Unclaimed property audits have been on the rise in recent years. The Counsel on State Taxation's October, 2013 report, The Best and Worst of State Unclaimed Property Laws revealed that for Fiscal Year 2013, there were over $40 billion in unclaimed property held by states—nearly double the $22.8 billion states held just a decade ago. The reality is unclaimed property is a relatively easy source of funds for revenue-hungry states.

But managing unclaimed property audits is not easy for insurers. For starters, they require extensive time and resources. There are essentially 6 stated requirements for an insurer to meet their obligations under the Settlement Agreements, model laws and/or regulations:

• Obtain access to the Social Security Administration's Death Master File (“DMF”)
• Gather insurer's data, potentially from multiple sources, and bump up against the DMF
• Use fuzzy logic to accommodate variations in data that would otherwise preclude a match
• Reconcile matches
• Locate and pay beneficiaries, or escheat monies to the states
• Generate reports to the states

Generating periodic reports to states is a simple task in theory. In practice, however, companies continue to struggle to meet the requirements. Many, in fact, question whether their level of compliance will meet the expectations of the auditors/state departments of insurance.

Compliance is critical. Companies need to be able to stand up at the end of the day with a solid belief that they have done everything possible to have evaluated their risks, implemented solutions and have controls in place to ensure the solution(s) is/are working as intended.