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CA Courts Rule in Favor of Life Insurer


Earlier this summer, the California Superior Court in San Francisco (Case Number: CGC15548384) ruled that two California unclaimed property regulations were invalid. The court opined that the state controller improperly adopted and imposed the purported “regulations” on holders of unclaimed property. In 2013, the State Controller issued “guidance” in its Holder Handbook requiring life insurance companies to: 1) compare its insureds’ life insurance policies or other records against the Social Security Administration’s Death Master File, and 2) proclaiming that a life insurance policy is reportable as unclaimed property under the California Unclaimed Property Law no later than three years after the insured had died, even if less than three years had elapsed since the insurer’s records disclosed that the insured had died.

Thrivent Financial sued the state claiming that these “regulations” were improperly adopted – and the court in this case agreed, thereby negating the effect of this so-called “guidance” issued by the Controller’s office in 2013. The net effect of this decision is that for the time being, these two requirements are no longer imposed on life insurers in California. Chances are that California law may be changed to adopt similar provisions, or the Controller may choose to adopt these positions as Regulations after following the proper administrative steps for doing so.

Stay tuned to the JMS blog for developments in this area – and contact us for clarity on unclaimed property compliance obligations in California and other states.

Tagged: california unclaimed property, california escheat, life insurance unclaimed property, death master file