Illinois treasurer calls on Rauner to sign life insurance reform
“I think everyone agrees there needs to be new revenue and spending cuts. We need a balanced approach,” Frerichs said during a stop Tuesday in East St. Louis. “The disagreement is on people trying to assign blame. They’re already focused on their next election. I just think it’s time to stop campaigning and to start governing.”
The special session was called after the General Assembly did not pass a budget before May 31. The 2018 fiscal year begins July 1.
The two-year budget impasse has led Moody’s Investors Service and S&P Global Ratings to downgrade the state’s bond rating to one notch above junk status.
“What that means is we’re paying far more interest than we should have to, more money is going to New York bond holders and less money is being spent on Illinois roads, bridges and schools,” said Frerichs, a Democrat.
Last week, Gov. Bruce Rauner placed blame for the state credit downgrade on Democrats.
“(Speaker Mike) Madigan’s majority owns this downgrade because they didn’t even attempt to pass a balanced budget, get our pension liability under control and other changes that would put Illinois on better financial footing,” the governor’s office said. “The governor will continue working toward a truly balanced budget with changes to our system to grow jobs and provide real and lasting property tax relief.”
But whether the Republican governor and the Democrat-controlled General Assembly can come to an agreement remains to be seen.
“I think anything is possible. People know what the solution is going to be, but we need to stop campaigning, stop the commercials demonizing people who are across the aisle and work towards a positive solution,” Frerichs said.
Frerichs spoke Tuesday at the East St. Louis City Hall as he called on Rauner to sign the proposed Life Insurance Reform Act.
The legislation, which was passed by both the House and Senate, would require life insurance companies to search their records for any unpaid death benefits that should have been paid to beneficiaries.
Life insurance companies would have to compare their searchable electronic records with the names on the Death Master File, which is maintained by the Social Security Administration, to confirm a policyholder is not dead, according to the treasurer’s office. The legislation calls on insurance companies to look at records dating back to 2000.
I never met a man or woman who bought an insurance policy because they wanted to make an insurance company more profitable, or because they wanted an executive to get a bonus. They did it because there is someone in their life they want to take care of when they’re no longer here.
Illinois State Treasurer Michael Frerichs
The treasurer’s office has identified, through insurance company audits, about $550 million in unclaimed death benefits, including $13.28 million in unclaimed life insurance benefits policies in the metro-east.
“I never met a man or woman who bought an insurance policy because they wanted to make an insurance company more profitable, or because they wanted an executive to get a bonus,” Frerichs said. “They did it because there is someone in their life they want to take care of when they’re no longer here.
Frerichs said if Rauner signs the legislation, his office will have nothing to do with life insurance again.
The Democratic treasurer said the bill passed along a party line vote but shouldn’t be a partisan issue.
“Death knocks on all doors, not just Democratic doors,” Frerichs said.
He said there are life insurance companies that plan for the profits off of not paying the benefits.
“There are a lot of good companies out there,” Frerichs said. “But the simple fact is, they get to hold onto that money, they get to invest it and keep all the interest. They’re making a lot of money off of these unpaid life insurance benefits.”
Frerichs said many times people, or organizations, don’t know they are beneficiaries of a life insurance policy.
Last year Armentha Byrd, 89, of Fairview Heights, and her daughter-in-law Sharon Byrd, of O’Fallon, discovered the elder Byrd had outlived her life insurance policy and was entitled to an $1,128 payment. However, the insurance company did not reach out to her, and the Byrds learned Armentha Byrd was listed by the Treasurer’s office as having unclaimed money.
Armentha Byrd used the money to help pay for prescription medication, Sharon Byrd said.
Being on a “fixed income, anything that comes in helps out,” Sharon Byrd said.
Last year, Rauner signed legislation that requires life insurers to conduct Death Master File comparisons on polices in good standing from January 2017 forward.
“We think (insurance companies) should do the right thing,” Frerichs said. “They should keep the promises they made to their policy holders.”
Rauner’s office said it is still reviewing the legislation.
In January, the governor’s office said the state’s Life Policy Locator Service, a free service, helped families find a deceased person’s lost life insurance policies and annuities, and the state Department of Insurance helped recover more than $1.7 million for Illinois families.
“The Life Policy Locator Service has drastically improved the state’s response time in handling Illinoisans’ life insurance policies. The swift manner in which funds are being identified and allocated is beneficial for all Illinoisans,” Department of Insurance Director Jennifer Hammer said at the time. “Funds are no longer going unclaimed. Instead money that rightfully belongs to Illinoisans is being appropriately given through a process that has cut the bureaucratic red tape for requestors.”
“The American Council of Life Insurers said it supports legislation that requires companies to compare records against social security records,” said Jack Dolan, the vice president for media relations for the council.
“This includes a bill that was just enacted last year in Illinois. Companies are still changing their operations to comply with the new law. We should give the new law time to work before enacting new requirements,” Dolan wrote in an email to the BND. “Moreover, ACLI is concerned about a provision in HB 302 that would apply the law retroactively to lapsed or terminated policies, which is contrary to the impairment of contract provision of the Illinois Constitution.”
Mum on the gubernatorial race
Frerichs said he wouldn’t comment about whether he would make an endorsement in the race for the Democratic nomination for governor, which features Chicago billionaire businessman J.B. Pritzker, Chicago businessman Chris Kennedy, Chicago Alderman Ameya Pawar, Madison County Regional Superintendent Bob Daiber and state Sen. Daniel Biss, of Evanston, among others.
“There will be plenty of time for campaigning,” Frerichs said. “I can’t tell you the number of people I’ve talked to who are just sick and tired of the campaigning. They want people to stop the campaigning and to focus on governing. That’s what we trying to do in our office. There will be plenty of time for elections down the road.”