Senate committee hears 'policyholder bill of rights' on life insurance; industry warns of unintended consequences

A Senate Insurance and Labor Committee heard testimony on S.B. 324, described by the bill sponsor as a "policyholder bill of rights" that would let a policyholder retain their original agent after a policy sale and require life insurers to search a National Association of Insurance Commissioners (NAIC) policy-locator service and report results to the state insurance commissioner.

The sponsor said the bill addresses long-standing problems when insurers are sold or change servicing arrangements and policyholders cannot obtain information from a new servicer. "The policy holder has the right to retain his or her original agent of record for a policy even if the insurer sells or transfers the policy to another insurer," the sponsor said while walking the committee through the proposal's reporting and notification provisions.

The bill also would require insurers to conduct searches of the NAIC policy-locator system at least quarterly no later than Jan. 1, 2027, and to report the results to the commissioner annually, the sponsor told the committee. Supporters said the change would help identify paid-up or otherwise forgotten policies and reduce unclaimed benefits reaching the state's unclaimed-property pool.

Industry witnesses expressed concerns. "The thought of the policy holder going and picking an agent because his agent...is no longer there — that, I think, is a foreign concept to the whole process of agency, insurers, and contracts," said Bobby Collier, who spoke for State Farm and the Council of Life Insurers. Collier warned that allowing policyholders to require insurers to recognize a selected agent could conflict with contractual arrangements and could alter the market for some products.

Michael Shanna of McGuireWoods Consulting, representing the Community Associations Institute, and other witnesses acknowledged the NAIC locator has found large volumes of benefits and noted that several states already use the service; Shanna told the committee that limits on HO-6 assessment coverage vary by carrier and that policy-locator checks can be helpful to find lost policies.

Committee members raised additional questions about multi-state policies, the interaction with Georgia's Unclaimed Life Insurance Benefit Act, and a provision that the sponsor had drafted to define "policyholder" broadly. One member warned that the bill's definition could give beneficiaries or contingent beneficiaries formal rights that could have unintended consequences in family-law situations, and urged clarifying language before a vote.

Outcome: The committee did not take a final vote on S.B. 324. Members asked for further conversations and technical fixes; the chair said the committee would meet again and the item remains under consideration.