Panel Eases Viatical Model Broker Licensing Provision

Insurers could be held responsible if there is no clear line between the 2 types of services, Boyd said.

Life insurers offer protection and financial security but viatical settlement companies are factoring companies that earn a profit on the spread between the purchase price and the face amount paid out upon the death of the viator, said George Coleman, vice president-government affairs and external affairs with Prudential Financial Inc., Newark, N.J.

“Inappropriate viatical settlement transactions have the potential to do serious damage to the life insurance business,” according to Coleman.

Ron Panneton, senior counsel with the National Association of Insurance Financial Advisors, Falls Church, Va., said NAIFA changed its position to oppose the measure because the 2 areas are different businesses and regulators should make sure that people who get into the viatical business know what they are talking about.

The Independent Insurance Agents & Brokers of America, Alexandria, Va., continues to support the original model regulation language.

Creating a separate license for viatical brokers establishes a “gag order” that restricts the relationship between “trusted” advisors and clients, according to Wes Bissett, the IIAB’s senior vice president-government affairs and state relations.

SpreadtheRisk’s Hennosy agreed with Bissett. Hennosy noted that jurisdictions that require a separate viatical broker license have issued only a handful of viatical broker licenses. That makes it more difficult for a contract holder to have the option of viaticating a policy, Hennosy said.

Alan Buerger, chief executive officer of Coventry First L.L.C., Fort Washington, Pa., said many clients choose to viaticate policies simply because they have outlived their need for the insurance or their ability to pay for the coverage. Those clients should be able to viaticate policies with their own life insurance agents, Buerger said.