85R16412 SMT-F
By: Smithee, et al. H.B. No. 1243
Substitute the following for H.B. No. 1243:
By: Phillips C.S.H.B. No. 1243
A BILL TO BE ENTITLED
AN ACT
relating to the identification and handling of unclaimed life
insurance and annuity contract proceeds.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 1109, Insurance Code, is amended by
adding Subchapter A-1 to read as follows:
SUBCHAPTER A-1. DEATH MASTER FILE SEARCH; IDENTIFICATION OF
UNCLAIMED PROCEEDS
Sec. 1109.010. DEFINITIONS. In this subchapter:
(1) "Annuity contract" means an annuity contract
issued in this state. The term does not include an annuity used to
fund an employment-based retirement plan or program for which the
insurer:
(A) does not perform the recordkeeping services;
or
(B) is not committed by the terms of the annuity
contract to pay death benefits to the beneficiaries of specific
plan participants.
(2) "Death Master File" means:
(A) the United States Social Security
Administration's Death Master File; or
(B) any other database or service that is at
least as comprehensive as the United States Social Security
Administration's Death Master File for determining whether a person
is dead.
(3) "Death Master File match" means a match of the
social security number or the name and date of birth of an insured
or retained asset account holder resulting from a search of the
Death Master File.
(4) "Life insurance policy" means a policy or
certificate of life insurance issued in this state that provides a
death benefit. The term does not include:
(A) a policy or certificate of life insurance
that provides a death benefit under an employee benefit plan that
is:
(i) subject to the Employee Retirement
Income Security Act of 1974 (29 U.S.C. Section 1001 et seq.); or
(ii) under any federal employee benefit
program;
(B) a policy or certificate of life insurance
that is used to fund a pre-need funeral contract or prearrangement;
(C) a policy or certificate of credit life or
accidental death insurance; or
(D) a policy issued to a group master
policyholder for which the insurer does not provide recordkeeping
services.
(5) "Recordkeeping services" means services provided
by an insurer, under an agreement with a group policy or contract
holder, to obtain, maintain, and administer in the insurer's or the
insurer's agents' systems the following information about each
individual insured under the group policy or contract or a line of
coverage under that policy or contract:
(A) the social security number or name and date
of birth of the insured;
(B) beneficiary designation information;
(C) coverage eligibility;
(D) benefit amount; and
(E) premium payment status.
(6) "Retained asset account" means a mechanism by
which the proceeds payable under a life insurance policy or annuity
contract are settled by the insurer or an entity acting on behalf of
the insurer by depositing the proceeds into an account with check or
draft writing privileges, where those proceeds are retained by the
insurer or the insurer's agent, under a supplementary contract not
involving annuity contract benefits other than death benefits.
Sec. 1109.011. IDENTIFICATION OF DEATH MASTER FILE MATCHES.
(a) An insurer shall compare its in-force life insurance policies,
annuity contracts, and retained asset accounts against a Death
Master File at least semiannually to identify potential Death
Master File matches. The insurer shall perform the first
comparison of a policy, contract, or account against a full Death
Master File and thereafter against Death Master File update files
to identify potential Death Master File matches.
(b) An insurer shall first conduct the comparison required
by Subsection (a) electronically to the extent the insurer's
records are available in electronic format, and then using the most
easily accessible insurer records for any records that are not
available electronically.
(c) Each subsequent comparison made under this section
shall include all in-force life insurance policies, annuity
contracts, and retained asset accounts and any policies, contracts,
or accounts that have lapsed since the previous comparison.
(d) An insurer shall implement procedures for conducting
comparisons under this section to account for:
(1) common nicknames, initials used in lieu of a first
or middle name, use of a middle name, compound first and middle
names, and interchanged first and middle names;
(2) compound last names, maiden or married names, and
hyphens, blank spaces, or apostrophes in last names;
(3) transposition of the month and date portions of
the date of birth; and
(4) an incomplete social security number.
Sec. 1109.012. DUTIES REGARDING DEATH MASTER FILE MATCH.
(a) For each Death Master File match, the insurer shall, not later
than the 90th day after the date the insurer identifies the match:
(1) complete a documented good faith effort to confirm
the death of the insured or retained asset account holder against
other available records and information;
(2) review the insurer's records to determine whether
the deceased individual had purchased or was otherwise covered by
any of the insurer's other products; and
(3) determine whether proceeds may be due in
accordance with the applicable policy or contract or terms
governing the applicable account.
(b) For group life insurance or a group annuity contract, an
insurer is required to confirm the possible death of an insured or
retained asset account holder under this section only if the
insurer provides recordkeeping services for the group policy or
group annuity contract.
(c) If the insurer determines under Subsection (a)(3) that
proceeds may be due and a beneficiary or other authorized
representative has not communicated with the insurer on or before
the 90th day after the date the insurer identifies a Death Master
File match, the insurer shall:
(1) complete a documented good faith effort to locate
and contact each beneficiary or other authorized representative on
the relevant policy, contract, or account; and
(2) provide to the beneficiary or authorized
representative the appropriate claim forms, instructions, or
information to make a claim, including information about any need
to provide an official death certificate or show proof of death
under the applicable policy or contract or terms governing the
applicable account.
(d) If an insurer is unable to confirm the death of an
insured or retained asset account holder after the insurer
identifies a Death Master File match, the insurer may consider the
relevant policy, contract, or account to remain in force according
to its terms.
(e) To the extent permitted by law, the insurer may disclose
minimum necessary personal information about the insured, retained
asset account holder, or beneficiary to a person the insurer
reasonably believes may be able to assist the insurer in locating a
person entitled to payment of the claim proceeds.
(f) An insurer or the insurer's service provider may not
charge an insured, retained asset account holder, beneficiary, or
authorized representative any fees or costs associated with
conducting a Death Master File comparison under this subchapter or
verifying a Death Master File match under this subchapter.
Sec. 1109.013. PRESUMPTION OF UNCLAIMED PROCEEDS; REPORT
AND DELIVERY OF PROCEEDS. (a) The proceeds of a life insurance
policy, annuity contract, or retained asset account, and any
accrued contractual interest, are first payable to each designated
beneficiary or owner as provided by the applicable policy or
contract or terms governing the applicable account.
(b) If a Death Master File match is confirmed, the proceeds
of the relevant policy, contract, or account are considered
unclaimed proceeds for purposes of this chapter on the third
anniversary of the date on which, according to the insurer's
records, the insurer completed a good faith effort as required by
Section 1109.012(c) that failed to locate a beneficiary or
authorized representative if the proceeds remain unpaid and no
beneficiary or authorized representative has submitted a claim for
the proceeds to the insurer before that date.
(c) An insurer shall report unclaimed proceeds as required
by Section 1109.051.
(d) An insurer shall deliver unclaimed proceeds to the
comptroller as required by Section 1109.052.
(e) For purposes of this section, unclaimed proceeds do not
include any statutory interest under Section 1103.104.
Sec. 1109.014. RULEMAKING AUTHORITY. The commissioner may
adopt rules to implement this subchapter.
Sec. 1109.015. AUTHORITY TO ISSUE CERTAIN ORDERS. The
commissioner may issue an order:
(1) limiting the Death Master File comparisons
required by this subchapter to only those files the insurer
maintains in searchable electronic format or approving a plan and
timeline for an insurer to convert the insurer's files to
searchable electronic format;
(2) exempting an insurer from the Death Master File
comparisons required by this subchapter or permitting an insurer to
perform the comparisons less frequently than required by this
subchapter on a showing of hardship to the insurer; or
(3) permitting an insurer to phase in compliance with
this subchapter according to a plan and timeline approved by the
commissioner.
Sec. 1109.016. AUTHORITY TO REQUEST DEATH CERTIFICATE.
Nothing in this subchapter limits an insurer's right to request a
death certificate as part of a claim validation process.
SECTION 2. Subchapter A-1, Chapter 1109, Insurance Code, as
added by this Act, applies only to an insurance policy or annuity
contract delivered, issued for delivery, or renewed on or after
January 1, 2018, or a retained asset account established in
connection with the insurance policy or annuity contract. An
insurance policy or annuity contract delivered, issued for
delivery, or renewed before that date, or a retained asset account
established in connection with the insurance policy or annuity
contract, is governed by the law as it existed immediately before
the effective date of this Act, and that law is continued in effect
for that purpose.
SECTION 3. This Act takes effect September 1, 2017.