Friday, April 29, 2011
Three years ago, Verus Financial LLC pitched an idea to cash-strapped states regarding identifying unclaimed life insurance policies that the states could seize as abandoned property. Eventually, 35 states signed up, agreeing to give Verus around 10% of what the state is able to seize. Verus is currently investigating two dozen insurance companies.
Insurance companies sometimes fail to ensure that they pay out on policies, which enables them to hold on to this money for a few years until the accounts go "dormant." Once they are dormant, the insurance company must notify the state. The state attempts to get in touch with the policyholders, but is able to seize the funds and use them until the rightful owner claims the property, if ever. This battle could shift millions to state coffers and consumers.
See Leslie Scism and Vauhini Vara, Life Insurers Skimp on Payouts: States, W.S.J., Apr. 28, 2011.
Special thanks to Gus Fuldner (MacAccess Systems LLC) for bringing this to my attention.