SOURCE: Life Insurance Settlement Association

July 17, 2007 11:56 ET

Industry Association Supports Life Settlement Bill Introduced in D.C.

ORLANDO, FL--(Marketwire - July 17, 2007) - The Life Insurance Settlement Association announced its strong support today for the recently introduced bill in the District of Columbia City Council to regulate life settlements in that jurisdiction. This legislation, introduced at the request of the D.C. Department of Insurance, Securities, and Banking, comprehensively protects life insurance policyowners by imposing tough licensing requirements on settlement providers and brokers and thorough oversight of interactions with consumers, including an important new set of disclosures and affirmations designed to buttress insurable interest requirements and prevent STOLI (stranger originated life insurance).

"This bill is reflective of the District's growing reputation as one of the nation's leading financial services regulators," said LISA executive director Doug Head. "As secondary market companies continue to be attracted to the region, this landmark legislation will provide the District with the necessary tools to foster competition while protecting consumers."

Commissioner Thomas E. Hampton has made settlement legislation his top priority in his speeches and other public statements regarding the Department's agenda. "We commend Commissioner Hampton's leadership on this issue," said Head. "His bill applies a thoughtful approach to complicated public policy issues, using the longstanding and tested NCOIL and NAIC models as a platform, and adding important updates in response to recent regulatory concerns regarding STOLI."

Life insurers have repeatedly and publicly stated that they have used aggressive underwriting to contain the wild speculation in human life that has alarmed policymakers, Head noted. "Nearly a dozen insurance companies have publicly stated or certified to investors and regulators that they have materially stopped STOLI by asking questions at policy inception designed to identify and weed out investor-manufactured transactions. The D.C. Department's bill would encourage such efforts throughout the market by codifying appropriate disclosures and affirmations designed to bring transparency to both sides of the transaction and to ensure an informed contract."

"Effective regulators study the market and react accordingly," Head continued. "That's what Commissioner Hampton has done here. His bill will directly address STOLI by ensuring that applicants for insurance certify that they have insurable interest, have not pre-arranged a settlement, and have not been improperly induced into renting out their insurance capacity. And this legislation will protect consumers who borrow against the market value of their policies in order to finance the purchase, by ensuring that they understand the possible detriments to them which can result from a change of ownership in the policy to satisfy the debt."

The D.C. action is very timely, Head noted. "With the National Conference of Insurance Legislators (NCOIL) meeting this week in Seattle, and with a majority of its life settlements subcommittee publicly opposed to the recent NAIC amendments, which impose a five year moratorium on settlements without stopping STOLI, and punishes a consumer's use of the policy as collateral in a legitimate loan transaction, we think that the D.C. Department's bill as introduced demonstrates that, as policymakers learn more about STOLI, they better understand how to address the problem."

Founded in 1994, the Life Insurance Settlement Association is the oldest and largest trade organization in the industry. Its goal is to promote the development, integrity and reputation of the life settlement industry, and to promote a competitive market for the people it serves. LISA now represents 150 members with a wide variety of interests in the industry. For more about the Association, visit www.lisassociation.org.

Contact Information

  • Contact:
    Doug Head
    Executive Director
    LISA
    407-894-3797
    Email Contact