The Life Insurance Settlement Association is criticizing a recent industry group warning against “stranger-owned life insurance.”
The American Council of Life Insurers, Washington, and the National Association of Insurance and Financial Advisors, Falls Church, Va., issued the third in a series of “STOLI Alert” notices earlier this month.
The latest notice describes the groups’ position on STOLI and regulatory efforts to keep strangers from helping consumers buy life insurance mainly to create policies that can be sold through the life settlement market.
LISA, Orlando, Fla., says the latest STOLI notice is “highly misleading and full of errors.”
The life settlements subcommittee of the National Conference of Insurance Legislators, Troy, N.Y., was scheduled to meet today.
Given the timing of the NCOIL subcommittee meeting, “we all need to be accurate about information,” says LISA Executive Director Doug Head.
LISA has responded to the STOLI Alert by issuing its own notice, “Be Alert To STOLI Alert.”
“The STOLI Alerts are put forth in broad mailings to agents and policy makers as if they are factual and documented,” Head says. “The truth is that these STOLI Alerts are, at best, highly misleading and inconsistent efforts. The STOLI Alerts contain assertions which contradict the ACLI’s own positions and which misinterpret the cases and examples which they cite.”
LISA objects to an alert statement suggesting that STOLI transactions are hard to detect.
Some of the STOLI court cases that the STOLI alert authors have identified show that STOLI transaction can be easily identified, LISA says.
LISA also objects to a statement in the alert suggesting that a provision in the revised viatical settlements model recently adopted by the National Association of Insurance Commissioners, Kansas City, Mo., that would restrict the sale of in-force life insurance policies for 5 years after issue is the most effective way to prevent STOLI-related fraud.
Steven Brostoff, a spokesman for the ACLI, dismissed the LISA criticisms.
“There is nothing in STOLI Alert that would offend someone who truly opposes STOLI,” Brostoff says.