May 23, 2017
A lively tussle is shaping up between a top Illinois official and the state’s mighty insurance industry, and the Illinois General Assembly will pick the winner.
At the center of the dispute is legislation, supported by Illinois Treasurer Michael Frerichs, that compels life insurance companies to review their records going back to 1996 and confirm that death benefits have been paid to policyholders’ beneficiaries.
Paying death benefits? Isn’t that what life insurance companies are supposed to do?
If the answer were always a resounding “yes,” there wouldn’t be any need for Frerichs’ bill.
Unfortunately, history shows too many life insurers haven’t been doing their jobs. That’s why this legislation should become law despite the strenuous objections of the state’s biggest insurers, including Allstate and State Farm.
“The insurance industry has been fighting this tooth and nail,” Frerichs tells me.
This is not the first time Frerichs has squared off against the life insurance business.
A few years ago, his office identified $550 million that should have been paid to beneficiaries in Illinois but instead was held by insurance companies.
In response, Frerichs pushed for legislation forcing life insurers to confirm they’ve paid death benefits on policies that were up-to-date with carriers. Gov. Bruce Rauner signed that bipartisan-supported bill in August 2016, and it took effect in January.
Still, if the state’s life insurance firms thought Frerichs was done with them, they were mistaken.
This time around, he’s pushing life insurers to dig deeper into their records, going back to 1996, to confirm if death benefits were paid.
The measure already has passed in the House and is making its way through the Senate, where it’s expected the insurance lobby will push hard to kill it.