Members of the North Dakota state Senate have voted 45-0 to pass a life settlement bill based on a draft model now being debated by regulators at the National Association of Insurance Commissioners.
The bill, Senate Bill 2268, was introduced by state Sens. Jerry Klein, R-Fessenden, N.D.; Nicholas Hacker, R-Grand Forks, N.D.; and Joel Heitkamp, D-Hankinson, N.D.
S.B. 2268 must go through a second legislative vetting, including a public hearing in the House, before being voted on by the House. If the full North Dakota legislature endorses the bill, it would go to Gov. John Hoeven, a Republican, for his signature.
If passed, the bill would become effective Aug. 1.
The bill resembles a draft of proposed changes to the Viatical Settlements model act developed by North Dakota Insurance Commissioner Jim Poolman.
An update of the model now being debated at the NAIC, Kansas City, Mo., includes a rule requiring most policyholders to keep life contracts for 5 years before selling the contracts.
Under the North Dakota bill, a violation would result if a person entered into a settlement transaction before the application or issuance of a policy or within 5 years starting with the date of issuance of the policy.
There would be exceptions if it could “conclusively be shown by the viatical settlement provider” that certain conditions existed, according to the bill text.
Some of those conditions include: terminal or chronic illness; death of the viator’s spouse; divorce from the viator’s spouse; retirement from full-time employment; or physical or mental disability that prevented full-time employment.
The bill’s disclosure section includes a requirement that the viatical settlement broker or provider inform a potential viator that there are alternatives to settlements, including accelerated death benefits or policy loans.
The National Conference of Insurance Legislators, Troy, N.Y., is working on its own life settlement model. The group of NCOIL legislators looking at the issue is being headed by North Dakota state Rep. George Keiser, R-Bismarck, N.D.
Groups praising the North Dakota Senate for passing S.S. 2268 include the American Council of Life Insurers, Washington; the Association for Advanced Life Underwriting, Falls Church, Va.; and the National Association of Insurance and Financial Advisors, Falls Church.