CHARLESTON, W.Va. — After fighting both court and legislative battles over life insurance companies who balked at turning over unclaimed funds, State Treasurer John Perdue’s office saw such firms surrender $3.7 million in fiscal year 2016 to the Unclaimed Property Division.
That number is precisely half of the $7.4 million comprising all types of insurance-related reports in fiscal 2016, which ended June 30. A report to the state unclaimed property program is an acknowledgment that a company is not the rightful holder of such assets and is surrendering those assets to the state Treasury. Treasurer Perdue’s office then attempts to find the rightful owners.
The life insurance reports also indicate companies had determined beneficiaries were due proceeds and could not be located, triggering the handover to unclaimed property.
The Treasurer filed suit in 2012, contending that life insurance companies are bound to either pay out life insurance benefits upon death or turn the assets over to the state if beneficiaries cannot be found.
By June 2013, the insurance policy amounts remitted, or turned over, stood at $1.3 million. For 2014, the figure had climbed to $1.9 million and by fiscal 2015, $3.2 million. The $3.7 million remittance in 2016 followed a Treasurer’s Office State Supreme Court of Appeals victory on the issue in June 2015 and a legislative triumph this past session.
In the latter scenario, lawmakers determined life insurance companies should be required to use Social Security’s Death Master File to ascertain if certain policy holders were still alive. Such companies had previously maintained they were not required to perform that function and only forced to do so if claims were filed.
“How does a family member file a claim when he does not know the relative even had a policy?” Perdue asked at the time. “That’s the definition of unclaimed property – a financial asset an owner or heir has become separated from but still maintains rightful ownership of. Now we will do our best to find the rightful owners of these proceeds.”
A similar increase in reporting occurred for matured life or endowment insurance policies. An endowment policy is a life insurance contract designed to pay a lump sum after a specific term (when it has “matured”) or on the death of the insured. Remittances to the Treasury of those policies rose to $1.2 million in fiscal 2016, up from $645,000 in fiscal 2013.
As for all remittances — unclaimed assets turned over by holders of unclaimed property — fiscal 2016 checked in at $29.6 million, an all-time high. The aforementioned insurance reports represented the greatest property type increase.
In the area of unclaimed property returned to rightful owners, Treasurer Perdue’s office processed claims of $13.8 million for 2016, nearly setting a fiscal year record. The record number of claims paid out was slightly more than $14 million in 2011.