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North Carolina Department of State Treasurer - DOC


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									                         North Carolina Department of State Treasurer
                          Escheat and Unclaimed Property Program

                              Guide to Unclaimed Property
                                  Insurance Industry
                                         (Effective with 2001 Reports)

          Refer to North Carolina General Statutes 116B-53 — Presumptions of Abandonment


    nsurance Company means an association, corporation, or
    fraternal or mutual benefit organization, whether or not          2.   Retaining claim files as long as an offer to settle
    for profit, engaged in the business of providing life                  remains open and maintaining files on drafts offered
    endowments, annuities, or insurance, including accident,               in settlement for six years after the claim file is
burial, casualty, credit life, contract performance, dental,               destroyed will prevent the need for estimating your
disability, fidelity, fire, health, hospitalization, illness, life,        claims draft liability in an audit. While estimates are
malpractice, marine, mortgage, surety, wage protection, and                permitted under General Statute 116B-53, we prefer
workers’ compensation insurance.                                           to have names and addresses to return monies to the
                                                                           rightful owner.
      Property And Casualty Insurance Drafts
                                                                                     Life Insurance Proceeds
     The Unclaimed Property Law does not apply to
drafts issued as offers to settle claims that are                          Under General Statute 116B-53(c)(9), the amount
unliquidated in amount or settled by subsequent drafts                owed by an insurer on a life policy, endowment policy, or
or other means. The question arises, which drafts are not             annuity that has matured or terminated is presumed
“offers to settle” and, therefore, are covered under                  abandoned if it is unclaimed three years after the
unclaimed property law?                                               obligation to pay arose. A policy or annuity payable
                                                                      upon proof of death is presumed abandoned three years
    Drafts for goods and services are generally                       after the insured has attained, or would have attained if
recognized as being liquidated in amount. Furniture,                  living, the limiting age under the mortality table on
supplies and copy machine repair bills are good                       which the reserve is based.
                                                                                           Auditor’s Tips
     It is generally recognized that first party drafts
(drafts representing policy obligations), are not excluded            1.   If you are required to give notice to the insured
from unclaimed property reporting. Paying the insured’s                    that a non-forfeiture provision is being exercised
car repair bill or medical expenses are liquidated in                      and the notice cannot be delivered to the last
amount. Such drafts are usually not issued until proof of                  known address, you need to make a reasonable
loss has been accepted. First party drafts are presumed                    search to determine the correct address for
abandoned five years after becoming payable.
      Drafts written to third parties are generally
considered to be “offers to settle” a claim. Some
                                                                      2.   If you learn of the death of the insured or
exceptions do exist. The payment to the ambulance                          annuitant and the beneficiary has not
service bill for a third party is liquidated when the draft                communicated to you within four months of the
is issued.                                                                 death, you need to take reasonable steps to pay the
                                                                           proceeds to the beneficiary.
                       Auditor’s Tips
                                                                      3.   You should request the name, address and
1.   You may need to devise a method to track those                        relationship to insured, of each beneficiary on each
     unpresented drafts which are offers to settle or were                 change of beneficiary form issued by the insurance
     settled by subsequent draft or other means. The few                   company for the insured.
     unpresented drafts issued as a settlement proposal
     are easier to track and usually large dollar amounts
     compared to those for liquidated amounts.
                                                                                     Auditor’s Tip

4.   If a person other than the insured or annuitant is             Renewal commissions are prone to the following
     entitled to the funds and an address of the person is      reporting errors.
     not known to the company or it is not definite and
     certain from the records of the company who is             1.   The company ceases or reduces renewal commission
     entitled to the funds, it is presumed that the last             in violation of the agreement with the agent.
     known address of the person entitled to the funds is
     the same as the last known address of the insured or       2.   The company inadvertently imposes the current
     annuitant according to the records of the company.              contract procedures on agents covered under older
5. The application of an automatic premium loan
   provision or other nonforfeiture provision in an             3.   Old lump-sum liabilities, where the agent detail has
   insurance policy does not prevent a policy from                   been lost, are written off to an income or expense
   maturing or terminating if the insured has died or the            account.
   insured or the beneficiary of the policy has otherwise
   become entitled to the proceeds before the depletion                 Other Types Of Property To Report
   of the cash surrender value of a policy by the                               (Not All Inclusive)
   application of those provisions.
                                                                    Individual policy benefits or claim payments
                      Auditor’s Tip                                 Group policy benefits or claims benefits
                                                                    Proceeds due beneficiaries
As a result of address changes or difficulty in locating            Death claims
beneficiaries, unclaimed insurance proceeds are                     Premium refunds
sometimes unpaid. Some insurance companies will
                                                                    Other amounts due under policy terms
advertise, check state agencies for addresses and hire
                                                                    Accident and health benefit payments
credit investigators.
                                                                    Unidentified remittances
               Policyholder Dividends                               Wages, payroll and salary
                                                                    Commissions
     Dividends payable under participating policies need to         Worker’s compensation benefits
be reported five years after payable. Policy dividend options       Miscellaneous outstanding checks
cannot be changed without the policyholder’s authorization.         Funds from stocks and bonds
                                                                    Dividend and interest payments
                      Auditor’s Tip

     You must have a contractual right to change the                                   Timetable
dividend application option and give notice to the
policyholder. We will usually review policies with a dividend    Life Insurance Company Reports Only
accumulation option that were changed from a cash                Cut Off Period – December 31
dividend option.                                                 Notice by Holder to Owner – March 15
                                                                 Report and Remit – May 1
        Agent’s Credit Balances/Commissions
                                                                All Other Insurance Company Reports
     Agent’s credit balances are presumed abandoned after        Cut Off Period – June 30
five years, while commissions and payroll items are              Notice by Holder to Owner – August 15
presumed abandoned after two years, per General                  Report and Remit – November 1
Statute 116B-53.

              Guides to Unclaimed Property are published by the Department of State Treasurer, Escheat and
              Unclaimed Property Program. Comments and questions should be addressed to Department of State
              Treasurer, Unclaimed Property, 325 North Salisbury Street, Raleigh, North Carolina 27603-1385 or call
              (919) 508-5180.
              April 2000

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