Governments around the world are starting to take a proactive role in helping life insurance beneficiaries find the policies they are entitled to.
Unclaimed life insurance polices are a problem I’ve worried about for years and were a major impetus for developing LegacyTracker
Last November, France’s financial sector regulator fined CNP Assurances 40 million euros ($50 million) for failing to do enough to find the beneficiaries of deceased life insurance policyholders. They characterized CNP’s efforts as being “highly insufficient“ . CNP who is the largest insurer in France (17% market share), responded by saying that they really always intended to pay all those unclaimed policies.
In their press release after the news of their fine was released CNP also indicated that it has never derived any profit from unclaimed settlements…”income earned on unclaimed funds had been added to the sum used to pay all policyholders” As an accountant, I’m a bit puzzled by that statement but…onwards.
Since 2007, life insurers in France have had a legal obligation to try to find life insurance beneficiaries of unclaimed policies after a holder’s death.
Prior to 2007, it was up to the heirs to claim the funds . That’s how it currently stands in Canada but this presumes that those beneficiaries or heirs know about a life insurance policy. The Cour des Comptes public audit office in France indicated in a report last year that life insurers have been very slow living up to their obligations to find heirs since the 2007 law was enacted and estimated that unclaimed life policies might be worth at least 2.76 Billion.
More info on the CNP story can be found here
So, What about Canadian Life Insurance Beneficiaries ?
The majority of the western world has Unclaimed Property legislation in place which includes unclaimed life insurance policies. However, only Alberta, Quebec and to a certain extent, British Columbia have Unclaimed Property legislation in place in Canada. In recent years, governments have really ‘zoned in” on the Win/Win Opportunity that such legislation provides to residents and their own treasuries. There has been a gradual shift to tighten up the rules around what assets are included in such legislation. An example would be the inclusion of Gift Cards in certain states like New York and New Jersey. And, as is the case in the US, Governments are ensuring that life insurers work diligently to identify unclaimed life insurance policies based on death (“The DMF or Death Master File“ ) In recent years, a national multi state audit project has been underway which has so far resulted in the return of more than $2.7 Billion to beneficiaries and/or State Treasuries. Auditors actually determined that insurers were using the ‘DMF” to stop annuity payments to deceased policy owners but not using the same files to find beneficiaries and to designate the policies as “unclaimed” Sun Life of Canada settled Unclaimed Property complaints with State Insurance regulators in November 2014 for $3.2 Million
Only 34% of Canadians have consumer protection in place in the form of Unclaimed Property legislation
As well, the rules around life insurance policies in most jurisdictions in Canada do NOT include an obligation by the insurer to look for beneficiaries.
Each week I receive approximately 2-3 emails from folks that are looking for some guidance around finding possible life insurance policies. There’s not much I can offer to them outside of what I’ve already offered in earlier posts like this one which also included a summary of the changes in the life insurance landscape over the years..another reason why finding a lost life insurance policy is made difficult,…another reason why legislation is needed and another reason why it’s important to safeguard & share important information about life insurance policies with loved ones and beneficiaries