State Treasurer John D. Perdue praised West Virginia Governor Earl Ray Tomblin today for his decision to veto Senate Bill 599, which would have irresponsibly amended State Code as it pertains to insurance policies and citizens’ rights under the Uniform Unclaimed Property Act.
“I commend the Governor for standing up for what is right for West Virginians. Senate Bill 599 was an unconstitutional amendment to the Uniform Unclaimed Property Act that would have deprived my office of its inherent function of administering the Act,” said Treasurer Perdue, who publicly opposed both Senate Bill 599 and its original companion legislation, House Bill 4473, which never moved out of the House Judiciary Committee.
SB599 gave the Insurance Commissioner the power to develop policies, requirements and interpretations for reporting life insurance within the Unclaimed Property Act. No other industry group or business which is required to report unclaimed property has the direct power to determine its own unclaimed property reporting requirements under state law.
While vetoing SB599, Governor Tomblin signed into law House Bill 4739, which is a bipartisan effort to clarify the obligation insurance companies have when it comes to searching and turning over unclaimed life insurance.
“I want to thank Governor Tomblin for his veto of SB599 and support of HB4739,” said Treasurer Perdue. “Additionally, I want to thank all the members of the legislature who worked to amend HB4739 from its original draft, which now helps strengthen the requirements insurance companies must adhere to.”
While not perfect, HB4739 creates measureable requirements for insurance companies. It requires life insurance companies to regularly search for deceased insureds using the Social Security Administration Death Master File (DMF).
This new law will make West Virginia the second state to require policy searches through 1986, when the DMF was first introduced. New York is the only other state with similar requirements.
“It’s important to note that my concern has never been about whether insurance companies are paying out claims that are received,” said Treasurer Perdue. “The issue is whether insurers have a responsibility to find out if a life insurance policy owner has died and the obligations that follow. The State Supreme Court already ruled on this issue, and the insurance industry went to the State Legislature to circumvent that decision.”
On June 16, 2015, the West Virginia Supreme Court of Appeals unanimously ruled that the death of the insured does trigger the duty to pay out proceeds. The ruling said insurance companies must make reasonable efforts to determine whether their insureds have died, and if they are unable to locate beneficiaries, must report those proceeds to the State as unclaimed property.
Insurance companies around the country have been audited and found to owe millions of dollars to beneficiaries and state unclaimed property funds.
At this point, 19 other states have passed some type of legislation that requires insurance companies to search the DMF or a similar file.
Since taking office, Treasurer Perdue has returned approximately $150 million in unclaimed property funds to rightful owners.