After 9 months of work, the New York insurance department is ready to introduce its own life settlement bill, says First Deputy Superintendent Kermitt Brooks.
The bill is designed to protect consumer rights as well as privacy and to allow for new market developments such as securitization, says Brooks. The department, he adds, is “agnostic about whether a life settlement market develops” but is intent on ensuring “good protections for consumers.”
Toward that end, he says the department scheduled a series of regular 2-4 hour working sessions in which stakeholders in the legislation went through a draft line by line. The one common point among these interested parties, he says, was a desire to see the market better regulated. In the end, he says, the bill does not resemble either of the models developed by the National Association of Insurance Commissioners or the National Conference of Insurance Legislators.
The New York bill, which will soon be introduced when a sponsor is found for it, has a 2-year ban on the sale of a life insurance policy after its purchase rather than a 5-year provision, Brooks says. The reason for the 2-year ban, he explains, is to try to balance policyholder rights, competitive interests, the need to protect insurable interests and a settler’s privacy.
The bill will better regulate all parties involved when an individual decides to sell a policy, Brooks continues. Life settlement providers that purchase contracts will have to be licensed as will life settlement brokers, he says.
Life settlement intermediaries, those who set up a system to track offers and counteroffers, and settled policy investors, either domestic or foreign, must be registered, Brooks explains. This will help ensure privacy protections for those selling policies because personal information needs to be produced before it can be sold to a provider, he adds. If a policy is sold to a foreign investor, then that party would still need to be registered with the department, according to Brooks.
But if a decision is made to take a group of settled contracts and securitize them, investors who purchase those beneficial interests will not have to be registered because no personal information will be at risk since investors will be looking at investments from a block of policies, Brooks explains.
Another feature of the department bill, Brooks notes, is that it requires disclosure of all settlement offers and compensation, and it goes further to require disclosure of the identity of any person receiving compensation from a provider or broker.