Frerichs de­cries gov’s par­tial veto of life in­sur­ance bill

Chicago Sun-Times - - POLITICS - BY STE­FANO ES­POS­ITO Staff Re­porter Email: ses­pos­ito@ suntimes. com Twit­ter: @ sle­spos­ito

About a year ago, Lynn Luc­ch­ese- Soto took a call from a man claim­ing he was from the state trea­surer’s of­fice and had in­for­ma­tion about the pro­ceeds from a big in­sur­ance pol­icy.

“I thought, ‘ Oh no, I’m a lawyer, this is a scam,’” Luc­ch­ese- Soto re­called Wed­nes­day.

But the call wasn’t a scam. Twelve years ago, Luc­ch­eseSoto, 60, of North­brook, be­came the guardian for twin boys, af­ter their mother — her friend — died in a car crash. The call last year was to in­form her of un­claimed in­sur­ance pro­ceeds for the twins.

Luc­ch­ese- Soto ap­peared down­town Wed­nes­day with state Trea­surer Michael Frerichs, who blasted Gov. Bruce Rauner for gut­ting a bill that would have forced in­sur­ance com­pa­nies to search their elec­tronic records for any un­paid death ben­e­fits dat­ing back to 2000.

Luc­ch­ese- Soto only learned about the death ben­e­fits for the twins af­ter a trea­surer’s of­fice au­dit. Frerichs said that be­tween 2011 and 2015, his of­fice has dis­cov­ered more than $ 550 mil­lion in death ben­e­fits that were not paid to fam­i­lies in Illi­nois. But Rauner’s par­tial veto of House Bill 302 bans Frerichs’ of­fice from bring­ing in au­di­tors to make sure in­sur­ance com­pa­nies are in fact check­ing their records prop­erly.

“What Gov. Rauner did is take away the one tool we had to hold in­sur­ance com­pa­nies ac­count­able,” Frerichs told re­porters at the Thomp­son Cen­ter.

Frerichs is urg­ing the Gen­eral Assem­bly to over­ride Rauner’s veto. Steve Brown, spokesman for House Speaker Michael Madi­gan, called the in­sur­ance com­pany tac­tics out­lined in the bill “rep­re­hen­si­ble” but said he couldn’t pre­dict whether a vote to over­ride the veto was likely.

“If this is al­lowed to stand, Illi­nois would be the only state in the coun­try that bans this [ au­dit] prac­tice,” Frerichs said.

The trea­surer’s of­fice says about 70 per­cent of in­sur­ance com­pa­nies vol­un­tar­ily al­low the state of­fice to check their books.

“We’re not say­ing that ev­ery life in­sur­ance com­pany out there is a bad ac­tor,” Frerichs said. “There are many [ that] do the right things, but for the rest, there are au­dits.”

Frerichs said: “I was told by in­sur­ance ex­ec­u­tives that it was the re­spon­si­bil­ity of the ben­e­fi­cia­ries to claim what was owed to them, and if they didn’t, it was their fault. I’ll re­mind you, [ Luc­ch­ese- Soto’s] sons were teenagers with spe­cial needs, and the in­sur­ance in­dus­try blames them for not get­ting the money that their mother wanted them to have. . . . This is wrong.”

In a state­ment, Rauner’s of­fice said, “The gov­er­nor amended this leg­is­la­tion be­cause it would re­sult in a num­ber of harm­ful con­se­quences. The bill al­lowed the Trea­surer’s Of­fice to en­gage ex­pen­sive au­dit­ing firms on a contin­gency fee ba­sis, po­ten­tially squan­der­ing mil­lions of dol­lars that could oth­er­wise go to­ward funding public pen­sions. It would likely drive up the cost of life in­sur­ance for work­ing fam­i­lies . . .

“We wel­come the op­por­tu­nity to col­lab­o­rate with the Trea­surer to cre­ate a more re­spon­si­ble model for ad­dress­ing this prob­lem in a way that would be fair to public pen­sion­ers, in­sur­ance com­pa­nies and fam­i­lies who pur­chase in­sur­ance.”

Luc­ch­ese- Soto says the money for her sons has been re­ceived, although she wouldn’t dis­close the amount.

“That money, we’ve put away for them, and hope­fully at some point, it will be used maybe as a down pay­ment on a home,” she said.


Illi­nois Trea­surer Michael Frerichs says if Gov. Bruce Rauner’s amenda­tory veto on com­pelling life in­sur­ance com­pa­nies to search records is al­lowed to stand, “Illi­nois would be the only state in the coun­try that bans this [ au­dit] prac­tice.”

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