NU Online News Service, July 17, 7:15 p.m. – Pennsylvania Gov. Mark Schweiker has signed S.B. 462, a bill that creates the Viatical Settlements Act.
The act gives the Pennsylvania Insurance Department the authority to regulate viatical and life settlements.
Viatical settlements arose in the 1980s as a way for terminally ill persons, especially people with AIDS, to raise immediate cash by selling the rights to life insurance policy benefits.
Today, companies in the viatical industry call the arrangements “life settlements” and make them available to the elderly as well as the sick.
Viatical settlement brokers, the companies that act as agents for ill or aging “viators,” sell the life insurance policies to viatical settlement providers. The viatical settlement providers then collect and pool the policies for the purpose of selling them to investors.
The new law regulates both the viatical brokers and the providers, according to Rosanne Placey, a spokeswoman for the Pennsylvania Insurance Department.
Brokers and providers must now get licenses from the state before they can engage in the viatical settlement business in Pennsylvania.
The law also puts the resale of a viator’s insurance policy under the jurisdiction of the Pennsylvania department, and it prohibits brokers and providers from entering into a viatical settlement contract for a life insurance policy that was obtained by means of a false, deceptive or misleading application.
Viatical industry participants interviewed praised the new law.
“We would have gone even further to help seniors realize the value of life insurance policies they are considering surrendering or lapsing,” says Alan Buerger, chief executive of Coventry First L.L.C., Fort Washington, Pa.
One proposal would have required life insurance companies to inform seniors about the option of life settlements as an alternative to surrendering policies, Buerger says.
S.B. 462 was introduced by Sen. Harold Mowery Jr., R-Lemoyne, Pa.
More information about the bill, including the text, is available at http://www.legis.state.pa.us/WU01/LI/BI/ALL/2001/0/SB0462.HTM