The Bipartisan Budget Act of 2013 included a provision that has the insurance industry in a kerfuffle. The provision deals with access to the Social Security Death Master File, perhaps the most comprehensive list of deceased Americans available. Life insurance companies in particular use the list to identify insureds and annuitants that have passed away. In fact, thanks in part to Florida's efforts to hold the companies accountable, a number of life insurance companies have committed to check their lists against the DMF on a more regular basis.
The DMF is not just a list of names, though. It also includes the deceased parties' Social Security numbers. And as anyone who has been a victim of identity theft knows, it is probably a good thing to limit access to Social Security numbers; those numbers are just what scammers and fraudsters thrive on. Which brings us back to the budget bill's provision to require certification for individuals who want access to the DMF.
According to proponents of the measure, certification would ensure that users of the data have a legitimate business purpose to do so, have "systems, facilities and procedures" in place to safeguard the data and have a track record of maintaining confidentiality, keeping data secure and using the data appropriately. Certification would cost and may need to be renewed. The U.S. Department of Commerce is working out the details.
Insurers and regulators are concerned that the certification program is killing an ant with an elephant. Impeding insurers' access, for example, could prove contrary to protecting the rights of policyholders. Without "prompt and uninterrupted access" the National Association of Insurance Commissioners says, insurance companies will not be able to identify deceased insureds and notify beneficiaries in a timely manner, nor will they be able to comply with state regulations and settlements.
The Commerce Department will most likely continue to hear from opponents to certification until the rule is finalized. That could be months away, though, as the initial draft must be completed and published for comment before it officially goes on the books. In the meantime, insurers have a reprieve: Existing rules will stay in place until all of that is taken care of.
Source: InsuranceNewsNet.com, "Proposal Could Limit Access To Death File," Linda Koco, Feb. 17, 2014