Latest Development on the Unclaimed Property Front for Life Insurers: West Virginia State Treasurer Files Ten Lawsuits against Life Insurers
On September 20, 2012, the West Virginia State Treasurer filed suit against 10 insurance companies seeking civil penalties and injunctive relief, contending that the insurers had violated the state’s Unclaimed Property Act by failing to compare their policyholder information against the Social Security Administration’s Death Master File to determine whether proceeds were owed to beneficiaries.
The Treasurer alleges that, because an insurer has failed to examine the Death Master File to determine whether its policyholders had died, the insurer “retained and earned vast income from proceeds which rightfully should have been paid to the West Virginia Unclaimed Property Fund.” The Treasurer demands to examine the records of the insurer, immediate payment to the State of all due unclaimed life insurance sums, injunctive relief, payment of his attorney’s fees, and civil penalties in amounts up to $1000 per day per policy.
West Virginia’s lawsuit is the latest front in the fast-changing regulatory landscape facing life insurance companies concerning unclaimed property laws. Companies face multiple and conflicting requests from various entities, making it extremely challenging to comply with each entity’s requirements. Multi-state investigations, inconsistent legislative and regulatory changes, class action litigation, and, now a State Treasurer’s lawsuit will continue to challenge the life insurance industry for the foreseeable future. Life insurance companies will need to be proactive in developing a strategy for responding to these multiple challenges.
Amanda Soberick contributed to this article.
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