State Treasurer John D. Perdue adamantly opposed West Virginia House Bill 4473 at a press conference today, saying the bill would irresponsibly amend State Code as it pertains to insurance policies and citizens’ rights under the Uniform Unclaimed Property Act.
“This is a blatant attempt by insurance company executives and special interest lobbyists to manipulate the law to benefit their pocketbooks,” Perdue said. “The State Supreme Court clearly addressed this issue last summer with a unanimous ruling that says insurance companies have a duty to review policies and determine if the insured died.”
HB4473 attempts to reverse the Supreme Court decision and change the law to say that a life insurance company does not have an obligation to pay out on a policy until a claim is made and the insurer receives proof of death.
While many insurance companies argue they should not be required to proactively or retroactively search Social Security’s Death Master File (DMF) or a similar list to determine proof of death, Perdue points out that most insurance companies already conduct similar searches to suspend annuity payments.
“People purchase life insurance with the expectation that their family will be taken care of after they are gone. This bill will deeply and negatively affect those survivors solely with the intent of benefiting insurers,” Perdue said. “This is an egregious abuse of power.”
On June 16, 2015, the West Virginia Supreme Court of Appeals unanimously ruled that the death of the insured triggers 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. Among those audits, up to 20-percent showed evidence that there was prior knowledge of the insured’s death in the company’s underlying records.
While State Treasurer Perdue turned to the court system to hold insurance companies accountable, various other states have reached settlements with insurance companies.
At this point, 19 states have passed legislation that requires insurance companies to search the DMF or a similar file. Similar legislation is pending in six other states. West Virginia HB4473 is a complete contrast to those recently passed laws by stating insurance companies have no responsibility to verify a beneficiary’s death.
It also contradicts the West Virginia’s Supreme Court ruling that says the insurer’s obligation is already clear in West Virginia’s State Code.
“This is about a commitment insurance companies made to people long ago. They said they would be there for families during their time of need, at the time of their loved one’s death,” said Perdue. “We owe it to the people of this state not to pass legislation that undermines this commitment.”
As the legal custodian of unclaimed property, Treasurer Perdue continues to advocate for the rights of unclaimed property owners and their beneficiaries.
Since taking office, Treasurer Perdue has returned approximately $150 million in unclaimed property funds to rightful owners.
For more information on West Virginia’s Unclaimed Property program, visit www.wvtreasury.com.