NU Online News Service, Dec. 19, 2003, 5:14 p.m. EST – The Viatical and Life Settlement Association of America, Orlando, Fla., is working on new accountability measures.[@@]
The association wants to have a standard set of data, and it wants to assure that there is no wrongdoing by any member of the group, says Doug Head, the association’s executive director.
In the past, the directors of the association adopted minimum disclosure resolutions. Other resolutions restricted members from buying newly issued life insurance policies and required members to implement anti-fraud plans.
The new accountability standards are an expansion of these resolutions. They provide association members with a “best practices” road map, according to M. Bryan Freeman, president of the association’s board.
Each member of the association has met the anti-fraud standards, by putting plans in place and documenting the plans with the association, Head says. Agreeing on a standard form for documenting a “certain basic set of data” has not been so easy, he says.
The set of data should go beyond the reporting requirements of individual states and include such information as how many policies the company has looked at and bought, the prices of the policies, and the life expectancies of the insureds.
This is “so we can begin to build real-world accountable data sets we can look at in the association, so when I go on the road, I’m not in the awkward position of saying ,?We don’t have information on that,’ ” Head says.
If all members use a standard set of internal controls and methods of documentation, then the association can “certify companies and say, ?These people are in the proper posture,’ and eventually we will be able to approach the best-practices standard,” Head says. “It’s a process, and we’re committed to going to that end, but we have a lot of work ahead of us.”
A viatical settlement is a vehicle that a seriously ill person can use to sell the rights to life insurance death benefits. Life settlements work much the same way, but they usually serve as vehicles for seniors and wealthy individuals who are seeking to sell policy benefits rights for financial or estate-planning purposes. Increasingly, the term “life settlement” is used to refer to both types of transactions.
Companies created the modern viatical and life settlement industry in response to the AIDS pandemic. Previously, use of viatical settlements was rare.
Head says updated standards are needed because the viatical industry has been evolving so quickly. In a period of several years, the industry has moved from an environment of relatively little regulation to one of intensive and rapidly changing legislation and regulation, he says.