Life insurers are protesting a decision to allow viatical brokers to operate with an agents license without obtaining a separate viatical brokers license.
During the spring meeting of the National Association of Insurance Commissioners last month, regulators voted to remove a requirement requiring a separate viatical brokers license from a draft of the Viatical Settlement model regulation. (See NU, March 22.)
The model–without the provision–was adopted by the Life Insurance and Annuities “A” committee. It still needs to be adopted by the NAICs executive committee and plenary before becoming a fully endorsed NAIC model.
The draft was changed after a working group spent several years developing it. The viatical industry maintained that the requirement was unnecessary and would discourage the business of viatication. They added that an agent who initiated the purchase of life insurance knows the consumer best and should see that consumer through a decision to viaticate a contract.
Life insurers, on the other hand, said viatication is a factoring or spread business that is very different from the life insurance business. Consequently, they maintained, it needs separate licensing requirements.
In a letter to all commissioners, American Council of Life Insurers President and CEO Frank Keating urged that the model be restored to its original content.
“It is both illogical and dangerous to assume that a licensed life insurance agent, without being first educated and trained, can correctly answer consumer questions regarding the particulars of viatical settlement transactions, such as the tax consequences and impact on government benefits eligibility,” Keating wrote.
In addition to letters that have been sent to commissioners, ACLI will seek to have the executive committee review its request.
Reproduced from National Underwriter Edition, April 9, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.