A key National Association of Insurance Commissioners (NAIC)committee agreed late Friday to determine whether guidelines shouldbe developed to provide consistency in the handling of unclaimeddeath benefits.

The decision was made after considerable debate by the NAIC'sLife Insurance and Annuity Committee. It was made at the urging ofNAIC President Tom Donelon and Nebraska Insurance Director BruceRamge and because state regulators are under considerable pressurefrom the industry.

The American Council of Life Insurers (ACLI) is leading thecharge on behalf of its members. In several letters to the NAIC,ACLI officials have called attention to the "challenges lifeinsurers face in complying with the growing inconsistency andcomplexity of the regulatory framework for unclaimed benefitadministration," and has demanded that the NAIC, as the industry"standard-setting organization," craft uniform guidelines, a modellaw or guidance on the issue.

However, "There is a long way to go on this," as stated by onecompany official.

The official said the industry is still divided on how they wantthe NAIC and states to proceed, with some opposed to using theSocial Security Death Master File (DMF) on current business andothers wanting uniform standards that all insurers follow.

The company official provided a note summarizing the meetingwritten by outside lawyers for the insurer at Sutherland, Asbill& Brennan.

The note said that the so-called "(A) Committee" voted to exposea charge for 2014 proposed by Ramge to "undertake a study todetermine if recommendations should be made to address consistencyin the handling of unclaimed death benefits."

Only Florida voted against the motion to expose the charge forcomment by interested parties.    Thecharge and the comment period (likely 7-10 days) will be posted onthe (A) Committee's website, the Sutherland advisory said.

The Friday debate exposed a rift amongst states on the issue.Florida, California and New Hampshire "wanted to water down thecharge to the point where nothing would be done," the Sutherlandadvisory said.

They are the states amongst the most aggressive in pursuingenforcement actions, including large settlements and fines, againstinsurance companies for not complying with state escheat laws byturning over proceeds of life insurance policies where the policyowner has died, but no beneficiaries put in claims for theproceeds.

Illinois, Pennsylvania and North Dakota are among other statesthat are the leads in pursuing large fines for noncompliance aswell as agreements mandating use of the DMF on a regular basis toensure that claims are paid on life insurance policies or the moneyturned over to the states. In some states, especially inCalifornia, parallel probes are being conducted by state treasureror comptroller offices, or unclaimed property agencies.

In the latest global settlement, against Transamerica inSeptember, officials of the lead states said the deal representsthe eighth life claim settlement agreement for the states.Presently, the state insurance regulators have either reachedsettlements or concluded the investigation of nine of the top 20companies constituting over 45 percent of the total market."Nationally, the priority is focused on the remaining examinationsof more than 30 top life and annuity insurers in this market," theFlorida Insurance Department said in a statement.

Besides the 20 largest companies, some states, like California,are being aggressive in pursuing enforcement actions againstsmaller insurers.

At the Friday meeting, demands that the NAIC start to work onuniform guidelines were led by Ramge and Tom Donelon, NAICpresident. For example, Donelon said that in the past two weeks,ever since the NAIC Executive Committee voted down the charge, hehas heard from many members who want something done.

Donelon said that there are a number of NAIC commissioners whothink this issue needs to be address, while others have gone alongwith the lead States' approach of pursuing settlements.

Donelon said it is past due that the NAIC do something on thisissue and he is "embarrassed" that not more has been done to pursueresolution of the probes during his tenure as president of theNAIC. He urged the committee to vote for the charge.

After that, "the vote to expose the charge passed almostunanimously," the Sutherland summary said.

Most of the nation's large insurers have settled with stateregulators and treasurers over the issue, and now John Chiang,California controller, and some state insurance regulators haveexpanded the probe to smaller insurers.

For example, on Oct. 30, Chiang countersued Thrivent Financialfor Lutherans, based in Minneapolis, in response to a lawsuit fileda few days earlier by Thrivent seeking to limit access to itsrecords by outside vendors hired by California to pursue its booksfor compliance with unclaimed property laws.

Earlier in the month, Chiang won a lawsuit against AmericanNational Insurance Co. of Galveston, Texas, dealing with access toANICO records. He has also filed suit seeking the same thingagainst Kemper Insurance, based in Chicago.

A third front is West Virginia. Oral arguments were heard inearly September on litigation dealing with the issue against 68insurers admitted to sell life insurance in the state. It isunclear when the court will rule.

The audits are being conducted by three independent vendors:Verus, the Unclaimed Property Clearinghouse and Kelmar Co.