 Frerichs said his office wants to identify life insurance policies belonging to
people who have died but who have not had their insurance benefits paid out to
rightful beneficiaries.
Frerichs, D-Champaign, said those audits predate his taking the treasurer’s
office in January 2015, and most insurance insurance companies have complied
with the audit requests.
Since 2013, the audits have identified more than $195 million in previously
unpaid life insurance benefits and annuities, the treasurer said.
“We will defend ourselves,” Frerichs said after an appearance in Springfield on
Monday.
“I’m not quite sure why they are doing this, but we have requested to audit
their books to make sure that consumers in the state of Illinois have their
wishes complied with. And rather than talking with us, rather than sitting down,
they filed a lawsuit. We can only assume their reasons.”
Essentially, he said, “this company has maintained they don’t have to pay out
until someone comes to them with proof of death.”
Frerichs said he’s doing his job, one aspect of which is making sure unclaimed
property — including life insurance proceeds — gets turned over to rightful
owners or heirs.
And time matters, the treasurer said.
“Not only does allowing decades to pass following a death needlessly harm the
policyholder’s beneficiaries or heirs, but it also drastically reduces the
possibility of finding those beneficiaries,” Frerichs said in a news release.
Suing are United Insurance Co. of America, Reserve National Insurance Co. and
The Reliable Insurance Co., which are part of the Kemper Corp. family of
companies.
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 In the lawsuit filed Oct. 26 in Sangamon
County Circuit Court (Case No. 2015 MR 998), the company, among
other things, argues the treasurer and hired auditors Verus
Financial LLC are overstepping their legal authority. The insurance
companies contend:
— No law supports the audits as they stand and that any
requirement the companies submit to them contradicts the state’s
Unclaimed Property Act.
— The auditors demands cannot be squared with Illinois Insurance
Code, nor the companies’ policies with the people insured.
— The current audits exceed constitutional limits on the treasurer’s
authority as a state regulator and violates the Illinois Department
of Insurance’s exclusive authority.
— The audit requirements were drawn without regard to rulemaking
requirements of the Illinois Administrative Act.
“Kemper believes it is in full compliance with Illinois law
regarding both unclaimed property as well as the payment of life
insurance benefits,” Kemper’s media relations office said in an
emailed response to an Illinois News Network request for comment.
“The audit in question has been underway for four years. We’ve
already produced thousands of documents, and our issue is with the
scope of the audit that is beyond the reach of the law and the
treasurer’s authority,” the company said.
Kemper said it has paid valid insurance claims for nearly a century
according to the terms of its policies and state law and is “ready
and willing to complete the audit to the extent it is conducted
within the confines of Illinois law.”
Frerichs said he would ask Illinois Attorney General Lisa Madigan to
represent his office.
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