House passes bill requiring insurers to seek beneficiaries


FRANKFORT (AP) — Kentucky House members overwhelmingly passed a bill Friday requiring insurers to make “good faith efforts” to track down life insurance beneficiaries, no matter when the policies were written.

The vote comes as lawmakers seek to shore up Kentucky’s Unclaimed Life Insurance Benefits Act after Republican Gov. Matt Bevin’s administration dropped efforts to defend the law from a legal challenge.

“The bill will help every single policyholder in the commonwealth of Kentucky, both large and small,” said Democratic Rep. Chris Harris, the bill’s lead sponsor. “But it will mostly help poor people. Because most of the policies that go unclaimed are small policies, burial policies that are sold in lower socio-economic neighborhoods in areas of our state.”

The 2012 unclaimed benefits law requires insurers to check public death records to determine whether policyholders have died and to make “good faith efforts” to try to find beneficiaries owed life insurance proceeds.

That law sailed through the General Assembly with no dissenting votes four years ago.

Several life insurance companies sued after it was enacted, saying the law could not be applied to policies written before the law was passed. A circuit judge ruled in the state’s favor, but the state Court of Appeals reversed the decision.

Arguments were scheduled recently before the state Supreme Court, but the Kentucky Department of Insurance asked to dismiss the case. Bevin, whose administration inherited the case, said at the time that after a “thorough analysis” of the appeals court ruling, he believed it was illegal to apply the law retroactively.

Attorney General Andy Beshear, a Democrat, said he was outraged by the Bevin administration’s decision and has asked the Supreme Court to substitute his office for the governor so the lawsuit can continue.

Harris said his legislation adheres to the intent of the original law that its provision apply retroactively to life insurance policies. But the 2012 statute lacked language clearly stating it was to be applied retroactively, he said. His measure aims to fix that oversight.

“It protects our constituents and it doesn’t ask big insurance companies to pay a single dime more than what the policy requires them to pay,” Harris said during debate on the measure.

The bill cleared the House on an 84-0 vote and now goes to the Senate.

The House amended the bill to require the Insurance Department to craft regulations informing insurers what constitutes a “good faith effort” in searching for beneficiaries of life insurance benefits.

Rep. Bart Rowland, R-Tompkinsville, said the amendment eased concerns about what would be expected of insurers in trying to track down beneficiaries. In some cases, those policies are decades old and the beneficiaries might have moved far away, some lawmakers said at a committee hearing on the bill.

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The legislation is House Bill 408.

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