Bill Seeks To Clarify Kentucky’s Unclaimed Life Insurance Law

Feb. 14--Several House members filed a bill Friday to clarify that a contested consumer-protection law was meant to cover all life insurance policies, not just those sold after the law was approved in 2012.

House Bill 408 would add language to the Unclaimed Life Insurance Benefits Act to clearly state that it applies to all policies in Kentucky issued before and after the law took effect. The law requires insurers to make "good faith efforts," using public death records, to determine whether policyholders have died so their benefits can be paid to the listed beneficiaries.

Several insurance companies owned by Kemper Corp. of St. Louis sued the Kentucky Department of Insurance in 2012 to block the law from being applied retroactively to thousands of policies they sold going door-to-door in low-income neighborhoods.

The state prevailed in Franklin Circuit Court, but the companies won at the Kentucky Court of Appeals.

Under then-Gov. Steve Beshear, the state took the case to the Kentucky Supreme Court. But new Gov. Matt Bevin last week ordered state lawyers to drop the case days before the high court was set to hear oral arguments, saying he agreed with the insurers.

A few days later, state Attorney General Andy Beshear, son of the former governor, said his office would try to intervene in the case and defend the law.

Rep. Chris Harris, the primary sponsor of HB 408, said the legislature clearly intended to protect all life insurance beneficiaries when it passed the law, not just new ones. The policies in question typically are sold to poorer Kentuckians who need the benefits to which they are entitled, Harris said.

"Often, small life-insurance policies are sold to the elderly in lower socio-economic classes in the mountains or inner cities to help their children cover the costs of the insured's funeral when they pass away," said Harris, D-Forest Hills. "The beneficiary may not even know a policy exists."

"Allowing insurance companies to just bury their heads in the sand and ignore publicly available information on the Social Security Administration's Master Death File isn't right or fair," Harris said. "If they owe it, they should pay it immediately. We are not asking insurance companies to do any more than pay what they owe when they owe it."

John Cheves: 859-231-3266, @BGPolitics

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