DIXON – Illinois Treasurer Michael Frerichs was in town Tuesday to continue a fight for what he thought was nothing more than common-sense policy.
The Life Insurance Reform Act, House Bill 302, is sitting on Gov. Bruce Rauner's desk, and Frerichs wants him to sign it. The bill would require life insurance companies to search death records to make sure they aren't holding money that should go to a beneficiary after a policyholder dies.
Some people, for various reasons, don't know they are beneficiaries of a life insurance policy, and Frerichs says some companies don't consider it their responsibility to alert them.
In fact, the treasurer says some insurers have even admitted to holding on to the money as long as possible to increase profit margins.
“I’ve never met a mom or dad who purchased life insurance with the hopes of helping an insurance executive make a profit or earn a bonus,” Frerichs said.
A similar bill was signed into law last year, but House Bill 302 would force insurers to research deaths dating back to 2000, rather than when the previous bill took effect in January 2017.
In Illinois, returning unclaimed property to its owners is among the treasurer's duties, and life insurance benefits fall within that realm. Since 2011, the treasurer’s office, through audits of more than 20 companies, has identified more than $550 million in death benefits that were not paid to Illinois beneficiaries. Nationally, that number is estimated at $7.4 billion.
"Unclaimed property can't be collected until it goes unclaimed for 5 years, and people usually need that money most right after a family member's death," Frerichs said.
The bill would shift the responsibility for policing from the treasurer's office to the insurance companies. Twice a year, insurers would have to compare their customer records with names on the Social Security Administration's Death Master File list, an anti-fraud database. Frerichs says many insurers already use the list to make sure annuity payments aren't going out the door after a death.
Frerichs, a former state senator, said common sense received a lot of pushback, resulting in political division and a lawsuit against his office.
"I think this is a nonpartisan issue, but some people are trying to make it a partisan fight," Frerichs said. "The insurance lobby is very powerful in Springfield, and they rallied Republicans against the bill."
The bill passed the House by a margin of 65-47, and the Senate by a 36-19 vote, but it took some work as most lawmakers wound up voting along party lines.
Chicago-based Kemper Corp. filed the lawsuit in fall 2015, and it is still in the courts. The lawsuit contends that “life insurers such as [Kemper] have no affirmative obligation to take any steps to determine that an insured has died and/or that benefits are payable."
Kemper also is questioning the legality of the treasurer's office's involvement in the process, but Frerichs has no qualms about his role.
"The treasurer is not involved in insurance, but the office is in charge of uncollected property, and we think it's a lot easier to find beneficiaries near the time of the policyholder's death," Frerichs said.
Pro-business organizations such as the Illinois Chamber of Commerce also fought the bill. Now that it has made its way to the governor's desk, the treasurer fears the partisanship will continue there.
Even though Rauner signed the first bill, Frerichs wants consumers who support the bill to contact the governor's office to tell him he should sign the current bill, too.
CONTACT THE GOVERNOR
To voice your opinion on House Bill 302, contact Gov. Bruce Rauner's Springfield office at 217-782-0244 or the Chicago office at 312-814-2121. Emails also can be sent via the link illinois.gov/gov/contactus/Pages/VoiceAnOpinion.aspx