FRANKFORT, Ky. – Legislation to hold life insurance companies accountable to the families of deceased loved ones who bought their products was passed unanimously by the Kentucky House of Representatives on Friday. This bill is a legislative response to uncertainty in the Unclaimed Life Insurance Benefits Act of 2012 and a resulting lawsuit against the Commonwealth about when the bill applied.
“This bill is fundamentally about keeping promises. Just like the original legislation, we had an opportunity to absolutely do the right thing by our constituents; those 43,000 Kentuckians who sent each of us up here to work for them,” Rep. Harris said.
House Bill 408 was crafted in response to Gov. Matt Bevin’s decision stop defending the 2012 consumer protection legislation just days before the case was to be heard by the Supreme Court of Kentucky.
The 2012 law, also passed unanimously, was based on a model law supported by the National Conference of Insurance Legislators and previously adopted by 15 states. It simply requires insurance companies to check the Social Security Death Index, which they already do routinely, and make a good faith effort to let beneficiaries know if there was a life insurance policy in their loved one’s name.
“By passing this bill we’re just asking these companies to do something they already do, look at the master death list and compare that to their records. If they find a match, they must make a reasonable effort to notify survivors, Rep. Harris said.”
Following the passage of this law, life insurance companies sued the Commonwealth, including one from Missouri that sold several thousand policies door-to-door in Kentucky. They questioned this new consumer protection law applied to all life insurance policies, which was the clear intent of the General Assembly.
“If you look at the record and look at the language of the law, it is crystal clear the intent was that this law should apply equally to all life insurance policies. This lawsuit centers around a technicality and, to be honest, one must wonder if they are focused on that hoping they won’t have to pay what they agreed to pay these beneficiaries,” Rep. Harris said.
The law was upheld by the circuit court, but was overturned recently by the state Court of Appeals citing uncertainty about whether the law applied retroactively to policies sold prior to the effective date of the legislation.
In turn, the Bevin administration announced this week that they would stop defending the case, potentially leaving over 11,000 Kentucky policyholders, many of them from low-income families, without these new protections.
Shortly after Gov. Bevin quit defending the 2012 law, Kentucky Attorney General Andy Beshear asked the Supreme Court of Kentucky if he could pick up the case and defend these commonsense consumer protections. The Court will rule soon on whether Beshear can intervene in the case, but the attorney general has been optimistic that the Court will allow him to pick up the ball the administration dropped.
“I applaud Attorney General Andy Beshear and his team for seeing that this law is important to Kentuckians and deserves a full defense by our Constitutional officers, Rep. Harris said. “Most life insurance companies agree with us that this legislation is not a burden and have the integrity to hold up their end of these agreements. That’s really all we’re asking; that a promise made is a promise kept.”
Rep. Harris represents the state’s 93rd House District including Martin County and part of Pike County.