New York Insurance Department is proposing legislation to re

 

Thursday, Mar 26,2009, 11:33:01 AM   Click:

New York, insurance regulators have proposed to regulate the life settlement business in a bill submitted to the State legislature. The measure calls for licensing for life settlement providers and brokers.

These operations are not currently regulated in New York.

A life settlement occurs when a person decides to no longer need a life insurance policy. The insured can receive more money by selling only through surrender to the life insurance company.

"In these uncertain economic times, there is strong pressure on people pressed for money to sell assets such as life insurance policies," said Insurance Superintendent Eric Dinallo in a statement. "This bill protects consumers by creating a transparent market with licensing, registration and disclosure requirements."

According to the Ministry, brokers connect with the owners of the political settlement providers who buy policies. In some cases, policies are sold to suppliers in an auction, as the life led by the interim regulations.

Consumers will be given the essential information they need to take a decision in a life settlement, including the value of the offers and bids-against, the fees paid to brokers life settlement and the contractual arrangements between parties involved in a transaction? Dinallo said.

The service will be authorized to issue, revoke, suspend or Nonrenewable life settlement providers and brokers licenses.

The bill would also prohibit the life settlement providers and brokers to engage in foreign operations of origin of life, or Stoli, a practice in which a life insurance policy is purchased for the benefit of someone who, when a policy is issued without insurable interest in the life of the insured, the ministry said.

In an interview with BestWire last summer, Scott Hawkins, Vice President and analyst at Conning Research & Consulting, said in May that some policyholders are turning to life settlements as a source of liquidity because other forms of credit, such as home loans and credit cards, are becoming less available (BestWire, 4 August 2008).

During the last years, some life insurers in the United States likely to see a lot of money in the company, entered the life settlement market in some way, shape or form or even offer alternatives via creative loan programs for policyholders who want or need cash (BestWire, April 21, 2008).

Phoenix Life Solutions, a unit of the life insurer Phoenix Cos Inc (NYSE: PNX)., Said he entered the settlement of cases through partnerships with four brokerage general agents (BestWire, 1 April 2008). Phoenix Life has been the source of life settlements, policy or not to buy the policy owners in exchange for immediate cash settlement.