A state House panel has approved a bill that would require life insurance companies to make a “good faith effort” to determine whether policyholders have died and notify beneficiaries.
The law is already on the books in Kentucky, but this proposal would make the policy retroactive.
Rep. Chris Harris, a Democrat from Forest Hills, said the bill would not require insurance companies to pay “one red cent” more than their contracts require.
“However, it does require them to make a concerted effort to pay what they actually owe to our constituents,” Harris said.
Life insurance companies owned by Kemper Corp. of St. Louis sued the state Department of Insurance for retroactively applying the law to policyholders. A state appeals court ruled in favor of the insurance companies, but former Gov. Steve Beshear’s administration appealed the decision.
Earlier this month, however, Gov. Matt Bevin’s commissioner of insurance dropped the case days before it was to be argued in the Kentucky Supreme Court.
Rep. Sannie Overly, a Democrat from Paris and chair of the Kentucky Democratic Party, said the 2012 law was intended to be retroactive.
“It is truly, truly disturbing to me as a member of this body that this governor and his insurance commissioner, who is a former life insurance executive, would withdraw their defense for the consumers of Kentucky,” Overly said.
Democratic Attorney General Andy Beshear has requested to intervene in the suit and defend the law.
Rep. Brad Montell, a Republican from Shelbyville, expressed skepticism of the bill, saying that constantly searching through death records to see if policyholders were still alive would be onerous for insurers.
“How much are they expected to put into this … to find those beneficiaries that probably don’t live in the same place, probably don’t have the same address, who knows if they got their Social Security number,” Montell said.
The bill now heads to the full House for consideration. When asked how the legislation would fare in the Republican-led Senate, and whether Bevin would sign it, Harris said “that’s yet to be seen.”