SPRINGFIELD - Gov. Bruce Rauner on Friday issued an amendatory veto of a bill requiring insurance companies with electronic records to locate beneficiaries of unclaimed life insurance policies as far back as 2000.
He called House Bill 302 "inequitable and potentially unconstitutional," as it would create a two-tier enforcement timeline between companies that have searchable e-records and those without, which only would have to search back to 2012.
"An insurer’s obligation to comply with HB 302 should not depend on differences in its record retention policies," Rauner stated in a veto message. "Such differential enforcement violates due process."
Rauner indicated that a "clear and logical threshold" for record keeping for all insurers is retroactive to Jan. 1, 2012.
His veto also came down against the "overreach of private auditing firms" that contract with the state Treasurer's office to reunite money with owners, while taking a cut of the action in finder's fees.
He said that one auditing firm has made more than $20 million in Illinois since 2011 in such practice.
"Throughout the country, including Illinois, states have retained private auditors with contingency fee arrangements for the identification of unclaimed property, including life insurance policies," he stated.
"The expansion of these private auditors, however, incentivizes behavior that rewards private companies at the expense of state taxpayers."
He said money recovered could have gone to pay down "our state’s desperately underfunded pension liability."
His veto prohibits contingency fee arrangements for auditors examining in-state policy holders, however, it does allow the arrangement for policy holders outside Illinois.
The legislation had been championed by State Treasurer Michael Frerichs whose duties include returning unclaimed property, such as abandoned deposits, safety deposit boxes and unpaid life insurance policies, to owners.
Frerichs said in a statement that Rauner's amendatory veto puts "corporate profits over people."
"He sided with greedy life insurance companies that line their pockets with death benefits they should have paid out to loved ones," Frerichs stated. "But he did more than that. With a stroke of his pen, he is trying to take away the tool our office uses to catch any company in the act.”