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  S.B. No. 561
 
 
 
 
AN ACT
  relating to the identification and handling of unclaimed life
  insurance and annuity contract proceeds.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Chapter 1109, Insurance Code, is amended by
  adding Subchapter A-1 to read as follows:
  SUBCHAPTER A-1.  DEATH MASTER FILE SEARCH; IDENTIFICATION OF
  UNCLAIMED PROCEEDS
         Sec. 1109.010.  DEFINITIONS. In this subchapter:
               (1)  "Annuity contract" means an annuity contract
  issued in this state.  The term does not include an annuity used to
  fund an employment-based retirement plan or program for which the
  insurer:
                     (A)  does not perform the recordkeeping services;
  or
                     (B)  is not committed by the terms of the annuity
  contract to pay death benefits to the beneficiaries of specific
  plan participants.
               (2)  "Death Master File" means:
                     (A)  the United States Social Security
  Administration's Death Master File; or
                     (B)  any other database or service that is at
  least as comprehensive as the United States Social Security
  Administration's Death Master File for determining whether a person
  is dead.
               (3)  "Death Master File match" means a match of the
  social security number or the name and date of birth of an insured
  or retained asset account holder resulting from a search of the
  Death Master File.
               (4)  "Life insurance policy" means a policy or
  certificate of life insurance issued in this state that provides a
  death benefit. The term does not include:
                     (A)  a policy or certificate of life insurance
  that provides a death benefit under an employee benefit plan that
  is:
                           (i)  subject to the Employee Retirement
  Income Security Act of 1974 (29 U.S.C. Section 1001 et seq.); or
                           (ii)  under any federal employee benefit
  program;
                     (B)  a policy or certificate of life insurance
  that is used to fund a pre-need funeral contract or prearrangement;
                     (C)  a policy or certificate of credit life or
  accidental death insurance; or
                     (D)  a policy issued to a group master
  policyholder for which the insurer does not provide recordkeeping
  services.
               (5)  "Recordkeeping services" means services provided
  by an insurer, under an agreement with a group policy or contract
  holder, to obtain, maintain, and administer in the insurer's or the
  insurer's agents' systems the following information about each
  individual insured under the group policy or contract or a line of
  coverage under that policy or contract:
                     (A)  the social security number or name and date
  of birth of the insured;
                     (B)  beneficiary designation information;
                     (C)  coverage eligibility;
                     (D)  benefit amount; and
                     (E)  premium payment status.
               (6)  "Retained asset account" means a mechanism by
  which the proceeds payable under a life insurance policy or annuity
  contract are settled by the insurer or an entity acting on behalf of
  the insurer by depositing the proceeds into an account with check or
  draft writing privileges, where those proceeds are retained by the
  insurer or the insurer's agent, under a supplementary contract not
  involving annuity contract benefits other than death benefits.
         Sec. 1109.011.  IDENTIFICATION OF DEATH MASTER FILE MATCHES.
  (a)  An insurer shall compare its in-force life insurance policies,
  annuity contracts, and retained asset accounts against a Death
  Master File at least semiannually to identify potential Death
  Master File matches. The insurer shall perform the first
  comparison of a policy, contract, or account against a full Death
  Master File and thereafter against Death Master File update files
  to identify potential Death Master File matches.
         (b)  An insurer shall first conduct the comparison required
  by Subsection (a) electronically to the extent the insurer's
  records are available in electronic format, and then use the most
  easily accessible insurer records for any records that are not
  available electronically.
         (c)  Each subsequent comparison made under this section
  shall include all in-force life insurance policies, annuity
  contracts, and retained asset accounts and any policies, contracts,
  or accounts that have lapsed since the previous comparison.
         (d)  An insurer shall implement procedures for conducting
  comparisons under this section to account for:
               (1)  common nicknames, initials used in lieu of a first
  or middle name, use of a middle name, compound first and middle
  names, and interchanged first and middle names;
               (2)  compound last names, maiden or married names, and
  hyphens, blank spaces, or apostrophes in last names;
               (3)  transposition of the month and date portions of
  the date of birth; and
               (4)  an incomplete social security number.
         Sec. 1109.012.  DUTIES REGARDING DEATH MASTER FILE MATCH.
  (a)  For each Death Master File match, the insurer shall, not later
  than the 90th day after the date the insurer identifies the match:
               (1)  complete a documented good faith effort to confirm
  the death of the insured or retained asset account holder against
  other available records and information;
               (2)  review the insurer's records to determine whether
  the deceased individual had purchased or was otherwise covered by
  any of the insurer's other products; and
               (3)  determine whether proceeds may be due in
  accordance with the applicable policy or contract or terms
  governing the applicable account.
         (b)  For group life insurance or a group annuity contract, an
  insurer is required to confirm the possible death of an insured or
  retained asset account holder under this section only if the
  insurer provides recordkeeping services for the group policy or
  group annuity contract.
         (c)  If the insurer determines under Subsection (a)(3) that
  proceeds may be due and a beneficiary or other authorized
  representative has not communicated with the insurer on or before
  the 90th day after the date the insurer identifies a Death Master
  File match, the insurer shall:
               (1)  complete a documented good faith effort to locate
  and contact each beneficiary or other authorized representative on
  the relevant policy, contract, or account; and
               (2)  provide to the beneficiary or authorized
  representative the appropriate claim forms, instructions, or
  information to make a claim, including information about any need
  to provide an official death certificate or show proof of death
  under the applicable policy or contract or terms governing the
  applicable account.
         (d)  If an insurer is unable to confirm the death of an
  insured or retained asset account holder after the insurer
  identifies a Death Master File match, the insurer may consider the
  relevant policy, contract, or account to remain in force according
  to its terms.
         (e)  To the extent permitted by law, the insurer may disclose
  minimum necessary personal information about the insured, retained
  asset account holder, or beneficiary to a person the insurer
  reasonably believes may be able to assist the insurer in locating a
  person entitled to payment of the claim proceeds.
         (f)  An insurer or the insurer's service provider may not
  charge an insured, retained asset account holder, beneficiary, or
  authorized representative any fees or costs associated with
  conducting a Death Master File comparison under this subchapter or
  verifying a Death Master File match under this subchapter.
         Sec. 1109.013.  PRESUMPTION OF UNCLAIMED PROCEEDS; REPORT
  AND DELIVERY OF PROCEEDS. (a)  The proceeds of a life insurance
  policy, annuity contract, or retained asset account, and any
  accrued contractual interest, are first payable to each designated
  beneficiary or owner as provided by the applicable policy or
  contract or terms governing the applicable account.
         (b)  If a Death Master File match is confirmed, the proceeds
  of the relevant policy, contract, or account are considered
  unclaimed proceeds for purposes of this chapter on the third
  anniversary of the date on which, according to the insurer's
  records, the insurer completed a good faith effort as required by
  Section 1109.012(c) that failed to locate a beneficiary or
  authorized representative if the proceeds remain unpaid and no
  beneficiary or authorized representative has submitted a claim for
  the proceeds to the insurer before that date.
         (c)  An insurer shall report unclaimed proceeds as required
  by Section 1109.051.
         (d)  An insurer shall deliver unclaimed proceeds to the
  comptroller as required by Section 1109.052.
         (e)  For purposes of this section, unclaimed proceeds do not
  include any statutory interest under Section 1103.104.
         Sec. 1109.014.  RULEMAKING AUTHORITY. The commissioner may
  adopt rules to implement this subchapter.
         Sec. 1109.015.  AUTHORITY TO ISSUE CERTAIN ORDERS. The
  commissioner may issue an order:
               (1)  limiting the Death Master File comparisons
  required by this subchapter to only those files the insurer
  maintains in searchable electronic format or approving a plan and
  timeline for an insurer to convert the insurer's files to
  searchable electronic format;
               (2)  exempting an insurer from the Death Master File
  comparisons required by this subchapter or permitting an insurer to
  perform the comparisons less frequently than required by this
  subchapter on a showing of hardship to the insurer; or
               (3)  permitting an insurer to phase in compliance with
  this subchapter according to a plan and timeline approved by the
  commissioner.
         Sec. 1109.016.  AUTHORITY TO REQUEST DEATH CERTIFICATE.
  Nothing in this subchapter limits an insurer's right to request a
  death certificate as part of a claim validation process.
         SECTION 2.  Subchapter A-1, Chapter 1109, Insurance Code, as
  added by this Act, applies only to an insurance policy or annuity
  contract delivered, issued for delivery, or renewed on or after
  January 1, 2018, or a retained asset account established in
  connection with the insurance policy or annuity contract. An
  insurance policy or annuity contract delivered, issued for
  delivery, or renewed before that date, or a retained asset account
  established in connection with the insurance policy or annuity
  contract, is governed by the law as it existed immediately before
  the effective date of this Act, and that law is continued in effect
  for that purpose.
         SECTION 3.  This Act takes effect September 1, 2017.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 561 passed the Senate on April
  19, 2017, by the following vote:  Yeas 30, Nays 1.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 561 passed the House on May 6,
  2017, by the following vote:  Yeas 142, Nays 2, one present not
  voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor