Friday, February 26, 2016

Life insurance benefits bill passes House, goes to Senate

Life insurance companies would have to make a good-faith effort to find beneficiaries of policies they sold before the enactment of a 2012 state unclaimed benefits law under legislation that is on its way to the state Senate.

House Bill 408, sponsored by Rep. Chris Harris, D-Forest Hills, specifies that the Unclaimed Benefits Act, a law state lawmakers passed in 2012, should apply retroactively to beneficiaries of policies sold before the legislation took effect in 2013. Known as the Unclaimed Life Insurance Benefits Act, the law requires life insurance companies to determine if a policy holder has died and then make a solid effort to locate beneficiaries of the policy.

Harris told the House that HB 408 “is a simple consumer-protection bill that helps every single life insurance policy holder in the Commonwealth of Kentucky receive the benefits that their beneficiaries are owed.”

The bill was amended with a floor amendment sponsored by Rep. Bart Rowland, R-Tompkinsville, that clarifies what constitutes a “good-faith effort” by insurance companies under HB 408.

The amendment “simply says that the Department of Insurance shall promulgate (implement) regulations that communicate to insurers what actions, steps and undertakings constitute a good-faith effort,” said Rowland.

HB 408 as amended passed the House 84-0 and now goes to the Senate for consideration.

HB 408 was filed by Harris this month after the state dropped its defense of the 2012 law in a case filed by several life insurance companies against the law four years ago. The companies argued that the law should not apply to policies issued before the legislation took effect. An appeals court agreed, saying Kentucky law requires a retroactivity provision in any law that is intended to apply to a period before the law took effect.