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September 25, 2003 at 08:00 PM
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The life settlement industry is trying to get regulators to listen to two proposals that would impact viatical brokers as well as an insureds contractual right to viaticate a policy.
One of the issues–whether or not an insurance contract can contain language that prohibits viatication of a life insurance policy–is scheduled to be reviewed by regulators at the National Association of Insurance Commissioners, Kansas City, Mo.
Different states are taking different positions, according to Lester Dunlap, assistant commissioner with the Louisiana insurance department and chair of the NAICs viatical settlements working group.
In Louisiana, such a prohibition is not permitted, Dunlap explains, because there are legislative and regulatory frameworks in place to protect consumers. “If we were discussing this 10-12 years ago, it might have been a different story,” he adds.
A second issue that life settlement representatives are trying to get heard is whether viaticating policies is, in fact, the business of insurance, Dunlap says.
If it is considered the business of insurance, then the viatical industry would be subject to the requirements of the Gramm-Leach-Bliley Act of 1999, he says.
And, if that were the case, then it is being argued that it could negate the need for a viatical brokers license if the broker is already an insurance producer, Dunlap explains.
The issue has come up before the viatical settlements working group and after “deliberate” discussion it was decided not to address it in the model regulation, he says.
Final touches are being put on the Viatical Settlements model regulation with the working group scheduled to vote up the draft on Oct. 9. The model could be fully adopted by the NAIC by March of next year.
