Escheatment for Insurance Companies: Compliance Guide | Eisen Blog
The Insurance Industry’s Guide to Escheatment Compliance
What is Escheatment in the Insurance Industry?
Escheatment is the process of turning over unclaimed or abandoned funds to the state after a defined dormancy period. For insurers, this often includes:
- Unpaid life insurance benefits when beneficiaries cannot be located
- Uncashed claim payments for property, casualty, health, or other insurance lines
- Premium refunds due to policy cancellations or overpayments
- Annuity payments left unclaimed after maturity
- Dividend or policyholder distributions that remain outstanding
Because insurance companies operate across multiple states and lines of business, identifying and reporting escheatable property can quickly become complicated.
Why Escheatment Is Especially Challenging for Insurers
Insurance companies face a unique set of obstacles when managing unclaimed property:
- Beneficiary identification: Life insurance benefits can go unclaimed when beneficiaries aren’t aware of the policy or can’t be located.
- Regulatory overlap: State unclaimed property laws intersect with insurance-specific regulations, such as the NAIC Unclaimed Life Insurance Benefits Model Act.
- Multiple payment types: From paper checks to electronic transfers, payouts may occur through different systems, making tracking more difficult.
- Nationwide compliance: Operating in all 50 states means navigating varied dormancy periods, outreach rules, and reporting requirements.
Without a consistent process, insurers risk missing escheatable funds - a mistake that can trigger costly audits.
Common Escheatment Scenarios for Insurance Companies
| Scenario | Escheatment Risk |
|---|---|
| Beneficiary of a life insurance policy is never located | Unpaid life insurance benefit |
| Claim check issued to a policyholder is never cashed | Unclaimed claim payment |
| Premium refund issued after cancellation is not deposited | Unclaimed refund |
| Annuity matures and no action is taken by the account holder | Unclaimed annuity payment |
| Dividend checks issued to policyholders remain outstanding | Uncashed instrument |
A Step-by-Step Approach to Escheatment for Insurance Companies
- Identify Dormant Funds: Implement tracking to flag inactivity across all product lines - from unpaid benefits to uncashed checks - and align them with applicable state dormancy timelines.
- Conduct Due Diligence Outreach: States typically require at least one attempt to notify the rightful owner before reporting. This may include first-class mail, email, or other communication methods allowed under state law.
- Report and Remit to the State: File a NAUPA-compliant report and remit funds to each state where the policyholder or beneficiary is last known to have lived. Negative reports may be required even if no property exists.
- Maintain Records and Prepare for Audit: States can review up to 10 - 15 years of escheatment history. Keep thorough documentation, including payment records, outreach attempts, and policyholder details.
How Eisen Helps Insurance Companies Manage Escheatment with Confidence
Eisen’s compliance platform is designed for insurers with complex, multi-state obligations. We make escheatment management simple, consistent, and audit-ready.
- Escheatment Manager : Automatically identify unclaimed funds across all product lines, track dormancy rules for every jurisdiction, and generate accurate, state-compliant reports in minutes.
- Outreach Manager: Launch and track owner notifications with customizable templates, verified contact information, and delivery confirmations to meet state due diligence requirements.
- Disbursement Manager: Manage multi-state remittances with ease, whether via ACH, check, or other approved methods, while ensuring reconciliation accuracy.
The Bottom Line
Escheatment for insurance companies isn’t just a compliance requirement - it’s a trust-building responsibility. With a proactive approach and the right tools, you can reduce audit risk, protect policyholder benefits, and keep your operations running smoothly.
Allen Osgood
December 8, 2025