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State adds search rule to cover life insurance Combing of death data aims to speed payouts

State insurance regulators have formally instituted new rules requiring all life insurers that operate in New York to regularly search a government list of recent deaths to find out if any policyholders have died, then locate beneficiaries so claims can be paid out.

The new regulation requires insurers to put procedures in place to identify unclaimed death benefits, find beneficiaries and make prompt payments.

In particular, insurers must now check their list of policies at least every three months against the U.S. Social Security Administration's Death Master File or another list approved by the state.

They must also search for multiple policies on the same person at all insurers owned by a single holding company and must cross-check policies with consumer requests received through the state's free new online service, Lost Policy Finder.

And when first selling a policy, they must seek more detailed beneficiary information, such as Social Security number and address, to make it easier to find and pay them later.

"Insurance companies will now be matching their life insurance policy lists with the death index database on a regular basis," Superintendent of Financial Services Benjamin M. Lawsky said in a news release. "Conducting computer matches isn't much of a burden, and the benefits to consumers are significant."

The new rules follow an investigation begun last year into life insurer claims practices. It found that many insurers regularly checked the list of recent deaths to stop making payments on annuities but didn't use the list to check if they needed to start payments on life insurance policies.

As a result, policies went unpaid when family members didn't know a policy existed or lacked enough information to make a claim, and tens of thousands of families didn't receive benefits to which they were entitled.

Under state law, unclaimed life insurance policy funds that are payable to consumers are turned over to the State Comptroller's Office after three years, although consumers can still claim the money later.

The state probe, which ordered the insurers to check the death list against policies on which no claims had been made, resulted in 32,715 payments totaling $262.2 million to consumers nationwide, including 7,525 payments totaling $95.9 million to New Yorkers.

"People sacrifice to buy life insurance to help their loved ones after their death, so it's reasonable to make sure their families actually receive the benefits when they are eligible," Gov. Andrew M. Cuomo said in the release.