Senate Bill 1232
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Florida Senate - 2000 SB 1232
By Senator Geller
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1 A bill to be entitled
2 An act relating to viatical settlements;
3 amending s. 626.9911, F.S.; modifying
4 definitions; amending s. 626.9912, F.S.;
5 prescribing information to be included in an
6 application for a viatical settlement provider
7 license; modifying prerequisites for licensure;
8 amending s. 626.9921, F.S.; providing for
9 approval and disapproval by the Department of
10 Insurance of viatical settlement purchase
11 agreement forms and other forms necessary to
12 effectuate a viatical settlement transaction;
13 requiring approval by the department of the
14 organizational documents of any trust to be
15 used by a viatical settlement provider;
16 amending s. 626.9922, F.S.; requiring licensees
17 to maintain books and contracts relating to
18 viatical settlement contracts or viatical
19 settlement purchase agreements at their home
20 office for a prescribed time; creating s.
21 626.99236, F.S.; providing for certain
22 disclosures to viatical settlement purchaser
23 after purchase of the agreement; amending s.
24 626.9924, F.S.; removing a requirement that a
25 viator acknowledge the existence of a
26 catastrophic or life-threatening illness;
27 requiring a provider to notify an insurer of a
28 policy that is to be transferred that the
29 policy has or will become the subject of a
30 viatical agreement; requiring notice to the
31 insured if the owner of an insurance policy is
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1 not the insured; creating s. 626.99245, F.S.;
2 providing for the application of other states'
3 laws under certain circumstances; amending s.
4 626.9925, F.S.; authorizing the department to
5 adopt rules; creating s. 626.99285, F.S.;
6 expanding statutory authority of the department
7 to regulate viatical settlements; providing an
8 effective date.
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10 Be It Enacted by the Legislature of the State of Florida:
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12 Section 1. Subsections (6), (7), (8), and (10) of
13 section 626.9911, Florida Statutes, are amended and subsection
14 (12) is added to that section to read:
15 626.9911 Definitions.--As used in this act, the term:
16 (6) "Viatical settlement provider" means a person who,
17 in this state, from this state, or with a resident of this
18 state, effectuates a viatical settlement contract. The term
19 does not include:
20 (a) Any bank, savings bank, savings and loan
21 association, credit union, or other licensed lending
22 institution that takes an assignment of a life insurance
23 policy as collateral for a loan;
24 (b) A life and health insurer that has lawfully issued
25 a life insurance policy that provides accelerated benefits to
26 terminally ill policyholders or certificateholders; or
27 (c) Any natural person who enters into no more than
28 one viatical settlement contract with a viator in 1 calendar
29 year, unless such natural person has previously been licensed
30 under this act or is currently licensed under this act.
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1 (d) A trust that meets the definition of a "related
2 provider trust."
3 (e) A viatical settlement provider, who from this
4 state, enters into a viatical settlement purchase agreement
5 with a purchaser who is resident of a state, other than
6 Florida, which has enacted statutes or promulgated regulations
7 governing viatical settlement purchase agreements. Such
8 viatical settlement purchase agreements shall be governed in
9 the effectuation of that viatical settlement purchase
10 agreement, under the statutes and regulations governing
11 viatical settlement purchase agreements in the purchaser's
12 state of residence.
13 (f) A viatical settlement provider who, from this
14 state, enters into a viatical settlement contract with a
15 viator who is resident of a state, other than Florida, which
16 has enacted statutes or promulgated regulations governing
17 viatical settlement contracts. Such viatical settlement
18 contracts shall be governed in the effectuation of that
19 viatical settlement contract, under the statutes and
20 regulations governing viatical settlement contracts in the
21 viator's state of residence.
22 (e)(g) A viator in this state.
23 (f)(h) A viatical settlement purchaser.
24 (7) "Viator" means the owner of a life insurance
25 policy or a certificateholder under a group policy insuring
26 the life of an individual with a catastrophic or
27 life-threatening illness or condition who enters or seeks to
28 enter into a viatical settlement contract. This term does not
29 include a viatical settlement purchaser or a viatical
30 settlement provider or any person acquiring a policy or
31 interest in a policy from a viatical settlement provider, nor
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1 does it include an independent third-party trustee or escrow
2 agent.
3 (8) "Related provider trust" means a trust established
4 by a viatical settlement provider for the sole purpose of
5 entering into or owning viatical settlement contracts. This
6 term does not include an independent third-party trustee or
7 escrow agent or a trust that does not enter into agreements
8 with a viator viatical settlement purchaser. A related
9 provider trust shall be subject to all provisions of this act
10 that apply to the viatical settlement provider who established
11 the related provider trust, except s. 626.9912, which shall
12 not be applicable. A viatical settlement provider may
13 establish no more than one related provider trust, and the
14 sole trustee of such related provider trust shall be the
15 viatical settlement provider licensed under s. 626.9912. The
16 name of the licensed viatical settlement provider shall be
17 included within the name of the related provider trust.
18 (10) "Viatical settlement purchaser" means a person,
19 other than a licensee under this part, an accredited investor
20 as defined in Rule 501, Regulation D of the Securities Act
21 Rules, or a qualified institutional buyer as defined by Rule
22 144(a) of the Federal Securities Act, or a special purpose
23 entity which is created solely to act as a financing source
24 for the viatical settlement provider, who gives a sum of money
25 as consideration for a life insurance policy or an interest in
26 the death benefits of a life insurance policy which has been
27 or will be the subject of a viatical settlement contract, for
28 the purpose of deriving an economic benefit. The above
29 references to Rule 501, Regulation D and Rule 144(a) of the
30 Federal Securities Act are used strictly for defining purposes
31 and shall not be interpreted in any other manner.
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1 (11) "Viatical settlement sales agent" means a person
2 other than a licensed viatical settlement provider who
3 arranges the purchase through a viatical settlement purchase
4 agreement of a life insurance policy or an interest in a life
5 insurance policy.
6 (12) "Viated policy" means a life insurance policy, or
7 a certificate under a group policy, which is the subject of a
8 viatical settlement contract.
9 Section 2. Subsection (1), paragraph (f) of subsection
10 (3), subsection (4), and paragraph (b) of subsection (5) of
11 section 626.9912, Florida Statutes, are amended to read:
12 626.9912 Viatical settlement provider license
13 required; application for license.--
14 (1) After July 1, 1996, A person may not perform the
15 functions of a viatical settlement provider as defined in this
16 act or enter into or solicit a viatical settlement contract
17 without first having obtained a license from the department.
18 (3) In the application, the applicant must provide all
19 of the following:
20 (f) All applications, viatical settlement contract
21 forms, viatical settlement purchase agreement forms rating
22 manuals, and other related forms proposed to be used by the
23 applicant.
24 (4) The department may not issue a license to an
25 entity other than a natural person if it is not satisfied that
26 all officers, directors, employees, stockholders, and
27 partners, and any other persons who exercise or have the
28 ability to exercise effective control of the entity or who
29 have the ability to influence the transaction of business by
30 the entity meet the standards of this act and have not
31 violated any provision of this act or rules of the department
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1 related to the business of viatical settlement contracts or
2 viatical settlement purchase agreements.
3 (5) Upon the filing of a sworn application and the
4 payment of the license fee, the department shall investigate
5 each applicant and may issue the applicant a license if the
6 department finds that the applicant:
7 (b) Is competent and trustworthy and intends to act in
8 good faith in the business authorized by the license applied
9 for; however, for purposes of this act, including this
10 paragraph, a person shall not be deemed to be incompetent and
11 untrustworthy solely for any felony committed more than 5
12 years before licensure if the person has had his or her civil
13 rights restored by the Governor and Cabinet with respect to
14 such felony.
15 Section 3. Section 626.9921, Florida Statutes, is
16 amended to read:
17 626.9921 Filing of forms; required procedures;
18 approval.--
19 (1) A viatical settlement contract form, a viatical
20 settlement purchase agreement, or any related form that is
21 necessary to effectuate a viatical settlement transaction may
22 be used in this state only after the viatical settlement
23 provider or any related provider trust has filed the form with
24 the department and only after the form has been approved by
25 the department.
26 (2) The contract form or related form must be filed
27 with the department at least 60 days before its use. A
28 contract form or related form is considered approved on the
29 60th day after its date of filing unless it has been
30 previously disapproved by the department. The department must
31 disapprove a viatical settlement contract form, viatical
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1 settlement purchase agreement, or related form that is
2 unreasonable, contrary to the public interest, discriminatory,
3 or misleading or unfair to the viator or the purchaser.
4 (3) If a viatical settlement provider elects to use a
5 related provider trust in accordance with this act, the
6 viatical settlement provider shall file notice of its
7 intention to use a related provider trust with the department,
8 including a copy of the trust agreement of the related
9 provider trust. The organizational documents of the trust must
10 be submitted to and approved by the department prior to the
11 transacting of business by the trust.
12 Section 4. Subsection (2) of section 626.9922, Florida
13 Statutes, is amended to read:
14 626.9922 Examination.--
15 (2) All accounts, books and records, documents, files,
16 contracts, and other information relating to all transactions
17 of viatical settlement contracts or viatical settlement
18 purchase agreements must be maintained by the licensee for a
19 period of at least 3 years after the death of the insured and
20 must be available to the department for inspection during
21 reasonable business hours. All such records must be maintained
22 at the licensee's home office.
23 Section 5. Section 626.99236, Florida Statutes, is
24 created to read:
25 626.99236 Disclosures to viatical settlement
26 purchasers after the purchase.--The viatical settlement
27 provider, itself or through another person, shall provide in
28 writing the following disclosures to any investor within 45
29 days after the effectuation of the viatical settlement
30 purchase agreement:
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1 (1) The life expectancy used by the provider in
2 determining the price paid to the viator.
3 (2) The name and address of the insurance company, the
4 policy number, and the date of issue of the viated policy.
5 (3) The name, address, experience, and qualifications
6 of the person issuing the life expectancy certification.
7 (4) The name and address of any person providing
8 escrow services.
9 (5) The type of life insurance policy offered or sold,
10 including whole life, term life, and universal life, or a
11 group policy certificate and the current status or condition
12 of such policy, together with any additional benefits
13 contained within the policy.
14 (6) The frequency with which the provider will provide
15 the status of the health condition of the insured to a
16 purchaser.
17 Section 6. Subsection (1) of section 626.9924, Florida
18 Statutes, is amended and new subsections (7) and (8) are added
19 to that section to read:
20 626.9924 Viatical settlement contracts; procedures;
21 rescission.--
22 (1) A viatical settlement provider entering into a
23 viatical settlement contract with any viator must first obtain
24 a witnessed document in which the viator consents to the
25 viatical settlement contract, acknowledges the catastrophic or
26 life-threatening illness, represents that he or she has a full
27 and complete understanding of the viatical settlement contract
28 and the benefits of the life insurance policy, releases his or
29 her medical records, and acknowledges that he or she has
30 entered into the viatical settlement contract freely and
31 voluntarily.
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1 (7) Within 20 days after a viator executes documents
2 necessary to transfer rights under an insurance policy, the
3 provider must give notice to the insurer of the policy that
4 the policy has or will become a viated policy.
5 (8) If the owner of the insurance policy is not the
6 insured, the provider shall notify the insured that the policy
7 has become the subject of a viatical settlement contract
8 within 20 days after the transfer of rights under the
9 contract.
10 Section 7. Section 626.99245, Florida Statutes, is
11 created to read:
12 626.99245 Conflict of regulation of viaticals.--
13 (1) A viatical settlement provider who, from this
14 state, enters into a viatical settlement purchase agreement
15 with a purchaser who is resident of a state other than
16 Florida, which state has enacted statutes or adopted
17 regulations governing viatical settlement purchase agreements,
18 shall be governed in the effectuation of that viatical
19 settlement purchase agreement by the statutes and regulations
20 of the purchaser's state of residence.
21 (2) A viatical settlement provider who, from this
22 state, enters into a viatical settlement contract with a
23 viator who is resident of a state other than Florida, which
24 state has enacted statutes or adopted regulations governing
25 viatical settlement contracts, shall be governed in the
26 effectuation of such viatical settlement contract by the
27 statutes and regulations of the viator's state of residence.
28 (3) The burden of proof for any exception claimed
29 under this section rests with the licensee.
30 Section 8. Section 626.9925, Florida Statutes, is
31 amended to read:
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1 626.9925 Rules.--The department may adopt rules to
2 administer implement this act, including rules establishing
3 standards for evaluating advertising by licensees; and rules
4 providing for the collection of data, for disclosures to
5 viators or purchasers, and for the reporting of medical
6 evaluations; and rules defining terms used in this act and
7 prescribing recordkeeping requirements relating to executed
8 viatical settlement contracts and viatical settlement purchase
9 agreements.
10 Section 9. Section 626.99285, Florida Statutes, is
11 created to read:
12 626.99285 Applicability of Florida Insurance Code.--In
13 addition to other applicable provisions cited in this chapter,
14 the department has the authority granted under ss. 624.310,
15 626.901 and 626.989 to regulate viatical settlement providers,
16 viatical settlement brokers, viatical settlement sales agents,
17 viatical settlement contracts, viatical settlement purchase
18 agreements, and viatical settlement transactions.
19 Section 10. This act shall take effect July 1, 2000.
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2 SENATE SUMMARY
3 Amends various provisions relating to the Viatical
Settlement Act. Modifies definitions applicable to the
4 act. Requires an applicant for a viatical settlement
provider license to include specified information in the
5 application form for the viatical settlement purchase
agreement. Modifies conditions under which the Department
6 of Insurance may approve or disapprove an application.
Requires departmental approval of the organizational
7 documents of any trust to be used by a viatical
settlement provider. Requires licensees to maintain books
8 and contracts relating to viatical settlement contracts
or viatical settlement purchase agreements at their home
9 office for a prescribed time. Requires certain
disclosures to be given to purchasers of a viatical
10 settlement agreement after the purchase. Deletes the
requirement that a viator acknowledge the existence of a
11 catastrophic or life-threatening illness. Requires a
provider to notify an insurer of a policy that is to be
12 transferred that the policy has or will become a viatical
policy. Requires notice to the insured if the owner of an
13 insurance policy in not the insured. Provides for the
application of other states' laws under certain
14 circumstances. Authorizes the department to adopt rules.
Expands the department's authority to regulate.
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