Life insurance companies doing business in New York must use an official government death list to identify policyholders who have died and make payments to their beneficiaries, state insurance regulators said this month.
Insurers must also report how many death benefits they have not paid because they did not use the government death list to promptly identify policyholders who had died.
The new requirement begins in September and will be in effect for six months. Meanwhile, the department will write a regulation to make the requirement to use the death list permanent.
Some life insurers use the U.S. Social Security Administration's Death Master File, an up-to-date-list of recent deaths, to stop annuity payments once a contract holder has died, but many do not use the same list to determine if any death benefit payments are due for life insurance policies, annuity contracts or retained asset accounts, according to the New York State Insurance Department.
Regulators are concerned about instances in which a death occurs and no claim is filed. In that case a life insurance company may continue to deduct premiums until the account is drained, or the policy may sit dormant with the money available for the insurer to invest while the beneficiary gets nothing.