A new Life Settlements Act has taken effect in Rhode Island without the benefit of the governor’s signature.
The law, introduced by state Rep. Brian Patrick Kennedy, D-Hopkinton, R.I., as H.B. 5199 and by state Sen. William Walaska, D-Warwick, R.I., as S. 229, was passed by the legislature in 2008, then vetoed by Gov. Donald Carcieri, R.
This year, Carcieri did not sign the bill, but he did not veto it. The bill became law once Carcieri passed it on to his secretary of state.
Kennedy and Walaska said they based their bill on the model recommended by the National Conference of Insurance Legislators, Troy, N.Y. Kennedy is the immediate past president of NCOIL.
The Rhode Island LSA bars stranger-originated life insurance transactions. The Rhode Island law defines a STOLI transaction as a plan to buy a life policy to benefit a third-party investor who has no insurable interest in the insured at the time the policy is originated.
The law mandates disclosure of broker compensation and other information be to policy owners. The law also requires life settlement companies seeking to do business in Rhode Island to register and pay a fee to the state’s Department of Business Regulation.
The act is set to take effect July 1, 2010.