SOURCE: Life Insurance Settlement Association
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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:
http://www.in.gov/legislative/bills/2008/HE/HE1379.1.html.
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 www.lisassociation.org.