Insurance companies are now facing a new battle in the challenge for data management as state regulators are now requiring that they verify their life insurance policies against the data from the Social Security Death Master File.
This is only the most recent of several changes that have been made by state regulators that are designed to help to identify life insurance policy beneficiaries by working with the Social Security Death Master File and checking it against the records for the insurance policies. While the actual regulations for this effort have yet to be written, insurers are preparing for the new mandate for cross checking the data in their policies.
Typically, insurance companies have been paying out life insurance policy death benefits when they receive a claim from beneficiaries. However, it has been argued by the states that if the insurance companies are required to perform a regular review of the Social Security Death Master File, then they will be able to screen for policyholders who have passed away and who are therefore must no longer pay premiums.
They will also be able to use this check to be able to identify the beneficiaries of the policy more proactively. This will hopefully mean that more beneficiaries will receive their payments, but otherwise, funds that do not have a beneficiary will automatically revert to the state.
A task force was created by state regulators in April 2011, to work to more effectively manage unclaimed death benefits. These regulators have called hearings and have performed audits to the major life insurance companies in states such as California and Florida.