Illinois General Assembly - Full Text of SB1783
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Full Text of SB1783  99th General Assembly




State of Illinois
2015 and 2016


Introduced 2/20/2015, by Sen. William R. Haine


New Act
215 ILCS 5/424  from Ch. 73, par. 1031

    Creates the Unclaimed Life Insurance Benefits Act. Provides that insurers with life insurance policies, annuity contracts, or retained asset accounts shall compare those accounts to the Social Security Administration's Death Master File or similar database on at least a semi-annual basis. Provides that within 90 days of finding a Death Master File match, the insurer shall complete a good faith effort to confirm the death of the insured or retained asset account holder, and to determine whether benefits are due and, if so, to locate beneficiaries and provide the appropriate forms or instructions. Provides that benefits from a policy, annuity contract, or a retained asset account, plus any applicable accrued contractual interest shall first be payable to the designated beneficiaries or owners and, in the event the beneficiaries or owners cannot be found, shall escheat pursuant to the Uniform Disposition of Unclaimed Property Act, and requires insurers to contact the Treasurer pursuant to the Uniform Disposition of Unclaimed Property Act. Provides that failures to meet the requirements of the Act with such frequency as to constitute a general business practice is a violation of provisions of the Illinois Insurance Code concerning unfair methods of competition and unfair or deceptive acts or practices. Makes conforming changes in the Illinois Insurance Code.

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SB1783LRB099 07630 MLM 27761 b

1    AN ACT concerning insurance.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 1. Short title. This Act may be cited as the
5Unclaimed Life Insurance Benefits Act.
6    Section 5. Purpose. This Act shall require recognition of
7the Uniform Disposition of Unclaimed Property Act and require
8the complete and proper disclosure, transparency, and
9accountability relating to any method of payment for life
10insurance, annuity, or retained asset agreement death
12    Section 10. Definitions. As used in this Act:
13    "Annuity contract" shall not include an annuity contract
14used to fund an employment-based retirement plan or program
15where (1) the insurer does not perform the record keeping
16services or (2) the insurer is not committed by the terms of
17the annuity contract to pay death benefits to the beneficiaries
18of specific plan participants.
19    "Death Master File" means the United States Social Security
20Administration's Death Master File or any other database or
21service that is at least as comprehensive as the United States
22Social Security Administration's Death Master File for



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1determining that a person has reportedly died.
2    "Death Master File match" means a search of the Death
3Master File that results in a match of the social security
4number or the name and date of birth of an insured, annuity
5owner, or retained asset account holder.
6    "Policy" means any policy or certificate of life insurance
7that provides a death benefit. "Policy" does not include (1)
8any policy or certificate of life insurance that provides a
9death benefit under an employee benefit plan subject to the
10federal Employee Retirement Income Security Act of 1974, as
11periodically amended, or under any federal employee benefit
12program, (2) any policy or certificate of life insurance that
13is used to fund a pre-need funeral contract or prearrangement,
14(3) any policy or certificate of credit life or accidental
15death insurance, or (4) any policy issued to a group master
16policyholder for which the insurer does not provide record
17keeping services.
18    "Record keeping services" means those circumstances under
19which the insurer has agreed with a group policy or annuity
20contract customer to be responsible for obtaining,
21maintaining, and administering in its own or its agents'
22systems information about each individual insured under an
23insured's group insurance contract (or a line of coverage
24thereunder), at least the following information: (1) social
25security number or name and date of birth, and (2) beneficiary
26designation information, (3) coverage eligibility, (4) benefit



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1amount, and (5) premium payment status.
2    "Retained asset account" means any mechanism whereby the
3settlement of proceeds payable under a policy or annuity
4contract is accomplished by the insurer or an entity acting on
5behalf of the insurer depositing the proceeds into an account
6with check or draft writing privileges, where those proceeds
7are retained by the insurer or its agent, pursuant to a
8supplementary contract not involving annuity benefits other
9than death benefits.
10    Section 15. Insurer conduct.
11    (a) An insurer shall perform a comparison of its insureds'
12in-force policies, annuity contracts, and retained asset
13accounts against a Death Master File on at least a semi-annual
14basis by using the full Death Master File once and thereafter
15using the Death Master File update files for future comparisons
16to identify potential matches of its insureds. For those
17potential matches identified as a result of a Death Master File
18match, the insurer shall:
19        (1) within 90 days of a Death Master File match:
20            (A) complete a good faith effort, which shall be
21        documented by the insurer, to confirm the death of the
22        insured or retained asset account holder against other
23        available records and information; and
24            (B) determine whether benefits are due in
25        accordance with the applicable policy or contract and,



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1        if benefits are due in accordance with the applicable
2        policy or contract:
3                (i) use good faith efforts, which shall be
4            documented by the insurer, to locate the
5            beneficiary or beneficiaries; and
6                (ii) provide the appropriate claims forms or
7            instructions to the beneficiary or beneficiaries
8            to make a claim, including the need to provide an
9            official death certificate, if applicable under
10            the policy or annuity contract; and
11        (2) with respect to group life insurance, confirm the
12    possible death of an insured when the insurers maintain at
13    least the following information of those covered under a
14    policy or certificate: social security number or name and
15    date of birth, beneficiary designation information,
16    coverage eligibility, benefit amount, and premium payment
17    status.
18    (b) Insurers shall implement procedures to account for the
19following when conducting searches of the Death Master File:
20        (1) common nicknames, initials used in lieu of a first
21    or middle name, use of a middle name, compound first and
22    middle names, and interchanged first and middle names;
23        (2) compound last names, maiden or married names, and
24    hyphens, blank spaces, or apostrophes in last names;
25        (3) transposition of the "month" and "date" portions of
26    the date of birth; and



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1        (4) incomplete social security numbers.
2    (c) To the extent permitted by law, an insurer may disclose
3the minimum necessary personal information about the insured or
4beneficiary to a person who the insurer reasonably believes may
5be able to assist the insurer locate the beneficiary or a
6person otherwise entitled to payment of the claims proceeds.
7    (d) An insurer or its service provider shall not charge any
8beneficiary or other authorized representative for any fees or
9costs associated with a Death Master File search or
10verification of a Death Master File match conducted pursuant to
11this Act.
12    (e) The benefits from a policy, annuity contract, or a
13retained asset account, plus any applicable accrued
14contractual interest shall first be payable to the designated
15beneficiaries or owners and, in the event the beneficiaries or
16owners cannot be found, shall escheat pursuant to the Uniform
17Disposition of Unclaimed Property Act. Interest payable under
18Article XIV of the Illinois Insurance Code shall not be payable
19as unclaimed property under the Uniform Disposition of
20Unclaimed Property Act.
21    (f) An insurer shall notify the Treasurer pursuant to the
22Uniform Disposition of Unclaimed Property Act upon the
23expiration of the statutory time period for escheat that:
24        (1) a policy or annuity contract beneficiary or
25    retained asset account holder has not submitted a claim
26    with the insurer; and



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1        (2) the insurer has complied with subsection (a) of
2    this Section and has been unable, after good faith efforts
3    documented by the insurer, to contact the retained asset
4    account holder, beneficiary, or beneficiaries.
5    (g) Upon such notice, an insurer shall immediately submit
6the unclaimed policy, annuity contract benefits, or unclaimed
7retained asset accounts, plus any applicable accrued interest,
8to the Treasurer pursuant to the Uniform Disposition of
9Unclaimed Property Act.
10    (h) Failure to meet any requirement of this Section with
11such frequency as to constitute a general business practice is
12a violation of Section 424 of the Illinois Insurance Code.
13Nothing in this Section shall be construed to create or imply a
14private cause of action for a violation of this Section.
15    Section 20. The Illinois Insurance Code is amended by
16changing Section 424 as follows:
17    (215 ILCS 5/424)  (from Ch. 73, par. 1031)
18    Sec. 424. Unfair methods of competition and unfair or
19deceptive acts or practices defined. The following are hereby
20defined as unfair methods of competition and unfair and
21deceptive acts or practices in the business of insurance:
22    (1) The commission by any person of any one or more of the
23acts defined or prohibited by Sections 134, 143.24c, 147, 148,
24149, 151, 155.22, 155.22a, 155.42, 236, 237, 364, and 469 of



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1this Code.
2    (2) Entering into any agreement to commit, or by any
3concerted action committing, any act of boycott, coercion or
4intimidation resulting in or tending to result in unreasonable
5restraint of, or monopoly in, the business of insurance.
6    (3) Making or permitting, in the case of insurance of the
7types enumerated in Classes 1, 2, and 3 of Section 4, any
8unfair discrimination between individuals or risks of the same
9class or of essentially the same hazard and expense element
10because of the race, color, religion, or national origin of
11such insurance risks or applicants. The application of this
12Article to the types of insurance enumerated in Class 1 of
13Section 4 shall in no way limit, reduce, or impair the
14protections and remedies already provided for by Sections 236
15and 364 of this Code or any other provision of this Code.
16    (4) Engaging in any of the acts or practices defined in or
17prohibited by Sections 154.5 through 154.8 of this Code.
18    (5) Making or charging any rate for insurance against
19losses arising from the use or ownership of a motor vehicle
20which requires a higher premium of any person by reason of his
21physical handicap, race, color, religion, or national origin.
22    (6) Failing to meet any requirement of the Unclaimed Life
23Insurance Benefits Act with such frequency as to constitute a
24general business practice.
25(Source: P.A. 97-527, eff. 8-23-11.)