AUGUSTA — A bill that would have required insurance companies to send a registered letter to notify holders of a canceled life insurance policy has been amended to impact only the state agency that spawned the legislation in the first place.
The original language of L.D. 220 would have required all life insurance companies to send life insurance cancellation notices by registered mail. The bill, which had a public hearing late last month and a work session last week, has been amended to apply only to the Maine Public Employees Retirement System, said Rep. Henry Beck, D-Waterville, co-chairman of the Insurance and Financial Services Committee.
Additional Images
“We felt we had a special jurisdiction over state employees’ life insurance plans,” Beck said. “We were hesitant to add new requirements on the market as a whole.”
The bill’s sponsor, Rep. Donna Doore, D-Augusta, said she is not disappointed that the legislation will be limited to MPERS, but she believes a certified letter is essential.
“I think it’s a step in the right direction,” Doore said. “We just need to fix it a little bit more.”
Doore sponsored the bill in response to Jennifer Neumeyer’s ongoing effort to claim a life insurance policy on her husband, Scott Neumeyer, who was 35 when he died of pancreatic cancer in December 2013. Neumeyer, a state employee insured by MPERS, believed the policy was active, but it in fact had been canceled in 2011 because of a missed payment. State officials say the retirement system sent a letter notifying Neumeyer at the time the policy was canceled. Jennifer Neumeyer, who only learned of the canceled policy after her husband’s death, says her family never received the letter.
Jennifer Neumeyer is appealing the retirement system’s decision to reject her claim. She is still awaiting the findings of an independent hearing officer who conducted a hearing in November.
The Legislature’s insurance committee will send two reports to the House of Representatives for consideration. The majority report would require MPERS to offer an option for a third-party notification of canceled policies. That means the policy holder would be able to pick another person who would have to be notified if the policy were terminated. State law already requires insurance companies to offer third-party notification for all individual plans.
The minority report, which Beck supports, would require MPERS to offer third-party notification and to notify the holder of a canceled policy by certified mail, which is a step below registered mail.
Certified mail, according to the U.S. Postal Service, provides proof of mailing and the date and time of the delivery or attempted delivery. Registered mail provides both proof of mailing and delivery as well as $25,000 insurance. Return receipts can be required for both certified and registered letters. It costs $3.78 to send a 1-ounce certified letter and an additional $2.70 to request a return receipt.
Attorney Daniel Dube of Lewiston, who represented Neumeyer during the hearing, has said the argument in favor of paying the claim centers on what Dube called improper notification that the retirement system had canceled Scott Neumeyer’s policy.
Doore said Monday that if MPERS had only been required to send a letter to a third-party designee, it would not have helped the Neumeyers because Jennifer Neumeyer would have been her husband’s designee.
“That would mean they live at the same location, so that wouldn’t help,” Doore said. “It’s not going to work, I feel, unless it’s certified.”
MPERS in 2014 made notification of 166 lapsed life insurance policies, Doore said. If the agency had notified each of those holders by certified mail, it would have cost about $630 or about $1,080 if a return receipt was requested for each.
“We’re not talking about a whole lot of money,” Doore said. “In Jen’s case it would have done so much good for them.”
Doore said MPERS is unable to provide proof that it ever mailed a letter to the Neumeyers. Third-party notification also would do nothing to alleviate that problem, she said.
“If it comes certified, it also protects the insurer,” Doore said.
The bill was amended, at least in part, due to a mixed response aired during a Feb. 24 public hearing. Eric Cioppa, superintendent of the Maine Bureau of Insurance, said his agency took no position on the bill, but noted that current law requires cancellation notices be sent to both the policyholder and third-party designees.
“Thus, there is already a safeguard in the law that provides for someone in addition to the policyholder to receive the cancellation notice and be able to take action to reinstate the policy,” he said, according to written testimony. “It is unlikely that both notices sent by regular mail would be lost.”
Attorney John Delahanty, who represented the American Council of Life Insurers, which includes 203 member companies in Maine, said the bill would not address the circumstances that led to the cancellation of Scott Neumeyer’s life insurance policy. Neumeyer, Delahanty said, was under a group life insurance policy issued to MPERS, which actually held the policy. As the policyholder, MPERS is responsible for notifying members of a canceled policy, and L.D. 220 would not require them to make that notification through registered mail.
“The bill, however, is looking to force insurance companies to alter long-standing existing practices and would apply to individual and not group life policies,” Delahanty said. “The ACLI believes that existing industry practices make L.D. 220 unnecessary at least as it applies to life insurance companies.”
Delahanty said the new law would drive up mailing and administrative costs for insurance companies and would ultimately pass along those increases to their customers in the form of increased premiums.
“For very practical reasons, insurance companies want to conserve policies and keep them in force on a premium paying basis, not lapse them,” Delahanty said. “It’s expensive for life insurers to identify potential new customers and persuade them to buy life insurance, so insurers are motivated to keep policyholders on their books.”
Doore said she is satisfied with limiting the legislation to MPERS because most insurance companies in Maine will try to make personal contact with someone before canceling a policy.
“That’s not happening with MPERS,” Doore said. “That was my goal. I wanted to fix their problems so this wouldn’t happen.”
Craig Crosby — 621-5642
ccrosby@centralmaine.com
Send questions/comments to the editors.
Success. Please wait for the page to reload. If the page does not reload within 5 seconds, please refresh the page.
Enter your email and password to access comments.
Hi, to comment on stories you must . This profile is in addition to your subscription and website login.
Already have a commenting profile? .
Invalid username/password.
Please check your email to confirm and complete your registration.
Only subscribers are eligible to post comments. Please subscribe or login first for digital access. Here’s why.
Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.