The Unclaimed Life Insurance Benefits Act was introduced in the US state of Kentucky back in 2012 with the idea that it would require good faith efforts from insurance companies to determine whether policyholders had died so that benefits could be paid out. However, several companies then took out a lawsuit against the state arguing that it should not apply retroactively to thousands of policies.
The law had been defended by the state – but a motion was then filed to dismiss this defence by attorneys of Governor Bevin’s insurance commissioner. The companies ultimately won at the court of appeals prompting dismay in some circles.
Bob Damron, former state representative, told the Lexington Herald and Leader, that: “If this is the direction the Bevin administration is moving in, putting insurance industry profits above protecting the consumers, then I’m very, very disappointed.”
For its part, the Bevin administration released a brief statement backing its support of the insurance companies.
“Upon review by the Office of Legal Services, the cabinet believes, as the Court of Appeals held, that the General Assembly did not intend the statute to apply retroactively to policies written prior to the statute’s effective date,” spokeswoman Ronda Sloan said.
However, Sharon Clark, the previous insurance commissioner, commented that this was “surprising news” and outlined that the law was designed to protect all life insurance policyholders in the state – not just those buying policies from January 01, 2013, onwards.
After complaints from several insurance companies, a retroactive consumer protection law was scrapped despite its aim of protecting life insurance beneficiaries.