Tackling the Unclaimed Property Debate

A commentary by Philadelphia partners Jason Gosselin and Stephen Serfass on the life insurance industry’s unclaimed property debate appeared in Law360.

In the article, Jason and Stephen write that the life insurance industry is “under attack again.” The article notes that the Florida insurance commissioner, who is leading a multistate task force, promised in May to hold market conduct examinations of most of the industry.  The action comes after complaints that life insurers’ have failed to search public records for deceased insureds and are thus failing to pay all death benefits due and owing.

Jason and Stephen noted that while the industry’s public response has been “tepid,” life insurers do not actually prefer that policy proceeds go unpaid.  “The industry knows full well that it cannot long survive if consumers believe the industry will not keep its promises,” they wrote.

They also noted that there are “good reasons why annuity issuers search public records for deceased annuitants” and there are “also good reasons why those practices generally are unnecessary in the life insurance context.”

Jason and Stephen wrote that “modest changes may be warranted, but insurers should defend their current practices and they should reject the narrative proffered by critics that current practices reflect an attitude of indifference toward consumers.”