Brooks: Life Settlement Bill To Return In Empire State

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.