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October 30, 2009 at 08:00 PM
WASHINGTON–A long-time consultant to life insurers says the major problem insurance underwriters have with the life settlement industry is that they fear that life settlement advisers are “gaming the system” by not telling underwriters upfront that an outsider is involved.
“The number 1 issue life underwriters have with life settlement advisors is at the point of application,” said A. James DeHayes, chairman of DeHayes Consulting Group, Roseville, Calif.
He made his comments in a talk at the 6th Annual Life Settlements Conference sponsored by Fasano Associates, Washington, D.C.
To ensure credibility with underwriters, “there has to be full medical disclosure, with the possibility that there will be a life settlement attached to it,” DeHayes explained. “When you game the system, you are creating a transaction that has the potential not only for fraud but is also very negative both for the consumer and the industry.”
He said that “long term, settlements have great value” because they “give people options that they wouldn’t have otherwise.”
But “they need to be considered openly with the right education,” he added.
