The insurance industry — companies as well as regulators — are racing against time to ensure uninterrupted access to the Social Security Death Master File (DMF).
The problem stems from an obscure provision of the recent Budget Act which limits public access to the DMF effective March 26 and requires the Department of Commerce (DOC) to develop a certification program to allow persons meeting certain criteria to have continued access to the DMF.
State insurance regulators, led by Benjamin Lawsky, superintendent of the New York Department of Financial Services; the American Council of Life Insurers, on behalf of the industry; and a host of other financial services providers are working intensely to get the Office of Management and Budget, and the National Technical Information Service (NTIS) to publish an interim rule that would allow continued access to the file pending completion of a final certification process.
The issue was taken up last Friday by a National Conference of Insurance Legislators' (NCOIL) Unclaimed Property Task Force studying changes to the model law dealing with unclaimed property.
The task force said that unless an interim rule is put in place, insurers may no longer have full access to the DMF, and it is unclear if and when full access will be restored to insurers.
"Because the Model Act requires that insurers run searches against the DMF, the Bipartisan Budget Act may render insurers unable to fully comply with the Model Act where it has been implemented by state law," the task force said.
ACLI made the same point in a March 10 letter to the NTIS and the Office of Management and Budget (OMB). The letter urged the two agencies "to work together to ensure uninterrupted and prompt access to the DMF by users with legitimate business and fraud prevention purposes, such as life insurers and third parties," and was signed by Dirk Kempthorne, ACLI president and CEO.
The issue is so critical that a new coalition has been formed to address the implementation of the DMF access provision.
Lawsky brought the issue to the attention of the Department of Commerce in a Jan. 22 letter. He noted the investigation by various state regulatory agencies dating back to 2008 which found that life insurers were using the DMF "asymmetrically," that is, many insurers regularly accessed the DMF in order to promptly cease making annuity payments to individuals, but most insurers were not similarly accessing the DMF to determine whether death benefits under life insurance policies should be paid to beneficiaries.
