Unclaimed Property Held By Life Insurers: California Fires A Shot Across the Bow
One of types of unclaimed property with the most history is life insurance and its proceeds. In fact, one of the U.S. Supreme Court decisions dealing with the constitutionality of unclaimed property laws — Connecticut Mutual Life Ins. Co. v. Moore — upheld the constitutionality of the New York Abandoned Property Law as applied to non-New York life insurance companies who held policies for New York residents. While life insurance proceeds and unclaimed property have a long history with one another, that doesn’t mean that there are no longer disputes concerning this type of property.
According to a recent article by Darla Mercado in Investment News, John Hancock Financial Services just agreed to a $20 million settlement with the State of California concerning unclaimed life insurance proceeds. Nor is California’s interest limited to John Hancock, the article quotes John Chiang, California’s State Controller, as promising further actions — including litigation if necessary — to make sure that life insurance companies report and deliver unclaimed property owed to the states. For life insurers that do not have comprehensive and robust unclaimed property compliance programs, this should be a wake up call.