House panel backs chance for insureds to get certified-mail notice before life-policy lapse

Representative Lance Clow, chairing the House Business Committee, won committee approval Feb. 27 to send House Bill 265 to the full House with a “do pass” recommendation. The bill would allow life-insurance policy owners to request certified-mail lapse notices for policies with more than $50,000 in face value and require insurers to attempt certified-return-receipt delivery to both the policy owner and any previously designated third party before a policy termination.

The measure aims to reduce involuntary forfeitures that sometimes occur when first-class mail is missed. Representative Lance Clow, the bill sponsor, described the proposal as a documentation mechanism that gives insured people—and their named designees—a better chance to learn of imminent lapses. “This provides a documented means for the insured and the owner to know that they've been properly notified,” Clow told the committee.

The bill would let an insured request certified-return-receipt notice 90 days before a potential lapse; if the insured makes that request, the insurer must send the certified notice at least 10 days before the policy would terminate. The request can be filed in several ways, the sponsor said, and the bill covers life-insurance policies greater than $50,000. If a certified notice is refused when delivered, the insurer is held harmless for attempting notification, the sponsor said.

Kathy Peterson of Meridian told the committee she worked on the idea after her family learned a long-held policy lapsed without notice after her mother’s death. “Please, for the sake of Idahoans, please pass House 265 Life Insurance Bill,” Peterson said in testimony outlining instances she said are common where families did not receive first-class mail warning of a lapse.

United Heritage Life Insurance Company’s chief administrative officer and general counsel, Geoff Neumeier, said his company supports HB 265 as written and could live with certain technical amendments suggested by the American Council of Life Insurers (ACLI). Neumeier noted some insurers use guaranteed-delivery services other than certified mail and said the ACLI’s suggested language to allow alternate delivery methods appeared reasonable.

Representative Birch moved the due-pass motion. After brief discussion the committee declared rule 80 and the chair called the ayes; the chair declared the motion carried. The committee did not record a roll-call vote in the transcript.

The bill language as presented addresses only life-insurance lapse notices and limits the certified-mail option to policies with face value greater than $50,000. The sponsor said the measure would not go into effect immediately: “this doesn't go into effect on January of 26 to give insurance companies time,” he said, indicating a delayed effective date to allow insurers to implement processes.

What’s next: HB 265 was sent to the House floor with a due-pass recommendation. If the bill advances, the Senate may consider technical amendments suggested in stakeholder comments.