Law requires companies to find life insurance beneficiaries going back 25 years
Four Florida insurers were in court Monday afternoon in the state Capitol, challenging a law that requires them to locate life insurance beneficiaries going back 25 years.
The companies contend that they don’t have to find anyone who was a beneficiary before the law was passed.
To rewind, a year-old Florida law requires life insurers to keep track of their customers who die and then track down the beneficiaries if a claim hasn’t been made.
The four companies in court claim to be OK with the idea of finding beneficiaries’ policies that were sold after the law took effect, but said the state can’t make them go back to 1992.
“What they can’t do, constitutionally, is impose (the law) retroactively and say, ‘Even though you followed the law, we’re going to change the law and you are going to go back and fix it at your cost,’” said Barry Richard, an attorney for the Kemper Insurance Company.
In total, 28 companies have settled and are not challenging the law.
The majority of the companies that settled with the state were already actively searching death records, so they knew when one of their policyholders died. They just didn’t do anything about it.
When the law was passed, its sponsors estimated that state residents could be entitled up to up to $1 billion.
“And if the beneficiary did not know they were named in that policy, and didn’t make a claim for those monies, the insurance companies kept the money,” said Sen. Lizbeth Benacquisto, R-Lee County, on March 10, 2016.
The companies in court said they never searched death records.
“The insurance company had an obligation to pay benefits upon proof of death, presented to it by survivors,” Richard said. “It didn’t require insurance companies to constantly search records to see who died.”
An adverse ruling for the state in this case could stop companies from searching for beneficiaries in deaths that took place prior to last year, leaving thousands of deceased policyholders’ wishes unfulfilled.
On Monday afternoon, a circuit judge in the Capitol told the state it must limit what records it wants to see, and also limit the questions it can ask company officials when being deposed.
The state promised to appeal the ruling.