” means an insured, contract owner, or retained asset account holder.

SB274,3,2 (f) “Policy” means any policy or certificate of life insurance that provides a death benefit. “Policy” does not include any of the following

SB274,3,5 1. A policy or certificate of life insurance that provides a death benefit under an employee benefit plan subject to the Employee Retirement Income Security Act of 1974 or under any federal employee benefit program.

SB274,3,7 2. A policy or certificate of life insurance that is used to fund a preneed funeral contract or prearrangement.

SB274,3,8 3. A policy or certificate of credit life or accidental death insurance.

SB274,3,10 4. A policy issued to a group master policyholder for which the insurer does not provide record-keeping services.

SB274,3,15 (g) “Record-keeping services” means those circumstances under which the insurer has agreed with a group policy or contract customer to be responsible for obtaining, maintaining, and administering in its own or its agents' systems information about each individual insured under an insured's group insurance contract, or a line of coverage thereunder, at least the following information:

SB274,3,16 1. Social security number or name and date of birth.

SB274,3,17 2. Beneficiary designation information.

SB274,3,18 3. Coverage eligibility.

SB274,3,19 4. Benefit amount.

SB274,3,20 5. Premium payment status.

SB274,4,2 (h) “Retained asset account” means any mechanism whereby the settlement of proceeds payable under a policy or contract is accomplished by the insurer or an entity acting on behalf of the insurer depositing the proceeds into an account with check or draft writing privileges, where those proceeds are retained by the insurer or its agent, pursuant to a supplementary contract not involving annuity benefits other than death benefits.

SB274,4,8 (2) Insurer conduct. (a) An insurer shall perform a comparison of its insureds' in-force policies, contracts, and retained asset accounts against a death master file, on at least a semi-annual basis, by using the full death master file once, and thereafter using the death master file update files for future comparisons, to identify potential matches of its insureds. For those potential matches identified as a result of a death master file match, the insurer shall do all of the following:

SB274,4,9 1. Within 90 days of a death master file match:

SB274,4,12 a. Complete a good faith effort, which shall be documented by the insurer, to confirm the death of the insured or retained asset account holder against other available records and information.

SB274,4,14 b. Determine whether benefits are due in accordance with the applicable policy or contract.

SB274,4,15 2. If benefits are due in accordance with the applicable policy or contract:

SB274,4,17 a. Use good faith efforts, which shall be documented by the insurer, to locate the beneficiary or beneficiaries.

SB274,4,20 b. Provide the appropriate claims forms or instructions to the beneficiary or beneficiaries to make a claim, including the need to provide an official death certificate, if applicable under the policy or contract.

SB274,4,23 (b) With respect to group life insurance, insurers are required to confirm the possible death of an insured when the insurers maintain at least the following information of those covered under a policy or certificate:

SB274,4,24 1. Social security number or name and date of birth.

SB274,4,25 2. Beneficiary designation information.

SB274,5,1 3. Coverage eligibility.

SB274,5,2 4. Benefit amount.

SB274,5,3 5. Premium payment status.

SB274,5,4 (c) Every insurer shall implement procedures to account for all of the following:

SB274,5,6 1. 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.

SB274,5,8 2. Compound last names; maiden or married names; and hyphens, blank spaces, or apostrophes in last names.

SB274,5,9 3. Transposition of the month and date portions of the date of birth.

SB274,5,13 (d) To the extent permitted by law, the insurer may disclose minimum necessary personal information about the insured or beneficiary to a person who the insurer reasonably believes may be able to assist the insurer to locate the beneficiary or a person otherwise entitled to payment of the claims proceeds.