Insurance-related claims offer partial explanation
State Treasurer John Perdue’s unclaimed property division has returned a little more than $3 million during the first three months of fiscal 2016, partly attributable to some insurance companies’ surrender of life insurance policies.
The Treasurer’s Office had returned $3.1 million – an average of about $1 million a month – from July 1 to Sept. 30. It returned $9 million in all of fiscal 2015. Perdue’s office, in the midst right now of a statewide newspaper insert project listing rightful owners’ names, is on pace to return $12 million in fiscal 2016.
“I’m very proud of the folks in unclaimed property who have gotten this fiscal year off to such a blazing start,” Treasurer Perdue said. “Whether you are an heir to a life insurance policy – a constituency which we have fought for -- or simply forgot the last paycheck from a job, it’s all money that belongs to the rightful owner, not state government or a corporation. This office wants you to have it.”
Some of the early returns may hinge on a Treasurer’s Office action involving insurance companies.
This summer, the state Supreme Court unanimously remanded and reversed a Putnam County Circuit Court ruling which had said that insurance companies were only required to pay out policies to the deceased’s heirs when a claim was filed against the policy. That case has yet to be set for rehearing.
Treasurer Perdue had argued that a request for payment can’t be filed for such a policy if the rightful owners’ heirs don’t know about its existence. If the heirs knew about it, the Treasurer’s Office reasoned, the assets would not be misplaced and classified as unclaimed to begin with. Holders of unclaimed property -- such as banks and utility companies – are required to report such assets, which they hold but do not own, without the rightful owners’ heirs asking for it. Insurance companies should be bound by the same principles, the Treasurer argued.
The Supreme Court ruled unanimously that the case be heard again by the Putnam County Circuit Court, with specific instructions guiding the future decision. The Court ruled that death of the insured triggers the duty to pay out insurance proceeds. Insurance companies must make efforts to determine whether their insureds have died, and if they are unable to locate beneficiaries, must report those proceeds to the State and unclaimed property.
Some insurance companies are now researching their policies to determine whether insureds have died, and are reporting those policies as unclaimed property. Changes in insurance reporting date back to about the time of filing of the lawsuit.
Unclaimed Property Deputy Treasurer Carolyn Atkinson said it appears more than $500,000 of the $3.1 million total was paid out to life insurance policy holders’ heirs.