Politics & Government

House passes bill to clarify that life insurance law is retroactive

The Kentucky House on Friday voted 84 to 0 for a bill to clarify that a state law protecting the rights of life insurance beneficiaries was retroactive and covers existing policies.

House Bill 408, now headed to the Senate, would add language to the Unclaimed Life Insurance Benefits Act of 2012 to specify that it applies to all policies in Kentucky issued before and after the law took effect.

The law requires insurers to make “good faith efforts,” using public death records, to determine whether policyholders have died so their benefits can be paid to the listed beneficiaries. Several insurance companies owned by Kemper Corp. of St. Louis sued the Kentucky Department of Insurance to block the 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 this month, new 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.

HB 408 faces rougher sledding in the Senate, and if it survives there, on Bevin’s desk.

Senate President Robert Stivers, R-Manchester, told reporters this week that his chamber doesn’t like to pass legislation if it involves lawsuits pending in the courts, as HB 408 potentially does. Although the Supreme Court has dismissed the insurance companies’ suit, following Bevin’s decision to withdraw the state from the case, Attorney General Andy Beshear has asked the court if he can intervene. That motion is pending.

It’s also unclear whether Bevin would sign or veto the bill even if the Senate passes it.

“The governor is not inclined to support this bill or any other retroactive legislation for legal contracts, because doing so would send a bad signal to prospective businesses. Nonetheless, he will thoughtfully review and consider any legislation brought to him for signature,” Bevin spokeswoman Jessica Ditto said.

John Cheves: 859-231-3266, @BGPolitics