By: Hancock  S.B. No. 561          (In the Senate - Filed January 20, 2017; February 8, 2017,   read first time and referred to Committee on Business & Commerce;   April 6, 2017, reported adversely, with favorable Committee   Substitute by the following vote:  Yeas 9, Nays 0; April 6, 2017,   sent to printer.)Click here to see the committee vote     COMMITTEE SUBSTITUTE FOR S.B. No. 561 By:  Hancock     A BILL TO BE ENTITLED   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.     * * * * *