The New York Department of Financial Services Announces Emergency Promulgation of Insurance Regulation 200 on Unclaimed Life Insurance Benefits

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On May 14, 2012, the New York Department of Financial Services (the NYDFS) announced the emergency promulgation of Insurance Regulation 200. The emergency regulation requires all life insurers doing business in New York to immediately begin implementing significant new procedures to identify unclaimed death benefits and locate beneficiaries so that prompt payments of benefits can be made. Regulation 200 will become effective June 14, 2012, which is 30 days after it was filed with the Secretary of State, and it remains in effect for 90 days thereafter.

Last July, the NYDFS had issued a letter to insurers pursuant to New York Insurance Law § 308 (the 308 Letter). The New York 308 Letter required life insurance companies and fraternal benefit societies doing business in New York (insurers) to conduct a cross check of their entire block of business against the U.S. Social Security Administration’s Death Master File (DMF), or another comparable database, using “exact” match criteria. Every life insurance policy and annuity contract (together, a policy), and retained asset account (account) issued by a New York domestic insurer or delivered or issued for delivery in New York by an authorized foreign insurer since 1986 was subject to the requirement, with certain exceptions. Insurers were required to pay any unpaid death benefit payments that may have been due under the policies and accounts and to submit monthly reports to the NYDFS on their progress in bucketing, paying and/or escheating amounts due and payable with regard to valid matches against the DMF.

Now Regulation 200 has expanded, rather severely and without providing an opportunity for notice and comment, the scope of the procedures that insurers must immediately undertake to identify valid death claims and pay beneficiaries. Regulation 200 also significantly changes the scope of retained asset accounts of foreign insurers that are subject to the regulation from that contained in the 308 Letter (i.e., accounts delivered or issued for delivery in New York) to "any account established under or as a result of" a life insurance policy or annuity contract delivered or issued for delivery in New York. The emergency regulation’s key requirements that go into effect on June 14 are as follows...

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Published In: Administrative Agency Updates, Finance & Banking Updates, Insurance Updates

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.

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