A leading life insurer group and another organization representing institutional life settlement investors issued separate statements agreeing with two new government reports calling for more regulation of life settlements.
The reports were issued almost simultaneously by the Government Accounting Office (GAO), at the request of the Senate Special Committee on Aging, and by a task force of the Securities and Exchange Commission (SEC).
Frank Keating, president and CEO of the American Council of Life Insurers (ACLI), said the report by the Securities and Exchange Commission task force pointed out the risks of stranger-originated life insurance (STOLI) transactions and other hazards to investors.
“The report addresses many of ACLI’s concerns with this market,” said Keating, who also praised a report on life settlements issued by the GAO.
Meanwhile, the Institutional Life Markets Association (ILMA), Washington, pledged to work with the SEC on the recommendations of its task force.
As for the GAO, ILMA said its report acknowledged life settlement contracts as a practical option for policy owners.
In its report, the GAO said state regulation provided inconsistent supervision of the life settlement market and reiterated its previous call for a federal agency to oversee the insurance industry.
The SEC’s report called on the federal government to define life settlements clearly as securities so that they could be regulated under federal securities laws.
As reported earlier, another industry group, the Life Insurance Settlement Association, Orlando, Fla., also has praised the reports, stating they both recognized that life settlements provide consumers a valuable alternative to surrendering a policy or letting it lapse.