UCP Legislation Presented By: John R. Camillo

2 Unclaimed Property Basics  Life insurance or annuity proceeds that are unclaimed after dormancy trigger and dormancy period are escheated to the state  “Dormancy Period” is the time that property remains dormant before escheated  “Dormancy trigger” is when property becomes inactive; defined by statute  Dormancy Triggers Utilized for Reporting Over Past 70 + Years  Policy claim – “Due Proof of Death”  Maturity  If no claim, limiting age  If no claim, “knowledge of death” (19 states)

3 UCP And The Life Insurance Industry  State Treasurers and Third-Party Auditors  “Asymmetric” Use of Social Security Death Master File  Perceived by Media and some regulators as an Unfair Claim Practice Act  NAIC Task Force  Organized in late 2010, began work in early 2011  Response to Asymmetric Use of DMF for Annuities  “Top 40”

4 NCOIL Unclaimed Property Model Act  Requires an insurer to perform a comparison of its in-force life insurance policies and retained asset accounts against the SSDMF, or a similar data base, on at least a “quarterly” basis. [amended 7/15/12 to provide for matching on a “semi-annual” basis.]  “Death Master File Match” is defined as a match of the social security number or the name and date of birth of an insured, annuity owner or retained asset account holder.  Must complete a good faith effort to confirm the death of insured and determine whether benefits are due w/n 90 days.  Failure to comply constitutes a violation of states’ unfair trade/business practices.

DMF Legislation StatuteNCOIL Match Criteria Matching Frequency Fuzzy Language Included 90 Days To Confirm Matches Effective Date KY-HB135YesQuarterlyNoYes, using “good faith” effort 01/01/13 MD-S77YesSemi AnnualYes *Yes, using “good faith” effort 10/01/13 AL-HB126YesEvery 3 yearsNoYes, using “commercially reasonable” efforts 01/01/14 NY-SB2756 A1831** YesQuarterlyNoYes, using “good faith” efforts 06/17/13 TNYesQuarterlyYesYes, using “good faith” efforts Did Not Pass *An insurer shall perform a comparison of its insureds’ in-force life insurance policies and retained asset accounts against a death master file… “using criteria reasonably designed to identify potential matches of its insureds.” ** Amended in 2013 to add lapsed and terminated policies to the list of policies which must be included in searches. Also requires an insurer to accept an alternative proof of loss if the beneficiary cannot obtain a death certificate.

DMF Legislation StatuteNCOIL Match Criteria Matching Frequency Fuzzy Language Included 90 Days To Confirm Matches Effective Date Al-192YesOnce every three years NoYes, using “commercially reasonable” efforts 01/1/16 MA-H20YesSemi AnnualNoYes, using “good faith” effort Pending MT-SB34YesSemi AnnualNoYes, using “reasonable” effort 01/01/14 NV-SB226YesSemi AnnualYes*Yes, using “reasonable” efforts 07/01/14 NM-S312YesSemi AnnualNoYes, using “good faith” efforts 07/01/13 ND-HB1171YesSemi AnnualYes*W/I 12 mos., using a “good faith” effort 08/01/13 RI-H5442YesSemi AnnualYes*Yes, using “good faith” effort Did Not Pass VT-H95YesSemi AnnualNoYes, using “good faith” effort 09/01/13 * Insurer shall adopt reasonable procedures to account for common variations on data, such as names, initials, transpositions and incomplete social security nos.

7 Legislative Outcomes  NCOIL Model – Retroactive Only (KY, MD, MT, ND, NY, VT)  Prospective Only (AL)  Prospective Only for Companies That Have Never Used the DMF (NM)  Insurance Commissioner Given Discretion to Grant Exemptions (ND, NV, RI)

8 Trade Association Positions  ACLI  LIC  NALC  American Fraternal Alliance

9 Legal Challenges to NCOIL Statutes  On 11/08/12 Kemper filed Declaratory Judgment Action in KY State Court challenging constitutionality of the retroactive provisions of KY Statute.  On 07/05/13 Kemper filed a similar Declaratory Judgment Action in Circuit Court of Maryland challenging the retroactive provisions of the MD Statute.

10 Litigation Developments  Andrews v. Nationwide- Ohio Court of Appeals  Ferngold v. John Hancock (D. Mass. August 19, 2013)  Total Asset Recovery Services, LLC v. MetLife, Inc. (Fla. Cir. Ct. August 20, 2013)  Chiang v. ANICO and Kemper  West Virginia Litigation against 69 Insurance Companies  Declaratory Judgment Actions brought by Kemper against Illinois, California, Florida, and Pennsylvania Insurance Departments.

11 Up Next-2014 Legislative Session  Legislative Landscape continues to evolve.  More Unclaimed Property Bills are likely to be introduced in  Retroactive Version of NCOIL Model  Prospective Version of NCOIL Model