SOURCE: Life Insurance Settlement Association

March 18, 2008 16:47 ET

LISA Applauds Indiana STOLI Legislation as the "Right Way Forward" in Protecting Consumer Rights

ORLANDO, FL--(Marketwire - March 18, 2008) - "The legislature of Indiana has taken significant and well-balanced measures to protect the rights of consumer policy holders in that state after they came under attack by Life Insurers earlier this year," said Doug Head, Executive Director of the Life Insurance Settlement Association. As originally advocated by anti-consumer insurers, Indiana HB 1379 was a draconian 59 page repeal of existing, workable, Indiana Life Settlement Law. The bill, as introduced, was loaded with provisions designed to thwart the Life Settlement Industry. Mr. Head explains: "As originally drafted for big life insurers, the proposal would have rolled back the hundred years of established consumer rights and allowed for abusive treatment of consumers by big insurance companies."

Thanks to the hard work of Indiana Representatives and Senators, including Sponsoring Representative Ripley, who recognized the flaws of other Models from his hard work with the National Conference of Insurance Legislators (NCOIL), a good product emerged. It was apparent that Indiana was not going to redesign workable law with a flawed and torturously convoluted Model. Insurance Chairman Frye, along with Senate Insurance Chairman Paul, worked on the proposal until it was pared down to three straightforward and focused paragraphs describing the improper activity of Stranger Originated Life Insurance (STOLI). The final language bans such activity. The overall frankness and openness of this process and the result it has produced has been in stark contrast to other legislatures that have chosen to rush the process or abridge consumers' rights under the pretense of fighting STOLI. However, thanks to this legislature, "the efforts of insurers to completely thwart consumer rights and destroy the Settlement Industry in Indiana did not succeed," says Mr. Head.

Under the terms of the law, insurers cannot deny payment of a claim two years after policy issue; reaffirming the strong, traditional commitment of insurance law to contestability periods of two years. The bill also recognizes that no policy is valid if there is no insurable interest in an insurance policy at inception and reaffirms Indiana's long standing commitment to the principle of insurable interest in policy origination.

Mr. Head points out: "By affirmatively rejecting the bad provisions of the big insurers, both the Indiana House and Senate focused attention on the improper origination of life insurance rather than the distraction of the consumer's right of access to a secondary market. We do not believe that STOLI is a Secondary Market problem, but, by definition, is a problem of strangers ORIGINATING a life insurance policy. Insurers sell policies, and they need to combat STOLI when they are aggressively marketing to seniors. We believe that Indiana has shown its skill in drilling the ball into the basket with this legislation."

"Indiana's sensible and targeted approach is one that we can surely support," said Executive Director Doug Head, making clear that LISA supports similar, direct, and forthright NCOIL-based approaches for other states that are considering revision to workable and existing Settlement Laws.

"If Indiana can do this in three paragraphs, other states should consider why they need fifty pages of legislation attacking the rights of consumers. We sure support this approach and we can work with the Insurance Commissioner Atterholt to help enforce this straightforward law," says Mr. Head, calling on legislatures in other states to consider this simple fix rather than a complex and contrived ban on consumer access to settlement markets as advocated by insurers. "We urge Governor Daniels to sign HB 1379."

See also, Indiana HB 1379:

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 171 members with a wide variety of interests in the industry. For more about the Association, visit

Contact Information

  • Contact:

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