To The Editor:

On March 15, 2010, Bruce Ferguson, Senior Vice President of State Relations for the American Council of Life Insurers responded to a National Underwriter column entitled “Dirty Little Secrets,” which accurately described the life insurance companies’ “deliberate campaign to conflate legitimate life settlements with stranger-originated life insurance transactions.” National Underwriter’s Editor-in-Chief, Steve Piontek, correctly exposed the “dirty little secret” of life insurers, namely their persistent complaining about the evils of stranger-originated life insurance (STOLI), while, at the same time, being responsible for the very root of STOLI.

In his response, Ferguson ignored the key legitimate questions about the role that life insurance companies have played in actually perpetrating STOLI: “Who else writes life insurance policies?” declared Mr. Piontek. Mr. Piontek rightly asked to “know more about what type of self-policing the ACLI has encouraged among its members. I’d like to hear more from companies about what actions they’ve taken against any agent who is involved in promoting STOLI.”

Instead of answering these questions, Ferguson launched a classic ad-hominem attack on the editor and the publication while continuing the ACLI’s campaign of disinformation. He repeats the oft-heard cry about how hard and difficult it is for multi-billion dollar life insurance companies to detect STOLI. Well, fortunately, here are the facts:

–Major life companies have told their stockholders that STOLI is not a problem.
–Major life company officers are opposed to the Settlement Business itself and have settled on STOLI as the most convenient story line.

As the facts above illustrate, the ACLI has failed to disclose to consumers the fact that the alleged STOLI problem, against which the ACLI has “aggressively…battled,” is barely a problem at all. In addition to the carriers’ own statements that STOLI is not a problem, a review of the National Association of Insurance Commissioners’ database reveals that there have been only a few consumer complaints relating to alleged STOLI transactions nationally over the past five years, and just one this year. These factual revelations beg the obvious question; why would the ACLI and insurers aggressively battle an issue that has drawn little to no complaints among consumers or that they have agreed is no longer relevant? The answer is simple: neither the ACLI nor insurers want to publicly express their true financial motives for opposing the life settlements market.

Contrary to Ferguson’s argument, the ACLI has not honorably fought actual STOLI, but has consistently sought to blur the lines, confuse all parties, and slow settlement activity with a false cover story. Instead of heralding the financial benefits that a consumer can receive in a properly completed life settlement transaction, or at a minimum, disclosing to the consumer that the marketplace exists, the ACLI has elected to effectuate a fear-based media strategy in an effort to push consumers away from the settlement marketplace to maintain or increase profitability.

As the voice of the life settlement industry, LISA is committed to protecting and advancing a consumer’s right to participate in the life settlement marketplace and would welcome the opportunity to work with the ACLI towards fair and reasonable legislation that appropriately protects consumers’ rights while addressing the worries of the insurance industry.

Doug Head

LISA Executive Director

Orlando, Fla.