CHICAGO – Insurance companies will be required to locate beneficiaries of unclaimed life insurance policies in Illinois and pay them money they're owed under legislation that Gov. Bruce Rauner signed into law on Friday.
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The Republican approved the politically popular measure over the objections of business and industry groups, which said it opened them up to "overreaching audits" and would make what they feel is Illinois' already bad-for-business legal climate even worse.
Democratic Treasurer Michael Frerichs has been pushing the measure in hearings across the state that featured people who didn't know they'd been named as beneficiaries testifying that insurance companies never alerted them after the policy holder died.
Frerichs said his office has identified more than $550 million in unpaid benefits owed to Illinois residents since 2011 and that $7.4 billion has been identified nationally.
The legislation, which the General Assembly unanimously approved in May, requires insurers to use federal death records to identify deceased policyholders whose life insurance proceeds remain unpaid. The companies must conduct the initial check after the law takes effect Jan. 1, then twice each year going forward.
"I've never met a man or woman who purchased life insurance with the expectation that the death benefits would stay with the insurance company rather than their family," Frerichs said. "Life insurance policies are purchased to help families push through difficult times. Today, grieving families no longer will be victimized by unscrupulous life insurance companies."
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Rauner also said Friday that the state insurance department is launching a website to help residents find out if they are a beneficiary of an insurance policy or annuity left by someone who died.
Business groups, including the U.S. Chamber of Commerce, argued against a provision that allows a private audit firm to search insurance company files and earn a contingency fee for finding money owed to beneficiaries. The chamber said the "profit-motivated" audits "have become a national concern for American businesses.
About a dozen states already have similar laws.
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