State lawmakers have decided to address insurable interest concerns by updating their own life settlement model rather than by adopting a model developed by state insurance regulators.
Members of the National Conference of Insurance Legislators, Albany, N.Y., who participated today in a conference call voted 5-0 to build on an NCOIL life settlements model rather than using a viatical settlements model developed by the National Association of Insurance Commissioners, Kansas City, Mo.
The NAIC is revising its own model.
Viatical settlements and life settlements are mechanisms for selling in-force life insurance policies to investors. In recent years, insurance company executives and others have complained about efforts by investors to create policies for the secondary market by, in effect, paying for life policies that insure the lives of strangers. Insurance law normally requires that a life policyholder have a direct financial interest in the life of the insured.
State Rep. George Keiser, R-Bismarck, N.D., asked that parties interested in shaping the NCOIL model update comment on issues such as policies that are manufactured solely for the purpose of resale by investors; the use of these policies in trusts; and insurable interest.
Keiser also asked for comments about issues such as fraud and disclosure requirements.
Comments are due Feb. 20.
NCOIL members hope to use the comments in discussions at their upcoming spring meeting, which will start March 1 in Savannah, Ga.