New York lawmakers likely will introduce a revised version of a life settlement regulation bill that failed to become law in 2008.
Kermitt Brooks, first deputy superintendent at the New York State Insurance Department, gave that assessment here Tuesday here at the Life Settlement Summit .
The bill died in 2008 in part because some lawmakers thought the bill privacy provisions were too weak to protect individuals who want to sell their life insurance policies to investors, Brooks said.
Others wanted to improve the clarity of the disclosures going to investors, Brooks said at the summit.
The summit was sponsored by Summit Business Media L.L.C., New York, the parent company of National Underwriter.
The 2008 bill was “neither fish nor fowl,” in that it did not closely follow either of two model life settlement laws have been advanced by organizations representing state insurance officials, Brooks said.
Model laws have been proposed by the National Association of Insurance Commissioners, Kansas City, Mo., and the National Conference of Insurance Legislators, Troy, N.Y.
Some life settlement industry participants opposed the 2008 bill because they believed it would have imposed burdensome registration requirements, Brooks said.
Others objected that the bill was “extraterritorial,” because it would have required companies to tell New York regulators about settlements originated in other states, Brooks said.
The bill Brooks will propose to lawmakers this week would be closer to the NCOIL model than to NAIC’s, and it would provide “more robust” protections to policy owners and to investors, Brooks said.
“We want to ensure subsequent owners [of a policy] will protect the policyholder’s privacy interests and that the policyholder is aware of the risks of selling,” Brooks said.
The revised bill also would seek stronger provisions to prohibit stranger-originated life insurance, a practice in which individuals buy life policies with the intention of selling them to investors almost immediately. Last year’s bill failed to define stranger-originated ife insurance adequately, Brooks said.
He said the new bill also would provide for certain other policyholder rights, such as the owner’s right to see the contract, limits on the sharing of information about policyholders and broker and advisor compensation disclosure requirements.
Another provision would require settlement providers to assure that investors understand what they are buying when they enter into a settlement contract, Brooks said.