NU Online News Service, June 14, 2004, 7:12 p.m. EDT, San Francisco – The National Association of Insurance Commissioners has adopted a viatical settlements model regulation.[@@]
The model passed here at the Kansas City, Mo., group’s summer meeting despite controversy about a deleted licensing provision.
Insurers criticized the removal of a provision in the model that would have required a separate license for producers who recommend or sell viatical settlements. Insurers said the change makes consumers vulnerable to producers who do not understand the product or misrepresent the product.
But representatives from the viatical and life settlements industry said removing the provision will encourage agents to give needed advice about a viable service.
Commissioners lined up on both sides of the issue. New York, Pennsylvania and Tennessee were among the states that expressed reservations about deleting the licensing provision from the model.
That provision would have given state insurance departments the opportunity to take action against abuses if an agent did not have a viatical license, according to Diane Koken, Pennsylvania insurance commissioner.
Consumers who agree to viatical settlements need extra protection because negotiating a viatical settlement is a riskier, more specialized transaction than buying a life insurance policy, according to Paula Flowers, Tennessee commissioner.
However, Larry Mirel, insurance commissioner for the District of Columbia, argued that for many consumers, life insurance is one of their most important assets, an asset that has both protection and investment components. If a life insurance contract is not performing as it should be, a consumer should have the right to talk to his agent and explore viatical settlement options, Mirel said.