Less than a year after launching an effort to rework its existing life settlements model act, the National Conference of Insurance Legislators passed a draft that includes a definition of stranger-originated life insurance that both the life insurance and life settlement industries signed off on.
The full NCOIL executive committee unanimously voted on the model during NCOIL’s annual meeting in Las Vegas, earlier this month. The vote followed a unanimous approval by the life insurance and financial planning committee of the organization, based in Troy, N.Y.
State Rep. George Keiser, R-47th District-Bismarck, N.D., who spearheaded the model’s development, said it represents a true compromise because all parties had to make concessions. He also noted that representatives of life insurers, life settlement companies and institutional investors spent between 30-40 hours on conference calls and in all-day sessions to create a model that would address STOLI.
The model’s development is an alternative to an amended Viatical Settlements model act adopted earlier this year by the National Association of Insurance Commissioners, Kansas City, Mo.
A major difference between the two models is the length of time a policyholder is prohibited from settling a policy. The NAIC model has a 5-year moratorium on settlement with certain exceptions for life changing events, while the NCOIL model has a 2-year moratorium reflecting the contestability period traditionally used in life insurance contracts.
Legislators considered it important to get the model adopted at the annual meeting so it could be brought before state legislatures starting in 2008.