The California Department of Insurance (CDI) has revised its proposed emergency regulations regulating life settlement providers in the state to make them less onerous to life settlement industry.
Among other changes, the revised rules state that audited financial statements submitted by life settlement providers to the CDI shall be held in confidence. The earlier version of the rules would have opened that information to scrutiny by the public, a fact that members of the settlement industry objected to.
The CDI’s rule revision comes after a bill advanced in the state Assembly that would have required the state to keep settlement brokers’ financial information confidential. The bill was approved unanimously by the Assembly Committee on Insurance. After the CDI backtracked on its rule proposal, however, SB 1242 was referred to the Assembly’s Committee on Appropriations, in effect killing the measure.
That effectively put the CDI back in charge of administering the state’s life settlement law, SB 98, which was enacted last year.
Some members of the Senate deemed the rules the CDI originally proposed to implement SB 98 “strayed from the language” of that law, says Ken Cooley, principal consultant to the state Senate Banking, Finance and Insurance Committee, which introduced SB 1242.
The regulations were revised to address some of the concerns of firms in the settlement industry, acknowledges a spokesman for the CDI.
Three different versions of SB 98 had been before the legislature and been vetoed once by Gov. Arnold Schwarzenegger before it was finally enacted in October Only two “no” votes were cast against the measure.
SB 98 establishes licensing requirements for life settlement brokers and providers in California. Among other provisions, it sets uniform conditions for every life settlement transaction and mandates a number of consumer disclosures.
For instance, it requires written disclosure to a policy owner of the gross purchase price, including commissions and fees before a contract is settled; the amount to be paid to the owner; and the amount paid to the owner’s broker.
Legislators advanced SB 1242 because they disagreed with some of the emergency rules originally advanced by the CID to implement SB 98. [The rules were issued on an emergency basis to permit settlement firms to continue operating in the state until the rules received final approval.]