February 23, 2016
Several months ago, it was my privilege to return a $5,000 unclaimed property check to a man from Hinton. Joseph Bigony thanked me. He told me that had it not been for my office’s Unclaimed Property Division, he never would have known he was due this money from his sister’s estate. His sister died almost 16 years ago.
A large insurance company held onto this money for years. It finally reported it to our Unclaimed Property Division after being pressured into a regulatory settlement with various states.
That agreement stemmed from an ongoing battle between states and insurance companies as to whether companies have an obligation to search Social Security’s Death Master File (DMF). Why is this important? A DMF search reveals which policy holders are dead, triggering payment to heirs. Still, insurance companies feel it is their right to hold onto someone else’s money.
I have been in the middle of this fight as your State Treasurer, working to make certain insurance companies relinquish these funds. I took this fight all the way to the West Virginia Supreme Court of Appeals.
In June 2015, the High Court unanimously ruled that the death of the insured triggers the duty to pay out proceeds. The court also said that insurance companies must make reasonable efforts to determine whether their insureds have died. If they are unable to locate beneficiaries, they must report those proceeds to the State as unclaimed property.
There are 19 other states that took a different route, and passed legislation to ensure that insurance companies make a reasonable effort to pay out claims. Similar legislation is pending in six states. But incredibly, this state’s lawmakers are working to do the exact opposite. The bills are HB 4473 and SB 599. I would gladly welcome your help in fighting them.
This proposed legislation says insurance companies have NO obligation and NO responsibility to check the DMF or a similar list to find out if the insured has died. I should point out that many insurance companies already conduct a similar search to suspend annuity payments. Companies cut off annuities for their own benefit but refuse to use the same file to pay out policies. I find this deeply disturbing.
People purchase life insurance with the expectation that their family will be taken care of during a most vulnerable time. It is our duty as public servants to protect these widows, children and loved ones and make sure they receive what they are due. It is not our duty to protect special interest groups and out-of-state insurance company executives.
Joe Bigony said he was glad to finally get the money owed his family. But he added it would have been better to have received it when he dug into his own bank account to bury his sister almost 16 years ago.
This is about a commitment insurance companies made to people long ago. They vowed they would be there for families during their time of need, at the time of their loved one’s death. We owe it to the people of this state not to pass legislation that undermines this commitment.
John Perdue is West Virginia’s state treasurer.
The 2017 NAST Legislative Conference hotel block is filling up fast. The hotel block closes January 10, 2017 so sign up today. To reserve your..