Florida officials estimate life insurance companies owe the state’s citizens more than $150 million. But lawmakers in the House approved a bill Monday they say will help to right that.
Rep. Blaise Ingoglia (R-Spring Hill) says the problem is simple.
“If I have an insurance policy and I name my spouse as the beneficiary and I pass away and my spouse has no idea that there’s actually a policy that can help with the funeral arguments, in the absence of this legislation, my spouse would never know. And unfortunately that’s happening to hundreds if not thousands of people in the state of Florida,” Ingoglia says.
Chief Financial Officer, Jeff Atwater says his office has been working with insurance companies to get unclaimed policies turned over to beneficiaries. So far lawmakers say about two dozen companies have returned about $458-million. But Rep. Evan Jenne (D-Hollywood) says not all companies are willing to, in his words, “do the right thing.”
“And in this case I would describe the right thing as an insurance company paying the beneficiary what they’re owed when a loved one dies. But unfortunately that’s not what’s happening all the time. Some, not all, have decided to take the low road,” Jenne says.
Jenne says insurance companies are incentivized not to contact family members after a loved one dies. He says by keeping that money the companies can continue collecting interest on it.
“Right now the CFO estimates there are $150 million in payments that should be paid out to beneficiaries, but are not being paid out. A quick check shows that over 20 years at a simple 3.25 percent interest rate will mean $97-million in unearned cash for these companies. $97-million that isn’t theirs to earn. $97-million earned by willfully not parting with money that belongs to someone else and literally thwarting the will of the dead,” Jenne says.
Jenne says he wants to change that. He is one of many co-sponsors on a bill with primary sponsor, Boca Bill Hager (R-Boca Raton). Hager says his measure would require insurance companies to seek out beneficiaries after a policy holder dies. If the beneficiary can’t be found, the company would be required to turn the policy over to the state’s unclaimed property office. The measure would also be retroactive—asking companies to look back in their files and find the beneficiaries of policies from people who died as many as 25 years ago. That retroactive aspect has some like Rep. Doug Broxon (R-Gulf Breeze) concerned.
“We have instructed the companies now that they have to go back 25 years and find those folks that should have been paid, but haven’t been paid. They haven’t done anything wrong, the life insurance companies. We’ve not done anything to tell them that they’ve done anything wrong. They’ve followed public policy,” Broxon says. “And now they have to go back because we’re telling them to go back. What’s happened? What’s the new dynamic? Why didn’t we know this 50 years ago?”
Broxon says companies aren’t paying because they don’t know about the deaths and no claims have been filed. He says what’s changed is that now technology is available to better track those policies. Some have raised concerns the companies could file a lawsuit due to the measure’s retroactivity. But lawmakers like Rep. John Wood (R-Winter Haven) say they’re not concerned.
“At the end of the day if a company decides that it wants to litigate over retroactivity and deny the citizens of Florida their contractual rights, they have that opportunity. And they have the opportunity to put that in the public domain with their litigation and I’m sure that the citizens of Florida will be paying close attention,” Wood says.
The measure passed the House unanimously. Now it heads back to the Senate for final approval.