The Life Insurance Settlement Association has retracted its attack on insurers regarding Oklahoma State University’s plan to collect $250 million by insuring the lives of 25 supporters, but not before igniting a bitter war of words between LISA and the American Council of Life Insurers over the transaction.

The Stillwater, Okla., school expects to raise $250 million for its athletic fund through the “Gift of a Lifetime” program, which came from one of its alumni, T. Boone Pickens. Pickens, the founder and chairman of Dallas-based BP Capital, along with Sherman Smith, recently donated $200 million for the construction of new athletic facilities for OSU.

“Our initial discussions with Boone on this subject quickly shifted from a ‘what if?’ to a ‘why not?’ conversation,” said OSU athletic director Mike Holder. “One thing led to another and we sought guidance of top insurance experts to research the idea. This program is evidence of our loyal supporters’ willingness to embrace new ways to help their university by leaving a lasting legacy that will benefit OSU Cowboys and Cowgirls for generations to come.”

LISA Executive Director Doug Head initially sounded the alarm regarding the program, calling it the “height of hypocrisy” for life insurers to support such a mechanism while opposing other secondary market transactions and funding mechanisms.

Upon learning more about the program, however, Head said, “Based on new information that we have obtained,” the group is satisfied that the OSU program does meet the standard for insurable interest.

“We now understand from these life insurance producers that the recent OSU charitable life insurance program is not what LISA considers to be stranger-initiated life insurance, a misuse of life insurance where only investors stand to reap substantially all of the death benefits of life insurance purchased by charities,” Head asserted, adding that LISA “regrets the errors” of its initial statement questioning the program’s validity.

In its statement, LISA said both charitable life insurance and the ability to borrow money to finance insurance premium payments are lawful, legitimate and useful transactions. In addition, it said this was the case “despite the life insurance industry’s assertion that only life insurance benefiting families who have lost their primary income earner is legitimate,” and “despite the claims of life insurers and their spokespersons and some insurance regulators that life insurance borrowing arrangements that do not limit their collateral solely to the cash surrender value of a policy are presumed to be suspect of insurable interest violations and therefore should be banned from bona fide life settlements for a period of 5 years.”

Michael Lovendusky, vice president and associate general counsel for the American Council of Life Insurers, said in response that those comments were “absurd” and that life insurers would not actively try to limit the number of consumers who could take advantage of their products.

“Life insurance provides numerous and various benefits to all individuals and institutions with insurable interests recognized by state law,” he said. “The industry would not likely limit its market to ‘families who have lost their primary income earner,’ though such family concerns are surely important to all life insurers.”

Lovendusky characterized LISA’s statement as “transparently desperate fabrications to distract readers from their embarrassing disparagement of participants in a legitimate insurance transaction benefiting an educational institution under the express authority of state law.”

Head maintained in his statement that LISA believes OSU’s program, while not a stranger-originated insurance transaction, would be treated as one under the proposed updated model viatical act set to be voted on by the National Association of Insurance Commissioners in June.