Players in the life settlement market want to make sure consumers understand how the brokers involved are paid.
At least 15 states have included broker disclosure requirements in viatical laws, according to Bryan Freeman, president of the Life Insurance Settlement Association, Orlando, Fla.
But the life settlement industry will be looking at other disclosure possibilities, Freeman said during a teleconference sponsored by Bear, Stearns & Co. Inc.
Bear Stearns held the teleconference shortly after LISA organized its annual spring conference in New York.
The topic of life settlement broker comp disclosure also came up during the LISA conference.
Life settlement brokers want to promote thorough disclosure to prevent abuses from occurring and to prevent commissions paid to an initiating agent from being out of line, said LISA Executive Director Doug Head.
Rob Haynie, managing partner at Life Insurance Settlements, Fort Lauderdale, Fla., said life settlement industry participants will be looking into the possibility of promoting requirements similar to those filed with state insurance departments by carriers.
Participants will discuss the possibility of developing language that would set a cap on broker compensation, Haynie said.
But Haynie said brokers deserve to receive significant compensation.
“We are not afraid of what brokers make,” Haynie says. “It represents payment for a service.”
In other LISA conference news:
- Head talked about a life settlement industry survey project that could collect data from about 20 companies. Life settlement companies want better information about the face amount of coverage settled, the payments made to the sellers, and the length of time that the policies sold were held by the original purchasers, Head said.
The survey project “is important for the industry and for anyone who looks at the industry,” said Scott Kirby, co-president of Advanced Settlements Inc., Orlando, Fla.
- Joseph Borg, director of the Alabama Securities Commission and president-elect of the North American Securities Administrators Association, Washington, said some life settlement transactions could fall under the jurisdiction of securities regulators.
If, for example, an industry representative encourages a consumer to sell a policy and the sale affects matters such as estate planning, the rep might be offering investment advice, Borg said.