May 2013
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In this issue


Letter to the Compliance Adviser

In this month’s newsletter, we have one letter to share with our readers. Enjoy!

Dear Compliance Adviser,

We are currently in the process of handling responses to the California due diligence letters.  We’ve been able to pay most of the claimants, however, there are a few that have not provided the documentation we need to issue payment. The California deadline is quickly approaching and how should we handle these pending claims?  Should we indicate on the California report that we’ve issued payment to the claimant even though we haven’t or should we report the funds and send the claimant to the state for payment? If we indicate we’ve paid the claimant, and we still do not receive the documentation, what should we do with these funds? 

Waiting for documentation in New Jersey

Dear Waiting for documentation in New Jersey,

Holders want to return the funds to the rightful owners, (contrary to what some states may think). However, if the claimant does not provide the documentation necessary for you to make payment, you can report the funds to the state and refer the claimant to the state for payment. The risk in holding on to the funds beyond the June deadline is that you may not receive the documentation and will need to include the item on the 2014 unclaimed property report. Because the item is past due for reporting, you will be assessed 12% interest by California for late reporting. In the interest of good customer service, I would recommend you make an effort to contact the claimant one more time (in writing if possible) and notify them that the funds will be turned over to the state on June 1, unless the requested documentation is provided. Hopefully, this should give them an incentive to gather the documentation together and send to you.

Remember that you can pay the claimant after the funds have been reported to the state. However, doing this would require you to submit a “Holder’s Claim for Reimbursement form (HCR-1)” to get your money back from California.

Best of Luck,
Compliance Adviser

Congratulations. You’ve survived the audit! Now What?

Your unclaimed property audit is finally over and you’ve settled all your past due unclaimed property reports with the audit state(s). What’s next? Take the lessons learned from the audit experience and use them to minimize the risk of another long drawn out unclaimed property audit, especially with another state that did not participate in the prior audit. Some lessons learned:

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State goes after another Insurer

It appears that the dust was beginning to settle for the insurance industry and then, here comes another lawsuit. The California Controller, John Chiang, recently filed a lawsuit against American National Insurance Company (ANICO), a Texas insurance company, alleging that the company’s dilatory and obstructive actions have significantly impeded the Controller’s audit to determine whether the company is complying with the state’s unclaimed property laws. In a subsequent statement, Chiang mentioned that “he’s challenging the pervasive industry practice in which many insurers are fleecing policyholders by welcoming premiums while turning a cold shoulder when the time comes to pay.”

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Josiah S. Osibodu, CPA
Managing Partner - Consulting Services
Kathleen H. Moyer
Managing Partner - Compliance Services
Cell: 609.412.0866