N.Y. Ups Data Requirements for Death Claims

The New York State Insurance Department is ordering all life insurers licensed to do business in the state to adhere to new rules when paying death benefits.

The Department issued a 308 letter, a request for information to which insurers are legally required to respond under Section 308 of the New York Insurance Law. The letter requires insurers to immediately begin using reliable available data to identify when policyholders have died and death benefits are due but unpaid.

“Some life insurers use the U. S. Social Security Administration’s Death Master File, an up-to-date list of recent deaths, to promptly stop annuity payments once a contract holder dies,” the Department said in a press release. “However, many insurers do not use the same Social Security death data to determine if any death benefit payments are due under life insurance policies, annuity contracts, or retained asset accounts.”

The letter spells out the procedures insurers are expected to implement to locate the appropriate beneficiaries, and make prompt payments as necessary.

“The Department is in the process of amending the unfair claims practices regulation to require life insurers to perform regular SSA Master File cross-checks and to require life insurers to request more detailed beneficiary information (e.g., social security number, address) to facilitate locating and making payments to beneficiaries in the future,” the letter states. “To address the Department’s concerns, life insurers should cross-check all life insurance policies, annuity contracts and retained asset accounts on their administration data files, including group policies for which a life insurer maintains detail insured records, with the latest updated version of the SSA Master File, or another database or service that is at least as comprehensive as the SSA Master File, to identify any death benefit payments that may be due under life insurance policies, annuity contracts, or retained asset accounts as a result of the death of an insured or contract or account holder.”