A life settlement provider operating in New York state need not necessarily tell a life policy owner about every contractual arrangement that the provider has with unaffiliated life settlement brokers, state officials say.

The provider can avoid having to disclose every contractual arrangement if the agreements use the same boiler-plate language governing how the provider and the broker will handle life settlement applications, according to the general counsel’s office at the New York State Insurance Department.

Office officials present that conclusion in Office of the General Counsel Opinion Number 11-02-07.

New York department officials say in the opinion that they are answering a question New York mapfrom a life settlement provider compliance director. The compliance director said the provider uses boiler-plate language stating that it is willing to consider buying policies from sellers who are represented by a broker, will not necessarily buy the policies, and will not conduct business with brokers who do not agree to the arrangements described in the boiler-plate language.

The compliance director has asked the New York department to confirm that New York Insurance Law Section 7811(a)(13) does not require the disclosure of the agreements.

In August 2010, the department held that a life settlement provider must disclose any affiliations or contractual arrangements with any other life settlement provider,

life settlement broker, life settlement intermediary, or party financing the transaction, even if the person or entity is not involved in the life settlement transaction.

“While the requirement that a life settlement provider or life settlement broker disclose any affiliations or contractual arrangements with a person or entity that is not involved in the life settlement transaction may seem broad, there are a number of reasons why the owner’s interests are best served by knowing whether a life settlement provider has such an affiliation or contractual arrangement,” department officials say in the new opinion.

But, if a provider uses boiler-plate agreements that treat hundreds of brokers in New York state the same, and most of the brokers are not involved in a particular life settlement transaction, the policy owner has no need to know the names of those brokers, officials say.

“Such disclosure may serve to obscure information pertaining to any life settlement brokers actually involved in the transaction,” officials say. “Therefore, in the department’s view, [the provider] need not disclose to a policy owner that it enters into boiler-plate agreements with unaffiliated life settlement brokers that govern the manner in which [the provider] and a life settlement broker will conduct business if [the provider] agrees to pursue a life settlement application submitted by the life settlement broker, when the life settlement broker is not actually engaged in the life settlement transaction.”

More New York life settlement market coverage from National Underwriter Life & Health: