New York Gov.-elect Eliot Spitzer has succeeded at getting the attention of life settlement industry professionals who attended the fall conference of the Life Insurance Settlement Association.
“There is an enormous elephant in the room, and it is Spitzer’s complaint,” said one LISA conference attendee.
Spitzer, who is now New York’s attorney general, rocked members of LISA, Orlando, Fla., in October by suing Coventry First L.L.C., Fort Washington, Pa., in connection with allegations that Coventry secretly paid life settlement brokers to suppress competing bids from other life settlement providers.
Conference attendees said the life settlement industry should take a firm stand against the kinds of practices that Spitzer has described in the suit.
“Our market is the consumer,” said Kenneth Klein, chief executive officer of Fair Market Life Settlements Corp., New York. “We have the most pro-consumer product since tissues.”
Life settlement firms should show the public that they have consumers’ interests at heart by making a statement about the Spitzer allegations, Klein said.
Anyone who conducts himself in an unacceptable way should longer be a member of LISA, Klein said.
Philip Loy of AVS Underwriting L.L.C., Kennesaw, Ga., also called for a vigorous response.
“We as an association cannot sit here and do nothing,” Loy said. “We must respond in a way that when we stand before the [National Association of Insurance Commissioners], we will retain some level of credibility.”
Another issue that conference attendees raised was problems with life expectancy estimates.
Too often, the estimators come up with life expectancies that “are lower than any reasonable methodology would produce,” an attendee said.
Other attendees countered that many of the low-ballers are not LISA members, and that sophisticated policy buyers either discard the estimates of the low-ballers or look for the average on an entire block of business.