A coalition of life insurance organizations is asking for a crackdown on “stranger-owned life insurance” arrangements, while life settlement firms are emphasizing their commitment to strong market rules.
The life industry groups, which teamed up to issue a statement Tuesday, includes the American Council of Life Insurers, Washington; the Association for Advanced Life Underwriting, Falls Church, Va.; the National Association of Insurance and Financial Advisors, Falls Church, Va.; and, the National Association of Independent Life Brokerage Agencies, Fairfax, Va.
The coalition says in the statement that the National Association of Insurance Commissioners, Kansas City, Mo., and regulators in individual states should protect insurable interest laws and prohibit SOLI transactions.
SOLI firms arrange for investors pay life insurance premiums for older, unrelated life insurance applicants.
The SOLI investors end up with the right to collect some or all of the life insurance policy proceeds.
SOLI arrangements are different from legitimate life settlements, or sales of in-force life insurance policies, the coalition says.
The SOLI arrangements “circumvent the intent behind state insurable interest laws, which are in place to ensure that the person taking out an insurance policy has an interest in the insured’s continued good health,” according to the coalition that issued today’s statement.
The coalition statement has come out during a time of intense activity in the area of life settlement regulation.