Kentucky House Passes Life Insurance 'Fix' Bill
A bill that would require life insurance companies to regularly check death records to find out if beneficiaries have died passed the state House on Friday.
A similar bill passed in 2012, but the new version would apply retroactively. It's an issue that was at the center of a lawsuit between life insurance companies and the state Department of Insurance.
Rep. Chris Harris, a Democrat from Forest Park, says that the bill would help poor Kentuckians.
“Most of the policies that go unclaimed are small policies, burial policies that are sold in lower socioeconomic neighborhoods in areas of our state,” Harris said.
“Many of the times beneficiaries don’t even know that a policy exists.”
Life insurance companies affiliated with Kemper Insurance in St. Louis sued the state, saying that they should only have to search death records for beneficiaries who buy policies in the future.
The Kentucky Court of Appeals ruled against the state, saying that the law didn’t apply retroactively and former Gov. Steve Beshear’s administration appealed the case to the state Supreme Court.
But Gov. Matt Bevin’s administration dropped Kentucky’s defense of the lawsuit earlier this month.
Rep. Cluster Howard, a Democrat from Jackson, said passing the bill is the right thing to do.
“It’s just disheartening to me that the department of insurance and these insurance companies would seek to abuse poor people,” Howard said.
Insurers would be required to make a “good faith effort” — as defined by the Department of Insurance — to search death records for deceased policy holders and, in turn, notify beneficiaries under the bill.
The measure passed the House 84-0 and now heads to the state Senate.