2016 Sunset Review Impacts Preneed Contracts

Tuesday, October 18, 2016 3:32 PM | Anonymous member (Administrator)

The Colorado General Assembly established the sunset review process in 1976 as a way to analyze and evaluate regulatory programs and determine the least restrictive regulation consistent with the public interest. In 2016, DORA's Office of Policy, Research and Regulatory Reform (OPRRR) conducted a Sunset Review of Colorado's Division of Insurance regulations. This section includes regulations and licensing for Preneed Contract Sellers.

The report was issued on October 17th and contains some recommendations that will impact funeral establishments that sell (or offer to sell) preneed funeral plans.

Recommendations from the OPRRR include:

  1. Amend preneed contract license fees based on costs to administer the program. (Currently, annual license fees are specified in statute from $100 to $2,000.)
  2. Authorize the Commissioner to conduct examinations of preneed contract sellers periodically or as often as the Commissioner deems necessary. A complaint would not be the only method to trigger an examination of  the books and records of a preneed contract seller. 
  3. Examinations of preneed contract sellers to be conducted by Division staff if the company is located in Colorado.
  4. Create a preneed recovery fund to mitigate losses for consumers and repeal the surety bond requirement of preneed contract sellers. 
  5. Require any interest and other earnings from a preneed trust account to remain with the principal. This recommendation will significantly impact the manner in which trust funds are being allocated by funeral establishments by requiring that all interest earnings remain in trust until after the death of the contractee. 
  6. Preneed funds that are not utilized to fulfill the requirements specified in a preneed contract, or remaining funds that are not claimed or returned to a beneficiary, must be transfered to the state's Unclaimed Property Trust Fund. 

This Sunset Review is likely to spur legislation to enact these recommendations. CFDA encourages its members to carefully review the report and determine the impact these recommendations will have on their business. 

Please share specific comments via email with CFDA office so we can determine a position and formulate a plan for anticipated legislation.