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House rejects bill requiring certified notice before life-insurance lapse for larger policies
Summary
House Bill 2-65, which would have required certified mailing notice to policyholders (and a designee) before non-monthly life policies of $50,000 or more are lapsed, failed on the House floor after debate about costs and administrative burden on insurers.
The Idaho House considered House Bill 2-65 on March 3, a proposal to require insurers to send certified return-receipt mail to policyholders and a designated third party before lapsing non-monthly life-insurance policies with face values of $50,000 or more.
Representative, District 20 sponsored the measure and said the requirement mirrors similar rules in other states and is intended to protect beneficiaries and families in the rare but harmful event of an unexpected lapse. The sponsor said the provision would not apply to monthly-premium policies and that policyholders could designate an additional contact for notice.
Opponents, including Representative, District 9 and Representative, District 33, said certified mailing would impose costs on insurers and agents that would flow to customers and that agents typically notify clients ahead of lapses. Representative, District 9 said the bill would add an unnecessary regulatory burden and noted policies already have grace periods and multiple notices.
On the recorded vote the bill failed to pass the House. The clerk reported the bill "failed to pass the House" and filed the result with the chief clerk's office. The sponsor said the requirement was narrowly targeted and that the purpose was to protect families who rely on policy proceeds in a time of need.
Because the bill failed, no statutory notice change will be implemented.
