Members of the California Senate have voted 35-1 to approve S.B. 1543, a bill that would define “stranger-originated life insurance” and classify the creation of STOLI arrangements as a fraudulent act.
The California Assembly has voted 76-1 to approve the bill.
The American Council of Life Insurers, Washington, and other industry groups, including the National Association of Insurance and Financial Advisors, Falls Church, Va., and the Association for Advanced Life Underwriting, Falls Church, have put out a statement welcoming passage of the bill and calling for Gov. Arnold Schwarzenegger, R, to sign it.
California state Sen. Michael Machado, D-San Joaquin, Calif., based S.B. 1543 on a model developed by the National Conference of Insurance Legislators, Troy, N.Y.
At least 12 other states already have acted against STOLI arrangements, according to ACLI President Frank Keating.
By making S.B. 1543 law, California would “protect its senior citizens from the speculators whose only interest in them is their early death,” Keating says.
In addition to defining the creation of STOLI arrangements as a fraudulent act, S.B. 1543 would permit the California Insurance Department to collect information from life settlement providers that would help it monitor the market, insurance groups say.
“NAIFA’s membership is very pleased with the California anti-STOLI legislation,” says NAIFA President Jeffrey Taggart.