Attorney General Andy Beshear and two state lawmakers unveiled legislation Thursday to make sure insurance companies notify and compensate the beneficiaries of a policyholder who dies.
At a news conference at Belfry High School attended by several senior citizens, Beshear and Democratic state Reps. Chris Harris of Forrest Hills and Darryl Owens of Louisville said the legislation will help protect Kentucky families.
The proposed legislation would strengthen the 2012 Kentucky Unclaimed Life Insurance Benefits Act by making it retroactive. The law requires insurance companies to check public death records for their Kentucky policyholders and make a “good-faith effort” to notify and compensate policy beneficiaries after their family member or loved one passes away.
The pre-filed bill, which will be presented to lawmakers when they convene in January, also requires the Department of Insurance to set guidelines for insurance companies on what constitutes a “good-faith effort.”
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Several insurance companies owned by Kemper Corp. of St. Louis sued the Kentucky Department of Insurance to block the existing law from being applied retroactively to more than 9,000 policies they sold going door-to-door in low-income neighborhoods.
The state prevailed in Franklin Circuit Court, but the companies won at the Kentucky Court of Appeals.
Under then-Gov. Steve Beshear, the state took the case to the Kentucky Supreme Court. But earlier this year, Gov. Matt Bevin ordered state lawyers to drop the case days before the high court was set to hear oral arguments. Bevin said he agreed with the insurance companies.
Andy Beshear tried to intervene on behalf of the state and consumers, but the case had been dismissed.
“This legislation fights for the people,” Beshear said Thursday. “It’s critical that we have strong laws in Kentucky that require insurance companies to work with consumers and pay out policies. My office will continue to work with lawmakers to strengthen our consumer protection laws.”
Harris, Owens and more than 15 House members supported identical legislation, House Bill 408, during this year’s legislative session. The measure passed the House of Representatives 84-0, but received no action in the Senate.
“We owe every resident of Kentucky the security to know when they buy an insurance policy that the policy will go where it belongs, to the beneficiaries,” Harris said. “Not years later, but within a reasonable time following the death of a policyholder. My bill will protect current Kentucky insurance policy holders and beneficiaries from some insurance companies that do what they can to keep from honoring the commitments that were made when the policy was sold.”