As more states join the Child Support Lien Network (CSLN), insurers must be aware of specific insurance claim intercept laws and their impact on claim processes. Recent regulatory activities — whether mandatory or optional in nature — send a clear signal that efforts will continue to ensure that child support obligations are met through various means, including interception of, and liens on, certain insurance proceeds.

Claim departments are required to recognize, interpret, and apply state regulatory requirements applicable to issues such as acceptance, denial, investigative periods, disclosures, and payments in their claim-handling processes. In addition to these standard and expected issues that need to be accounted for, some states impose proactive requirements on insurers to notify the applicable state's child support enforcement agency when a claim is filed or in advance of settlement payment — or both.

This type of notification allows for the agency to verify if the claimant is listed in a database of delinquent child support obligors. A traditional notice of lien would follow, subject to various state exceptions as to priority. Some states, not yet embracing reporting and claim data matching across multiple lines of business, rely on definitions of income to permit garnishment of workers' compensation payments. Others have sought to encourage insurers to engage in voluntary reporting and validation of key claimant information prior to providing settlement proceeds.