SOURCE: Life Insurance Settlement Association

Life Insurance Settlement Association

August 05, 2009 06:00 ET

Industry Survey Reveals New Regulations Forced Life Settlement Companies to Stop Business in Several States

Life Settlement Review/LISA Study Shows Lack of Consumer Awareness Still an Issue for the Industry

ORLANDO, FL--(Marketwire - August 5, 2009) - Today, Life Settlement Review announced the results of their new industry survey. The online survey, convened over a period of one month, found that 43% of participants claimed that new legal/regulatory restrictions had caused them to stop doing business in one or more states. Fifty percent of those who had stopped doing business in at least one state named "bonds or other licensing provisions" as the reason for their actions.

North Dakota, West Virginia and Vermont were the most frequently named states where laws/regulations had shut down life settlement businesses. All three states passed bans on settlements in the first five years that a life insurance policy is in force. North Dakota and West Virginia both require life settlement providers to carry a surety bond. Starting on October 1, 2009, Vermont will limit brokers from earning more than 2% of the amount paid by a life settlement company to the policy owner.

Survey respondents cited a lack of capital (47% of responses) as the biggest threat currently facing the life settlement industry. Lack of capital was followed by "unreliable mortality estimates" (16%), "negative media reports" (11%), "fraudulent activity by industry actors" (10%) and finally, "negative state regulatory environment" (9%).

The survey results will be published in the August issue of Life Settlement Review, which features in-depth interviews with top industry leaders and editorial commentary by well known life settlement experts. The survey was conducted in conjunction with the Life Insurance Settlement Association (LISA), the industry's largest and oldest trade association.

"The concern over capital reflects the understanding we had going into our New York spring conference, namely that we had to dramatically increase our focus on investment capital," explained Doug Head, Executive Director of LISA. "To the degree that we can, we are redirecting the conversation towards capital development and related issues. Our capacity to actually do something about the world economic situation and the absence of capital in the market is somewhat limited. We know that the capital markets will return. For LISA, it is a matter of having already established the structures, rules, and understanding so that business can flow swiftly and efficiently when the markets return."

The survey was conducted with 117 participants who were polled from a combination of Life Settlement Review readers and LISA members. Additional results of the survey include:

* Roughly 71% of respondents told Life Settlement Review that "the amount of value they bring to a transaction" should most determine the amount of commission that a life settlement broker receives on a transaction.

* Fifty-two percent reported that "regulatory controls" will be the next major challenge facing the life settlement industry as it grows.

* An average of 82% cited "lack of basic awareness of the option" as the top reason why more consumers do not avail themselves of the settlement option. On average, only 13% cited the notion that "economics do not work for particular situations" as the main reason.

Survey Demographics

Survey participants were divided according to their primary line of business: Broker (40%), Industry Services (15%), Financial Entity (14%), Provider (12%), Producer (10%), Legal Services (4%) and Life Expectancy/Actuarial Services (4%). Respondents also listed New York (21%), California (18%) and Florida (13%) as the states in which they conduct the highest amount/volume of business.

About Life Settlement Review

Recognizing a void in the secondary market for a substantive business journal focused on life settlements, Life Settlement Review was established in February 2009. Today, Life Settlement Review is recognized as the leading monthly publication offering a broad cross section of news, editorial commentary, regulatory information as well as business advertisements and classifieds.

About the Life Insurance Settlement Association

Established 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 over 140 members with a wide variety of interests in the industry. For more about the association, visit www.thevoiceoftheindustry.com.

Contact Information

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    Life Insurance Settlement Association
    Doug Head
    Executive Director
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    Life Settlement Review
    Daniel Jimenez
    Managing Editor
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