When we last left the "Death Master File" controversy intersecting life insurance policies and the unclaimed property laws, it looked like things were winding down. A variety of companies announced settlements, Congress got involved, and state insurance regulators were issuing revised standards for compliance.
Despite those settlements, West Virginia Treasurer John Purdue has now filed suit against many of the same insurance companies alleging that they failed to deliver unclaimed insurance policies to that state in accordance with the West Virginia Unclaimed Property Act.
In most situations, either an heir or the administrator of
the deceased's estate will notify the insurer that the policy has become
triggered, and often there is no issue. These lawsuits center upon what, if anything, the insurance companies are required to do
to determine whether or not an insured has died in the absence of such
notification. According to the Charleston Gazette, the lawsuits allege that "a reasonable exercise in good faith and fair dealing statutorily
imposed upon defendant includes an annual examination of life insurance
policy holders to determine if they are deceased or three years past the
applicable limiting age." Again, because this topic may come up in our professional
capacity, we are not going to analyze this question in any great detail
except to say that the unclaimed property laws are generally silent as
to how (or whether) the insurer has such an obligation.
In any event, it seems the story isn't quite over.