The National Association of Insurance Commissioners adopted amendments to the Viatical Settlements model act during its summer meeting here.
The amended model was the first to be adopted under a new model law policy initiated by the organization, based in Kansas City, Mo., and much of the discussion prior to its vote related to process. In fact, Nevada, New York, Montana, Washington and Virginia abstained from voting for the model because of process reasons. California had also indicated it would abstain, but was not among the states named after the vote. New York cited the need for greater privacy protections in the model.
The concern with process focused on a 2-point requirement for voting for a model: the belief that the substance is worthy and a commitment to bring the model back to a commissioner’s home state and actively work for its passage there. Commissioners wanted a clearer sense of what commitment meant.
Jim Poolman, North Dakota insurance commissioner, who was very involved in the model’s development, said if commissioners get hung up on the process rather than focus on the public policy merit of the model and other models that are developed, then it will “absolutely cripple the organization.”
Sandy Praeger, NAIC president-elect and Kansas insurance commissioner, offered context on what commissioners would be undertaking if they agreed to commit to bring the model back to their states. She said it does not mean a commissioner would be promising to get it enacted in his or her state exactly as it was passed. But because it is “an important consumer protection,” she said, this model needed to be adopted.
Julie McPeak, Kentucky executive director and chair of the Life and Annuities “A” Committee, noted that 35 states have the Viatical Settlements model on their books, so the amended model would meet the standard of uniformity.
She also cited “consumer protections” in the model, including enhanced disclosure requirements for brokers and providers, as well as bonding requirements for settlement providers and 15 hours of continuing education required on a bi-annual basis.
She added that a 5-year ban on the sale of contracts would reduce the return on the sale of a contract and help eliminate stranger-owned life insurance contracts and create a red-flag for non-recourse premium financing. “This model addresses lots of issues in the market today,” she concluded.