A. 7131--A 2
RESPECT TO LIFE SETTLEMENTS, within a time period specified by the
superintendent of not less than fifteen business days, the superinten-
dent is authorized to levy a civil penalty, after notice and hearing,
against such corporation or person not to exceed five hundred dollars
per day for each day beyond the date specified by the superintendent for
response, but in no event shall such penalty exceed seven thousand five
hundred dollars.
S 2. Section 2101 of the insurance law is amended by adding a new
subsection (v) to read as follows:
(V) IN THIS ARTICLE, "LIFE SETTLEMENT BROKER" SHALL HAVE THE MEANING
CONTAINED IN SUBSECTION (J) OF SECTION SEVEN THOUSAND EIGHT HUNDRED TWO
OF THIS CHAPTER.
S 3. Paragraph 1 of subsection (a) of section 2102 of the insurance
law, as amended by chapter 687 of the laws of 2003, is amended to read
as follows:
(1) No person, firm, association or corporation shall act as an insur-
ance producer [or], insurance adjuster OR LIFE SETTLEMENT BROKER in this
state without having authority to do so by virtue of a license issued
and in force pursuant to the provisions of this chapter.
S 4. The section heading and subsections (a) and (b) of section 2110
of the insurance law, as amended by chapter 687 of the laws of 2003, are
amended to read as follows:
Revocation or suspension of license of insurance producer, insurance
consultant [or], adjuster OR LIFE SETTLEMENT BROKER. (a) The superinten-
dent may refuse to renew, revoke, or may suspend for a period the super-
intendent determines the license of any insurance producer, insurance
consultant [or], adjuster OR LIFE SETTLEMENT BROKER, if, after notice
and hearing, the superintendent determines that the licensee or any
sub-licensee has:
(1) violated any insurance laws, or violated any regulation, subpoena
or order of the superintendent [of insurance] or of another state's
insurance commissioner, or has violated any law in the course of his OR
HER dealings in such capacity;
(2) provided materially incorrect, materially misleading, materially
incomplete or materially untrue information in the license application;
(3) obtained or attempted to obtain a license through misrepresen-
tation or fraud;
(4)(A) used fraudulent, coercive or dishonest practices;
(B) demonstrated incompetence;
(C) demonstrated untrustworthiness; or
(D) demonstrated financial irresponsibility in the conduct of business
in this state or elsewhere;
(5) improperly withheld, misappropriated or converted any monies or
properties received in the course of business in this state or else-
where;
(6) intentionally misrepresented the terms of an actual or proposed
insurance contract, LIFE SETTLEMENT CONTRACT or application for insur-
ance;
(7) has been convicted of a felony;
(8) admitted or been found to have committed any insurance unfair
trade practice or fraud;
(9) had an insurance producer license, A LIFE SETTLEMENT BROKER
LICENSE, or its equivalent, denied, suspended or revoked in any other
state, province, district or territory;
A. 7131--A 3
(10) forged another's name to an application for insurance OR LIFE
SETTLEMENT CONTRACT or to any document related to an insurance OR LIFE
SETTLEMENT transaction;
(11) improperly used notes or any other reference material to complete
an examination for an insurance license OR LIFE SETTLEMENT BROKER
LICENSE;
(12) knowingly accepted insurance business from an individual who is
not licensed;
(13) failed to comply with an administrative or court order imposing a
child support obligation; [or]
(14) failed to pay state income tax or comply with any administrative
or court order directing payment of state income tax[.];
(15) WHILE ACTING AS A LIFE SETTLEMENT BROKER, KNOWINGLY CONDUCTED THE
BUSINESS OF LIFE SETTLEMENTS WITH A PERSON WHO IS NOT LICENSED OR REGIS-
TERED UNLESS SUCH PERSON IS NOT REQUIRED TO BE LICENSED OR REGISTERED;
(16) WHILE ACTING AS A LIFE SETTLEMENT BROKER, SOLD, ASSIGNED, PLEDGED
OR OTHERWISE TRANSFERRED THE OWNERSHIP OF A LIFE SETTLEMENT CONTRACT TO
A PERSON OTHER THAN AS PROVIDED IN ARTICLE SEVENTY-EIGHT OF THIS CHAP-
TER;
(17) WHILE ACTING AS A LIFE SETTLEMENT BROKER, FAILED TO PROTECT THE
PRIVACY OF THE INSURED OR OWNER OR OTHER PERSON FOR WHOM THE LIFE
SETTLEMENT BROKER WAS REQUIRED TO PROVIDE PROTECTION PURSUANT TO ARTICLE
SEVENTY-EIGHT OF THIS CHAPTER; OR
(18) CEASED TO MEET THE REQUIREMENTS FOR LICENSURE UNDER THIS CHAPTER.
(b) Before revoking or suspending the license of any insurance produc-
er, LIFE SETTLEMENT BROKER or other licensee pursuant to the provisions
of this article, the superintendent shall, except when proceeding pursu-
ant to subsection (f) of this section, give notice to the licensee and
to every sub-licensee and shall hold, or cause to be held, a hearing not
less than ten days after the giving of such notice.
S 5. The section heading of section 2119 of the insurance law is
amended and a new subsection (e) is added to read as follows:
Insurance agents, brokers, consultants, AND LIFE SETTLEMENT BROKERS;
written contract for compensation; excess charges prohibited.
(E)(1) NO PERSON LICENSED AS A LIFE SETTLEMENT BROKER MAY RECEIVE ANY
COMPENSATION FOR EXAMINING, APPRAISING, REVIEWING OR EVALUATING ANY LIFE
SETTLEMENT CONTRACT OR FOR MAKING RECOMMENDATIONS OR GIVING ADVICE WITH
REGARD TO SUCH CONTRACT; OR RECEIVE ANY COMPENSATION FROM ANY OWNER OR
PROPOSED OWNER FOR OR ON ACCOUNT OF THE SOLICITATION OR NEGOTIATION OF,
OR OTHER SERVICES IN CONNECTION WITH, ANY LIFE SETTLEMENT CONTRACT
SUBJECT TO THIS CHAPTER OR FOR ANY OTHER SERVICES ON ACCOUNT OF SUCH
CONTRACT; UNLESS SUCH COMPENSATION IS BASED UPON A WRITTEN MEMORANDUM
SIGNED BY THE PARTY TO BE CHARGED AND SPECIFYING OR CLEARLY DEFINING THE
AMOUNT OR EXTENT OF SUCH COMPENSATION. A COPY OF EVERY SUCH MEMORANDUM
SHALL BE RETAINED BY THE LICENSEE FOR NOT LESS THAN THREE YEARS AFTER
SUCH SERVICES HAVE BEEN FULLY PERFORMED.
(2) NO PERSON LICENSED AS A LIFE SETTLEMENT BROKER MAY RECEIVE ANY
COMPENSATION, DIRECT OR INDIRECT, FOR OR ON ACCOUNT OF THE SOLICITATION
OR NEGOTIATION OF, OR OTHER SERVICES IN CONNECTION WITH A LIFE SETTLE-
MENT CONTRACT SUBJECT TO THIS CHAPTER FROM ANY PERSON FOR WHOM ANY SUCH
LICENSEE HAS PERFORMED ANY RELATED CONSULTING SERVICE FOR WHICH THE
LICENSEE HAS RECEIVED A FEE OR CONTRACTED TO RECEIVE A FEE WITHIN THE
PRECEDING TWELVE MONTHS UNLESS SUCH COMPENSATION IS PROVIDED FOR IN THE
WRITTEN MEMORANDUM REQUIRED PURSUANT TO PARAGRAPH ONE OF THIS
SUBSECTION.
A. 7131--A 4
(3) NO PERSON LICENSED AS A LIFE SETTLEMENT BROKER MAY RECEIVE ANY
COMPENSATION, DIRECT OR INDIRECT, FROM A LIFE SETTLEMENT PROVIDER OR ANY
OTHER PERSON WITH RESPECT TO ANY LIFE SETTLEMENT CONTRACT IF THE LIFE
SETTLEMENT BROKER HAS ALREADY RECEIVED OR WILL RECEIVE COMPENSATION,
DIRECT OR INDIRECT FROM, OR ON BEHALF OF, THE OWNER WITH RESPECT TO THAT
LIFE SETTLEMENT CONTRACT.
S 6. Subsections (a) and (b) of section 2132 of the insurance law, as
added by chapter 656 of the laws of 1992, are amended to read as
follows:
(a) This section shall apply to resident and non-resident persons
licensed pursuant to this article with respect to [the following types
of insurance]:
(1) life insurance, annuity contracts, variable annuity contracts and
variable life insurance;
(2) sickness, accident and health insurance; [and]
(3) all lines of property and casualty insurance; AND
(4) LIFE SETTLEMENTS.
(b) This section shall not apply to:
(1) those persons holding licenses for which an examination is not
required by the laws of this state; [or]
(2) any limited licensees or any other licensees as the superintendent
may exempt subject to any continuing education requirements deemed
appropriate by the superintendent[.]; OR
(3) FOR PURPOSES OF THE CONTINUING EDUCATION REQUIREMENTS FOR LIFE
SETTLEMENTS, AN INSURANCE PRODUCER WITH A LIFE LINE OF AUTHORITY WHO IS
ACTING AS A LIFE SETTLEMENT BROKER PURSUANT TO SECTION TWO THOUSAND ONE
HUNDRED THIRTY-SEVEN OF THIS ARTICLE.
S 7. The insurance law is amended by adding a new section 2137 to
read as follows:
S 2137. LIFE SETTLEMENT BROKERS; LICENSING. (A) THE SUPERINTENDENT
MAY ISSUE A LICENSE TO ANY INDIVIDUAL, FIRM, ASSOCIATION OR CORPORATION
WHO OR THAT HAS COMPLIED WITH THE REQUIREMENTS OF THIS CHAPTER, AUTHOR-
IZING THE LICENSEE TO ACT AS A LIFE SETTLEMENT BROKER.
(B) ANY SUCH LICENSE ISSUED TO A FIRM OR ASSOCIATION SHALL AUTHORIZE
ONLY THE MEMBERS THEREOF, NAMED IN SUCH LICENSE AS SUB-LICENSEES, TO ACT
INDIVIDUALLY AS LIFE SETTLEMENT BROKERS THEREUNDER, AND ANY SUCH LICENSE
ISSUED TO A CORPORATION SHALL AUTHORIZE ONLY THE OFFICERS AND DIRECTORS
THEREOF, WHO ARE NAMED IN SUCH LICENSE AS SUB-LICENSEES, TO ACT INDIVID-
UALLY AS LIFE SETTLEMENT BROKERS THEREUNDER. EVERY SUB-LICENSEE, ACTING
AS A LIFE SETTLEMENT BROKER PURSUANT TO SUCH A LICENSE SHALL BE AUTHOR-
IZED SO TO ACT ONLY IN THE NAME OF THE LICENSEE.
(C) EVERY INDIVIDUAL APPLICANT FOR A LICENSE UNDER THIS SECTION AND
EVERY PROPOSED SUB-LICENSEE SHALL BE EIGHTEEN YEARS OF AGE OR OVER AT
THE TIME OF THE ISSUANCE OF SUCH LICENSE.
(D)(1) BEFORE ANY ORIGINAL LIFE SETTLEMENT BROKER'S LICENSE IS ISSUED,
THERE SHALL BE ON FILE IN THE OFFICE OF THE SUPERINTENDENT AN APPLICA-
TION BY THE PROPOSED LICENSEE IN SUCH FORM OR FORMS, AND SUPPLEMENTS
THERETO, AND CONTAINING INFORMATION THE SUPERINTENDENT PRESCRIBES. FOR
EACH BUSINESS ENTITY, THE SUB-LICENSEE OR SUB-LICENSEES NAMED IN THE
APPLICATION SHALL BE DESIGNATED RESPONSIBLE FOR THE BUSINESS ENTITY'S
COMPLIANCE WITH THIS CHAPTER AND REGULATIONS PROMULGATED THEREUNDER. THE
APPLICANT SHALL FULLY DISCLOSE THE IDENTITY OF ALL STOCKHOLDERS (EXCEPT
STOCKHOLDERS OWNING FEWER THAN TEN PERCENT OF THE VOTING SHARES OF A
LIFE SETTLEMENT BROKER WHOSE SHARES ARE PUBLICLY TRADED), PARTNERS,
OFFICERS, MEMBERS, DIRECTORS AND PERSONS WITH A CONTROLLING INTEREST AND
THE SUPERINTENDENT MAY, IN THE EXERCISE OF THE SUPERINTENDENT'S
A. 7131--A 5
DISCRETION, REFUSE TO ISSUE A LICENSE IN THE NAME OF A LEGAL ENTITY IF
NOT SATISFIED THAT ANY EMPLOYEE, STOCKHOLDER, PARTNER, OFFICER, MEMBER,
DIRECTOR OR PERSON WITH A CONTROLLING INTEREST THEREOF WHO MAY MATE-
RIALLY INFLUENCE THE APPLICANT'S CONDUCT MEETS THE STANDARDS OF THIS
ARTICLE AND ARTICLE SEVENTY-EIGHT OF THIS CHAPTER. THEREAFTER, THE
APPLICANT AND, IF A LICENSE HAS BEEN ISSUED, THE LICENSEE, SHALL PROVIDE
TO THE SUPERINTENDENT NEW OR REVISED INFORMATION ABOUT STOCKHOLDERS
(EXCEPT STOCKHOLDERS OWNING FEWER THAN TEN PERCENT OF THE VOTING SHARES
OF A LIFE SETTLEMENT BROKER WHOSE SHARES ARE PUBLICLY TRADED), PARTNERS,
OFFICERS, MEMBERS, DIRECTORS AND PERSONS WITH A CONTROLLING INTEREST
WITHIN THIRTY DAYS OF THE CHANGE. FOR PURPOSES OF THIS SECTION,
"CONTROLLING INTEREST" MEANS A PERSON WHO DIRECTLY OR INDIRECTLY, HAS
THE POWER TO CAUSE TO BE DIRECTED THE MANAGEMENT, CONTROL OR ACTIVITIES
OF SUCH LICENSEE.
(2) THE SUPERINTENDENT MAY REQUIRE ANY INDIVIDUAL NAMED IN THE APPLI-
CATION FOR SUCH LICENSE TO SUBMIT A SET OF FINGERPRINTS, UNLESS SUCH
APPLICANT IS LICENSED AS AN INSURANCE PRODUCER WITH A LIFE LINE OF
AUTHORITY. SUCH FINGERPRINTS SHALL BE SUBMITTED TO THE DIVISION OF CRIM-
INAL JUSTICE SERVICES FOR A STATE CRIMINAL HISTORY RECORD CHECK, AS
DEFINED IN SUBDIVISION ONE OF SECTION THREE THOUSAND THIRTY-FIVE OF THE
EDUCATION LAW, AND MAY BE SUBMITTED TO THE FEDERAL BUREAU OF INVESTI-
GATION FOR A NATIONAL CRIMINAL HISTORY RECORD CHECK. ALL SUCH CRIMINAL
HISTORY RECORDS SENT TO THE SUPERINTENDENT PURSUANT TO THIS PARAGRAPH
SHALL BE CONFIDENTIAL PURSUANT TO THE APPLICABLE FEDERAL AND STATE LAWS,
RULES AND REGULATIONS, AND SHALL NOT BE PUBLISHED OR IN ANY WAY
DISCLOSED TO PERSONS OTHER THAN THE SUPERINTENDENT, UNLESS OTHERWISE
AUTHORIZED BY LAW. THE SUPERINTENDENT SHALL PROVIDE SUCH APPLICANT WITH
A COPY OF HIS OR HER CRIMINAL HISTORY RECORD, IF ANY, TOGETHER WITH A
COPY OF ARTICLE TWENTY-THREE-A OF THE CORRECTION LAW, AND INFORM SUCH
APPLICANT OF HIS OR HER RIGHT TO SEEK CORRECTION OF ANY INCORRECT INFOR-
MATION CONTAINED IN SUCH RECORD PURSUANT TO REGULATIONS AND PROCEDURES
ESTABLISHED BY THE DIVISION OF CRIMINAL JUSTICE SERVICES. ALL DETERMI-
NATIONS TO GRANT OR DENY CLEARANCE FOR LICENSURE PURSUANT TO THIS
SECTION SHALL BE IN ACCORDANCE WITH SUBDIVISION SIXTEEN OF SECTION TWO
HUNDRED NINETY-SIX OF THE EXECUTIVE LAW AND ARTICLE TWENTY-THREE-A OF
THE CORRECTION LAW. WHEN THE SUPERINTENDENT DENIES AN APPLICATION,
WRITTEN NOTICE OF SUCH DETERMINATION SHALL BE GIVEN TO THE PROSPECTIVE
APPLICANT WHO SHALL BE AFFORDED NOTICE AND THE RIGHT TO BE HEARD AND
OFFER PROOF IN OPPOSITION TO SUCH DETERMINATION.
(E) THE SUPERINTENDENT SHALL, IN ORDER TO DETERMINE THE COMPETENCY OF
EVERY INDIVIDUAL APPLICANT AND OF EVERY PROPOSED SUB-LICENSEE FOR THE
LIFE SETTLEMENT BROKER LICENSE, REQUIRE SUCH INDIVIDUAL TO SUBMIT TO A
PERSONAL WRITTEN EXAMINATION AND TO PASS THE SAME TO THE SATISFACTION OF
THE SUPERINTENDENT. THE EXAMINATION SHALL BE HELD AT SUCH TIMES AND
PLACES AS THE SUPERINTENDENT SHALL FROM TIME TO TIME DETERMINE. EVERY
INDIVIDUAL APPLYING TO TAKE ANY WRITTEN EXAMINATION SHALL, AT THE TIME
OF APPLYING THEREFOR, PAY TO THE SUPERINTENDENT OR, AT THE DISCRETION OF
THE SUPERINTENDENT, DIRECTLY TO ANY ORGANIZATION THAT IS UNDER CONTRACT
TO PROVIDE EXAMINATION SERVICES, AN EXAMINATION FEE OF AN AMOUNT THAT IS
THE ACTUAL DOCUMENTED ADMINISTRATIVE COST OF CONDUCTING SAID QUALIFYING
EXAMINATION AS CERTIFIED BY THE SUPERINTENDENT FROM TIME TO TIME. AN
EXAMINATION FEE REPRESENTS AN ADMINISTRATIVE EXPENSE AND IS NOT REFUNDA-
BLE. THE SUPERINTENDENT MAY ACCEPT, IN LIEU OF ANY SUCH EXAMINATION, THE
RESULT OF ANY PREVIOUS WRITTEN EXAMINATION, GIVEN BY THE SUPERINTENDENT,
WHICH IN THE SUPERINTENDENT'S JUDGMENT, IS EQUIVALENT TO THE EXAMINATION
FOR WHICH IT IS SUBSTITUTED. NO INDIVIDUAL SHALL BE DEEMED QUALIFIED TO
A. 7131--A 6
TAKE THE EXAMINATION UNLESS HE OR SHE SHALL HAVE SUCCESSFULLY COMPLETED
A COURSE OR COURSES, APPROVED BY THE SUPERINTENDENT.
(F)(1) NO SUCH WRITTEN EXAMINATION OR PRELICENSING EDUCATION SHALL BE
REQUIRED:
(A) OF ANY INSURANCE PRODUCER WITH A LIFE LINE OF AUTHORITY LICENSED
IN THIS STATE FOR AT LEAST ONE YEAR;
(B) IN THE DISCRETION OF THE SUPERINTENDENT, OF ANY INDIVIDUAL WHOSE
LICENSE HAS BEEN REVOKED OR SUSPENDED;
(C) OF ANY APPLICANT WHO HAS PASSED THE WRITTEN EXAMINATION GIVEN BY
THE SUPERINTENDENT FOR A LIFE SETTLEMENT BROKER'S LICENSE AND WAS
LICENSED AS SUCH, OR OF AN APPLICANT WHO WAS LICENSED AS A LIFE SETTLE-
MENT BROKER BUT DID NOT PASS SUCH AN EXAMINATION; PROVIDED THE APPLICANT
APPLIES WITHIN TWO YEARS FOLLOWING THE DATE OF TERMINATION OF THE APPLI-
CANT'S LICENSE;
(D) IN THE DISCRETION OF THE SUPERINTENDENT, AS TO ALL OR ANY PART OF
THE WRITTEN EXAMINATION OR THE PREREQUISITE COURSE SPECIFIED IN
SUBSECTION (E) OF THIS SECTION, OF ANY INDIVIDUAL SEEKING TO BE NAMED A
LICENSEE OR SUB-LICENSEE, UPON WHOM HAS BEEN CONFERRED THE CHARTERED
LIFE UNDERWRITER (C.L.U.) OR CHARTERED LIFE UNDERWRITER ASSOCIATE DESIG-
NATION BY THE AMERICAN COLLEGE; OR
(E) ANY INDIVIDUAL SEEKING TO BE NAMED A LICENSEE OR SUB-LICENSEE, WHO
IS A NONRESIDENT AND A LIFE SETTLEMENT BROKER OR WHO IS LICENSED AS AN
INSURANCE PRODUCER WITH A LIFE LINE OF AUTHORITY IN THE INDIVIDUAL'S
HOME STATE FOR AT LEAST ONE YEAR; PROVIDED, HOWEVER, THAT THE INDIVID-
UAL'S HOME STATE GRANTS NONRESIDENT LICENSES TO RESIDENTS OF THIS STATE
ON THE SAME BASIS.
(2) NO PRELICENSING EDUCATION SHALL BE REQUIRED OF ANY INDIVIDUAL
REGULARLY EMPLOYED BY A LIFE SETTLEMENT PROVIDER, LIFE INSURANCE COMPA-
NY, LIFE SETTLEMENT BROKER, OR AN INSURANCE PRODUCER WITH A LIFE LINE OF
AUTHORITY, FOR A PERIOD OR PERIODS AGGREGATING NOT LESS THAN ONE YEAR,
DURING THE THREE YEARS NEXT PRECEDING THE DATE OF ENTRANCE INTO THE
SERVICE OF THE ARMED FORCES OF THE UNITED STATES OR IMMEDIATELY FOLLOW-
ING HIS OR HER DISCHARGE THEREFROM, IN RESPONSIBLE DUTIES RELATING TO
THE USE OF LIFE INSURANCE AND ANNUITY CONTRACTS IN THE DESIGN AND ADMIN-
ISTRATION OF PLANS FOR ESTATE CONSERVATION AND DISTRIBUTION, EMPLOYEE
BENEFITS AND BUSINESS CONTINUATION, AND SETTLEMENTS OF LIFE INSURANCE
AND ANNUITY CONTRACTS; PROVIDED THE APPLICATION FOR SUCH LICENSE IS
FILED WITHIN ONE YEAR FOLLOWING THE DATE OF DISCHARGE, AND THE APPLICANT
SUBMITS WITH THE APPLICATION A STATEMENT SUBSCRIBED AND AFFIRMED AS TRUE
UNDER THE PENALTIES OF PERJURY BY SUCH EMPLOYER OR EMPLOYERS STATING
FACTS WHICH SHOW COMPLIANCE WITH THIS REQUIREMENT.
(G) THE SUPERINTENDENT MAY REFUSE TO ISSUE ANY LIFE SETTLEMENT
BROKER'S LICENSE IF, IN THE SUPERINTENDENT'S JUDGMENT, THE PROPOSED
LICENSEE OR ANY SUB-LICENSEE: IS NOT TRUSTWORTHY AND COMPETENT TO ACT
AS A LIFE SETTLEMENT BROKER; HAS GIVEN CAUSE FOR LICENSE REVOCATION OR
SUSPENSION; OR HAS FAILED TO COMPLY WITH ANY PREREQUISITE FOR THE ISSU-
ANCE OF SUCH LICENSE.
(H)(1) EVERY LICENSE ISSUED TO A BUSINESS ENTITY PURSUANT TO
SUBSECTION (A) OF THIS SECTION SHALL EXPIRE ON JUNE THIRTIETH OF
ODD-NUMBERED YEARS.
(2) EVERY LICENSE ISSUED PURSUANT TO THIS SECTION TO AN INDIVIDUAL WHO
WAS BORN IN AN ODD-NUMBERED YEAR SHALL EXPIRE ON THE INDIVIDUAL'S BIRTH-
DAY IN EACH ODD-NUMBERED YEAR. EVERY LICENSE ISSUED PURSUANT TO THIS
SECTION TO AN INDIVIDUAL WHO WAS BORN IN AN EVEN-NUMBERED YEAR SHALL
EXPIRE ON THE INDIVIDUAL'S BIRTHDAY IN EACH EVEN-NUMBERED YEAR. EVERY
A. 7131--A 7
SUCH LICENSE MAY BE RENEWED FOR THE ENSUING PERIOD OF TWENTY-FOUR MONTHS
UPON THE FILING OF AN APPLICATION IN CONFORMITY WITH THIS SUBSECTION.
(3) THE LICENSE MAY BE ISSUED FOR ALL OF SUCH TWO-YEAR TERMS, OR UPON
APPLICATION MADE DURING ANY SUCH TERM, FOR THE BALANCE THEREOF.
(4) ANY LICENSE SHALL BE CONSIDERED IN GOOD STANDING WITHIN THE
LICENSE TERM UNLESS:
(A) REVOKED OR SUSPENDED BY THE SUPERINTENDENT PURSUANT TO THIS ARTI-
CLE; OR
(B) IF AT THE EXPIRATION DATE OF THE LICENSE TERM, THE LICENSEE FAILS
TO FILE A RENEWAL APPLICATION, PROVIDED THE LICENSE WAS IN GOOD STANDING
DURING THE TERM.
(5) BEFORE THE RENEWAL OF ANY LIFE SETTLEMENT BROKER'S LICENSE SHALL
BE ISSUED, THE LICENSEE SHALL HAVE:
(A) FILED A COMPLETED RENEWAL APPLICATION IN SUCH FORM OR FORMS, AND
SUPPLEMENTS THERETO, AND CONTAINING SUCH INFORMATION AS THE SUPERINTEN-
DENT MAY PRESCRIBE; AND
(B) PAID SUCH FEES AS ARE PRESCRIBED BY THE SUPERINTENDENT; PROVIDED,
HOWEVER, THAT SUCH FEE SHALL NOT EXCEED THAT WHICH IS REQUIRED FOR THE
LICENSING OR RENEWAL FOR AN INSURANCE PRODUCER WITH A LIFE LINE OF
AUTHORITY.
(6) IF AN APPLICATION FOR A RENEWAL LICENSE SHALL HAVE BEEN FILED WITH
THE SUPERINTENDENT BEFORE THE EXPIRATION OF SUCH LICENSE, THEN THE
LICENSE SOUGHT TO BE RENEWED SHALL CONTINUE IN FULL FORCE AND EFFECT
EITHER UNTIL THE ISSUANCE BY THE SUPERINTENDENT OF THE RENEWAL LICENSE
APPLIED FOR OR UNTIL FIVE DAYS AFTER THE SUPERINTENDENT SHALL HAVE
REFUSED TO ISSUE SUCH RENEWAL LICENSE AND SHALL HAVE GIVEN NOTICE OF
SUCH REFUSAL TO THE APPLICANT AND TO EACH PROPOSED SUB-LICENSEE. BEFORE
REFUSING TO RENEW ANY SUCH LICENSE, EXCEPT ON THE GROUND OF FAILURE TO
PASS A WRITTEN EXAMINATION, THE SUPERINTENDENT SHALL NOTIFY THE APPLI-
CANT OF THE SUPERINTENDENT'S INTENTION TO DO SO AND SHALL GIVE THE
APPLICANT A HEARING.
(7)(A) THE SUPERINTENDENT MAY, IN ISSUING A RENEWAL LICENSE, DISPENSE
WITH THE REQUIREMENTS OF A VERIFIED APPLICATION BY ANY INDIVIDUAL LICEN-
SEE OR SUB-LICENSEE WHO, BY REASON OF BEING ENGAGED IN ANY MILITARY
SERVICE FOR THE UNITED STATES, IS UNABLE TO MAKE PERSONAL APPLICATION
FOR THE RENEWAL LICENSE, UPON THE FILING OF AN APPLICATION ON BEHALF OF
SUCH INDIVIDUAL, IN SUCH FORM AS THE SUPERINTENDENT SHALL PRESCRIBE, BY
A PERSON WHO, IN THE PERSON'S JUDGMENT, HAS KNOWLEDGE OF THE FACTS AND
WHO MAKES AFFIDAVIT SHOWING SUCH MILITARY SERVICE AND THE INABILITY OF
THE LIFE SETTLEMENT BROKER TO MAKE PERSONAL APPLICATION.
(B) AN INDIVIDUAL LICENSEE OR SUB-LICENSEE WHO IS UNABLE TO COMPLY
WITH LICENSE RENEWAL PROCEDURES DUE TO OTHER EXTENUATING CIRCUMSTANCES,
SUCH AS A LONG-TERM MEDICAL DISABILITY, MAY REQUEST A WAIVER OF SUCH
PROCEDURES, IN SUCH FORM AS THE SUPERINTENDENT SHALL PRESCRIBE. THE
LICENSEE OR SUB-LICENSEE MAY ALSO REQUEST A WAIVER OF ANY EXAMINATION
REQUIREMENT OR ANY OTHER FINE OR SANCTION IMPOSED FOR FAILURE TO COMPLY
WITH RENEWAL PROCEDURES.
(8) IN ADDITION TO ANY EXAMINATION FEE REQUIRED BY SUBSECTION (E) OF
THIS SECTION, THERE SHALL BE PAID TO THE SUPERINTENDENT FOR EACH INDI-
VIDUAL LICENSE APPLICANT AND EACH PROPOSED SUB-LICENSEE A LICENSING OR
RENEWAL FEE TO BE DETERMINED BY THE SUPERINTENDENT; PROVIDED, HOWEVER
THAT SUCH FEE SHALL NOT EXCEED THAT WHICH IS REQUIRED FOR THE LICENSING
OR RENEWAL FOR AN INSURANCE PRODUCER WITH A LIFE LINE OF AUTHORITY.
(9) AN APPLICATION FOR THE RENEWAL OF A LICENSE SHALL BE FILED WITH
THE SUPERINTENDENT NOT LESS THAN SIXTY DAYS PRIOR TO THE DATE THE
A. 7131--A 8
LICENSE EXPIRES OR THE APPLICANT SHALL BE SUBJECT TO A FURTHER FEE OF
TEN DOLLARS FOR LATE FILING.
(10) NO LICENSE FEE SHALL BE REQUIRED OF ANY PERSON WHO SERVED AS A
MEMBER OF THE ARMED FORCES OF THE UNITED STATES AT ANY TIME AND WHO
SHALL HAVE BEEN DISCHARGED THEREFROM, UNDER CONDITIONS OTHER THAN
DISHONORABLE, IN A CURRENT LICENSING PERIOD, FOR THE DURATION OF SUCH
PERIOD.
(11) EXCEPT WHERE A CORPORATION, ASSOCIATION OR FIRM LICENSED AS A
LIFE SETTLEMENT BROKER IS APPLYING TO ADD A SUB-LICENSEE, THERE SHALL BE
NO FEE REQUIRED FOR THE ISSUANCE OF AN AMENDED LICENSE.
(12) THE LICENSE SHALL CONTAIN THE LICENSEE'S NAME, ADDRESS, PERSONAL
IDENTIFICATION NUMBER, THE DATE OF ISSUANCE, AND ANY OTHER INFORMATION
THE SUPERINTENDENT DEEMS NECESSARY. THE SUPERINTENDENT MAY ISSUE THE
LIFE SETTLEMENT BROKER'S LICENSE IN CONJUNCTION WITH ANY OTHER LICENSE,
OR ITS RENEWAL, HELD BY THE APPLICANT.
(I) IF THE SUPERINTENDENT DEEMS IT NECESSARY, THEN THE SUPERINTENDENT
MAY REQUIRE ANY LICENSED LIFE SETTLEMENT BROKER TO SUBMIT A NEW APPLICA-
TION AT ANY TIME.
(J) THE SUPERINTENDENT MAY ISSUE A REPLACEMENT FOR A CURRENTLY
IN-FORCE LICENSE THAT HAS BEEN LOST OR DESTROYED. BEFORE SUCH REPLACE-
MENT LICENSE SHALL BE ISSUED, THERE SHALL BE ON FILE IN THE OFFICE OF
THE SUPERINTENDENT A WRITTEN APPLICATION FOR SUCH REPLACEMENT LICENSE,
AFFIRMING UNDER PENALTY OF PERJURY THAT THE ORIGINAL LICENSE HAS BEEN
LOST OR DESTROYED, TOGETHER WITH A FEE OF FIFTEEN DOLLARS.
S 8. Section 2401 of the insurance law is amended to read as follows:
S 2401. Purpose. The purpose of this article is to regulate trade
practices in the business of insurance, INCLUDING THE BUSINESS OF LIFE
SETTLEMENTS, in accordance with the intent of congress as expressed in
Public Law 15, 79th Congress, by defining, or providing for the determi-
nation of, all such practices in this state [which] THAT constitute
unfair methods of competition or unfair or deceptive acts or practices
and by prohibiting the trade practices so defined or determined.
S 9. Subsections (a) and (b) of section 2402 of the insurance law,
subsection (b) as amended by chapter 631 of the laws of 2007, are
amended to read as follows:
(a) "Person" means any individual and any legal entity subject to any
provision of this chapter, engaged in the business of insurance in this
state, including any reciprocal exchange or Lloyds insurer, OR IN THE
BUSINESS OF LIFE SETTLEMENTS.
(b) "Defined violation" means the commission by a person of an act
prohibited by: section one thousand two hundred fourteen, one thousand
two hundred seventeen, one thousand two hundred twenty, one thousand
three hundred thirteen, subparagraph (B) of paragraph two of subsection
(i) of section one thousand three hundred twenty-two, subparagraph (B)
of paragraph two of subsection (i) of section one thousand three hundred
twenty-four, two thousand one hundred twenty-two, two thousand one
hundred twenty-three, subsection (p) of section two thousand three
hundred thirteen, section two thousand three hundred twenty-four, two
thousand five hundred two, two thousand five hundred three, two thousand
five hundred four, two thousand six hundred one, two thousand six
hundred two, two thousand six hundred three, two thousand six hundred
four, two thousand six hundred six, two thousand seven hundred three,
three thousand one hundred nine, three thousand two hundred
twenty-four-a, three thousand four hundred twenty-nine, three thousand
four hundred thirty-three, paragraph seven of subsection (e) of section
three thousand four hundred twenty-six, four thousand two hundred twen-
A. 7131--A 9
ty-four, four thousand two hundred twenty-five [or], four thousand two
hundred twenty-six, SEVEN THOUSAND EIGHT HUNDRED NINE, SEVEN THOUSAND
EIGHT HUNDRED TEN, SEVEN THOUSAND EIGHT HUNDRED ELEVEN, SEVEN THOUSAND
EIGHT HUNDRED THIRTEEN, SEVEN THOUSAND EIGHT HUNDRED FOURTEEN AND SEVEN
THOUSAND EIGHT HUNDRED FIFTEEN of this chapter; or section 135.60,
135.65, 175.05, 175.45, or 190.20, or article one hundred five of the
penal law.
S 10. Subsection (c) of section 3220 of the insurance law is amended
to read as follows:
(c) (1) Notwithstanding any provision of law, a person whose life is
insured under any policy of group life insurance, whether or not such
policy is otherwise subject to this section, is permitted to make an
assignment of all or any part of his incidents of ownership in such
insurance, including, without limitation, any right to designate a bene-
ficiary or beneficiaries thereunder and any right to have an individual
policy issued upon termination either of employment or of said policy of
group life insurance, provided that the insurer and the group policy-
holder may prohibit or restrict such assignment by appropriate policy
provisions EXCEPT AS OTHERWISE PROVIDED IN PARAGRAPH THREE OF THIS
SUBSECTION.
(2) [This] PARAGRAPH ONE OF THIS subsection shall be construed as
declaring the law as it existed prior to its enactment and not as modi-
fying it.
(3) A GROUP POLICY THAT PERMITS ASSIGNMENT OF AN INSURED PERSON'S
RIGHTS BY GIFT SHALL ALSO ALLOW ASSIGNMENT FOR VALUE TO THE SAME EXTENT
THAT IT ALLOWS ASSIGNMENT BY GIFT.
S 11. Article 78 of the insurance law is REPEALED and a new article 78
is added to read as follows:
ARTICLE 78
LIFE SETTLEMENTS
SECTION 7801. SHORT TITLE.
7802. DEFINITIONS.
7803. LICENSE REQUIREMENTS FOR LIFE SETTLEMENT PROVIDERS.
7804. REGISTRATION REQUIREMENTS FOR LIFE SETTLEMENT INTERME-
DIARIES.
7805. LICENSE AND REGISTRATION REVOCATION.
7806. LIFE SETTLEMENT CONTRACT FORMS.
7807. REPORTING REQUIREMENTS.
7808. EXAMINATIONS OR INVESTIGATIONS.
7809. ADVERTISING.
7810. PRIVACY.
7811. DISCLOSURES TO OWNERS AND INSUREDS.
7812. LIFE INSURANCE APPLICATIONS.
7813. GENERAL RULES.
7814. PROHIBITED PRACTICES.
7815. STRANGER-ORIGINATED LIFE INSURANCE.
7816. PENALTIES AND CIVIL REMEDIES.
7817. AUTHORITY TO PROMULGATE REGULATIONS.
7818. NONCONFORMING CONTRACTS.
7819. APPLICABILITY AND CHOICE OF LAW.
7820. SEVERABILITY.
S 7801. SHORT TITLE. THIS ARTICLE SHALL BE KNOWN AND MAY BE CITED AS
THE "LIFE SETTLEMENTS ACT".
S 7802. DEFINITIONS. IN THIS ARTICLE:
(A) "ACCREDITED INVESTORS" SHALL BE AS DEFINED IN REGULATION D, RULE
501 OF THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED.
A. 7131--A 10
(B) "ADVERTISEMENT" MEANS ANY WRITTEN, ELECTRONIC OR PRINTED COMMUNI-
CATION OR ANY COMMUNICATION BY MEANS OF RECORDED TELEPHONE MESSAGES OR
TRANSMITTED ON RADIO, TELEVISION, THE INTERNET OR SIMILAR COMMUNICATIONS
MEDIA, INCLUDING FILM STRIPS, MOTION PICTURES AND VIDEOS, PUBLISHED,
DISSEMINATED, CIRCULATED OR PLACED BEFORE THE PUBLIC, DIRECTLY OR INDI-
RECTLY, FOR THE PURPOSE OF CREATING AN INTEREST IN OR INDUCING A PERSON
TO PURCHASE, SELL, ASSIGN, DEVISE, BEQUEST OR TRANSFER THE DEATH BENEFIT
OR OWNERSHIP OF, A LIFE INSURANCE POLICY OR AN INTEREST IN A LIFE INSUR-
ANCE POLICY PURSUANT TO A LIFE SETTLEMENT CONTRACT.
(C)(1) "BUSINESS OF LIFE SETTLEMENTS" MEANS AN ACTIVITY INVOLVING, BUT
NOT LIMITED TO, OFFERING TO ENTER INTO, SOLICITING, NEGOTIATING, PROCUR-
ING, EFFECTUATING, MONITORING, OR TRACKING LIFE SETTLEMENT CONTRACTS.
(2) FOR PURPOSES OF THIS ARTICLE, "BUSINESS OF LIFE SETTLEMENTS" SHALL
ALSO INCLUDE:
(A) SUCH ACTS OR TRANSACTIONS EFFECTUATED IN THIS STATE BY MAIL OR
OTHERWISE FROM OUTSIDE THIS STATE; AND
(B) DOING OR PROPOSING TO DO ANY BUSINESS IN SUBSTANCE EQUIVALENT TO
THE BUSINESS OF LIFE SETTLEMENTS IN A MANNER DESIGNED TO EVADE THE
PROVISIONS OF THIS CHAPTER.
(D) "COMPENSATION" MEANS ANYTHING OF VALUE, INCLUDING MONEY, CREDITS,
LOANS, INTEREST ON PREMIUM, FORGIVENESS OF PRINCIPAL OR INTEREST,
VACATIONS, PRIZES, GIFTS OR THE PAYMENT OF EMPLOYEE SALARIES OR
EXPENSES, WHETHER PAID AS COMMISSION OR OTHERWISE.
(E) "FINANCING ENTITY" MEANS AN ACCREDITED INVESTOR:
(1) WHOSE PRINCIPAL ACTIVITY IN CONNECTION WITH THE TRANSACTION IS
PROVIDING FUNDS TO EFFECT THE LIFE SETTLEMENT CONTRACT OR TO PURCHASE
ONE OR MORE POLICIES; AND
(2) WHO HAS AN AGREEMENT IN WRITING WITH A LIFE SETTLEMENT PROVIDER TO
FINANCE THE ACQUISITION OF A LIFE SETTLEMENT CONTRACT.
(F) "FINANCING TRANSACTION" MEANS A TRANSACTION IN WHICH A LICENSED
LIFE SETTLEMENT PROVIDER OBTAINS FINANCING FROM A FINANCING ENTITY,
INCLUDING ANY SECURED OR UNSECURED FINANCING, ANY SECURITIZATION TRANS-
ACTION, OR ANY SECURITIES OFFERING WHICH IS REGISTERED OR EXEMPT FROM
REGISTRATION UNDER FEDERAL AND STATE SECURITIES LAWS.
(G) "INSURED" MEANS A PERSON COVERED UNDER A POLICY THAT IS OR MAY BE
THE SUBJECT OF A LIFE SETTLEMENT CONTRACT.
(H) "INSURER" MEANS A LIFE INSURANCE COMPANY OR A FRATERNAL BENEFIT
SOCIETY.
(I) "LIFE EXPECTANCY" MEANS THE ARITHMETIC MEAN OF THE NUMBER OF
MONTHS THE INSURED CAN BE EXPECTED TO LIVE TAKING INTO CONSIDERATION
MEDICAL RECORDS AND APPROPRIATE EXPERIENTIAL DATA.
(J) "LIFE SETTLEMENT BROKER" MEANS A PERSON WHO, FOR COMPENSATION,
SOLICITS, NEGOTIATES OR OFFERS TO NEGOTIATE A LIFE SETTLEMENT CONTRACT;
EXCEPT THAT SUCH TERM SHALL NOT INCLUDE A LICENSED LIFE SETTLEMENT
PROVIDER, OR REPRESENTATIVE THEREOF, LICENSED ATTORNEY AT LAW, CERTIFIED
PUBLIC ACCOUNTANT, OR FINANCIAL PLANNER THAT IS ACCREDITED BY A
NATIONALLY RECOGNIZED ACCREDITATION AGENCY ACCEPTABLE TO THE SUPERINTEN-
DENT, WHO IS RETAINED IN HIS OR HER PROFESSIONAL CAPACITY, DOES NOT
ADVERTISE AS BEING IN THE BUSINESS OF LIFE SETTLEMENTS AND IS COMPEN-
SATED WITHOUT REGARD TO WHETHER A LIFE SETTLEMENT CONTRACT IS EFFECTUAT-
ED.
(K)(1) "LIFE SETTLEMENT CONTRACT" MEANS AN AGREEMENT ESTABLISHING THE
TERMS UNDER WHICH COMPENSATION IS PROVIDED, WHICH COMPENSATION IS LESS
THAN THE EXPECTED DEATH BENEFIT OF THE POLICY, IN RETURN FOR THE ASSIGN-
MENT, TRANSFER, SALE, RELEASE, DEVISE OR BEQUEST OF ANY PORTION OF:
(A) THE DEATH BENEFIT;
A. 7131--A 11
(B) THE OWNERSHIP OF THE POLICY; OR
(C) ANY BENEFICIAL INTEREST IN THE POLICY, OR IN A TRUST OR ANY OTHER
ENTITY THAT OWNS THE POLICY, WHERE A PRIMARY PURPOSE OF THE TRANSACTION
IS TO ACQUIRE THE POLICY.
(2) "LIFE SETTLEMENT CONTRACT" SHALL INCLUDE AN AGREEMENT, ENTERED
INTO AFTER THE EFFECTIVE DATE OF THIS ARTICLE, DESCRIBED IN PARAGRAPH
ONE OF THIS SUBSECTION REGARDLESS OF THE DATE THE COMPENSATION IS
PROVIDED AND REGARDLESS OF THE DATE THE ASSIGNMENT, TRANSFER, SALE,
DEVISE OR BEQUEST IS EFFECTUATED.
(3) "LIFE SETTLEMENT CONTRACT" SHALL NOT INCLUDE:
(A) AN ASSIGNMENT OF A POLICY AS COLLATERAL FOR A LOAN BY ANY DEPOSI-
TORY INSTITUTION INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
THE NATIONAL CREDIT UNION ADMINISTRATION;
(B) AN ASSIGNMENT OF A POLICY AS COLLATERAL FOR A LOAN MADE BY A
LICENSED FINANCIAL INSTITUTION UNDER WHICH THE LENDER TAKES AN INTEREST
IN A LIFE INSURANCE POLICY SOLELY TO SECURE REPAYMENT OF A LOAN OR, IF
THERE IS A DEFAULT ON THE LOAN AND THE POLICY IS TRANSFERRED, THE TRANS-
FER OF THE POLICY BY THE LENDER, PROVIDED THAT THE DEFAULT ITSELF IS NOT
PURSUANT TO AN AGREEMENT OR UNDERSTANDING WITH ANY OTHER PERSON FOR THE
PURPOSE OF EVADING REGULATION UNDER THIS ARTICLE;
(C) AN ASSIGNMENT OF A POLICY AS COLLATERAL FOR A LOAN MADE BY A LEND-
ER THAT DOES NOT VIOLATE ARTICLE TWELVE-B OF THE BANKING LAW;
(D) THE MAKING OF A POLICY LOAN, OR THE PAYING OF SURRENDER BENEFITS
OR OTHER BENEFITS, BY THE ISSUER OF A POLICY WITH RESPECT TO THAT POLI-
CY;
(E) AN EXCHANGE OF LIFE INSURANCE POLICIES IN A TRANSACTION DESCRIBED
BY SECTION 1035 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED;
(F) AN AGREEMENT MADE BY AN INDIVIDUAL TO TAKE AN ASSIGNMENT,
PURCHASE, OR OTHERWISE RECEIVE THE DEATH BENEFIT OR OWNERSHIP OF ANY
PORTION OF A POLICY OR POLICIES ON THE LIFE OF A SINGLE INSURED OR LIVES
OF JOINT INSUREDS; PROVIDED THAT, IN A CALENDAR YEAR, THE INDIVIDUAL
ENTERS INTO NO OTHER AGREEMENT TO TAKE AN ASSIGNMENT, PURCHASE, OR
OTHERWISE RECEIVE THE DEATH BENEFIT OR OWNERSHIP OF ANY PORTION OF A
POLICY OR POLICIES ON THE LIFE OF ANY OTHER INSURED OR LIVES OF ANY
OTHER JOINT INSUREDS;
(G) AN AGREEMENT TO ASSIGN, TRANSFER OR PLEDGE A SETTLED POLICY, OR
ANY INTEREST THEREIN, TO A LICENSED LIFE SETTLEMENT PROVIDER, AN ACCRED-
ITED INVESTOR OR QUALIFIED INSTITUTIONAL BUYER, FINANCING ENTITY,
SPECIAL PURPOSE ENTITY, OR RELATED PROVIDER TRUST;
(H) AN AGREEMENT WHERE ALL THE PARTIES ARE CLOSELY RELATED TO THE
INSURED BY BLOOD OR LAW OR HAVE A LAWFUL SUBSTANTIAL ECONOMIC INTEREST
IN THE CONTINUED LIFE, HEALTH AND BODILY SAFETY OF THE PERSON INSURED,
OR ARE TRUSTS ESTABLISHED PRIMARILY FOR THE BENEFIT OF SUCH PARTIES;
(I) ANY DESIGNATION, CONSENT OR AGREEMENT BY AN INSURED WHO IS AN
EMPLOYEE OF AN EMPLOYER IN CONNECTION WITH THE PURCHASE BY THE EMPLOYER,
OR TRUST ESTABLISHED BY THE EMPLOYER, OF LIFE INSURANCE ON THE LIFE OF
THE EMPLOYEE;
(J) A BONA FIDE BUSINESS SUCCESSION PLANNING ARRANGEMENT BETWEEN:
(I) ONE OR MORE SHAREHOLDERS IN A CORPORATION OR BETWEEN A CORPORATION
AND ONE OR MORE OF ITS SHAREHOLDERS OR ONE OR MORE TRUSTS ESTABLISHED BY
ITS SHAREHOLDERS;
(II) ONE OR MORE PARTNERS IN A PARTNERSHIP OR BETWEEN A PARTNERSHIP
AND ONE OR MORE OF ITS PARTNERS OR ONE OR MORE TRUSTS ESTABLISHED BY ITS
PARTNERS; OR
A. 7131--A 12
(III) ONE OR MORE MEMBERS IN A LIMITED LIABILITY COMPANY OR BETWEEN A
LIMITED LIABILITY COMPANY AND ONE OR MORE OF ITS MEMBERS OR ONE OR MORE
TRUSTS ESTABLISHED BY ITS MEMBERS;
(K) LEGITIMATE CORPORATE OR PENSION BENEFIT PLANS, AS DETERMINED BY
THE SUPERINTENDENT; OR
(L) ANY OTHER AGREEMENT THAT THE SUPERINTENDENT DETERMINES IS SUBSTAN-
TIALLY SIMILAR TO ANY OF THE FOREGOING.
(L) "LIFE SETTLEMENT INTERMEDIARY" MEANS A PERSON WHO MAINTAINS AN
ELECTRONIC OR OTHER FACILITY OR SYSTEM FOR THE DISCLOSURE, THROUGH A
FORUM OF OFFERS AND COUNTEROFFERS TO SELL OR PURCHASE A POLICY OR A
SETTLED POLICY; AND DELIVERS TO:
(1) A LIFE SETTLEMENT PROVIDER AN OFFER FROM A LIFE SETTLEMENT BROKER
OR OWNER TO SELL A POLICY;
(2) AN OWNER OR LIFE SETTLEMENT BROKER AN OFFER FROM A LIFE SETTLEMENT
PROVIDER TO PURCHASE A POLICY; OR
(3) A LIFE SETTLEMENT PROVIDER AN OFFER TO SELL OR PURCHASE A SETTLED
POLICY.
(M) "LIFE SETTLEMENT PROVIDER" MEANS A PERSON WHO ENTERS INTO A LIFE
SETTLEMENT CONTRACT WITH THE OWNER.
(N) "OWNER" MEANS THE OWNER OF A POLICY WHO ENTERS OR SEEKS TO ENTER
INTO A LIFE SETTLEMENT CONTRACT.
(O) "PERSON" MEANS ANY NATURAL PERSON OR LEGAL ENTITY, INCLUDING A
PARTNERSHIP, LIMITED LIABILITY COMPANY, ASSOCIATION, TRUST OR CORPO-
RATION.
(P) "POLICY" MEANS AN INDIVIDUAL OR GROUP LIFE INSURANCE POLICY OR
CERTIFICATE.
(Q) "PREMIUM FINANCE LOAN" MEANS A LOAN MADE FOR THE PURPOSES OF
MAKING PREMIUM PAYMENTS ON A LIFE INSURANCE POLICY, WHICH LOAN IS
SECURED BY AN INTEREST IN SUCH LIFE INSURANCE POLICY.
(R) "QUALIFIED INSTITUTIONAL BUYER" SHALL BE AS DEFINED IN RULE 144A
OF THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED.
(S) "RELATED PROVIDER TRUST" MEANS A TRUST ESTABLISHED BY A LICENSED
LIFE SETTLEMENT PROVIDER OR A FINANCING ENTITY FOR THE SOLE PURPOSE OF
HOLDING THE OWNERSHIP OR BENEFICIAL INTEREST IN SETTLED POLICIES IN
CONNECTION WITH A FINANCING TRANSACTION; PROVIDED THAT THE TRUST HAS A
WRITTEN AGREEMENT WITH THE LICENSED LIFE SETTLEMENT PROVIDER UNDER
WHICH:
(1) THE LICENSED LIFE SETTLEMENT PROVIDER IS RESPONSIBLE FOR ENSURING
COMPLIANCE WITH ALL STATUTORY AND REGULATORY REQUIREMENTS; AND
(2) THE TRUST AGREES TO MAKE ALL RECORDS AND FILES RELATING TO LIFE
SETTLEMENT TRANSACTIONS AVAILABLE TO THE SUPERINTENDENT AS IF THOSE
RECORDS AND FILES WERE MAINTAINED DIRECTLY BY THE LICENSED LIFE SETTLE-
MENT PROVIDER.
(T) "SETTLED POLICY" MEANS A POLICY THAT AT ANY TIME HAS BEEN ACQUIRED
BY A LIFE SETTLEMENT PROVIDER PURSUANT TO A LIFE SETTLEMENT CONTRACT.
(U) "SPECIAL PURPOSE ENTITY" MEANS A CORPORATION, PARTNERSHIP, TRUST,
LIMITED LIABILITY COMPANY, OR OTHER LEGAL ENTITY FORMED SOLELY TO
PROVIDE, EITHER DIRECTLY OR INDIRECTLY, ACCESS TO INSTITUTIONAL CAPITAL
MARKETS FOR A FINANCING ENTITY OR LICENSED LIFE SETTLEMENT PROVIDER.
S 7803. LICENSE REQUIREMENTS FOR LIFE SETTLEMENT PROVIDERS. (A) NO
PERSON SHALL ENGAGE IN THE BUSINESS OF LIFE SETTLEMENTS AS A LIFE
SETTLEMENT PROVIDER IN THIS STATE WITHOUT HAVING AUTHORITY TO DO SO BY
VIRTUE OF A LIFE SETTLEMENT PROVIDER LICENSE ISSUED AND IN FORCE PURSU-
ANT TO THIS ARTICLE.
(B)(1) THE SUPERINTENDENT MAY ISSUE A LIFE SETTLEMENT PROVIDER LICENSE
TO ANY PERSON WHO IS DEEMED BY THE SUPERINTENDENT TO BE TRUSTWORTHY AND
A. 7131--A 13
COMPETENT TO ACT AS A LIFE SETTLEMENT PROVIDER AND WHO IS OTHERWISE
QUALIFIED AS REQUIRED IN THIS ARTICLE AND WHO HAS COMPLIED WITH THE
PREREQUISITES PRESCRIBED IN THIS ARTICLE.
(2) EVERY LICENSE ISSUED PURSUANT TO THIS SECTION SHALL EXPIRE ON JUNE
THIRTIETH OF ODD-NUMBERED YEARS.
(C)(1) APPLICATION FOR A LIFE SETTLEMENT PROVIDER LICENSE SHALL BE
MADE TO THE SUPERINTENDENT BY THE APPLICANT ON A FORM PRESCRIBED BY THE
SUPERINTENDENT, AND THE APPLICATION SHALL BE ACCOMPANIED BY A FEE IN AN
AMOUNT TO BE ESTABLISHED BY THE SUPERINTENDENT.
(2) THE APPLICANT FOR A LIFE SETTLEMENT PROVIDER LICENSE SHALL:
(A) FULLY DISCLOSE THE IDENTITY OF ALL STOCKHOLDERS (EXCEPT STOCKHOLD-
ERS OWNING FEWER THAN TEN PERCENT OF THE VOTING SHARES OF A LIFE SETTLE-
MENT PROVIDER WHOSE SHARES ARE PUBLICLY TRADED), PARTNERS, OFFICERS,
MEMBERS, DIRECTORS AND PERSONS WITH A CONTROLLING INTEREST. FOR PURPOSES
OF THIS SECTION, "CONTROLLING INTEREST" MEANS A PERSON WHO DIRECTLY OR
INDIRECTLY, HAS THE POWER TO CAUSE TO BE DIRECTED THE MANAGEMENT,
CONTROL OR ACTIVITIES OF SUCH LICENSEE;
(B) PROVIDE A DETAILED PLAN OF OPERATION;
(C) PROVIDE, IF A LEGAL ENTITY, A CERTIFICATE OF GOOD STANDING FROM
THE STATE OF ITS DOMICILE;
(D) PROVIDE AN ANTI-FRAUD PLAN THAT MEETS THE REQUIREMENTS OF ARTICLE
FOUR OF THIS CHAPTER;
(E) DEMONSTRATE FINANCIAL ACCOUNTABILITY AS EVIDENCED BY A BOND OR
OTHER METHOD FOR FINANCIAL ACCOUNTABILITY AS DETERMINED BY THE SUPER-
INTENDENT PURSUANT TO REGULATION; AND
(F) PROVIDE ANY OTHER INFORMATION REQUIRED BY THE SUPERINTENDENT.
(D) THE SUPERINTENDENT MAY REQUIRE AN APPLICANT FOR SUCH LICENSE TO
SUBMIT A SET OF FINGERPRINTS. SUCH FINGERPRINTS SHALL BE SUBMITTED TO
THE DIVISION OF CRIMINAL JUSTICE SERVICES FOR A STATE CRIMINAL HISTORY
RECORD CHECK, AS DEFINED IN SUBDIVISION ONE OF SECTION THREE THOUSAND
THIRTY-FIVE OF THE EDUCATION LAW, AND MAY BE SUBMITTED TO THE FEDERAL
BUREAU OF INVESTIGATION FOR A NATIONAL CRIMINAL HISTORY RECORD CHECK.
ALL SUCH CRIMINAL HISTORY RECORDS SENT TO THE SUPERINTENDENT PURSUANT TO
THIS PARAGRAPH SHALL BE CONFIDENTIAL PURSUANT TO THE APPLICABLE FEDERAL
AND STATE LAWS, RULES AND REGULATIONS, AND SHALL NOT BE PUBLISHED OR IN
ANY WAY DISCLOSED TO PERSONS OTHER THAN THE SUPERINTENDENT, UNLESS
OTHERWISE AUTHORIZED BY LAW. THE SUPERINTENDENT SHALL PROVIDE SUCH
APPLICANT WITH A COPY OF HIS OR HER CRIMINAL HISTORY RECORD, IF ANY,
TOGETHER WITH A COPY OF ARTICLE TWENTY-THREE-A OF THE CORRECTION LAW,
AND INFORM SUCH APPLICANT OF HIS OR HER RIGHT TO SEEK CORRECTION OF ANY
INCORRECT INFORMATION CONTAINED IN SUCH RECORD PURSUANT TO REGULATIONS
AND PROCEDURES ESTABLISHED BY THE DIVISION OF CRIMINAL JUSTICE SERVICES.
ALL DETERMINATIONS TO GRANT OR DENY CLEARANCE FOR LICENSURE PURSUANT TO
THIS SECTION SHALL BE IN ACCORDANCE WITH SUBDIVISION SIXTEEN OF SECTION
TWO HUNDRED NINETY-SIX OF THE EXECUTIVE LAW AND ARTICLE TWENTY-THREE-A
OF THE CORRECTION LAW. WHEN THE SUPERINTENDENT DENIES AN APPLICATION,
WRITTEN NOTICE OF SUCH DETERMINATION SHALL BE GIVEN TO THE PROSPECTIVE
APPLICANT WHO SHALL BE AFFORDED NOTICE AND THE RIGHT TO BE HEARD AND
OFFER PROOF IN OPPOSITION TO SUCH DETERMINATION.
(E)(1) AS PART OF THE APPLICATION, THE APPLICANT SHALL SUBMIT A POWER
OF ATTORNEY DESIGNATING THE SUPERINTENDENT AS AGENT FOR THE PURPOSE OF
RECEIVING SERVICE OF LEGAL DOCUMENTS OR PROCESS.
(2) THE POWER OF ATTORNEY SHALL INCLUDE THE NAME AND ADDRESS OF THE
OFFICER, AGENT, OR OTHER PERSON TO WHOM SUCH LEGAL DOCUMENTS OR PROCESS
SHALL BE FORWARDED BY THE SUPERINTENDENT OR HIS OR HER DEPUTY ON BEHALF
OF SUCH LIFE SETTLEMENT PROVIDER.
A. 7131--A 14
(3) SERVICE OF LEGAL DOCUMENTS OR PROCESS UPON A LIFE SETTLEMENT
PROVIDER PURSUANT TO THIS SUBSECTION SHALL BE MADE BY SERVING THE SUPER-
INTENDENT, ANY DEPUTY SUPERINTENDENT OR ANY SALARIED EMPLOYEE OF THE
DEPARTMENT WHOM THE SUPERINTENDENT DESIGNATES FOR SUCH PURPOSE WITH TWO
COPIES THEREOF AND THE PAYMENT OF A FEE OF FORTY DOLLARS. THE SUPER-
INTENDENT SHALL FORWARD A COPY OF SUCH LEGAL DOCUMENTS OR PROCESS BY
REGISTERED OR CERTIFIED MAIL TO THE LIFE SETTLEMENT PROVIDER AT THE
ADDRESS GIVEN IN ITS WRITTEN CERTIFICATE OF REGISTRATION, AND SHALL KEEP
A RECORD OF ALL LEGAL DOCUMENTS OR PROCESS SO SERVED. SERVICE OF LEGAL
DOCUMENTS OR PROCESS SO MADE SHALL BE DEEMED MADE WITHIN THE TERRITORIAL
JURISDICTION OF ANY COURT IN THIS STATE.
(F) THE SUPERINTENDENT, IN THE EXERCISE OF THE SUPERINTENDENT'S
DISCRETION, MAY REFUSE TO ISSUE A LIFE SETTLEMENT PROVIDER LICENSE IN
THE NAME OF ANY PERSON IF NOT SATISFIED THAT ANY OFFICER, EMPLOYEE,
STOCKHOLDER, PARTNER, DIRECTOR, MEMBER, AGENT, OR RESPONSIBLE PERSON
THEREOF, WHO MAY MATERIALLY INFLUENCE THE APPLICANT'S CONDUCT, MEETS THE
STANDARDS OF THIS ARTICLE.
(G) EVERY LICENSE ISSUED PURSUANT TO THIS SECTION MAY BE RENEWED FOR
THE ENSUING PERIOD OF TWENTY-FOUR MONTHS UPON THE FILING OF AN APPLICA-
TION IN CONFORMITY WITH THIS SECTION.
(H)(1) BEFORE THE RENEWAL OF ANY LIFE SETTLEMENT PROVIDER LICENSE
SHALL BE ISSUED, AN APPLICATION FOR RENEWAL OF THE LICENSE SHALL BE MADE
TO THE SUPERINTENDENT BY THE APPLICANT ON A FORM PRESCRIBED BY THE
SUPERINTENDENT AND CONTAINING SUCH INFORMATION AS THE SUPERINTENDENT MAY
PRESCRIBE. THE APPLICATION SHALL BE ACCOMPANIED BY A FEE IN AN AMOUNT TO
BE ESTABLISHED BY THE SUPERINTENDENT.
(2) IF AN APPLICATION FOR A RENEWAL LICENSE SHALL HAVE BEEN FILED WITH
THE SUPERINTENDENT BEFORE THE EXPIRATION OF THE LICENSE, THEN THE
LICENSE SOUGHT TO BE RENEWED SHALL CONTINUE IN FULL FORCE AND EFFECT
EITHER UNTIL THE ISSUANCE BY THE SUPERINTENDENT OF THE RENEWAL LICENSE
APPLIED FOR OR UNTIL FIVE DAYS AFTER THE SUPERINTENDENT SHALL HAVE
REFUSED TO ISSUE SUCH RENEWAL LICENSE AND SHALL HAVE GIVEN NOTICE OF
SUCH REFUSAL TO THE APPLICANT. BEFORE REFUSING TO RENEW ANY SUCH
LICENSE, THE SUPERINTENDENT SHALL NOTIFY THE APPLICANT OF THE SUPER-
INTENDENT'S INTENTION TO DO SO AND SHALL GIVE SUCH APPLICANT A HEARING.
(3) AN APPLICATION FOR THE RENEWAL OF A LICENSE SHALL BE FILED WITH
THE SUPERINTENDENT NOT LESS THAN SIXTY DAYS PRIOR TO THE DATE THE
LICENSE EXPIRES OR THE APPLICANT MAY BE SUBJECT TO A FURTHER FEE FOR
LATE FILING, AS PRESCRIBED BY THE SUPERINTENDENT.
(I) A LIFE SETTLEMENT PROVIDER LICENSEE SHALL PROVIDE TO THE SUPER-
INTENDENT NEW OR REVISED INFORMATION ABOUT STOCKHOLDERS (EXCEPT STOCK-
HOLDERS OWNING FEWER THAN TEN PERCENT OF THE VOTING SHARES OF A LIFE
SETTLEMENT PROVIDER WHOSE SHARES ARE PUBLICLY TRADED), PARTNERS, OFFI-
CERS, MEMBERS, DIRECTORS, DESIGNATED EMPLOYEES OR PERSONS WITH A
CONTROLLING INTEREST WITHIN THIRTY DAYS OF THE CHANGE.
(J) EVERY INDIVIDUAL APPLICANT FOR A LICENSE UNDER THIS SECTION SHALL
BE EIGHTEEN YEARS OF AGE OR OLDER AT THE TIME OF THE ISSUANCE OF SUCH
LICENSE.
S 7804. REGISTRATION REQUIREMENTS FOR LIFE SETTLEMENT INTERMEDIARIES.
(A) NO PERSON SHALL ACT AS A LIFE SETTLEMENT INTERMEDIARY IN THIS STATE
WITHOUT HAVING AUTHORITY TO DO SO BY VIRTUE OF A REGISTRATION ISSUED AND
IN FORCE PURSUANT TO THIS ARTICLE.
(B)(1) THE SUPERINTENDENT MAY ISSUE A LIFE SETTLEMENT INTERMEDIARY
REGISTRATION TO ANY PERSON WHO:
(A) IS DEEMED BY THE SUPERINTENDENT TO BE TRUSTWORTHY AND COMPETENT TO
ACT AS A LIFE SETTLEMENT INTERMEDIARY;
A. 7131--A 15
(B) IS OTHERWISE QUALIFIED AS REQUIRED IN THIS ARTICLE; AND
(C) HAS COMPLIED WITH THE PREREQUISITES PRESCRIBED IN THIS ARTICLE.
(2) EVERY REGISTRATION ISSUED PURSUANT TO THIS SECTION SHALL EXPIRE ON
JUNE THIRTIETH OF ODD-NUMBERED YEARS.
(C)(1) APPLICATION FOR A LIFE SETTLEMENT INTERMEDIARY REGISTRATION
SHALL BE MADE TO THE SUPERINTENDENT BY THE APPLICANT ON A FORM
PRESCRIBED BY THE SUPERINTENDENT, AND THE APPLICATION SHALL BE ACCOMPA-
NIED BY A FEE IN AN AMOUNT ESTABLISHED BY THE SUPERINTENDENT.
(2) THE APPLICANT FOR A LIFE SETTLEMENT INTERMEDIARY REGISTRATION
SHALL PROVIDE:
(A) THE STATE IN WHICH THE LIFE SETTLEMENT INTERMEDIARY IS DOMICILED
OR RESIDENT;
(B) THE PRINCIPAL PLACE OF BUSINESS OF THE LIFE SETTLEMENT INTERME-
DIARY;
(C) ALL OTHER STATES IN WHICH THE LIFE SETTLEMENT INTERMEDIARY IS
DOING OR INTENDS TO DO BUSINESS;
(D) A DETAILED PLAN OF OPERATION; AND
(E) THE IDENTITIES OF THE LIFE SETTLEMENT INTERMEDIARY EXECUTIVE OFFI-
CER OR OFFICERS DIRECTLY RESPONSIBLE FOR SUCH BUSINESS, AND ALL STOCK-
HOLDERS (EXCEPT STOCKHOLDERS OWNING FEWER THAN TEN PERCENT OF THE VOTING
SHARES OF A LIFE SETTLEMENT INTERMEDIARY WHOSE SHARES ARE PUBLICLY TRAD-
ED), PARTNERS, OFFICERS, MEMBERS, DIRECTORS AND PERSONS WITH A CONTROL-
LING INTEREST. FOR PURPOSES OF THIS SECTION, "CONTROLLING INTEREST"
MEANS A PERSON WHO DIRECTLY OR INDIRECTLY, HAS THE POWER TO CAUSE TO BE
DIRECTED THE MANAGEMENT, CONTROL OR ACTIVITIES OF SUCH REGISTRANT.
(D) EACH LIFE SETTLEMENT INTERMEDIARY THAT IS REQUIRED TO REGISTER
PURSUANT TO THIS SECTION SHALL ALSO FURNISH SUCH INFORMATION AS MAY BE
REQUIRED BY THE SUPERINTENDENT TO:
(1) VERIFY THAT THE PERSON OR PERSONS QUALIFY AS A LIFE SETTLEMENT
INTERMEDIARY; AND
(2) DETERMINE COMPLIANCE WITH ANY APPLICABLE STATE LAW.
(E)(1) AS PART OF THE APPLICATION, THE APPLICANT SHALL SUBMIT A POWER
OF ATTORNEY DESIGNATING THE SUPERINTENDENT AS AGENT FOR THE PURPOSE OF
RECEIVING SERVICE OF LEGAL DOCUMENTS OR PROCESS.
(2) THE POWER OF ATTORNEY SHALL INCLUDE THE NAME AND ADDRESS OF THE
OFFICER, AGENT, OR OTHER PERSON TO WHOM SUCH LEGAL DOCUMENTS OR PROCESS
SHALL BE FORWARDED BY THE SUPERINTENDENT OR HIS OR HER DEPUTY ON BEHALF
OF SUCH LIFE SETTLEMENT PROVIDER.
(3) SERVICE OF LEGAL DOCUMENTS OR PROCESS UPON A LIFE SETTLEMENT
PROVIDER PURSUANT TO THIS SUBSECTION SHALL BE MADE BY SERVING THE SUPER-
INTENDENT, ANY DEPUTY SUPERINTENDENT OR ANY SALARIED EMPLOYEE OF THE
DEPARTMENT WHOM THE SUPERINTENDENT DESIGNATES FOR SUCH PURPOSE WITH TWO
COPIES THEREOF AND THE PAYMENT OF A FEE OF FORTY DOLLARS. THE SUPER-
INTENDENT SHALL FORWARD A COPY OF SUCH LEGAL DOCUMENTS OR PROCESS BY
REGISTERED OR CERTIFIED MAIL TO THE LIFE SETTLEMENT PROVIDER AT THE
ADDRESS GIVEN IN ITS WRITTEN CERTIFICATE OF REGISTRATION, AND SHALL KEEP
A RECORD OF ALL LEGAL DOCUMENTS OR PROCESS SO SERVED. SERVICE OF LEGAL
DOCUMENTS OR PROCESS SO MADE SHALL BE DEEMED MADE WITHIN THE TERRITORIAL
JURISDICTION OF ANY COURT IN THIS STATE.
(F) THE SUPERINTENDENT MAY REQUIRE AN APPLICANT FOR SUCH REGISTRATION
TO SUBMIT A SET OF FINGERPRINTS. SUCH FINGERPRINTS SHALL BE SUBMITTED
TO THE DIVISION OF CRIMINAL JUSTICE SERVICES FOR A STATE CRIMINAL HISTO-
RY RECORD CHECK, AS DEFINED IN SUBDIVISION ONE OF SECTION THREE THOUSAND
THIRTY-FIVE OF THE EDUCATION LAW, AND MAY BE SUBMITTED TO THE FEDERAL
BUREAU OF INVESTIGATION FOR A NATIONAL CRIMINAL HISTORY RECORD CHECK.
ALL SUCH CRIMINAL HISTORY RECORDS SENT TO THE SUPERINTENDENT PURSUANT TO
A. 7131--A 16
THIS PARAGRAPH SHALL BE CONFIDENTIAL PURSUANT TO THE APPLICABLE FEDERAL
AND STATE LAWS, RULES AND REGULATIONS, AND SHALL NOT BE PUBLISHED OR IN
ANY WAY DISCLOSED TO PERSONS OTHER THAN THE SUPERINTENDENT, UNLESS
OTHERWISE AUTHORIZED BY LAW. THE SUPERINTENDENT SHALL PROVIDE SUCH
APPLICANT WITH A COPY OF HIS OR HER CRIMINAL HISTORY RECORD, IF ANY,
TOGETHER WITH A COPY OF ARTICLE TWENTY-THREE-A OF THE CORRECTION LAW,
AND INFORM SUCH APPLICANT OF HIS OR HER RIGHT TO SEEK CORRECTION OF ANY
INCORRECT INFORMATION CONTAINED IN SUCH RECORD PURSUANT TO REGULATIONS
AND PROCEDURES ESTABLISHED BY THE DIVISION OF CRIMINAL JUSTICE SERVICES.
ALL DETERMINATIONS TO GRANT OR DENY CLEARANCE FOR REGISTRATION PURSUANT
TO THIS SECTION SHALL BE IN ACCORDANCE WITH SUBDIVISION SIXTEEN OF
SECTION TWO HUNDRED NINETY-SIX OF THE EXECUTIVE LAW AND ARTICLE TWENTY-
THREE-A OF THE CORRECTION LAW. WHEN THE SUPERINTENDENT DENIES AN APPLI-
CATION, WRITTEN NOTICE OF SUCH DETERMINATION SHALL BE GIVEN TO THE
PROSPECTIVE APPLICANT WHO SHALL BE AFFORDED NOTICE AND THE RIGHT TO BE
HEARD AND OFFER PROOF IN OPPOSITION TO SUCH DETERMINATION.
(G) THE SUPERINTENDENT, IN THE EXERCISE OF THE SUPERINTENDENT'S
DISCRETION, MAY REFUSE TO ISSUE A LIFE SETTLEMENT INTERMEDIARY REGISTRA-
TION IN THE NAME OF ANY PERSON IF NOT SATISFIED THAT ANY OFFICER,
EMPLOYEE, STOCKHOLDER, PARTNER, DIRECTOR, MEMBER, AGENT, OR RESPONSIBLE
PERSON THEREOF WHO MAY MATERIALLY INFLUENCE THE APPLICANT'S CONDUCT
MEETS THE STANDARDS OF THIS ARTICLE.
(H) EVERY REGISTRATION ISSUED PURSUANT TO THIS SECTION MAY BE RENEWED
FOR THE ENSUING PERIOD OF TWENTY-FOUR MONTHS UPON THE FILING OF AN
APPLICATION IN CONFORMITY WITH THIS SECTION.
(I)(1) BEFORE THE RENEWAL OF ANY LIFE SETTLEMENT INTERMEDIARY REGIS-
TRATION SHALL BE ISSUED, AN APPLICATION FOR RENEWAL OF THE REGISTRATION
SHALL BE MADE TO THE SUPERINTENDENT BY THE APPLICANT ON A FORM
PRESCRIBED BY THE SUPERINTENDENT AND CONTAINING SUCH INFORMATION AS THE
SUPERINTENDENT MAY PRESCRIBE, AND THE APPLICATION SHALL BE ACCOMPANIED
BY A FEE IN AN AMOUNT TO BE ESTABLISHED BY THE SUPERINTENDENT.
(2) IF AN APPLICATION FOR RENEWAL REGISTRATION SHALL HAVE BEEN FILED
WITH THE SUPERINTENDENT BEFORE THE EXPIRATION OF THE REGISTRATION, THE
REGISTRATION SOUGHT TO BE RENEWED SHALL CONTINUE IN FULL FORCE AND
EFFECT EITHER UNTIL THE ISSUANCE BY THE SUPERINTENDENT OF THE RENEWAL
REGISTRATION APPLIED FOR OR UNTIL FIVE DAYS AFTER THE SUPERINTENDENT
SHALL HAVE REFUSED TO ISSUE SUCH RENEWAL REGISTRATION AND SHALL HAVE
GIVEN NOTICE OF SUCH REFUSAL TO THE APPLICANT. BEFORE REFUSING TO RENEW
ANY SUCH REGISTRATION, THE SUPERINTENDENT SHALL NOTIFY THE APPLICANT OF
THE SUPERINTENDENT'S INTENTION TO DO SO AND SHALL GIVE SUCH APPLICANT A
HEARING.
(3) AN APPLICATION FOR THE RENEWAL OF A REGISTRATION SHALL BE FILED
WITH THE SUPERINTENDENT NOT LESS THAN SIXTY DAYS PRIOR TO THE DATE THE
REGISTRATION EXPIRES OR THE APPLICANT MAY BE SUBJECT TO A FURTHER FEE
FOR LATE FILING, AS PRESCRIBED BY THE SUPERINTENDENT.
(J) A LIFE SETTLEMENT INTERMEDIARY SHALL, AS TO ANY SUBSEQUENT CHANGES
IN ANY OF THE ITEMS SET FORTH IN PARAGRAPH TWO OF SUBSECTION (C) AND
PARAGRAPH ONE OF SUBSECTION (D) OF THIS SECTION, NOTIFY THE SUPERINTEN-
DENT IN WRITING WITHIN THIRTY DAYS OF ANY SUCH CHANGE.
(K) EVERY INDIVIDUAL APPLICANT FOR REGISTRATION UNDER THIS SECTION
SHALL BE EIGHTEEN YEARS OF AGE OR OLDER AT THE TIME OF THE ISSUANCE OF
SUCH REGISTRATION.
S 7805. LICENSE AND REGISTRATION REVOCATION. (A) THE SUPERINTENDENT
MAY SUSPEND, REVOKE OR REFUSE TO RENEW THE LICENSE OF ANY LIFE SETTLE-
MENT PROVIDER OR THE REGISTRATION OF ANY LIFE SETTLEMENT INTERMEDIARY,
IF, AFTER NOTICE AND HEARING, THE SUPERINTENDENT DETERMINES THAT THE
A. 7131--A 17
LIFE SETTLEMENT PROVIDER OR LIFE SETTLEMENT INTERMEDIARY, OR ANY OFFI-
CER, PARTNER, MEMBER, OR KEY MANAGEMENT PERSONNEL THEREOF, HAS:
(1) VIOLATED ANY INSURANCE LAWS OR ANY REGULATION PROMULGATED THERE-
UNDER, ANY SUBPOENA OR ORDER OF THE SUPERINTENDENT OR OF ANOTHER STATE'S
INSURANCE COMMISSIONER, OR ANY OTHER LAW IN THE COURSE OF THE LICENSEE'S
DEALINGS IN SUCH CAPACITY;
(2) PROVIDED MATERIALLY INCORRECT, MATERIALLY MISLEADING, MATERIALLY
INCOMPLETE OR MATERIALLY UNTRUE INFORMATION IN THE LICENSE OR REGISTRA-
TION APPLICATION;
(3) OBTAINED OR ATTEMPTED TO OBTAIN A LICENSE OR REGISTRATION THROUGH
MISREPRESENTATION OR FRAUD;
(4)(A) USED FRAUDULENT, COERCIVE OR DISHONEST PRACTICES;
(B) DEMONSTRATED INCOMPETENCE;
(C) DEMONSTRATED UNTRUSTWORTHINESS; OR
(D) DEMONSTRATED FINANCIAL IRRESPONSIBILITY IN THE CONDUCT OF BUSINESS
IN THIS STATE OR ELSEWHERE;
(5) IMPROPERLY WITHHELD, MISAPPROPRIATED OR CONVERTED ANY MONIES OR
PROPERTIES RECEIVED IN THE COURSE OF BUSINESS IN THIS STATE OR ELSE-
WHERE;
(6) INTENTIONALLY MISREPRESENTED THE TERMS OF ANY INSURANCE CONTRACT
OR LIFE SETTLEMENT CONTRACT OR ANY APPLICATION THEREFOR;
(7) BEEN CONVICTED OF A FELONY, OR HAS BEEN GUILTY OF FRAUDULENT OR
DISHONEST PRACTICES OR OTHER MISCONDUCT OR MALFEASANCE;
(8) ADMITTED OR BEEN FOUND TO HAVE COMMITTED ANY INSURANCE UNFAIR
TRADE PRACTICE OR FRAUD;
(9) HAD A LIFE SETTLEMENT PROVIDER LICENSE OR LIFE SETTLEMENT INTERME-
DIARY REGISTRATION, OR AN EQUIVALENT DENIED, SUSPENDED OR REVOKED IN ANY
OTHER STATE, PROVINCE, DISTRICT OR TERRITORY;
(10) FORGED ANOTHER PERSON'S NAME TO AN APPLICATION FOR INSURANCE OR
LIFE SETTLEMENT CONTRACT OR TO ANY DOCUMENT RELATED TO AN INSURANCE OR
LIFE SETTLEMENT TRANSACTION;
(11) KNOWINGLY CONDUCTED THE BUSINESS OF LIFE SETTLEMENTS WITH A
PERSON WHO IS NOT LICENSED OR REGISTERED UNLESS SUCH PERSON IS NOT
REQUIRED TO BE LICENSED OR REGISTERED;
(12) DEMONSTRATED A PATTERN OF UNREASONABLE PAYMENTS TO OWNERS OR
INSUREDS;
(13) FAILED TO HONOR CONTRACTUAL OBLIGATIONS SET OUT IN A LIFE SETTLE-
MENT CONTRACT;
(14) SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED THE OWNERSHIP OF
A SETTLED POLICY TO A PERSON OTHER THAN AS PROVIDED IN THIS ARTICLE; OR
(15) FAILED TO PROTECT THE PRIVACY OF THE INSURED OR OWNER OR OTHER
PERSON FOR WHOM THE LICENSEE OR REGISTRANT WAS REQUIRED TO PROVIDE
PROTECTION PURSUANT TO THIS ARTICLE.
(B)(1) BEFORE THE SUPERINTENDENT SUSPENDS, REVOKES OR REFUSES TO RENEW
THE LICENSE OF A LIFE SETTLEMENT PROVIDER OR THE REGISTRATION OF A LIFE
SETTLEMENT INTERMEDIARY, THE SUPERINTENDENT SHALL GIVE NOTICE TO THE
LICENSEE OR REGISTRANT AND SHALL HOLD, OR CAUSE TO BE HELD, A HEARING
NOT LESS THAN TEN DAYS AFTER THE GIVING OF SUCH NOTICE, EXCEPT THAT
WHERE, IN THE JUDGMENT OF THE SUPERINTENDENT, THE PUBLIC HEALTH, SAFETY
OR WELFARE SO REQUIRES, A LICENSE OR REGISTRATION MAY BE SUSPENDED FOR
UP TO TEN DAYS PRIOR TO A HEARING.
(2) IN LIEU OF REVOKING OR SUSPENDING THE LICENSE OR REGISTRATION FOR
ANY OF THE CAUSES ENUMERATED IN SUBSECTION (A) OF THIS SECTION, THE
SUPERINTENDENT MAY IMPOSE A CIVIL PENALTY NOT TO EXCEED TEN THOUSAND
DOLLARS FOR EACH VIOLATION.
A. 7131--A 18
(3) UPON THE FAILURE OF SUCH LICENSEE OR REGISTRANT TO PAY SUCH PENAL-
TY ORDERED PURSUANT TO PARAGRAPH TWO OF THIS SUBSECTION WITHIN TWENTY
DAYS AFTER THE MAILING OF SUCH ORDER, POSTAGE PREPAID, REGISTERED, AND
ADDRESSED TO THE LAST KNOWN PLACE OF BUSINESS OF SUCH LICENSEE OR REGIS-
TRANT, UNLESS SUCH ORDER IS STAYED BY A COURT OF COMPETENT JURISDICTION,
THE SUPERINTENDENT MAY REVOKE THE LICENSE OF SUCH LICENSEE OR THE REGIS-
TRATION OF SUCH REGISTRANT, OR MAY SUSPEND THE SAME FOR SUCH PERIOD AS
THE SUPERINTENDENT DETERMINES.
S 7806. LIFE SETTLEMENT CONTRACT FORMS. (A) NO LICENSED LIFE SETTLE-
MENT PROVIDER SHALL ENTER INTO A LIFE SETTLEMENT CONTRACT SUBJECT TO
THIS CHAPTER UNLESS THE LIFE SETTLEMENT CONTRACT FORM, APPLICATION FORM,
AND ANY OTHER FORM AS MAY BE PRESCRIBED BY REGULATION, HAS BEEN FILED
WITH AND APPROVED BY THE SUPERINTENDENT. THE SUPERINTENDENT MAY DISAP-
PROVE ANY SUCH FORM IF THE SUPERINTENDENT FINDS THE FORM OR ANY
PROVISIONS CONTAINED THEREIN TO BE UNREASONABLE, CONTRARY TO LAW OR THE
INTERESTS OF THE PEOPLE OF THIS STATE, OR OTHERWISE MISLEADING OR
UNFAIR.
(B) WHENEVER, BY THE PROVISIONS OF THIS CHAPTER, THE SUPERINTENDENT
HAS APPROVED ANY LIFE SETTLEMENT CONTRACT FORM, APPLICATION FORM, OR ANY
OTHER FORM, THE SUPERINTENDENT MAY, AFTER NOTICE AND HEARING GIVEN TO
THE LIFE SETTLEMENT PROVIDER THAT SUBMITTED THE FORM FOR APPROVAL, WITH-
DRAW AN APPROVAL PREVIOUSLY GIVEN IF:
(1) THE USE OF THE FORM IS CONTRARY TO THE REQUIREMENTS APPLICABLE TO
THE FORM AT THE TIME OF SUCH WITHDRAWAL, OR
(2) IT CONTAINS PROVISIONS THAT ARE UNJUST, UNFAIR OR INEQUITABLE.
ANY WITHDRAWAL OF APPROVAL SHALL BE EFFECTIVE AT THE EXPIRATION OF
SUCH PERIOD, AT LEAST NINETY DAYS AFTER THE GIVING OF NOTICE OF WITH-
DRAWAL OR AS THE SUPERINTENDENT SHALL IN SUCH NOTICE PRESCRIBE.
S 7807. REPORTING REQUIREMENTS. (A)(1) EVERY LICENSED LIFE SETTLEMENT
PROVIDER SHALL FILE IN THE OFFICE OF THE SUPERINTENDENT, ANNUALLY ON OR
BEFORE THE FIRST DAY OF MARCH, A STATEMENT, TO BE KNOWN AS ITS ANNUAL
STATEMENT, VERIFIED BY THE OATH OF AT LEAST TWO OF ITS PRINCIPAL OFFI-
CERS, SHOWING ITS CONDITION AT THE END OF THE PRECEDING CALENDAR YEAR.
THE STATEMENT SHALL BE IN SUCH FORM AND SHALL CONTAIN SUCH OTHER MATTERS
AS THE SUPERINTENDENT SHALL PRESCRIBE. IN ADDITION TO ANY OTHER REQUIRE-
MENTS, THE ANNUAL STATEMENT SHALL SPECIFY THE TOTAL NUMBER, AGGREGATE
FACE AMOUNT AND LIFE SETTLEMENT PROCEEDS OF POLICIES SETTLED DURING THE
IMMEDIATELY PRECEDING CALENDAR YEAR, TOGETHER WITH A BREAKDOWN OF THE
INFORMATION BY POLICY ISSUE YEAR. THE INFORMATION SHALL NOT INCLUDE
INDIVIDUAL TRANSACTION DATA REGARDING THE BUSINESS OF LIFE SETTLEMENTS
OR INFORMATION IF THERE IS A REASONABLE BASIS TO BELIEVE THE INFORMATION
COULD BE USED TO IDENTIFY THE OWNER OR THE INSURED.
(2) EVERY LIFE SETTLEMENT PROVIDER THAT WILLFULLY FAILS TO FILE AN
ANNUAL STATEMENT AS REQUIRED IN THIS SECTION, OR WILLFULLY FAILS TO
REPLY WITHIN THIRTY DAYS TO A WRITTEN INQUIRY BY THE SUPERINTENDENT IN
CONNECTION THEREWITH, SHALL, IN ADDITION TO OTHER PENALTIES PROVIDED BY
THIS CHAPTER, BE SUBJECT, UPON DUE NOTICE AND OPPORTUNITY TO BE HEARD,
TO A PENALTY NOT TO EXCEED FIVE HUNDRED DOLLARS PER DAY OF DELAY, NOT TO
EXCEED FIFTY THOUSAND DOLLARS IN THE AGGREGATE, FOR EACH SUCH FAILURE.
S 7808. EXAMINATIONS OR INVESTIGATIONS. THE SUPERINTENDENT MAY MAKE AN
EXAMINATION OR INVESTIGATION INTO THE AFFAIRS OF ANY LIFE SETTLEMENT
PROVIDER, LIFE SETTLEMENT BROKER, LIFE SETTLEMENT INTERMEDIARY, APPLI-
CANT FOR LICENSURE AS A LIFE SETTLEMENT PROVIDER OR LIFE SETTLEMENT
BROKER, OR APPLICANT FOR REGISTRATION AS A LIFE SETTLEMENT INTERMEDIARY
AS PRESCRIBED UNDER ARTICLE THREE OF THIS CHAPTER.
A. 7131--A 19
S 7809. ADVERTISING. (A) A LIFE SETTLEMENT PROVIDER, LIFE SETTLEMENT
INTERMEDIARY OR LIFE SETTLEMENT BROKER LICENSED PURSUANT TO THIS ARTICLE
MAY CONDUCT OR PARTICIPATE IN ADVERTISEMENTS WITHIN THIS STATE. THE
ADVERTISEMENTS SHALL COMPLY WITH ALL ADVERTISING AND MARKETING LAWS OR
RULES AND REGULATIONS AS MAY BE PROMULGATED BY THE SUPERINTENDENT.
(B) ADVERTISEMENTS SHALL BE ACCURATE, TRUTHFUL AND NOT MISLEADING IN
FACT OR BY IMPLICATION.
(C) NO LIFE SETTLEMENT PROVIDER, LIFE SETTLEMENT INTERMEDIARY, LIFE
SETTLEMENT BROKER, OR ANY PERSON ACTING ON BEHALF THEREOF SHALL:
(1) DIRECTLY OR INDIRECTLY, MARKET, ADVERTISE, SOLICIT OR OTHERWISE
PROMOTE THE PURCHASE OF A POLICY FOR THE PRIMARY PURPOSE OF, OR WITH AN
EMPHASIS ON, SETTLING THE POLICY; OR
(2) USE THE WORDS "FREE", "NO COST" OR WORDS OF SIMILAR IMPORT IN THE
MARKETING, ADVERTISING, SOLICITING OR OTHERWISE PROMOTING OF THE
PURCHASE OF A POLICY.
(D) THE FAILURE TO FOLLOW THE PROVISIONS OF THIS SECTION SHALL BE A
DEFINED VIOLATION UNDER ARTICLE TWENTY-FOUR OF THIS CHAPTER.
S 7810. PRIVACY. (A) EXCEPT AS OTHERWISE PERMITTED OR REQUIRED BY
LAW, NO LIFE SETTLEMENT PROVIDER, LIFE SETTLEMENT BROKER, OR LIFE
SETTLEMENT INTERMEDIARY, OR ANY AUTHORIZED REPRESENTATIVE THEREOF,
INSURER, INFORMATION BUREAU, RATING AGENCY OR COMPANY, OR ANY OTHER
PERSON WITH ACTUAL KNOWLEDGE OF AN INSURED OR OWNER'S IDENTITY, SHALL
DISCLOSE THE IDENTITY OF THE INSURED OR OWNER, OR ANY INFORMATION THAT
THERE IS A REASONABLE BASIS TO BELIEVE COULD BE USED TO IDENTIFY THE
INSURED OR OWNER, OR THE INSURED'S FINANCIAL OR MEDICAL INFORMATION, TO
ANY PERSON UNLESS THE DISCLOSURE IS:
(1) NECESSARY TO EFFECT A LIFE SETTLEMENT CONTRACT BETWEEN THE OWNER
AND A LIFE SETTLEMENT PROVIDER AND THE OWNER AND INSURED HAVE PROVIDED
PRIOR WRITTEN CONSENT TO THE DISCLOSURE;
(2) NECESSARY TO EFFECTUATE THE SALE OR TRANSFER OF A LIFE SETTLEMENT
CONTRACT OR A SETTLED POLICY, OR INTEREST THEREIN, PROVIDED THAT EVERY
SALE IS CONDUCTED IN ACCORDANCE WITH APPLICABLE STATE AND FEDERAL LAW
AND PROVIDED FURTHER THAT THE OWNER AND THE INSURED HAVE BOTH PROVIDED
PRIOR WRITTEN CONSENT TO THE DISCLOSURE;
(3) PROVIDED IN RESPONSE TO AN INVESTIGATION OR EXAMINATION BY THE
SUPERINTENDENT, ANY OTHER GOVERNMENTAL OFFICER OR AGENCY, OR A SELF-RE-
GULATING ENTITY ESTABLISHED PURSUANT TO FEDERAL SECURITIES LAW;
(4) A TERM OR CONDITION TO THE TRANSFER OF A POLICY BY ONE LICENSED
LIFE SETTLEMENT PROVIDER TO ANOTHER LICENSED LIFE SETTLEMENT PROVIDER,
IN WHICH CASE THE RECEIVING LIFE SETTLEMENT PROVIDER SHALL BE REQUIRED
TO COMPLY WITH THE CONFIDENTIALITY REQUIREMENTS OF THIS SECTION;
(5) NECESSARY TO ALLOW THE LIFE SETTLEMENT PROVIDER OR LIFE SETTLEMENT
BROKER, OR ANY AUTHORIZED REPRESENTATIVE THEREOF TO ADMINISTER THE
INSURANCE POLICY, OR TO MAKE CONTACTS FOR THE PURPOSE OF DETERMINING
HEALTH STATUS AS AUTHORIZED BY SUBSECTION (L) OF SECTION SEVEN THOUSAND
EIGHT HUNDRED THIRTEEN OF THIS ARTICLE. FOR THE PURPOSES OF THIS
SECTION, THE TERM "AUTHORIZED REPRESENTATIVE" SHALL NOT INCLUDE ANY
PERSON WHO HAS OR MAY HAVE ANY FINANCIAL INTEREST IN THE LIFE SETTLEMENT
CONTRACT OTHER THAN A LICENSED LIFE SETTLEMENT PROVIDER, LICENSED LIFE
SETTLEMENT BROKER, FINANCING ENTITY, RELATED PROVIDER TRUST OR SPECIAL
PURPOSE ENTITY; FURTHER, A LIFE SETTLEMENT PROVIDER OR LIFE SETTLEMENT
BROKER SHALL REQUIRE ITS AUTHORIZED REPRESENTATIVE TO AGREE IN WRITING
TO ADHERE TO THE PRIVACY PROVISIONS OF THIS ARTICLE;
(6) REQUIRED TO PURCHASE INSURANCE; OR
(7) OTHERWISE PERMITTED BY REGULATION PROMULGATED BY THE SUPERINTEN-
DENT.
A. 7131--A 20
(B) ANY PERSON WHO OBTAINS OR MAY OBTAIN A SETTLED POLICY, OR ANY
INTEREST THEREIN, PURSUANT TO A TRANSFER, SALE, CONVEYANCE OR ASSIGNMENT
OF A SETTLED POLICY, OR ANY INTEREST THEREIN, SHALL:
(1) COMPLY WITH THE PROVISIONS OF THIS CHAPTER AND REGULATIONS PROMUL-
GATED THEREUNDER AND ALL OTHER APPLICABLE LAWS, GOVERNING THE PROTECTION
OF THE IDENTITY AND PRIVACY OF THE INSURED OR OWNER; AND
(2) PROTECT AGAINST THE UNLAWFUL RELEASE OF ALL INFORMATION CONCERNING
THE IDENTITY OF ANY INSURED OR OWNER, WHICH INFORMATION WOULD OR COULD
REASONABLY BE EXPECTED TO BE USED TO IDENTIFY OR CONTACT SUCH INSURED OR
OWNER, INCLUDING THE NAME, ADDRESS (EXCEPT THE STATE OF RESIDENCE) OR
SOCIAL SECURITY NUMBER OF THE INSURED OR THE OWNER, OR REPRESENTATIVE
THEREOF, THE RELATED INSURANCE POLICY NUMBER OR THE INSURED'S MEDICAL
INFORMATION.
(C) NON-PUBLIC PERSONAL INFORMATION SOLICITED OR OBTAINED IN
CONNECTION WITH A PROPOSED OR EXECUTED LIFE SETTLEMENT CONTRACT SHALL BE
SUBJECT TO THE PROVISIONS APPLICABLE TO FINANCIAL INSTITUTIONS UNDER THE
GRAMM LEACH BLILEY ACT, P.L. 106-102 (1999), AND ALL OTHER APPLICABLE
LAWS RELATING TO CONFIDENTIALITY OF NON-PUBLIC PERSONAL INFORMATION.
(D) THE FAILURE TO FOLLOW THE PROVISIONS OF THIS SECTION SHALL BE A
DEFINED VIOLATION UNDER ARTICLE TWENTY-FOUR OF THIS CHAPTER.
S 7811. DISCLOSURES TO OWNERS AND INSUREDS. (A) THE LIFE SETTLEMENT
PROVIDER OR LIFE SETTLEMENT BROKER SHALL PROVIDE TO THE OWNER AND
INSURED WITH A SEPARATE WRITTEN DOCUMENT CONSPICUOUSLY DISPLAYING THE
INFORMATION AND DISCLOSURES REQUIRED BY THIS SUBSECTION. THE SEPARATE
DOCUMENT SHALL BE SIGNED BY THE OWNER, INSURED AND LIFE SETTLEMENT
PROVIDER, NO LATER THAN THE DATE THE LIFE SETTLEMENT CONTRACT IS SIGNED
BY ALL PARTIES. AT A MINIMUM, THE DOCUMENT SHALL STATE:
(1) THAT THERE ARE POSSIBLE ALTERNATIVES TO LIFE SETTLEMENT CONTRACTS,
INCLUDING ACCELERATED BENEFITS OFFERED BY THE ISSUER OF THE POLICY;
(2) THAT SOME OR ALL OF THE PROCEEDS OF A LIFE SETTLEMENT CONTRACT MAY
BE TAXABLE AND THAT ADVICE SHOULD BE SOUGHT FROM A PROFESSIONAL TAX
ADVISOR;
(3) THAT THE PROCEEDS FROM A LIFE SETTLEMENT CONTRACT COULD BE SUBJECT
TO THE CLAIMS OF CREDITORS;
(4) THAT RECEIPT OF PROCEEDS FROM A LIFE SETTLEMENT CONTRACT MAY
ADVERSELY AFFECT THE RECIPIENTS' ELIGIBILITY FOR PUBLIC ASSISTANCE OR
OTHER GOVERNMENT BENEFITS OR ENTITLEMENTS AND THAT ADVICE SHOULD BE
OBTAINED FROM THE APPROPRIATE AGENCIES;
(5) THAT THE OWNER HAS A RIGHT TO RESCIND A LIFE SETTLEMENT CONTRACT
FROM THE TIME OF EXECUTION OF THE CONTRACT UNTIL FIFTEEN DAYS AFTER THE
RECEIPT OF THE LIFE SETTLEMENT PROCEEDS BY THE OWNER;
(6) THAT PROCEEDS WILL BE SENT TO THE OWNER WITHIN THREE BUSINESS DAYS
AFTER THE LIFE SETTLEMENT PROVIDER HAS RECEIVED THE INSURER OR GROUP
ADMINISTRATOR'S ACKNOWLEDGEMENT THAT OWNERSHIP OF THE POLICY OR INTEREST
IN THE CERTIFICATE HAS BEEN TRANSFERRED AND THE BENEFICIARY HAS BEEN
DESIGNATED IN ACCORDANCE WITH THE TERMS OF THE LIFE SETTLEMENT CONTRACT;
(7) THAT ENTERING INTO A LIFE SETTLEMENT CONTRACT MAY CAUSE OTHER
RIGHTS OR BENEFITS, INCLUDING CONVERSION RIGHTS AND WAIVER OF PREMIUM
BENEFITS, THAT MAY EXIST UNDER THE POLICY OR CERTIFICATE OF A GROUP
POLICY TO BE FORFEITED BY THE OWNER AND THAT ASSISTANCE SHOULD BE SOUGHT
FROM A PROFESSIONAL FINANCIAL ADVISOR;
(8) THE AMOUNT AND METHOD OF CALCULATING THE COMPENSATION PROVIDED OR
TO BE PROVIDED TO THE LIFE SETTLEMENT BROKER, AND ANY OTHER PERSON IN
CONNECTION WITH THE TRANSACTION;
(9) THE DATE BY WHICH THE FUNDS WILL BE AVAILABLE TO THE OWNER AND THE
TRANSMITTER OF THE FUNDS;
A. 7131--A 21
(10) THAT THE LIFE SETTLEMENT PROVIDER OR LIFE SETTLEMENT BROKER IS
REQUIRED TO PROVIDE AN OWNER OR INSURED DURING THE SOLICITATION PROCESS
WITH A CONSUMER INFORMATION BOOKLET IN A FORM PRESCRIBED BY THE SUPER-
INTENDENT, OR OTHER MATERIAL APPROVED BY THE SUPERINTENDENT;
(11) THAT THE INSURED MAY BE CONTACTED BY EITHER THE LIFE SETTLEMENT
PROVIDER OR LIFE SETTLEMENT BROKER, OR ANY AUTHORIZED REPRESENTATIVE
THEREOF, FOR THE PURPOSE OF DETERMINING THE INSURED'S HEALTH STATUS OR
TO VERIFY THE INSURED'S ADDRESS, AND THAT THE CONTACT SHALL BE LIMITED
TO ONCE EVERY THREE MONTHS IF THE INSURED HAS A LIFE EXPECTANCY OF MORE
THAN ONE YEAR, AND NO MORE THAN ONCE PER MONTH IF THE INSURED HAS A LIFE
EXPECTANCY OF ONE YEAR OR LESS;
(12) ANY AFFILIATIONS OR CONTRACTUAL ARRANGEMENTS BETWEEN THE LIFE
SETTLEMENT PROVIDER AND THE ISSUER OF THE POLICY TO BE SETTLED;
(13) ANY AFFILIATIONS OR CONTRACTUAL ARRANGEMENTS WITH ANY OTHER LIFE
SETTLEMENT PROVIDER, LIFE SETTLEMENT BROKER, LIFE SETTLEMENT INTERME-
DIARY OR PARTY FINANCING THE TRANSACTION;
(14) THAT A LIFE SETTLEMENT BROKER REPRESENTS EXCLUSIVELY THE OWNER,
AND NOT THE INSURER OR THE LIFE SETTLEMENT PROVIDER OR ANY OTHER PERSON,
AND OWES A FIDUCIARY DUTY TO THE OWNER, INCLUDING A DUTY TO ACT ACCORD-
ING TO THE OWNER'S INSTRUCTIONS AND IN THE BEST INTEREST OF THE OWNER;
(15) THE NAME, BUSINESS ADDRESS, TELEPHONE NUMBER AND E-MAIL ADDRESS
OF THE INDEPENDENT, THIRD PARTY ESCROW AGENT AND THAT THE OWNER HAS THE
RIGHT TO INSPECT OR RECEIVE COPIES OF THE RELEVANT ESCROW OR TRUST
AGREEMENTS OR DOCUMENTS;
(16) THAT A CHANGE OF OWNERSHIP COULD IN THE FUTURE LIMIT THE
INSURED'S ABILITY TO PURCHASE FUTURE INSURANCE ON THE INSURED'S LIFE
BECAUSE THERE IS A LIMIT TO HOW MUCH COVERAGE INSURERS WILL ISSUE ON ONE
LIFE; AND
(17) THE NAME, BUSINESS ADDRESS, TELEPHONE NUMBER AND E-MAIL ADDRESS
OF THE LIFE SETTLEMENT PROVIDER.
(B) THE DISCLOSURE DOCUMENT PROVIDED BY THE LIFE SETTLEMENT PROVIDER
SHALL CONTAIN THE FOLLOWING LANGUAGE, OR SUCH OTHER LANGUAGE REQUIRED BY
THE SUPERINTENDENT BY REGULATION: "ALL MEDICAL, FINANCIAL OR PERSONAL
INFORMATION SOLICITED OR OBTAINED BY A LIFE SETTLEMENT PROVIDER OR LIFE
SETTLEMENT BROKER ABOUT AN INSURED, INCLUDING THE INSURED'S IDENTITY OR
THE IDENTITY OF FAMILY MEMBERS, A SPOUSE OR A SIGNIFICANT OTHER MAY BE
DISCLOSED AS NECESSARY TO EFFECT THE LIFE SETTLEMENT CONTRACT BETWEEN
THE OWNER AND PROVIDER. IF YOU ARE ASKED TO PROVIDE THIS INFORMATION,
YOU WILL BE ASKED TO CONSENT TO THE DISCLOSURE. THE INFORMATION MAY BE
PROVIDED TO SOMEONE WHO BUYS THE POLICY OR PROVIDES FUNDS FOR THE
PURCHASE. YOU MAY BE ASKED TO RENEW YOUR PERMISSION TO SHARE INFORMATION
EVERY TWO YEARS".
(C) THE LIFE SETTLEMENT BROKER SHALL PROVIDE THE OWNER AND INSURED
WITH A SEPARATE WRITTEN DOCUMENT CONSPICUOUSLY DISPLAYING THE INFORMA-
TION AND DISCLOSURES REQUIRED BY THIS SUBSECTION. THE SEPARATE DOCUMENT
SHALL BE SIGNED BY THE OWNER, INSURED AND LIFE SETTLEMENT BROKER, NO
LATER THAN THE DATE THE LIFE SETTLEMENT CONTRACT IS SIGNED BY ALL
PARTIES. AT A MINIMUM, THE DOCUMENT SHALL STATE:
(1) THE NAME, BUSINESS ADDRESS, TELEPHONE NUMBER AND E-MAIL ADDRESS OF
THE LIFE SETTLEMENT BROKER;
(2) A FULL, COMPLETE AND ACCURATE DESCRIPTION OF ALL THE OFFERS, COUN-
TER-OFFERS, ACCEPTANCES AND REJECTIONS RELATING TO THE PROPOSED LIFE
SETTLEMENT CONTRACT;
(3) ANY AFFILIATIONS OR CONTRACTUAL ARRANGEMENTS WITH ANY LIFE SETTLE-
MENT PROVIDER, OTHER LIFE SETTLEMENT BROKER, LIFE SETTLEMENT INTERME-
DIARY OR ANY FINANCING ENTITY;
A. 7131--A 22
(4) THE NAME OF EACH LIFE SETTLEMENT BROKER AND ANY OTHER PERSON
LICENSED OR REGISTERED PURSUANT TO THIS CHAPTER, AND ANY PERSON AFFIL-
IATED WITH SUCH BROKER OR PERSON, WHO RECEIVES OR WILL RECEIVE COMPEN-
SATION DUE TO THE LIFE SETTLEMENT CONTRACT AND THE AMOUNT OF COMPEN-
SATION DIRECTLY RECEIVED OR TO BE RECEIVED BY THAT BROKER; AND
(5) A COMPLETE RECONCILIATION OF THE GROSS OFFER OR BID BY THE LIFE
SETTLEMENT PROVIDER TO THE NET AMOUNT OF PROCEEDS OR VALUE TO BE
RECEIVED BY THE OWNER, PROVIDED THAT FOR THE PURPOSE OF THIS SECTION,
"GROSS OFFER OR BID" SHALL MEAN THE TOTAL AMOUNT OR VALUE OFFERED BY THE
LIFE SETTLEMENT PROVIDER FOR THE PURCHASE OF ONE OR MORE LIFE INSURANCE
POLICIES, INCLUSIVE OF COMMISSIONS AND FEES.
(D) THE FAILURE TO PROVIDE THE DISCLOSURES DESCRIBED IN THIS SECTION
SHALL BE A DEFINED VIOLATION UNDER ARTICLE TWENTY-FOUR OF THIS CHAPTER.
S 7812. LIFE INSURANCE APPLICATIONS. (A) WITHOUT LIMITING THE ABILITY
OF AN INSURER TO ASSESS THE INSURABILITY OF A POLICY APPLICANT AND TO
DETERMINE WHETHER OR NOT TO ISSUE THE POLICY, AND IN ADDITION TO OTHER
QUESTIONS AN INSURER MAY LAWFULLY POSE TO A LIFE INSURANCE APPLICANT,
INSURERS MAY INQUIRE IN THE APPLICATION FOR INSURANCE WHETHER THE
PROPOSED OWNER INTENDS TO PAY PREMIUMS WITH THE ASSISTANCE OF FINANCING
FROM A LENDER THAT WILL USE THE POLICY AS COLLATERAL TO SUPPORT THE
FINANCING.
(B) THE INSURER MAY INCLUDE THE FOLLOWING NOTICE TO THE APPLICANT AND
THE INSURED, OR OTHER NOTICE ACCEPTABLE TO THE SUPERINTENDENT, ON THE
APPLICATION OR AS AN AMENDMENT THERETO: "IF YOU ENTER INTO A LOAN
ARRANGEMENT WHERE THE POLICY IS USED AS COLLATERAL, AND THE POLICY
CHANGES OWNERSHIP AT SOME POINT IN THE FUTURE IN SATISFACTION OF THE
LOAN, THEN THE FOLLOWING MAY BE TRUE:
(1) A CHANGE OF OWNERSHIP MAY LEAD TO A PERSON UNKNOWN TO YOU OWNING
AN INTEREST IN THE INSURED'S LIFE;
(2) A CHANGE OF OWNERSHIP MAY LIMIT YOUR ABILITY TO PURCHASE INSURANCE
IN THE FUTURE ON THE INSURED'S LIFE BECAUSE THERE IS A LIMIT TO HOW MUCH
COVERAGE INSURERS WILL ISSUE ON ONE LIFE;
(3) IF OWNERSHIP OF THE LIFE INSURANCE POLICY CHANGES, AND YOU WISH TO
OBTAIN MORE INSURANCE COVERAGE ON THE INSURED'S LIFE IN THE FUTURE, THE
INSURED'S HIGHER ISSUE AGE, A CHANGE IN HEALTH STATUS, AND/OR OTHER
FACTORS MAY REDUCE THE ABILITY TO OBTAIN COVERAGE AND/OR MAY RESULT IN
SIGNIFICANTLY HIGHER PREMIUMS; AND
(4) YOU SHOULD CONSULT A PROFESSIONAL ADVISOR, SINCE A CHANGE IN
OWNERSHIP IN SATISFACTION OF THE LOAN MAY RESULT IN TAX CONSEQUENCES TO
THE OWNER."
S 7813. GENERAL RULES. (A) A LIFE SETTLEMENT PROVIDER ENTERING INTO A
LIFE SETTLEMENT CONTRACT SHALL FIRST OBTAIN A WRITTEN CONSENT FROM THE
INSURED TO THE RELEASE OF THE INSURED'S MEDICAL RECORDS SUBJECT TO THE
LIMITATIONS CONTAINED IN SECTION SEVEN THOUSAND EIGHT HUNDRED TEN OF
THIS ARTICLE.
(B) THE INSURER SHALL RESPOND TO A REQUEST FOR VERIFICATION OF COVER-
AGE SUBMITTED BY A LIFE SETTLEMENT PROVIDER, LIFE SETTLEMENT BROKER OR
LIFE SETTLEMENT INTERMEDIARY WITHIN FIFTEEN DAYS AFTER THE DATE THE
REQUEST IS RECEIVED. THE INSURER SHALL COMPLETE AND ISSUE THE VERIFICA-
TION OF COVERAGE OR INDICATE THE SPECIFIC REASONS WHY IT IS UNABLE TO
RESPOND. IN ITS RESPONSE, THE INSURER SHALL INDICATE WHETHER, BASED ON
THE MEDICAL EVIDENCE AND DOCUMENTS PROVIDED, THE INSURER IS PURSUING OR
INTENDS TO PURSUE AN INVESTIGATION REGARDING THE VALIDITY OF THE POLICY.
(C) THE LIFE SETTLEMENT PROVIDER SHALL GIVE WRITTEN NOTICE TO THE
INSURER THAT ISSUED THE POLICY WITHIN TEN DAYS AFTER THE LIFE SETTLEMENT
CONTRACT IS EXECUTED BY ALL PARTIES.
A. 7131--A 23
(D) UNLESS THE INSURER IS PURSUING OR INTENDS TO PURSUE AN INVESTI-
GATION, THE INSURER SHALL, WITHIN FIFTEEN DAYS OF RECEIPT OF A REQUEST
FOR A CHANGE OF OWNERSHIP OR ASSIGNMENT USED TO EFFECTUATE THE TRANSFER
OR ASSIGNMENT OF THE OWNER'S RIGHTS OR BENEFITS UNDER A POLICY TO A LIFE
SETTLEMENT PROVIDER, PROCESS THE CHANGE OF OWNERSHIP OR ASSIGNMENT AND
NOTIFY THE LIFE SETTLEMENT PROVIDER AND THE OWNER THAT THE TRANSFER OR
ASSIGNMENT HAS BEEN EFFECTUATED.
(E) IF A LIFE SETTLEMENT BROKER PERFORMS ANY ACTIVITY REQUIRED OF THE
LIFE SETTLEMENT PROVIDER IN THIS SECTION OR PROVIDES ANY DISCLOSURES
REQUIRED BY SECTION SEVEN THOUSAND EIGHT HUNDRED ELEVEN OF THIS ARTICLE,
THEN THE LIFE SETTLEMENT PROVIDER IS DEEMED TO HAVE PERFORMED THAT
ACTIVITY OR PROVIDED THAT DISCLOSURE.
(F) ALL MEDICAL INFORMATION SOLICITED OR OBTAINED BY ANY LICENSEE OR
ANY OTHER PERSON SHALL BE SUBJECT TO THE PROVISIONS APPLICABLE TO HEALTH
CARE PROVIDERS UNDER THE PUBLIC HEALTH LAW AND ALL APPLICABLE LAWS
RELATING TO CONFIDENTIALITY OF MEDICAL INFORMATION, PROVIDED THAT, TO
THE EXTENT THAT THIS CHAPTER PROVIDES FOR GREATER CONFIDENTIALITY OF
MEDICAL INFORMATION, THIS CHAPTER SHALL GOVERN.
(G)(1) EVERY LIFE SETTLEMENT CONTRACT SHALL PROVIDE THAT THE OWNER HAS
AN UNCONDITIONAL RIGHT TO RESCIND THE LIFE SETTLEMENT CONTRACT FROM THE
TIME OF EXECUTION OF THE CONTRACT UNTIL FIFTEEN DAYS AFTER THE RECEIPT
OF THE LIFE SETTLEMENT PROCEEDS BY THE OWNER BY GIVING NOTICE OF RESCIS-
SION TO THE LIFE SETTLEMENT PROVIDER BY MIDNIGHT OF THE FIFTEENTH DAY.
(2) WITHIN FIVE DAYS AFTER RECEIPT OF THE NOTICE OF RESCISSION, THE
LIFE SETTLEMENT PROVIDER SHALL PROVIDE A WRITTEN STATEMENT TO THE OWNER
ITEMIZING THE AMOUNT OF ALL LIFE SETTLEMENT PROCEEDS AND ANY PREMIUMS,
LOANS AND LOAN INTEREST PAID OR TO BE PAID AS OF A DATE CERTAIN AS MAY
BE REQUESTED BY THE OWNER.
(3) WITHIN FIFTEEN DAYS AFTER THE RECEIPT OF THE WRITTEN, ITEMIZED
STATEMENT BY THE OWNER, THE OWNER MUST REPAY ALL SUCH LIFE SETTLEMENT
PROCEEDS AND ANY PREMIUMS, LOANS AND LOAN INTEREST PAID BY THE LIFE
SETTLEMENT PROVIDER.
(4) IF THE INSURED DIES DURING THE RESCISSION PERIOD, THE LIFE SETTLE-
MENT CONTRACT SHALL BE DEEMED TO HAVE BEEN RESCINDED, SUBJECT TO REPAY-
MENT OF ALL LIFE SETTLEMENT PROCEEDS AND ANY PREMIUMS, LOANS AND LOAN
INTEREST PAID BY THE LIFE SETTLEMENT PROVIDER.
(5) WITHIN FIVE DAYS AFTER RECEIPT OF NOTICE OF THE INSURED'S DEATH
DURING THE RESCISSION PERIOD, THE LIFE SETTLEMENT PROVIDER SHALL PROVIDE
A WRITTEN STATEMENT TO THE OWNER OR, IF THE OWNER IS DECEASED, TO THE
LEGAL REPRESENTATIVE OF THE OWNER'S ESTATE, ITEMIZING THE AMOUNT OF ALL
LIFE SETTLEMENT PROCEEDS AND ANY PREMIUMS, LOANS AND LOAN INTEREST PAID
OR TO BE PAID AS OF A DATE CERTAIN AS MAY BE REQUESTED BY THE OWNER OR
THE LEGAL REPRESENTATIVE OF THE OWNER'S ESTATE. AS SOON AS PRACTICABLE,
THE OWNER OR THE OWNER'S ESTATE SHALL REPAY ALL SUCH PROCEEDS AND ANY
PREMIUMS, LOANS AND LOAN INTEREST PAID BY THE LIFE SETTLEMENT PROVIDER.
(H) WITHIN THREE BUSINESS DAYS AFTER RECEIPT FROM THE OWNER OF DOCU-
MENTS TO EFFECT THE TRANSFER OF THE INSURANCE POLICY, THE LIFE SETTLE-
MENT PROVIDER SHALL DEPOSIT THE PROCEEDS OF THE LIFE SETTLEMENT CONTRACT
INTO AN ESCROW OR TRUST ACCOUNT MAINTAINED IN AN INSURED BANK LOCATED IN
THIS STATE OR OTHER BANK ACCEPTABLE TO THE SUPERINTENDENT. THE ESCROW
AGENT OR TRUSTEE SHALL BE REQUIRED TO TRANSFER THE PROCEEDS DUE TO THE
OWNER WITHIN THREE BUSINESS DAYS OF ACKNOWLEDGEMENT OF THE TRANSFER FROM
THE INSURER.
(I) FAILURE TO TENDER THE LIFE SETTLEMENT CONTRACT PROCEEDS TO THE
OWNER BY THE DATE DISCLOSED TO THE OWNER SHALL RENDER THE LIFE SETTLE-
MENT CONTRACT VOIDABLE BY THE OWNER FOR LACK OF CONSIDERATION UNTIL THE
A. 7131--A 24
TIME THE PROCEEDS ARE TENDERED TO AND ACCEPTED BY THE OWNER. A FAILURE
TO GIVE WRITTEN NOTICE OF THE RIGHT OF RESCISSION HEREUNDER SHALL TOLL
THE RIGHT OF RESCISSION UNTIL THIRTY DAYS AFTER THE WRITTEN NOTICE OF
THE RIGHT OF RESCISSION HAS BEEN GIVEN.
(J) THE VALUE OF ANY COMPENSATION PROVIDED TO A LIFE SETTLEMENT BROKER
IN EXCHANGE FOR SERVICES PROVIDED TO THE OWNER PERTAINING TO A LIFE
SETTLEMENT CONTRACT SHALL BE COMPUTED AS A PERCENTAGE OF THE OFFER
OBTAINED, NOT THE FACE VALUE OF THE POLICY. A LIFE SETTLEMENT BROKER MAY
REDUCE THE COMPENSATION PROVIDED BELOW THIS PERCENTAGE.
(K)(1) NO PERSON, AT ANY TIME PRIOR TO, OR AT THE TIME OF, THE APPLI-
CATION FOR, OR ISSUANCE OF, A POLICY, OR DURING THE TWO-YEAR PERIOD
COMMENCING WITH THE DATE OF ISSUANCE OF THE POLICY, SHALL ENTER INTO A
LIFE SETTLEMENT CONTRACT, REGARDLESS OF THE DATE THE COMPENSATION IS TO
BE PROVIDED AND REGARDLESS OF THE DATE THE ASSIGNMENT, TRANSFER, SALE,
DEVISE OR BEQUEST OF THE POLICY IS TO OCCUR. THIS PROHIBITION SHALL NOT
APPLY IF THE OWNER CERTIFIES TO THE LIFE SETTLEMENT PROVIDER THAT:
(A) THE POLICY WAS ISSUED UPON THE OWNER'S EXERCISE OF CONVERSION
RIGHTS ARISING OUT OF A POLICY, PROVIDED THE TOTAL OF THE TIME COVERED
UNDER THE CONVERSION POLICY PLUS THE TIME COVERED UNDER THE PRIOR POLICY
IS AT LEAST TWENTY-FOUR MONTHS. THE TIME COVERED UNDER A GROUP POLICY
SHALL BE CALCULATED WITHOUT REGARD TO A CHANGE IN INSURERS, PROVIDED THE
COVERAGE HAS BEEN CONTINUOUS AND UNDER THE SAME GROUP SPONSORSHIP; OR
(B) ONE OR MORE OF THE FOLLOWING CONDITIONS, FOR WHICH THE OWNER
SUBMITS INDEPENDENT EVIDENCE TO THE LIFE SETTLEMENT PROVIDER, HAVE BEEN
MET WITHIN THE TWO-YEAR PERIOD:
(I) THE OWNER OR INSURED IS TERMINALLY OR CHRONICALLY ILL;
(II) THE OWNER OR INSURED DISPOSES OF OWNERSHIP INTERESTS IN A CLOSELY
HELD CORPORATION, PURSUANT TO THE TERMS OF A BUYOUT OR OTHER SIMILAR
AGREEMENT IN EFFECT AT THE TIME THE INSURANCE POLICY WAS INITIALLY
ISSUED;
(III) THE OWNER'S SPOUSE DIES;
(IV) THE OWNER DIVORCES HIS OR HER SPOUSE;
(V) THE OWNER RETIRES FROM FULL-TIME EMPLOYMENT OR INVOLUNTARILY CEAS-
ES EMPLOYMENT;
(VI) THE OWNER BECOMES PHYSICALLY OR MENTALLY DISABLED AND A PHYSICIAN
DETERMINES THAT THE DISABILITY PREVENTS THE OWNER FROM MAINTAINING
FULL-TIME EMPLOYMENT;
(VII) A FINAL ORDER, JUDGMENT OR DECREE IS ENTERED BY A COURT OF
COMPETENT JURISDICTION, ON THE APPLICATION OF A CREDITOR OF THE OWNER,
ADJUDICATING THE OWNER BANKRUPT OR INSOLVENT, OR APPROVING A PETITION
SEEKING REORGANIZATION OF THE OWNER OR APPOINTING A RECEIVER, TRUSTEE OR
LIQUIDATOR TO ALL OR A SUBSTANTIAL PART OF THE OWNER'S ASSETS; OR
(VIII) ANY OTHER CONDITION THAT THE SUPERINTENDENT MAY DETERMINE BY
REGULATION TO BE AN EXTRAORDINARY CIRCUMSTANCE FOR THE OWNER OR THE
INSURED.
(2) COPIES OF THE INDEPENDENT EVIDENCE REQUIRED BY SUBPARAGRAPH (B) OF
PARAGRAPH ONE OF THIS SUBSECTION SHALL BE SUBMITTED TO THE INSURER WHEN
THE LIFE SETTLEMENT PROVIDER SUBMITS A REQUEST TO THE INSURER FOR
VERIFICATION OF COVERAGE. THE COPIES SHALL BE ACCOMPANIED BY A LETTER OF
ATTESTATION FROM THE LIFE SETTLEMENT PROVIDER THAT THE COPIES ARE TRUE
AND CORRECT COPIES OF THE DOCUMENTS RECEIVED BY THE LIFE SETTLEMENT
PROVIDER. NOTHING IN THIS SECTION SHALL PROHIBIT AN INSURER FROM EXER-
CISING ITS RIGHT TO CONTEST THE VALIDITY OF ANY POLICY.
(3) FOR THE PURPOSES OF THIS SECTION A PERSON IS:
A. 7131--A 25
(A) TERMINALLY ILL IF THE INDIVIDUAL HAS AN ILLNESS, SICKNESS OR PHYS-
ICAL CONDITION THAT CAN REASONABLY BE EXPECTED TO RESULT IN DEATH IN
TWENTY-FOUR MONTHS OR LESS; OR
(B) CHRONICALLY ILL IF THAT INDIVIDUAL HAS BEEN CERTIFIED BY A
LICENSED HEALTH CARE PRACTITIONER AS:
(I) BEING UNABLE TO PERFORM WITHOUT SUBSTANTIAL ASSISTANCE FROM ANOTH-
ER INDIVIDUAL AT LEAST TWO ACTIVITIES OF DAILY LIVING (I.E., EATING,
TOILETING, TRANSFERRING, BATHING, DRESSING OR CONTINENCE) FOR A PERIOD
OF AT LEAST NINETY DAYS, DUE TO A LOSS OF FUNCTIONAL CAPACITY;
(II) REQUIRING SUBSTANTIAL SUPERVISION TO PROTECT THE INDIVIDUAL FROM
THREATS TO HEALTH AND SAFETY DUE TO SEVERE COGNITIVE IMPAIRMENT FOR A
PERIOD OF AT LEAST NINETY DAYS, DUE TO A LOSS OF FUNCTIONAL CAPACITY; OR
(III) HAVING A LEVEL OF DISABILITY SIMILAR TO THAT DESCRIBED IN CLAUSE
(I) OF THIS SUBPARAGRAPH, AS DETERMINED BY THE UNITED STATES SECRETARY
OF HEALTH AND HUMAN SERVICES.
(L) CONTACTS WITH THE INSURED FOR THE PURPOSE OF DETERMINING THE
HEALTH STATUS OF THE INSURED BY A LICENSED LIFE SETTLEMENT PROVIDER
AFTER THE LIFE SETTLEMENT CONTRACT HAS BEEN EXECUTED SHALL BE MADE ONLY
BY THE LICENSED LIFE SETTLEMENT PROVIDER OR LICENSED LIFE SETTLEMENT
BROKER, OR ANY AUTHORIZED REPRESENTATIVE THEREOF, AND SHALL BE LIMITED
TO ONCE EVERY THREE MONTHS FOR AN INSURED WITH A LIFE EXPECTANCY OF MORE
THAN ONE YEAR, AND TO NO MORE THAN ONCE PER MONTH FOR AN INSURED WITH A
LIFE EXPECTANCY OF ONE YEAR OR LESS.
(M) THE LIFE SETTLEMENT BROKER SHALL REPRESENT ONLY THE OWNER AND OWES
A FIDUCIARY DUTY TO THE OWNER, INCLUDING A DUTY TO ACT ACCORDING TO THE
OWNER'S INSTRUCTIONS AND IN THE BEST INTEREST OF THE OWNER.
(N)(1) A LIFE SETTLEMENT PROVIDER, LIFE SETTLEMENT BROKER, OR LIFE
SETTLEMENT INTERMEDIARY SHALL BE RESPONSIBLE FOR THE ACTIONS OF ITS
AUTHORIZED REPRESENTATIVE.
(2) AN AUTHORIZED REPRESENTATIVE OF A LIFE SETTLEMENT PROVIDER, LIFE
SETTLEMENT BROKER, OR LIFE SETTLEMENT INTERMEDIARY SHALL NOT HAVE ANY
FINANCIAL INTEREST IN THE LIFE SETTLEMENT CONTRACT OR A SETTLED POLICY.
(O)(1) A LIFE SETTLEMENT INTERMEDIARY'S SERVICES SHALL NOT BE LIMITED
TO LIFE SETTLEMENT PROVIDERS OR LIFE SETTLEMENT BROKERS THAT ARE AFFIL-
IATES, PARENTS, OR SUBSIDIARIES OF THE LIFE SETTLEMENT INTERMEDIARY.
(2) A LIFE SETTLEMENT INTERMEDIARY SHALL ESTABLISH AND MAINTAIN
SYSTEMS, PRACTICES AND PROCEDURES TO ENSURE THAT:
(A) EVERY TRANSACTION WITH AN AFFILIATE, PARENT OR SUBSIDIARY OF THE
LIFE SETTLEMENT INTERMEDIARY IS FAIR AND EQUITABLE AND CONDUCTED ON AN
ARMS-LENGTH BASIS; AND
(B) AN AFFILIATE, PARENT OR SUBSIDIARY OF THE LIFE SETTLEMENT INTERME-
DIARY IS NOT GRANTED OR PROVIDED WITH PREFERENTIAL TREATMENT OR ACCESS
TO INFORMATION OR SERVICES THAT ARE NOT GRANTED OR PROVIDED TO AN UNAF-
FILIATED LIFE SETTLEMENT PROVIDER OR LIFE SETTLEMENT BROKER THAT
CONDUCTS BUSINESS WITH THE LIFE SETTLEMENT INTERMEDIARY.
(P) A LIFE SETTLEMENT PROVIDER MAY SELL, ASSIGN, PLEDGE OR OTHERWISE
TRANSFER THE OWNERSHIP OF A SETTLED POLICY ONLY TO A LICENSED LIFE
SETTLEMENT PROVIDER, AN ACCREDITED INVESTOR OR QUALIFIED INSTITUTIONAL
BUYER, FINANCING ENTITY, SPECIAL PURPOSE ENTITY, OR RELATED PROVIDER
TRUST; PROVIDED, HOWEVER, A LIFE SETTLEMENT PROVIDER MAY SELL, ASSIGN,
PLEDGE OR OTHERWISE TRANSFER A BENEFICIAL INTEREST IN A SETTLED POLICY
TO SOMEONE OTHER THAN A LIFE SETTLEMENT PROVIDER LICENSED IN THIS STATE,
AN ACCREDITED INVESTOR OR QUALIFIED INSTITUTIONAL BUYER, FINANCING ENTI-
TY, SPECIAL PURPOSE ENTITY, OR RELATED PROVIDER TRUST IF A LICENSED LIFE
SETTLEMENT PROVIDER CONTINUES TO ADMINISTER AND SERVICE THE SETTLED
A. 7131--A 26
POLICY AND PROTECTS THE PRIVACY OF THE INSURED AND OWNER PURSUANT TO
SECTION SEVEN THOUSAND EIGHT HUNDRED TEN OF THIS ARTICLE.
(Q) THE FAILURE TO FOLLOW THE PROVISIONS OF THIS SECTION SHALL BE A
DEFINED VIOLATION UNDER ARTICLE TWENTY-FOUR OF THIS CHAPTER.
S 7814. PROHIBITED PRACTICES. (A) NO PERSON SHALL:
(1) ENTER INTO A LIFE SETTLEMENT CONTRACT IF THE PERSON KNOWS OR
REASONABLY SHOULD HAVE KNOWN THAT THE POLICY WAS OBTAINED IN A FALSE,
DECEPTIVE OR MISLEADING WAY;
(2) ENGAGE IN ANY TRANSACTION, PRACTICE OR COURSE OF BUSINESS IF THE
PERSON KNOWS OR REASONABLY SHOULD HAVE KNOWN THAT THE INTENT WAS TO
AVOID THE DISCLOSURE OR OTHER NOTICE REQUIREMENTS OF THIS ARTICLE;
(3) ENGAGE IN ANY FRAUDULENT ACT OR PRACTICE IN CONNECTION WITH ANY
TRANSACTION RELATING TO ANY LIFE SETTLEMENT;
(4)(A) ENTER INTO A PREMIUM FINANCE LOAN WITH ANY PERSON OR AGENCY, OR
ANY PERSON AFFILIATED WITH SUCH PERSON OR AGENCY, PURSUANT TO WHICH THE
PERSON SHALL RECEIVE ANY PROCEEDS, FEES OR OTHER CONSIDERATION, DIRECTLY
OR INDIRECTLY, FROM THE POLICY OR OWNER OF THE POLICY OR ANY OTHER
PERSON, OTHER THAN COMMISSIONS EARNED BY A LICENSED INSURANCE PRODUCER
ON THE POLICY, WITH RESPECT TO THE PREMIUM FINANCE LOAN OR ANY SETTLE-
MENT CONTRACT OR OTHER TRANSACTION RELATED TO SUCH POLICY THAT ARE IN
ADDITION TO THE AMOUNTS REQUIRED TO PAY THE PRINCIPAL, INTEREST AND ANY
REASONABLE COSTS OR EXPENSES INCURRED BY THE LENDER OR BORROWER RELATED
TO THE PREMIUM FINANCE LOAN OR SUBSEQUENT SALE OF SUCH LOAN; PROVIDED,
FURTHER, THAT ANY PAYMENTS, CHARGES, FEES OR OTHER AMOUNTS IN ADDITION
TO THE AMOUNTS REQUIRED TO PAY THE PRINCIPAL, INTEREST AND ANY REASON-
ABLE COSTS OR EXPENSES INCURRED BY THE LENDER OR BORROWER RELATED TO THE
PREMIUM FINANCE LOAN SHALL BE REMITTED TO THE ORIGINAL OWNER OF THE
POLICY OR TO THE ORIGINAL OWNER'S ESTATE IF THE ORIGINAL OWNER IS NOT
LIVING AT THE TIME OF THE DETERMINATION OF THE OVERPAYMENT;
(B) IF, AT ANY TIME, A POLICY THAT IS THE SUBJECT OF A PREMIUM FINANCE
LOAN IS SOLD, ASSIGNED, TRANSFERRED, DEVISED OR BEQUEATHED TO A PERSON
OR AGENCY SPECIFIED IN SUBPARAGRAPH (A) OF THIS PARAGRAPH OR TO A LIFE
SETTLEMENT PROVIDER PURSUANT TO THE TERMS OF A PREMIUM FINANCE LOAN, ANY
PROCEEDS OR OTHER CONSIDERATION RECEIVED OTHER THAN THE AMOUNTS SPECI-
FIED IN SUBPARAGRAPH (A) OF THIS PARAGRAPH SHALL BE REMITTED TO THE
ORIGINAL OWNER OF THE POLICY OR TO THE ORIGINAL OWNER'S ESTATE IF THE
ORIGINAL OWNER IS NOT THEN LIVING.
(5) WITH RESPECT TO ANY LIFE SETTLEMENT CONTRACT, KNOWINGLY FAIL TO
DISCLOSE ANY AFFILIATION OR CONTRACTUAL ARRANGEMENT AS REQUIRED BY THIS
ARTICLE;
(6) DIRECTLY OR INDIRECTLY, PURCHASE OR OBTAIN AN INTEREST IN ANY
POLICY THAT IS THE SUBJECT OF A LIFE SETTLEMENT CONTRACT WHERE THE
PERSON HAS ACTED AS A LIFE SETTLEMENT BROKER OR LIFE SETTLEMENT INTERME-
DIARY WITH RESPECT TO THE POLICY;
(7) DIRECTLY OR INDIRECTLY PROVIDE OR OFFER TO PROVIDE ANY COMPEN-
SATION TO ANY PERSON ACTING IN THIS STATE AS A LIFE SETTLEMENT BROKER,
UNLESS THE PERSON IS A LICENSED LIFE SETTLEMENT BROKER PURSUANT TO THE
PROVISIONS OF SECTION TWO THOUSAND ONE HUNDRED THIRTY-SEVEN OF THIS
CHAPTER;
(8) DIRECTLY OR INDIRECTLY PAY OR OFFER TO PAY ANY REFERRAL OR
FINDER'S FEE OR PROVIDE OR OFFER TO PROVIDE ANY OTHER COMPENSATION TO
ANY OWNER'S PHYSICIAN, ATTORNEY, ACCOUNTANT OR OTHER PERSON PROVIDING
MEDICAL, LEGAL OR FINANCIAL PLANNING SERVICES TO THE OWNER, OR TO ANY
OTHER PERSON, OTHER THAN A LIFE SETTLEMENT BROKER, REPRESENTING THE
OWNER WITH RESPECT TO THE LIFE SETTLEMENT CONTRACT;
A. 7131--A 27
(9) DIRECTLY OR INDIRECTLY PROVIDE OR OFFER TO PROVIDE COMPENSATION TO
A LIFE SETTLEMENT BROKER, EXCEPT WHERE THE COMPENSATION IS FOR A SPECIF-
IC LIFE SETTLEMENT CONTRACT AND IS CLEARLY DISCLOSED TO THE OWNER AS
REQUIRED IN THIS ARTICLE;
(10) DIRECTLY OR INDIRECTLY ENGAGE IN ANY ACT DETERMINED BY THE SUPER-
INTENDENT TO BE AN UNFAIR OR DECEPTIVE ACT OR PRACTICE PURSUANT TO THIS
CHAPTER;
(11) REMOVE, CONCEAL, ALTER, DESTROY OR SEQUESTER FROM THE SUPERINTEN-
DENT THE ASSETS OR RECORDS OF A LIFE SETTLEMENT PROVIDER, LIFE SETTLE-
MENT BROKER, LIFE SETTLEMENT INTERMEDIARY OR OTHER PERSON ENGAGED IN THE
BUSINESS OF LIFE SETTLEMENTS;
(12) MISREPRESENT OR CONCEAL THE FINANCIAL CONDITION OF A LIFE SETTLE-
MENT PROVIDER; OR
(13) IN RELATION TO THE BUSINESS OF LIFE SETTLEMENTS, FILE WITH THE
SUPERINTENDENT A DOCUMENT CONTAINING MATERIALLY FALSE INFORMATION
CONCERNING ANY FACT MATERIAL THERETO OR OTHERWISE CONCEAL INFORMATION
ABOUT A FACT MATERIAL THERETO FROM THE SUPERINTENDENT.
(B) NO LIFE SETTLEMENT PROVIDER, LIFE SETTLEMENT BROKER, LIFE SETTLE-
MENT INTERMEDIARY, OWNER OR ANY OTHER PERSON, AS A CONDITION OF ENTERING
INTO A LIFE SETTLEMENT CONTRACT, SHALL REQUEST OR REQUIRE AN INSURED TO
SUBMIT TO A MEDICAL EXAMINATION AT ANY TIME SUBSEQUENT TO THE SETTLEMENT
OF THE POLICY.
(C) NO LIFE SETTLEMENT PROVIDER SHALL ENTER INTO ANY LIFE SETTLEMENT
CONTRACT IN WHICH PAYMENTS OF PROCEEDS ARE MADE IN INSTALLMENTS.
(D) NO LIFE SETTLEMENT PROVIDER, LIFE SETTLEMENT BROKER OR LIFE
SETTLEMENT INTERMEDIARY SHALL DIRECTLY OR INDIRECTLY:
(1) BE A PARTY TO OR ENTER INTO AN AGREEMENT OR UNDERSTANDING LIMITING
OR RESTRICTING AN OWNER'S OR LIFE SETTLEMENT BROKER'S ABILITY TO SEEK
COMPETITIVE BIDS ON POLICIES TO THE EXTENT THAT THE AGREEMENT OR UNDER-
STANDING UNLAWFULLY RESTRAINS TRADE OR CONSTITUTES ANTI-COMPETITIVE
BEHAVIOR;
(2) MONOPOLIZE OR ATTEMPT TO MONOPOLIZE, OR COMBINE OR CONSPIRE WITH
ANY OTHER PERSON OR PERSONS TO MONOPOLIZE, IN THIS STATE, THE BUSINESS
OF LIFE SETTLEMENTS;
(3) BE A PARTY TO OR ENTER INTO AN AGREEMENT WITH A LIFE SETTLEMENT
PROVIDER, LIFE SETTLEMENT BROKER OR LIFE SETTLEMENT INTERMEDIARY TO THE
EXTENT THAT THE AGREEMENT FIXES OR LIMITS THE VALUE PAID TO OWNERS;
(4) BE A PARTY TO OR ENTER INTO ANY AGREEMENT OR COMMUNICATION WITH A
LIFE SETTLEMENT PROVIDER OR LIFE SETTLEMENT INTERMEDIARY WITH RESPECT TO
THE TERMS TO BE OFFERED TO AN OWNER TO THE EXTENT THAT THE AGREEMENT OR
UNDERSTANDING UNLAWFULLY RESTRAINS TRADE OR CONSTITUTES ANTI-COMPETITIVE
BEHAVIOR;
(5) BE A PARTY TO OR ENTER INTO ANY AGREEMENT WITH A LIFE SETTLEMENT
PROVIDER, LIFE SETTLEMENT BROKER, LIFE SETTLEMENT INTERMEDIARY OR OTHER
PERSON TO RESTRAIN TRADE OR ENGAGE IN ANY OTHER ANTI-COMPETITIVE BEHAV-
IOR;
(6) BE PARTY TO OR ENTER INTO ANY AGREEMENT WITH A LIFE SETTLEMENT
PROVIDER, LIFE SETTLEMENT BROKER, LIFE SETTLEMENT INTERMEDIARY OR OTHER
PERSON THE EFFECT OF WHICH MAY BE SUBSTANTIALLY TO LESSEN COMPETITION IN
THE BUSINESS OF LIFE SETTLEMENTS SUBJECT TO THIS CHAPTER; OR
(7) BE A PARTY TO OR ENTER INTO ANY AGREEMENT WITH A LIFE SETTLEMENT
PROVIDER, LIFE SETTLEMENT BROKER, LIFE SETTLEMENT INTERMEDIARY OR OTHER
PERSON TO REFUSE TO CONDUCT BUSINESS WITH ANY PERSON IN THE BUSINESS OF
LIFE SETTLEMENTS.
(E) NO LIFE SETTLEMENT INTERMEDIARY SHALL:
A. 7131--A 28
(1) REPRESENT, SOLICIT, NEGOTIATE OR ACT ON BEHALF OF, AN OWNER, A
LIFE SETTLEMENT PROVIDER, OR A LIFE SETTLEMENT BROKER; OR
(2) ACT AS A LIFE SETTLEMENT PROVIDER OR LIFE SETTLEMENT BROKER.
(F) NO INSURER SHALL PROHIBIT AN INSURANCE AGENT FROM DISCLOSING TO A
CLIENT THE AVAILABILITY OF A LIFE SETTLEMENT CONTRACT.
(G) THE FAILURE TO FOLLOW THE PROVISIONS OF THIS SECTION SHALL BE A
DEFINED VIOLATION UNDER ARTICLE TWENTY-FOUR OF THIS CHAPTER.
S 7815. STRANGER-ORIGINATED LIFE INSURANCE. (A) IN THIS CHAPTER,
"STRANGER-ORIGINATED LIFE INSURANCE" MEANS ANY ACT, PRACTICE OR ARRANGE-
MENT, AT OR PRIOR TO POLICY ISSUANCE, TO INITIATE OR FACILITATE THE
ISSUANCE OF A POLICY FOR THE INTENDED BENEFIT OF A PERSON WHO, AT THE
TIME OF POLICY ORIGINATION, HAS NO INSURABLE INTEREST IN THE LIFE OF THE
INSURED UNDER THE LAWS OF THIS STATE, INCLUDING:
(1) THE PURCHASE OF LIFE INSURANCE WITH RESOURCES OR GUARANTEES FROM
OR THROUGH A PERSON THAT, AT THE TIME OF POLICY INITIATION, COULD NOT
LAWFULLY INITIATE THE POLICY;
(2) AN ARRANGEMENT OR OTHER AGREEMENT TO TRANSFER THE OWNERSHIP OF THE
POLICY OR THE POLICY BENEFITS TO ANOTHER PERSON; OR
(3) A TRUST OR SIMILAR ARRANGEMENT THAT IS USED, DIRECTLY OR INDIRECT-
LY, FOR THE PURPOSE OF PURCHASING ONE OR MORE POLICIES FOR THE INTENDED
BENEFIT OF ANOTHER PERSON IN A MANNER THAT VIOLATES THE INSURABLE INTER-
EST LAWS OF THIS STATE.
(B) STRANGER-ORIGINATED LIFE INSURANCE DOES NOT INCLUDE THOSE TRANS-
ACTIONS AND PRACTICES SET FORTH IN PARAGRAPH THREE OF SUBSECTION (K) OF
SECTION SEVEN THOUSAND EIGHT HUNDRED TWO OF THIS ARTICLE, PROVIDED THAT
THE TRANSACTION OR PRACTICE ITSELF IS NOT PURSUANT TO AN AGREEMENT OR
UNDERSTANDING WITH ANY OTHER PERSON FOR THE PURPOSE OF EVADING REGU-
LATION UNDER THIS ARTICLE.
(C) NO PERSON SHALL DIRECTLY OR INDIRECTLY ENGAGE IN ANY ACT, PRACTICE
OR ARRANGEMENT THAT CONSTITUTES STRANGER-ORIGINATED LIFE INSURANCE.
(D) THE FAILURE TO FOLLOW THE PROVISION OF SUBSECTION (C) OF THIS
SECTION SHALL BE A DEFINED VIOLATION UNDER ARTICLE TWENTY-FOUR OF THIS
CHAPTER.
S 7816. PENALTIES AND CIVIL REMEDIES. (A)(1) IF, AFTER NOTICE AND
HEARING, THE SUPERINTENDENT DETERMINES THAT ANY INFORMATION REQUIRED BY
SUBSECTION (C) OF SECTION SEVEN THOUSAND EIGHT HUNDRED ELEVEN OF THIS
ARTICLE WAS NOT PROVIDED OR WAS DELAYED IN BEING PROVIDED TO THE MATERI-
AL DETRIMENT OF THE OWNER, THEN THE SUPERINTENDENT, IN ADDITION TO ANY
OTHER PENALTY PRESCRIBED BY LAW, MAY REQUIRE THE LIFE SETTLEMENT BROKER
TO PAY THE OWNER AN AMOUNT NOT TO EXCEED THE COMPENSATION DUE OR
PROVIDED TO THE LIFE SETTLEMENT BROKER.
(2) IF, AFTER NOTICE AND HEARING, THE SUPERINTENDENT DETERMINES THAT
ANY INFORMATION REQUIRED BY SUBSECTION (A) OF SECTION SEVEN THOUSAND
EIGHT HUNDRED ELEVEN OF THIS ARTICLE WAS NOT PROVIDED OR WAS DELAYED IN
BEING PROVIDED TO THE MATERIAL DETRIMENT OF THE OWNER, THEN THE SUPER-
INTENDENT, IN ADDITION TO ANY OTHER PENALTY PRESCRIBED BY LAW, MAY
REQUIRE THE LIFE SETTLEMENT PROVIDER TO PAY THE OWNER AN AMOUNT NOT TO
EXCEED THE DEATH BENEFIT UNDER THE POLICY AT THE TIME THE POLICY WAS
SETTLED.
(B)(1) IF, AFTER NOTICE AND HEARING, THE SUPERINTENDENT DETERMINES
THAT ANY LIFE SETTLEMENT BROKER OR ANY REPRESENTATIVE THEREOF VIOLATES
SUBSECTION (C) OF SECTION SEVEN THOUSAND EIGHT HUNDRED FIFTEEN OF THIS
ARTICLE, THEN THE SUPERINTENDENT, IN ADDITION TO ANY OTHER PENALTY
PRESCRIBED BY LAW, MAY REQUIRE THE LIFE SETTLEMENT BROKER TO PAY THE
OWNER AN AMOUNT NOT TO EXCEED THE COMPENSATION DUE OR PROVIDED TO THE
LIFE SETTLEMENT BROKER.
A. 7131--A 29
(2) IF, AFTER NOTICE AND HEARING, THE SUPERINTENDENT DETERMINES ANY
LIFE SETTLEMENT PROVIDER OR ANY REPRESENTATIVE THEREOF VIOLATES
SUBSECTION (C) OF SECTION SEVEN THOUSAND EIGHT HUNDRED FIFTEEN OF THIS
ARTICLE, THEN THE SUPERINTENDENT, IN ADDITION TO ANY OTHER PENALTY
PRESCRIBED BY LAW, MAY REQUIRE THE LIFE SETTLEMENT PROVIDER TO PAY THE
OWNER AN AMOUNT NOT TO EXCEED THE DEATH BENEFIT UNDER THE POLICY AT THE
TIME THE POLICY WAS SETTLED.
(C) IF, AFTER NOTICE AND HEARING, THE SUPERINTENDENT DETERMINES THAT
ANY PERSON VIOLATED SECTION SEVEN THOUSAND EIGHT HUNDRED TEN OF THIS
ARTICLE, THEN THE SUPERINTENDENT, IN ADDITION TO ANY OTHER PENALTY
PRESCRIBED BY LAW, MAY REQUIRE THE PERSON TO PAY THE INSURED AN AMOUNT
NOT TO EXCEED TWENTY THOUSAND DOLLARS.
(D)(1) IF, AFTER NOTICE AND HEARING, THE SUPERINTENDENT DETERMINES
THAT ANY PERSON THAT ACTED AS A LIFE SETTLEMENT PROVIDER WITHOUT A
LICENSE IN VIOLATION OF SUBSECTION (A) OF SECTION SEVEN THOUSAND EIGHT
HUNDRED THREE OF THIS ARTICLE, THEN THE SUPERINTENDENT MAY IMPOSE A
CIVIL PENALTY NOT TO EXCEED TWENTY THOUSAND DOLLARS FOR EACH POLICY
SETTLED IN VIOLATION THEREOF; AND, IN ADDITION, THE SUPERINTENDENT MAY
REQUIRE THE LIFE SETTLEMENT PROVIDER TO PAY THE INSURED AN AMOUNT NOT TO
EXCEED THE DEATH BENEFIT UNDER THE POLICY AT THE TIME THE POLICY WAS
SETTLED.
(2) IF, AFTER NOTICE AND HEARING, THE SUPERINTENDENT DETERMINES THAT
ANY PERSON ACTED AS A LIFE SETTLEMENT BROKER WITHOUT A LICENSE IN
VIOLATION OF SUBSECTION (A) OF SECTION TWO THOUSAND ONE HUNDRED THIRTY-
SEVEN OF THIS CHAPTER, THEN THE SUPERINTENDENT MAY IMPOSE A CIVIL PENAL-
TY NOT TO EXCEED TEN THOUSAND DOLLARS FOR EACH POLICY AND REQUIRE THE
LIFE SETTLEMENT BROKER TO PAY THE OWNER AN AMOUNT NOT TO EXCEED THE
COMPENSATION DUE OR PROVIDED TO THE LIFE SETTLEMENT BROKER.
(3) IF, AFTER NOTICE AND HEARING, THE SUPERINTENDENT DETERMINES THAT
ANY PERSON ACTED AS A LIFE SETTLEMENT INTERMEDIARY WITHOUT A REGISTRA-
TION IN VIOLATION OF SUBSECTION (A) OF SECTION SEVEN THOUSAND EIGHT
HUNDRED FOUR OF THIS ARTICLE, THEN THE SUPERINTENDENT MAY IMPOSE A CIVIL
PENALTY NOT TO EXCEED TEN THOUSAND DOLLARS FOR EACH TRANSACTION AND
REQUIRE THE LIFE SETTLEMENT INTERMEDIARY TO PAY THE OWNER AN AMOUNT NOT
TO EXCEED THE COMPENSATION DUE OR PROVIDED TO THE LIFE SETTLEMENT INTER-
MEDIARY.
(E) NOTHING PROVIDED IN THIS ARTICLE SHALL LIMIT OR RESTRICT ANY
COMMON LAW, CONTRACTUAL OR OTHER RIGHT OF ACTION.
S 7817. AUTHORITY TO PROMULGATE REGULATIONS. THE SUPERINTENDENT MAY
PROMULGATE REGULATIONS IMPLEMENTING THIS ARTICLE.
S 7818. NONCONFORMING CONTRACTS. (A) EXCEPT AS OTHERWISE SPECIFICALLY
PROVIDED IN THIS CHAPTER, ANY LIFE SETTLEMENT CONTRACT SUBJECT TO THIS
CHAPTER THAT IS IN VIOLATION OF ANY OF THE PROVISIONS OF THIS CHAPTER
SHALL BE VALID AND BINDING UPON THE LIFE SETTLEMENT PROVIDER, BUT IN ALL
RESPECTS IN WHICH THE CONTRACT'S PROVISIONS ARE IN VIOLATION OF THE
REQUIREMENTS OR PROHIBITIONS OF THIS CHAPTER IT SHALL BE ENFORCEABLE AS
IF IT CONFORMED WITH SUCH REQUIREMENTS OR PROHIBITIONS.
(B) IN ANY ACTION TO RECOVER UNDER THE PROVISIONS OF ANY LIFE SETTLE-
MENT CONTRACT THAT THE SUPERINTENDENT IS AUTHORIZED BY THIS CHAPTER TO
APPROVE, IF IN THE SUPERINTENDENT'S OPINION THE PROVISIONS OF THIS CHAP-
TER ARE MORE FAVORABLE TO OWNERS, THE COURT SHALL ENFORCE SUCH CONTRACT
AS IF ITS PROVISIONS WERE THE SAME AS THOSE SPECIFIED IN THIS CHAPTER
UNLESS THE COURT FINDS THAT THE ACTUAL PROVISIONS OF THE CONTRACT WERE
MORE FAVORABLE TO OWNERS AT THE DATE WHEN THE CONTRACT WAS ENTERED INTO.
S 7819. APPLICABILITY AND CHOICE OF LAW. (A) THE PROVISIONS OF THIS
ARTICLE SHALL APPLY TO ANY LIFE SETTLEMENT CONTRACT MADE, PROPOSED TO BE
A. 7131--A 30
MADE, OR SOLICITED WITH A RESIDENT OF THIS STATE OR ANY PERSON PHYS-
ICALLY IN THIS STATE.
(B)(1) IF THERE IS MORE THAN ONE OWNER ON A SINGLE POLICY, AND THE
OWNERS ARE RESIDENTS OF DIFFERENT STATES, THEN THE STATE OF RESIDENCY
SHALL BE THE STATE IN WHICH THE OWNER HAVING THE LARGEST PERCENTAGE OF
OWNERSHIP RESIDES OR, IF THE OWNERS HOLD EQUAL OWNERSHIP, THE STATE OF
RESIDENCE OF ONE OWNER, AGREED UPON IN WRITING BY ALL OF THE OWNERS.
(2) A LIFE SETTLEMENT CONTRACT ENTERED INTO WITH AN OWNER WHO IS A
RESIDENT OF ANOTHER STATE MAY BE GOVERNED BY THE LAWS OF THE OTHER STATE
PROVIDED THAT THE OWNER ELECTS IN WRITING TO BE GOVERNED BY THE LAWS OF
THE OTHER STATE, AND IF THE OWNER IS ALSO A RESIDENT OF THIS STATE, THE
LIFE SETTLEMENT CONTRACT IS MADE, PROPOSED TO BE MADE AND SOLICITED
OUTSIDE THIS STATE.
(C) FOR THE PURPOSES OF THIS SECTION, WITH RESPECT TO ANY PERSON OTHER
THAN A NATURAL PERSON, THE STATE OF RESIDENCE SHALL BE:
(1) A STATE IN WHICH THE PERSON MAINTAINS AN OFFICE; OR
(2) WITH RESPECT TO A TRUST, A STATE IN WHICH THE GRANTOR RESIDES.
S 7820. SEVERABILITY. IF ANY CLAUSE, SENTENCE, PARAGRAPH, SECTION OR
PART OF THIS ARTICLE SHALL BE ADJUDGED BY ANY COURT OF COMPETENT JURIS-
DICTION TO BE INVALID AND AFTER EXHAUSTION OF ALL FURTHER JUDICIAL
REVIEW, THE JUDGMENT SHALL NOT AFFECT, IMPAIR OR INVALIDATE THE REMAIN-
DER THEREOF, BUT SHALL BE CONFINED IN ITS OPERATION TO THE CLAUSE,
SENTENCE, PARAGRAPH, SECTION OR PART OF THIS ARTICLE DIRECTLY INVOLVED
IN THE CONTROVERSY IN WHICH THE JUDGMENT SHALL HAVE BEEN RENDERED.
S 12. Subsection (b) of section 403 of the insurance law, as amended
by chapter 805 of the laws of 1984, is amended to read as follows:
(b) For the purpose of section one hundred nine of this chapter, it is
a violation of this chapter for any individual, firm, association or
corporation subject to the provisions of this chapter to commit a frau-
dulent insurance act OR A FRAUDULENT LIFE SETTLEMENT ACT.
S 13. Section 403 of the insurance law is amended by adding a new
subsection (f) to read as follows:
(F) IN THIS ARTICLE, "FRAUDULENT LIFE SETTLEMENT ACT" MEANS A FRAUD AS
DEFINED IN SECTION 176.40 OF THE PENAL LAW.
S 14. Subsection (c) of section 403 of the insurance law, as amended
by chapter 262 of the laws of 1998, is amended to read as follows:
(c) In addition to any criminal liability arising under the provisions
of this section, the superintendent shall be empowered to levy a civil
penalty not exceeding five thousand dollars and the amount of the claim
for each violation upon any person, including those persons and their
employees licensed pursuant to this chapter, who is found to have: (i)
committed a fraudulent insurance act, FRAUDULENT LIFE SETTLEMENT ACT or
otherwise violates the provisions of this section; or (ii) knowingly and
with intent to defraud files, makes, or assists, solicits or conspires
with another to file or make an application for a premium reduction,
pursuant to subsection (a) of section two thousand three hundred thir-
ty-six of this chapter, containing any materially false information or
which, for the purpose of misleading, conceals information concerning
any fact material thereto.
S 15. Subsection (a) of section 404 of the insurance law is amended to
read as follows:
(a) If the insurance frauds bureau has reason to believe that a person
has engaged in, or is engaging in, an act defined in section 155.05 of
the penal law, with respect to personal or commercial insurance trans-
actions [or], THE BUSINESS OF LIFE SETTLEMENTS, section 176.05 OR
SECTION 176.40 of such law, the superintendent may make such investi-
A. 7131--A 31
gation within or without this state as [he] THE SUPERINTENDENT deems
necessary to aid in the enforcement of this chapter or to determine
whether any person has violated or is about to violate any such
provision of the penal law.
S 16. Section 405 of the insurance law, subsection (a) as amended by
chapter 635 of the laws of 1996, subsection (d) as added by chapter 57
of the laws of 1993, the opening paragraph of subsection (d) as amended
by chapter 191 of the laws of 2008, paragraphs 9 and 10 of subsection
(d) as amended and paragraph 11 of subsection (d) as added by chapter
678 of the laws of 1997, is amended to read as follows:
S 405. Reports. (a) Any person licensed OR REGISTERED pursuant to the
provisions of this chapter, and any person engaged in the business of
insurance OR LIFE SETTLEMENT in this state who is exempted from compli-
ance with the licensing requirements of this chapter, including the
state insurance fund of this state, who has reason to believe that an
insurance transaction OR LIFE SETTLEMENT ACT may be fraudulent, or has
knowledge that a fraudulent insurance transaction OR FRAUDULENT LIFE
SETTLEMENT ACT is about to take place, or has taken place shall, within
thirty days after determination by such person that the transaction
appears to be fraudulent, send to the insurance frauds bureau on a form
prescribed by the superintendent, the information requested by the form
and such additional information relative to the factual circumstances of
the transaction and the parties involved as the superintendent may
require. The insurance frauds bureau shall accept reports of suspected
fraudulent insurance transactions OR FRAUDULENT LIFE SETTLEMENT ACTS
from any self insurer, including but not limited to self insurers
providing health insurance coverage or those defined in section fifty of
the workers' compensation law, and shall treat such reports as any other
received pursuant to this section.
(b) The insurance frauds bureau shall review each report and undertake
such further investigation as it deems necessary and proper to determine
the validity of the allegations.
(c) Whenever the superintendent is satisfied that a material fraud,
deceit, or intentional misrepresentation has been committed in an insur-
ance transaction OR IN THE BUSINESS OF LIFE SETTLEMENTS or purported
insurance transaction OR BUSINESS OF LIFE SETTLEMENTS, he OR SHE shall
report any such violation of law to the appropriate licensing agency,
the district attorney of the county in which such acts were committed,
when authorized by law, to the attorney general, and where appropriate,
to the person who submitted the report of fraudulent activity, as
provided by the provisions of this article. Within one hundred twenty
days of receipt of the superintendent's report, the attorney general or
the district attorney concerned shall inform the superintendent as to
the status of the reported violations.
(d) No later than March fifteenth of each year, beginning in nineteen
hundred ninety-four, the superintendent shall furnish to the governor,
the speaker of the assembly and the president pro tem of the senate a
report containing:
(1) a comprehensive summary and assessment of the frauds bureau's
efforts in discovering, investigating and halting fraudulent activities
and assisting in the prosecution of persons who are parties to insurance
fraud OR LIFE SETTLEMENT FRAUD;
(2) the number of reports received from any person or persons engaged
in the business of insurance OR LIFE SETTLEMENTS, the number of investi-
gations undertaken by the bureau pursuant to any reports received, the
number of investigations undertaken not as a result of reports received,
A. 7131--A 32
the number of investigations that resulted in a referral to a licensing
agency, a local prosecutor or the attorney general, the number of such
referrals pursued by a licensing agency, a local prosecutor or the
attorney general, and the disposition of such cases;
(3) a delineation of the number of reported and investigated cases by
line of insurance AND THOSE THAT RELATE TO LIFE SETTLEMENTS;
(4) a comparison of the frauds bureau's experience, with regard to
paragraphs two and three of this [subdivision] SUBSECTION, to the
bureau's experience of years past;
(5) the total number of employees assigned to the frauds bureau delin-
eated by title and location of bureau assigned;
(6) an assessment of THE ACTIVITIES OF insurance [company] COMPANIES
AND LIFE SETTLEMENT PROVIDERS activities in regard to detecting, inves-
tigating and reporting fraudulent activities, including a list of compa-
nies which maintain special investigative units for the sole purpose of
detecting, investigating and reporting fraudulent activities and the
number of investigators assigned to such units per every thirty thousand
policies OR LIFE SETTLEMENT CONTRACTS in force with such company OR
PROVIDER;
(7) the amount of technical and monetary assistance requested and
received by the frauds bureau from any insurance company or companies,
ANY LIFE SETTLEMENT PROVIDER OR PROVIDERS, or any organization funded by
insurance companies OR LIFE SETTLEMENT PROVIDERS;
(8) the amount of money returned by the frauds bureau to insurance
companies pursuant to any fraudulent claims that were recouped by the
bureau;
(9) the number and amount of civil penalties levied by the frauds
bureau pursuant to chapter four hundred eighty of the laws of nineteen
hundred ninety-two;
(10) recommendations for further statutory or administrative changes
designed to meet the objectives of this article; and
(11) an assessment of law enforcement and insurance company activities
to detect and curtail the incidence of operating a motor vehicle without
proper insurance coverage as required by this chapter.
S 17. Section 406 of the insurance law, as amended by chapter 6 of the
laws of 2007, is amended to read as follows:
S 406. Immunity. In the absence of fraud or bad faith, no person
shall be subject to civil liability, and no civil cause of action of any
nature shall arise against such person [(i)] for any: (I) information
relating to suspected fraudulent insurance transactions OR FRAUDULENT
LIFE SETTLEMENT ACTS furnished to law enforcement officials, their
agents and employees; [and (ii) for any] (II) information relating to
suspected fraudulent insurance transactions OR FRAUDULENT LIFE SETTLE-
MENT ACTS furnished to other persons subject to the provisions of this
chapter; and [(iii) for any] (III) such information furnished in reports
to the insurance frauds bureau, its agents or employees or any state
agency investigating fraud or misconduct relating to workers' compen-
sation insurance, its agents or employees. Nor shall the superintendent
or any employee of the insurance frauds bureau, in the absence of fraud
or bad faith, be subject to civil liability and no civil cause of action
of any nature shall arise against them by virtue of the publication of
any report or bulletin related to the official activities of the insur-
ance frauds bureau. Nothing herein is intended to abrogate or modify in
any way any common law privilege of immunity heretofore enjoyed by any
person.
A. 7131--A 33
S 18. The insurance law is amended by adding a new section 411 to read
as follows:
S 411. LIFE SETTLEMENTS FRAUD PREVENTION PLANS. (A) EVERY LIFE
SETTLEMENT PROVIDER SHALL FILE WITH THE SUPERINTENDENT A PLAN FOR THE
DETECTION, INVESTIGATION AND PREVENTION OF FRAUDULENT LIFE SETTLEMENT
ACTS IN THIS STATE AND THOSE FRAUDULENT LIFE SETTLEMENT ACTS AFFECTING
LIFE SETTLEMENT CONTRACTS IN THIS STATE.
(1) THE PLAN SHALL PROVIDE THE TIME AND MANNER IN WHICH SUCH PLAN
SHALL BE IMPLEMENTED, INCLUDING PROVISIONS FOR A SPECIAL INVESTIGATIONS
UNIT AND STAFFING LEVELS WITHIN SUCH UNIT. SUCH INVESTIGATORS SHALL BE
RESPONSIBLE FOR INVESTIGATING INFORMATION ON OR CASES OF SUSPECTED FRAU-
DULENT ACTIVITY AND FOR EFFECTIVELY IMPLEMENTING FRAUD PREVENTION AND
REDUCTION ACTIVITIES PURSUANT TO THE PLAN FILED WITH THE SUPERINTENDENT.
A LIFE SETTLEMENT PROVIDER SHALL INCLUDE IN SUCH PLAN STAFFING LEVELS
AND ALLOCATIONS OF RESOURCES OF SUCH SPECIAL INVESTIGATIONS UNIT THAT
SHALL BE SUFFICIENT AND APPROPRIATE FOR THE PROPER IMPLEMENTATION OF THE
PLAN AND APPROVAL OF SUCH PLAN PURSUANT TO SUBSECTION (C) OF THIS
SECTION.
(2) IN LIEU OF A SPECIAL INVESTIGATIONS UNIT, A LIFE SETTLEMENT
PROVIDER MAY CONTRACT WITH A PROVIDER OF SERVICES RELATED TO THE INVES-
TIGATION OF INFORMATION ON OR CASES OF SUSPECTED FRAUDULENT ACTIVITIES;
PROVIDED, HOWEVER, THAT A LIFE SETTLEMENT PROVIDER THAT OPTS FOR
CONTRACTING WITH A SEPARATE PROVIDER OF SERVICES, SHALL PROVIDE TO THE
SUPERINTENDENT A DETAILED PLAN THEREFOR, PURSUANT TO REQUIREMENTS SET
FORTH IN REGULATION BY THE SUPERINTENDENT.
(3) A PERSON EMPLOYED BY A SPECIAL INVESTIGATIONS UNIT OR AN INDEPEND-
ENT PROVIDER OF INVESTIGATIVE SERVICES UNDER CONTRACT WITH A LIFE
SETTLEMENT PROVIDER SHALL BE QUALIFIED BY EDUCATION OR EXPERIENCE TO ACT
IN SUCH CAPACITY, SUBJECT TO REQUIREMENTS ESTABLISHED BY THE SUPERINTEN-
DENT IN A REGULATION.
(B) THE PLAN SHALL PROVIDE FOR THE FOLLOWING:
(1) INTERFACE OF SPECIAL INVESTIGATIONS UNIT PERSONNEL WITH LAW
ENFORCEMENT AND PROSECUTORIAL AGENCIES, INCLUDING THE INSURANCE FRAUDS
BUREAU IN THE DEPARTMENT;
(2) REPORTING OF FRAUD DATA TO A CENTRAL ORGANIZATION APPROVED BY THE
SUPERINTENDENT;
(3) IN-SERVICE EDUCATION AND TRAINING FOR PERSONNEL IN IDENTIFYING AND
EVALUATING INSTANCES OF SUSPECTED FRAUDULENT ACTIVITY;
(4) COORDINATION WITH OTHER UNITS OF A LIFE SETTLEMENT PROVIDER FOR
THE INVESTIGATION AND INITIATION OF CIVIL ACTIONS BASED UPON INFORMATION
RECEIVED BY OR THROUGH THE SPECIAL INVESTIGATION UNIT;
(5) PUBLIC AWARENESS OF THE COST AND FREQUENCY OF FRAUDULENT ACTIV-
ITIES, AND THE METHODS OF PREVENTING FRAUD;
(6) DEVELOPMENT AND USE OF A FRAUD DETECTION AND PROCEDURES MANUAL TO
ASSIST IN THE DETECTION AND ELIMINATION OF FRAUDULENT ACTIVITY; AND
(7) THE TIME AND MANNER IN WHICH SUCH PLAN SHALL BE IMPLEMENTED AND A
DEMONSTRATION THAT THE FRAUD PREVENTION AND REDUCTION MEASURES OUTLINED
IN THE PLAN WILL BE FULLY IMPLEMENTED.
(C)(1) A FRAUD DETECTION AND PREVENTION PLAN FILED BY A LIFE SETTLE-
MENT PROVIDER WITH THE SUPERINTENDENT PURSUANT TO THIS SECTION SHALL BE
DEEMED APPROVED BY THE SUPERINTENDENT IF NOT RETURNED BY THE SUPERINTEN-
DENT FOR REVISION WITHIN ONE HUNDRED TWENTY DAYS OF THE DATE OF FILING.
IF THE SUPERINTENDENT RETURNS A PLAN FOR REVISION, THE SUPERINTENDENT
SHALL STATE THE POINTS OF OBJECTION WITH SUCH PLAN, AND ANY AMENDMENTS
AS THE SUPERINTENDENT MAY REQUIRE CONSISTENT WITH THE PROVISIONS OF THIS
SECTION, INCLUDING STAFFING LEVELS, RESOURCE ALLOCATION, OR OTHER POLICY
A. 7131--A 34
OR OPERATIONAL CONSIDERATIONS. AN AMENDED PLAN REFLECTING THE CHANGES
SHALL BE FILED WITH THE SUPERINTENDENT WITHIN FORTY-FIVE DAYS FROM THE
DATE OF RETURN.
(2) IF THE SUPERINTENDENT HAS RETURNED A PLAN FOR REVISION MORE THAN
ONE TIME, THEN THE LIFE SETTLEMENT PROVIDER SHALL BE ENTITLED TO A HEAR-
ING PURSUANT TO THE PROVISIONS OF ARTICLE THREE OF THIS CHAPTER AND
REGULATIONS PROMULGATED THEREUNDER.
(3) IF A LIFE SETTLEMENT PROVIDER FAILS TO SUBMIT A FINAL PLAN WITHIN
THIRTY DAYS AFTER A DETERMINATION OF THE SUPERINTENDENT AFTER THE HEAR-
ING HELD PURSUANT TO PARAGRAPH TWO OF THIS SUBSECTION, OR OTHERWISE
FAILS TO SUBMIT A PLAN, OR FAILS TO IMPLEMENT THE PROVISIONS OF A PLAN
IN A TIME AND MANNER PROVIDED FOR IN SUCH PLAN, OR OTHERWISE REFUSES TO
COMPLY WITH THE PROVISIONS OF THIS SECTION, THE SUPERINTENDENT MAY
IMPOSE:
(A) A FINE OF NOT MORE THAN TWO THOUSAND DOLLARS PER DAY FOR SUCH
FAILURE BY A LIFE SETTLEMENT PROVIDER UNTIL THE SUPERINTENDENT DEEMS THE
LIFE SETTLEMENT PROVIDER TO BE IN COMPLIANCE;
(B) UPON THE LIFE SETTLEMENT PROVIDER A FRAUD DETECTION AND PREVENTION
PLAN DEEMED TO BE APPROPRIATE BY THE SUPERINTENDENT, WHICH SHALL BE
IMPLEMENTED BY THE LIFE SETTLEMENT PROVIDER; OR
(C) BOTH A FINE AND A FRAUD DETECTION AND PREVENTION PLAN PURSUANT TO
SUBPARAGRAPHS (A) AND (B) OF THIS PARAGRAPH.
(D) ANY PLAN, THE INFORMATION CONTAINED THEREIN, OR CORRESPONDENCE
RELATED THERETO, OR ANY OTHER INFORMATION FURNISHED PURSUANT TO THIS
SECTION SHALL BE DEEMED TO BE A CONFIDENTIAL COMMUNICATION AND SHALL NOT
BE OPEN FOR REVIEW OR BE SUBJECT TO A SUBPOENA EXCEPT BY A COURT ORDER
OR BY REQUEST FROM ANY LAW ENFORCEMENT AGENCY OR AUTHORITY.
(E) EVERY LIFE SETTLEMENT PROVIDER REQUIRED TO FILE A FRAUD PREVENTION
PLAN SHALL REPORT TO THE SUPERINTENDENT ON AN ANNUAL BASIS, NO LATER
THAN MARCH FIFTEENTH, DESCRIBING THE PROVIDER'S EXPERIENCE, PERFORMANCE
AND COST EFFECTIVENESS IN IMPLEMENTING THE PLAN, UTILIZING SUCH FORMS AS
THE SUPERINTENDENT MAY PRESCRIBE. UPON CONSIDERATION OF SUCH REPORTS,
THE SUPERINTENDENT MAY REQUIRE AMENDMENTS TO THE PROVIDER'S FRAUD
DETECTION AND PREVENTION PLAN AS DEEMED NECESSARY.
S 19. The penal law is amended by adding seven new sections 176.40,
176.45, 176.50, 176.55, 176.60, 176.65 and 176.70 to read as follows:
S 176.40 FRAUDULENT LIFE SETTLEMENT ACT; DEFINED.
A FRAUDULENT LIFE SETTLEMENT ACT IS COMMITTED BY ANY PERSON WHO, KNOW-
INGLY AND WITH INTENT TO DEFRAUD, PRESENTS, CAUSES TO BE PRESENTED, OR
PREPARES WITH KNOWLEDGE OR BELIEF THAT IT WILL BE PRESENTED TO, OR BY, A
LIFE SETTLEMENT PROVIDER, LIFE SETTLEMENT BROKER, LIFE SETTLEMENT INTER-
MEDIARY, OR PURCHASER OF A SETTLED LIFE INSURANCE POLICY OR ANY INTEREST
THEREIN, OR ANY AGENT THEREOF, OR TO ANY OWNER ANY WRITTEN STATEMENT OR
OTHER PHYSICAL EVIDENCE AS PART OF, OR IN SUPPORT OF, AN APPLICATION FOR
A LIFE SETTLEMENT CONTRACT, A CLAIM FOR PAYMENT OR OTHER BENEFIT UNDER A
LIFE SETTLEMENT CONTRACT OR THE SALE OF A SETTLED LIFE INSURANCE POLICY
OR ANY INTEREST THEREIN, WHICH THE PERSON KNOWS TO:
(1) CONTAIN MATERIALLY FALSE INFORMATION CONCERNING ANY MATERIAL FACT
THERETO; OR
(2) CONCEAL, FOR THE PURPOSE OF MISLEADING, INFORMATION CONCERNING ANY
FACT MATERIAL THERETO.
S 176.45 LIFE SETTLEMENT FRAUD IN THE FIFTH DEGREE.
A PERSON IS GUILTY OF LIFE SETTLEMENT FRAUD IN THE FIFTH DEGREE WHEN
HE OR SHE COMMITS A FRAUDULENT LIFE SETTLEMENT ACT.
LIFE SETTLEMENT FRAUD IN THE FIFTH DEGREE IS A CLASS A MISDEMEANOR.
S 176.50 LIFE SETTLEMENT FRAUD IN THE FOURTH DEGREE.
A. 7131--A 35
A PERSON IS GUILTY OF LIFE SETTLEMENT FRAUD IN THE FOURTH DEGREE WHEN
HE OR SHE COMMITS A FRAUDULENT LIFE SETTLEMENT ACT AND THEREBY WRONGFUL-
LY TAKES, OBTAINS OR WITHHOLDS, OR ATTEMPTS TO WRONGFULLY TAKE, OBTAIN
OR WITHHOLD PROPERTY WITH A VALUE IN EXCESS OF TWENTY-FIVE THOUSAND
DOLLARS.
LIFE SETTLEMENT FRAUD IN THE FOURTH DEGREE IS A CLASS E FELONY.
S 176.55 LIFE SETTLEMENT FRAUD IN THE THIRD DEGREE.
A PERSON IS GUILTY OF LIFE SETTLEMENT FRAUD IN THE THIRD DEGREE WHEN
HE OR SHE COMMITS A FRAUDULENT LIFE SETTLEMENT ACT AND THEREBY WRONGFUL-
LY TAKES, OBTAINS OR WITHHOLDS, OR ATTEMPTS TO WRONGFULLY TAKE, OBTAIN
OR WITHHOLD PROPERTY WITH A VALUE IN EXCESS OF FIFTY THOUSAND DOLLARS.
LIFE SETTLEMENT FRAUD IN THE THIRD DEGREE IS A CLASS D FELONY.
S 176.60 LIFE SETTLEMENT FRAUD IN THE SECOND DEGREE.
A PERSON IS GUILTY OF LIFE SETTLEMENT FRAUD IN THE SECOND DEGREE WHEN
HE OR SHE COMMITS A FRAUDULENT LIFE SETTLEMENT ACT AND THEREBY WRONGFUL-
LY TAKES, OBTAINS OR WITHHOLDS, OR ATTEMPTS TO WRONGFULLY TAKE, OBTAIN
OR WITHHOLD PROPERTY WITH A VALUE IN EXCESS OF ONE HUNDRED THOUSAND
DOLLARS.
LIFE SETTLEMENT FRAUD IN THE SECOND DEGREE IS A CLASS C FELONY.
S 176.65 LIFE SETTLEMENT FRAUD IN THE FIRST DEGREE.
A PERSON IS GUILTY OF LIFE SETTLEMENT FRAUD IN THE FIRST DEGREE WHEN
HE OR SHE COMMITS A FRAUDULENT LIFE SETTLEMENT ACT AND THEREBY WRONGFUL-
LY TAKES, OBTAINS OR WITHHOLDS, OR ATTEMPTS TO WRONGFULLY TAKE, OBTAIN
OR WITHHOLD PROPERTY WITH A VALUE IN EXCESS OF ONE MILLION DOLLARS.
LIFE SETTLEMENT FRAUD IN THE FIRST DEGREE IS A CLASS B FELONY.
S 176.70 AGGRAVATED LIFE SETTLEMENT FRAUD.
A PERSON IS GUILTY OF AGGRAVATED LIFE SETTLEMENT FRAUD WHEN HE OR SHE
COMMITS A FRAUDULENT LIFE SETTLEMENT ACT, AND HAS BEEN PREVIOUSLY
CONVICTED WITHIN THE PRECEDING FIVE YEARS OF ANY OFFENSE, AN ESSENTIAL
ELEMENT OF WHICH IS THE COMMISSION OF A FRAUDULENT LIFE SETTLEMENT ACT.
AGGRAVATED LIFE SETTLEMENT FRAUD IS A CLASS D FELONY.
S 20. Section 570 of the banking law, as added by chapter 488 of the
laws of 1960, is amended to read as follows:
S 570. Restrictions on premium finance agreements. 1. No premium
finance agreement shall contain any provision by which:
(a) In the absence of default of the insured, the premium finance
agency holding the agreement may, arbitrarily and without reasonable
cause, accelerate the maturity of any part or all of the amount owing
thereunder;
(b) A power of attorney is given to confess judgment in this state; or
(c) The insured relieves the insurance agent or broker or the premium
finance agency holding the agreement from liability for any legal rights
or remedies [which] THAT the insured may otherwise have against [him]
THE INSURANCE AGENT OR BROKER.
2. NO PERSON MAY USE A PREMIUM FINANCE AGREEMENT IN A MANNER DESIGNED
TO EVADE ANY REQUIREMENT OF ARTICLE SEVENTY-EIGHT OF THE INSURANCE LAW.
3. EVERY PERSON OR PREMIUM FINANCE AGENCY THAT ENTERS INTO A PREMIUM
FINANCE AGREEMENT, AS SUCH TERMS ARE DEFINED PURSUANT TO ARTICLE
TWELVE-B OF THIS CHAPTER, SHALL FILE IN THE OFFICE OF THE SUPERINTENDENT
OF INSURANCE, ON OR BEFORE THE FIRST DAY OF MARCH, A STATEMENT, TO BE
KNOWN AS ITS ANNUAL STATEMENT, VERIFIED BY THE OATH OF AT LEAST TWO OF
ITS PRINCIPAL OFFICERS, SHOWING ITS CONDITION AT THE END OF THE PRECED-
ING CALENDAR YEAR. THE STATEMENT SHALL BE IN SUCH FORM AND SHALL CONTAIN
SUCH OTHER MATTERS AS THE SUPERINTENDENT OF INSURANCE SHALL PRESCRIBE.
IN ADDITION TO ANY OTHER REQUIREMENTS, THE ANNUAL STATEMENT SHALL SPECI-
FY THE TOTAL NUMBER, AGGREGATE FACE AMOUNT AND LIFE SETTLEMENT PROCEEDS
A. 7131--A 36
OF, POLICIES SETTLED DURING THE IMMEDIATELY PRECEDING CALENDAR YEAR,
TOGETHER WITH A BREAKDOWN OF THE INFORMATION BY POLICY ISSUE YEAR.
S 21. This act shall take effect on the one hundred eightieth day
after it shall have become a law, provided that:
(1) a person lawfully operating as a life settlement provider, life
settlement broker or life settlement intermediary in this state with
respect to life settlement transactions not heretofore regulated under
the insurance law may, with respect to such transactions, continue to do
so after such one hundred eightieth day, pending approval or disapproval
of the person's application for a license or registration, as applica-
ble, if the appropriate application is filed with the superintendent of
insurance not later than 30 days after the superintendent publishes, on
the insurance department's website, the application form for such licen-
sure or registration, and provided further that such person certifies in
the application that such person shall comply with all applicable
provisions of the insurance law and regulations thereunder;
(2) a person licensed as a viatical settlement company or a viatical
settlement broker immediately prior to the effective date of this act
may act as a life settlement provider or a life settlement broker after
such one hundred eightieth day, for the duration of the term of the
provider or the broker's license, without having to file a new applica-
tion, including with respect to transactions not heretofore regulated
under the insurance law;
(3) with respect to life settlement transactions not heretofore regu-
lated under the insurance law, a person licensed as a viatical settle-
ment company immediately prior to the effective date of this act or a
person lawfully operating as a life settlement provider in this state,
as described in subdivision one of this section, that has filed, no
later than 30 days prior to the effective date of this act, specimen
copies of the contract forms, application forms and other forms that it
intends to use, and certified to the superintendent of insurance that
such forms are in compliance with the insurance law and any regulations
promulgated thereunder, may use the unapproved forms until the super-
intendent of insurance has either approved or disapproved the forms;
(4) with respect to viatical settlement transactions heretofore regu-
lated under the insurance law, a person licensed as a viatical settle-
ment company immediately prior to the effective date of this act, as
described in subdivision two of this section, shall not continue to
issue contract forms, application forms and other forms approved by the
superintendent of insurance prior to the effective date of this act,
after the effective date of this act. Any such person that has filed, no
later than thirty days prior to the effective date of this act, specimen
copies of the contract forms, application forms and other forms that it
intends to use, and that has certified to the superintendent of insur-
ance that such forms are in compliance with the insurance law and any
regulations promulgated thereunder, as of the effective date of this
act, may use such unapproved forms until the superintendent of insurance
has either approved or disapproved the forms;
(5) sections 7810, 7811 and 7815 of the insurance law, as added by
section eleven of this act, shall take effect immediately; and
(6) effective immediately, the superintendent of insurance may promul-
gate any rules and regulations necessary for the implementation of the
provisions of this act on its effective date.