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31 Notre Dame J.L. Ethics & Pub. Pol'y 1 (2017)
Dead or Alive: The Law, Policy, and Market Effects of Legislation on Unclaimed Life Insurance Benefits

handle is hein.journals/ndlep31 and id is 9 raw text is: ARTICLES DEAD OR ALIVE? THE LAW, POLICY, AND MARKET EFFECTS OF LEGISLATION ON UNCLAIMED LIFE INSURANCE BENEFITS JAMES M. CARSON, ROBERT E. Hoyr, AND TIM R. SAMPLES* ABSTRACT A wave of multi-state audits on the insurance industry's use of the Social Security Administration's Death Master File (DMF) stirred national con- troversy over the status of unclaimed life insurance proceeds. Multi-state investigations uncovered asymmetric use of the DMF among many large insurance companies. Accusations of unethical behavior led to numerous settlement agreements between state regulators and insurers. Payouts and fines stemming from these settlements already number in the billions of dollars. Legislative responses are also underway. Some states have adopted-and others are considering-legislation requiring life insurers to search the DM to identify and pay (or eascheat) unclaimed death benefits. Cur- rently, legislative responses vary among the states, underscoring the long- standing tension between uniformity and state-centric regulation of insurance in the United States. Some states have imposed DMF search requirements on a prospective basis. Others have attempted to apply such requirements on a retroactive basis, affecting both new and existing policies. Emerging legislation on unclaimed life insurance has significant implica- tions for consumers, insurance markets, and even state finances. This Article focuses on the crucial question of retroactive versus prospective applicability of legislation on unclaimed life insurance benefits. In consid- ering the financial implications and legal dimensions of this question, this * James M. Carson is the Daniel P. Amos Distinguished Professor of Insurance at the Terry College of Business, University of Georgia. Robert E. Hoyt holds the Dudley L. Moore, Jr. Chair of Insurance and serves as Department Head for Insurance, Legal Stud- ies, and Real Estate at the Terry College of Business, University of Georgia. Tim Samples is Assistant Professor of Legal Studies at the Terry College of Business, University of Geor- gia. The National Alliance of Life Companies (NALC) encouraged an independent review of the issues surrounding unclaimed property by academics with knowledge of the insurance industry. An earlier draft of this Article was cited and distributed at a meeting of the National Association of Insurance Commissioners (NAIC) working group on unclaimed life insurance benefits in 2015 and received research support from Kemper Corporation.