A Storm Cloud on the Horizon: Unclaimed Property Auditors Targeting Middle-Tier Insurance Companies


Over the past three years, more than 25 insurance companies have become subject to market conduct exams and unclaimed property audits by more than 35 cash-hungry states. Represented by Verus Financial, LLP (Verus), state auditors and insurance regulators are asserting that insurers have engaged in improper handling of life insurance policies and annuity contracts by failing to proactively identify death claims and locate missing beneficiaries. Verus claims that insurers consult certain government databases—e.g., the Social Security Administration’s Death Master File (DMF)— to terminate annuity payments when annuitants die, but do not consult these same databases to determine whether life insurance insurers or annuity contract owners have died in order to pay their beneficiaries. Verus further asserts that insurers throughout the industry have failed to timely escheat death benefits and matured policy/contract proceeds.

The Old Is New Again -

To date, regulators have focused primarily on the largest insurance companies. Indeed, the three unclaimed property settlements that regulators have reached to date have been with some of the industry’s largest players. However, recent developments confirm that state officials are now targeting mid-size life insurance companies, and that Verus is no longer the only auditor involved. Two other auditors have thrown their hats into the ring: Unclaimed Property Clearinghouse (UPCH) and Kelmar. Currently, these two auditing firms are representing state auditors and not Departments of Insurance, but that may change.

While UPCH and Kelmar are following in the footsteps of Verus, additional information about UPCH and Kelmar audits will be helpful to understanding the significant impact these auditors will have on mid-size insurers.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Sutherland Asbill & Brennan LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.