Lawsuit challenging Florida’s new life insurance law filed

Last month, we discussed how Florida now has a new law on the books that will fundamentally change the way life insurance companies conduct business in the state.

To recap, the bill requires all life insurance companies that were not a part of a previous settlement to search the Social Security Death Master File for the names of active policyholders starting all the way back in 1992 and, in the event of a match, locate the beneficiaries. If no beneficiaries are discovered within five years, the policy proceeds would then be turned over to the Florida Bureau of Unclaimed Property.

Both the settlements and the legislation were borne out of the discovery that while life insurance companies were not conducting searches of death records for the names of active policyholders, they were actively searching them for the names of annuity recipients as these benefits stop upon death.

In recent developments, four Missouri-based life insurance companies affiliated with the Kemper Corporation — Reliable Life Insurance Company, Mutual Savings Life Insurance Company, Reserve National Insurance Company and United Insurance Company of America — have filed a lawsuit against the Florida Department of Financial Services requesting that the new law be blocked.

Specifically, the lawsuit alleges that the law is unconstitutional given its retroactive application to roughly 150,000 policies, which otherwise state that payment of claims is incumbent on the policyholder or beneficiary providing proof of death.

“Under the plain terms of the insurance contracts, it is not the death of the insured, but instead, plaintiffs receipt of due proof of death, that triggers their obligation to investigate and pay a claim,” reads the lawsuit.

For their part, state officials have vowed to defend the law, calling it a “common sense, consumer-friendly policy,” while also accusing the insurance industry as a whole of resisting “pro-consumer changes.”

It will be interesting to follow the progress of this lawsuit. Stay tuned for updates.

Consider speaking with an experienced legal professional if you have any questions or concerns relating to any insurance law matter.