JIm Avery is Prudential’s president of individual life insurance, and an outspoken critic of both the life settlements industry and stranger-owned
life insurance (STOLI). He recently traveled to South Korea in an effort to convince the life insurance industry there to not allow the practice of life settlements.
What made you go to South Korea? South Korea has no legislation that allows life settlements, viaticals or STOLI, so it’s virgin territory there. The head of their Democratic party, a Mrs. Park, is putting forth legislation to allow life settlements, so I went there to explain why this might not be good.
Let’s hear your elevator pitch. I explained that life settlements are prone to promote fraud, but even without that, they are an inappropriate use of a consumer contract in an institutional space that should not be allowed. I made this argument to the head of the Democratic Party, the head of the Korea Life Insurance Association, and the head of their Financial Services Commission. They all had different views.
What did Park think? She noted that in this tough economy, people were letting their policies lapse without getting any value from them. In contrast, she saw the settlement industry as giving them tremendous value. But the question that she can’t answer for me or anyone else is, where is that money coming from? It comes from the insurance company, which means that all consumers will pay for the benefit of the investors coming into this industry. Why would you want the mom and pop consumer to pay more for insurance, just to benefit Wall Street? Hasn’t Wall Street done enough damage?
Did the life settlement industry make its case separately to South Korean lawmakers? Mrs. Park is very educated on this subject which leads me to believe that there is some part of the settlement industry out there educating her. She knew too much, given their lack of having an industry.