San Francisco - The National Association of Insurance Commissioners (NAIC) today adopted amendments to the Viatical Settlements Model Act during the Association's Summer National Meeting in San Francisco.
The Model, which has been widely discussed among state regulators, addresses several issues in the life settlement marketplace, including an emerging type of life insurance practice known as Stranger-Originated Life Insurance (STOLI).
The model strengthens several consumer protections and imposes a five-year ban settling a life insurance policy with specified elements indicative of a STOLI transaction. A life settlement is the transfer of life insurance benefits available under a policy. STOLI transactions are traditionally defined as life insurance policies manufactured for the purpose of settling in the secondary market.
"We are extremely pleased with the passage of proposed amendments to the Viatical Settlement Model,” said Julie McPeak, Life Insurance and Annuities Committee Chair and Kentucky Office of Insurance Executive Director. “The intensity of the discussions during our review process validated the Committee's belief that this should be an area of major concern to those of us charged with protecting the public. This is a victory for consumers, particularly those who are ill, elderly or otherwise vulnerable.”
The NAIC, Kansas City, Mo., began looking at this type of life insurance practice in May 2006. The life settlement industry has changed significantly since the last revisions to the Viatical Settlements Model, which many states have adopted. “The drafting process was lengthy and done with great deliberation. We received and seriously considered input from the many interested parties,” McPeak said. “In the end, the measures to strengthen the Model, which has already been adopted in 35 states, passed because its importance was recognized by the NAIC membership.” Source: NAIC
