Senate Bill 1956c1

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    Florida Senate - 2000                           CS for SB 1956

    By the Committee on Banking and Insurance; and Senator Lee





    311-2003A-00

  1                      A bill to be entitled

  2         An act relating to viatical settlements;

  3         amending s. 626.9911, F.S.; redefining the

  4         terms "viatical settlement contract," "viatical

  5         settlement provider," "viator," "related

  6         provider trust," and "viatical settlement

  7         purchaser"; defining the terms "viaticated

  8         policy," "related form," "special purpose

  9         entity," and "financing entity"; amending s.

10         626.9912, F.S.; requiring additional

11         information for license applications; amending

12         s. 626.9921, F.S.; providing for additional

13         forms; amending s. 626.9922, F.S.; revising

14         recordkeeping time requirements; defining the

15         term "home office"; providing that records be

16         made available; creating s. 626.99236, F.S.;

17         providing for disclosure to viatical settlement

18         purchasers; providing for rescission of

19         agreements; amending s. 626.9924, F.S.;

20         providing for notice of viaticated policies;

21         creating s. 626.99245, F.S.; providing for the

22         regulation of interstate conflicts; amending s.

23         626.9925, F.S.; providing additional rulemaking

24         authority; amending s. 626.99275, F.S.;

25         providing criminal penalties; creating s.

26         626.99278, F.S.; requiring the adoption of an

27         anti-fraud plan; creating s. 626.99285, F.S.;

28         providing for the applicability of the

29         Insurance Code; creating s. 626.99287, F.S.;

30         providing for the contestability of viaticated

31         policies; creating 626.99295, F.S.; providing

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  1         for a grace period for unlicensed viatical

  2         settlement providers; providing an effective

  3         date.

  4

  5  Be It Enacted by the Legislature of the State of Florida:

  6

  7         Section 1.  Subsections (5), (6), (7), (8), and (10) of

  8  section 626.9911, Florida Statutes, are amended and

  9  subsections (12), (13), (14), and (15) are added to that

10  section to read:

11         626.9911  Definitions.--As used in this act, the term:

12         (5)  "Viatical settlement contract" means a written

13  agreement entered into between a viatical settlement provider,

14  or its related provider trust, and a viator. The viatical

15  settlement contract includes an agreement to transfer

16  ownership or change the beneficiary designation of a life

17  insurance policy at a later date, regardless of the date that

18  compensation is paid to the viator.  The agreement must

19  establish the terms under which the viatical settlement

20  provider will pay compensation or anything of value, which

21  compensation or value is less than the expected death benefit

22  of the insurance policy or certificate, in return for the

23  viator's assignment, transfer, sale, devise, or bequest of the

24  death benefit or ownership of all or a portion of the

25  insurance policy or certificate of insurance to the viatical

26  settlement provider.  A viatical settlement contract also

27  includes a contract for a loan or other financial transaction

28  secured primarily by an individual or group life insurance

29  policy, other than a loan by a life insurance company pursuant

30  to the terms of the life insurance contract, or a loan secured

31  by the cash value of a policy.

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  1         (6)  "Viatical settlement provider" means a person who,

  2  in this state, from this state, or with a resident of this

  3  state, effectuates a viatical settlement contract.  The term

  4  does not include:

  5         (a)  Any bank, savings bank, savings and loan

  6  association, credit union, or other licensed lending

  7  institution that takes an assignment of a life insurance

  8  policy as collateral for a loan;

  9         (b)  A life and health insurer that has lawfully issued

10  a life insurance policy that provides accelerated benefits to

11  terminally ill policyholders or certificateholders; or

12         (c)  Any natural person who enters into no more than

13  one viatical settlement contract with a viator in 1 calendar

14  year, unless such natural person has previously been licensed

15  under this act or is currently licensed under this act.

16         (d)  A trust that meets the definition of a "related

17  provider trust."

18         (e)  A viatical settlement provider, who from this

19  state, enters into a viatical settlement purchase agreement

20  with a purchaser who is resident of a state, other than

21  Florida, which has enacted statutes or promulgated regulations

22  governing viatical settlement purchase agreements. Such

23  viatical settlement purchase agreements shall be governed in

24  the effectuation of that viatical settlement purchase

25  agreement, under the statutes and regulations governing

26  viatical settlement purchase agreements in the purchaser's

27  state of residence.

28         (f)  A viatical settlement provider who, from this

29  state, enters into a viatical settlement contract with a

30  viator who is resident of a state, other than Florida, which

31  has enacted statutes or promulgated regulations governing

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  1  viatical settlement contracts. Such viatical settlement

  2  contracts shall be governed in the effectuation of that

  3  viatical settlement contract, under the statutes and

  4  regulations governing viatical settlement contracts in the

  5  viator's state of residence.

  6         (e)(g)  A viator in this state.

  7         (f)(h)  A viatical settlement purchaser.

  8         (g)  A financing entity.

  9         (7)  "Viator" means the owner of a life insurance

10  policy or a certificateholder under a group policy insuring

11  the life of an individual with a catastrophic or

12  life-threatening illness or condition who enters or seeks to

13  enter into a viatical settlement contract. This term does not

14  include a viatical settlement purchaser or a viatical

15  settlement provider or any person acquiring a policy or

16  interest in a policy from a viatical settlement provider, nor

17  does it include an independent third-party trustee or escrow

18  agent.

19         (8)  "Related provider trust" means a trust established

20  by a viatical settlement provider for the sole purpose of

21  entering into or owning viatical settlement contracts. This

22  term does not include an independent third-party trustee or

23  escrow agent or a trust that does not enter into agreements

24  with a viator viatical settlement purchaser.  A related

25  provider trust shall be subject to all provisions of this act

26  that apply to the viatical settlement provider who established

27  the related provider trust, except s. 626.9912, which shall

28  not be applicable. A viatical settlement provider may

29  establish no more than one related provider trust, and the

30  sole trustee of such related provider trust shall be the

31  viatical settlement provider licensed under s. 626.9912. The

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  1  name of the licensed viatical settlement provider shall be

  2  included within the name of the related provider trust.

  3         (10)  "Viatical settlement purchaser" means a person,

  4  other than a licensee under this part, an accredited investor

  5  as defined in Rule 501, Regulation D of the Securities Act

  6  Rules, or a qualified institutional buyer as defined by Rule

  7  144(a) of the Federal Securities Act, or a special purpose

  8  entity which is created solely to act as a financing source

  9  for the viatical settlement provider, who gives a sum of money

10  as consideration for a life insurance policy or an interest in

11  the death benefits of a life insurance policy which has been

12  or will be the subject of a viatical settlement contract, for

13  the purpose of deriving an economic benefit. The above

14  references to Rule 501, Regulation D and Rule 144(a) of the

15  Federal Securities Act are used strictly for defining purposes

16  and shall not be interpreted in any other manner. Any person

17  who claims to be an accredited investor shall sign an

18  affidavit stating that he or she is an accredited investor,

19  the basis of that claim, and that he or she understands that

20  as an accredited investor he or she will not be entitled to

21  certain protections of the Viatical Act. This affidavit must

22  be kept with other documents required to be maintained by this

23  act.

24         (11)  "Viatical settlement sales agent" means a person

25  other than a licensed viatical settlement provider who

26  arranges the purchase through a viatical settlement purchase

27  agreement of a life insurance policy or an interest in a life

28  insurance policy.

29         (12)  "Viaticated policy" means a life insurance

30  policy, or a certificate under a group policy, which is the

31  subject of a viatical settlement contract.

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  1         (13)  "Related form" means any form, created by or on

  2  behalf of a licensee, which a viator or viatical settlement

  3  purchaser is required to sign or initial. The forms include,

  4  but are not limited to, a power of attorney, a release of

  5  medical information form, a suitability questionnaire, a

  6  disclosure document, or any addendum, schedule, or amendment

  7  to a viatical settlement contract or viatical settlement

  8  purchase agreement considered necessary by a provider to

  9  effectuate a viatical settlement transaction.

10         (14)  "Special purpose entity" means an entity

11  established by a licensed viatical settlement provider, which

12  may be a corporation, partnership, trust, or other similar

13  entity formed solely to act as a vehicle to permit a lender to

14  the provider to access institutional capital markets for the

15  provider. A special purpose entity shall not enter into a

16  viatical settlement contract or a viatical settlement purchase

17  agreement.

18         (15)  "Financing entity" means an underwriter,

19  placement agent, lender, purchaser of securities, or purchaser

20  of a policy or certificate from a viatical settlement

21  provider, credit enhancer, or any person that may be a party

22  to a viatical settlement contract and that has direct

23  ownership in a policy or certificate that is the subject of a

24  viatical settlement contract, but whose sole activity related

25  to the transaction is providing funds to effect the viatical

26  settlement and who has an agreement in writing with a licensed

27  viatical settlement provider to act as a participant in a

28  financing transaction. The term does not include a

29  nonaccredited investor or other natural person.

30

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  1         Section 2.  Subsection (1), paragraph (f) of subsection

  2  (3), subsection (4), and paragraph (b) of subsection (5) of

  3  section 626.9912, Florida Statutes, are amended to read:

  4         626.9912  Viatical settlement provider license

  5  required; application for license.--

  6         (1)  After July 1, 1996, A person may not perform the

  7  functions of a viatical settlement provider as defined in this

  8  act or enter into or solicit a viatical settlement contract

  9  without first having obtained a license from the department.

10         (3)  In the application, the applicant must provide all

11  of the following:

12         (f)  All applications, viatical settlement contract

13  forms, viatical settlement purchase agreement forms, escrow

14  forms rating manuals, and other related forms proposed to be

15  used by the applicant.

16         (4)  The department may not issue a license to an

17  entity other than a natural person if it is not satisfied that

18  all officers, directors, employees, stockholders, and

19  partners, and any other persons who exercise or have the

20  ability to exercise effective control of the entity or who

21  have the ability to influence the transaction of business by

22  the entity meet the standards of this act and have not

23  violated any provision of this act or rules of the department

24  related to the business of viatical settlement contracts or

25  viatical settlement purchase agreements.

26         (5)  Upon the filing of a sworn application and the

27  payment of the license fee, the department shall investigate

28  each applicant and may issue the applicant a license if the

29  department finds that the applicant:

30         (b)  Is competent and trustworthy and intends to act in

31  good faith in the business authorized by the license applied

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  1  for; however, for purposes of this act, including this

  2  paragraph, a person shall not be deemed to be incompetent and

  3  untrustworthy solely for any felony committed more than 5

  4  years before licensure if the person has had his or her civil

  5  rights restored by the Governor and Cabinet with respect to

  6  such felony.

  7         Section 3.  Section 626.9921, Florida Statutes, is

  8  amended to read:

  9         626.9921  Filing of forms; required procedures;

10  approval.--

11         (1)  A viatical settlement contract form, viatical

12  settlement purchase agreement form, escrow form, or related

13  form may be used in this state only after the viatical

14  settlement provider or any related provider trust has filed

15  the form with the department and only after the form has been

16  approved by the department.

17         (2)  The viatical settlement contract form, viatical

18  settlement purchase agreement form, escrow form, or related

19  form must be filed with the department at least 60 days before

20  its use.  The A contract form or related form is considered

21  approved on the 60th day after its date of filing unless it

22  has been previously disapproved by the department. The

23  department must disapprove a viatical settlement contract

24  form, viatical settlement purchase agreement form, escrow

25  form, or related form that is unreasonable, contrary to the

26  public interest, discriminatory, or misleading or unfair to

27  the viator or the purchaser.

28         (3)  If a viatical settlement provider elects to use a

29  related provider trust in accordance with this act, the

30  viatical settlement provider shall file notice of its

31  intention to use a related provider trust with the department,

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  1  including a copy of the trust agreement of the related

  2  provider trust. The organizational documents of the trust must

  3  be submitted to and approved by the department before the

  4  transacting of business by the trust.

  5         (4)  The department may adopt, by rule, standardized

  6  forms to be used by licensees, at the licensee's option in

  7  place of separately approved forms.

  8         Section 4.  Subsection (2) of section 626.9922, Florida

  9  Statutes, is amended and subsections (3), (4), and (5) are

10  added to that section to read:

11         626.9922  Examination.--

12         (1)  The department may examine the business and

13  affairs of any licensee or applicant for a license.  The

14  department may order any licensee or applicant to produce any

15  records, books, files, advertising and solicitation materials,

16  or other information and may take statements under oath to

17  determine whether the licensee or applicant is in violation of

18  the law or is acting contrary to the public interest.  The

19  expenses incurred in conducting any examination or

20  investigation must be paid by the licensee or applicant.

21  Examinations and investigations must be conducted as provided

22  in chapter 624, and licensees are subject to all applicable

23  provisions of the insurance code.

24         (2)  All accounts, books and records, documents, files,

25  contracts, and other information relating to all transactions

26  of viatical settlement contracts or viatical settlement

27  purchase agreements must be maintained by the licensee for a

28  period of at least 3 years after the death of the insured and

29  must be available to the department for inspection during

30  reasonable business hours.

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  1         (3)  All such records or accurate copies of such

  2  records must be maintained at the licensee's home office. As

  3  used in this section, the term "home office" means the

  4  principal place of business and any other single storage

  5  facility, the street address of which shall be disclosed to

  6  the department within 20 days after its initial use, or within

  7  20 days of the effective date of this subsection.

  8         (4)  The originals of records required to be maintained

  9  under this section must be made available to the department

10  for examination at the department's request.

11         Section 5.  Section 626.99236, Florida Statutes, is

12  created to read:

13         626.99236  Further disclosures to viatical settlement

14  purchasers.--

15         (1)  No later than 5 days prior to the assignment,

16  transfer, sale, devise, or bequest of the death benefit or

17  ownership of all or a portion of the insurance policy or

18  certificate of insurance to the purchaser, the viatical

19  settlement provider, itself or through another person, shall

20  provide in writing the following disclosures to any viatical

21  settlement purchaser:

22         (a)  All the life expectancy certifications obtained by

23  the provider.

24         (b)  The name and address of the insurance company, the

25  policy number, and the date of original issue of the

26  viaticated policy.

27         (c)  The experience and qualifications of the person

28  issuing the life expectancy certification, and that person's

29  relationship to the viatical settlement provider, the viatical

30  settlement broker, the viatical settlement sales agent, and

31  the viator.

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  1         (d)  The name and address of any person providing

  2  escrow services, and that person's relationship to the

  3  viatical settlement provider, the viatical settlement broker,

  4  the viatical settlement sales agent, and the viator.

  5         (e)  The type of life insurance policy offered or sold,

  6  including a statement as to whether the policy is whole life,

  7  term life, universal life, or a group policy certificate; a

  8  statement as to whether the policy is in lapse status or has

  9  lapsed in the last two years; and a statement as to whether

10  the purchaser is entitled to benefits contained in the policy

11  other than the death benefit of the policy.

12         (f)  The procedure to be used by the provider to

13  provide the status of the health condition of the insured to a

14  purchaser.

15         (2)  The viatical settlement purchase agreement is

16  voidable by the purchaser at anytime within three days after

17  the disclosures mandated by this section are received by the

18  purchaser.

19         (3)  At the time the disclosures in subsection (1) are

20  made, the viatical settlement purchaser shall be advised to

21  seek independent financial advice from a person not

22  compensated by the viatical settlement provider or the

23  viatical settlement sales agent. The viatical settlement

24  purchaser shall sign an affidavit that he or she has received

25  the disclosures and understands their importance.

26         Section 6.  Subsection (1) of section 626.9924, Florida

27  Statutes, is amended, and subsections (7) and (8) are added to

28  that section to read:

29         626.9924  Viatical settlement contracts; procedures;

30  rescission.--

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  1         (1)  A viatical settlement provider entering into a

  2  viatical settlement contract with any viator must first obtain

  3  a witnessed document in which the viator consents to the

  4  viatical settlement contract, acknowledges the catastrophic or

  5  life-threatening illness, represents that he or she has a full

  6  and complete understanding of the viatical settlement contract

  7  and the benefits of the life insurance policy, releases his or

  8  her medical records, and acknowledges that he or she has

  9  entered into the viatical settlement contract freely and

10  voluntarily.

11         (7)  At any time during the contestable period, within

12  20 days after a viator executes documents necessary to

13  transfer rights under an insurance policy or within 20 days of

14  any agreement, option, promise, or any other form of

15  understanding, express or implied, to viaticate the policy,

16  the provider must give notice to the insurer of the policy

17  that the policy has or will become a viaticated policy. The

18  notice must be accompanied by the documents required by s.

19  626.99287(5)(a) in their entirety.

20         (8)  If the owner of the insurance policy is not the

21  insured, the provider shall notify the insured that the policy

22  has become the subject of a viatical settlement contract

23  within 20 days after the transfer of rights under the

24  contract.

25         Section 7.  Section 626.99245, Florida Statutes, is

26  created to read:

27         626.99245  Conflict of regulation of viaticals.--

28         (1)  A viatical settlement provider who from this state

29  enters into a viatical settlement purchase agreement with a

30  purchaser who is resident of another state that has enacted

31  statutes or adopted regulations governing viatical settlement

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  1  purchase agreements, shall be governed in the effectuation of

  2  that viatical settlement purchase agreement by the statutes

  3  and regulations of the purchaser's state of residence. If the

  4  state in which the purchaser is a resident has not enacted

  5  statutes or regulations governing viatical settlement purchase

  6  agreements, the provider shall give the purchaser notice that

  7  neither Florida nor his or her state regulates the transaction

  8  upon which he or she is entering. For transactions in these

  9  states, however, the viatical settlement provider is to

10  maintain all records required as if the transactions were

11  executed in Florida. However, the forms used in those states

12  need not be approved by the department.

13         (2)  A viatical settlement provider who from this state

14  enters into a viatical settlement contract with a viator who

15  is resident of another state that has enacted statutes or

16  adopted regulations governing viatical settlement contracts

17  shall be governed in the effectuation of that viatical

18  settlement contract by the statutes and regulations of the

19  viator's state of residence. If the state in which the viator

20  is a resident has not enacted statutes or regulations

21  governing viatical settlement agreements, the provider shall

22  give the viator notice that neither Florida nor his or her

23  state regulates the transaction upon which he or she is

24  entering. For transactions in those states, however, the

25  viatical settlement provider is to maintain all records

26  required as if the transactions were executed in Florida. The

27  forms used in those states need not be approved by the

28  department.

29         Section 8.  Section 626.9925, Florida Statutes, is

30  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 life

  6  expectancies; 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 626.99275, Florida Statutes, is

11  amended to read:

12         626.99275  Prohibited practices; penalties.--

13         (1)  It is unlawful for any person:

14         (a)(1)  To knowingly enter into, broker, or otherwise

15  deal in a viatical settlement contract the subject of which is

16  a life insurance policy, knowing that the policy was obtained

17  by presenting materially false information concerning any fact

18  material to the policy or by concealing, for the purpose of

19  misleading another, information concerning any fact material

20  to the policy, where the viator or the viator's agent intended

21  to defraud the policy's issuer that was obtained by means of a

22  false, deceptive, or misleading application for the life

23  insurance policy.

24         (b)(2)  In the solicitation or sale of a viatical

25  settlement purchase agreement:

26         1.(a)  To employ any device, scheme, or artifice to

27  defraud;

28         2.(b)  To obtain money or property by means of an

29  untrue statement of a material fact or by any omission to

30  state a material fact necessary in order to make the

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  1  statements made, in light of the circumstances under which

  2  they were made, not misleading; or

  3         3.(c)  To engage in any transaction, practice, or

  4  course of business which operates or would operate as a fraud

  5  or deceit upon a person.

  6         (c)  To knowingly engage in any transaction, practice,

  7  or course of business intending thereby to avoid the notice

  8  requirements of s. 626.9924(7).

  9         (2)  A person who violates any provision of this

10  section commits:

11         (a)  A felony of the third degree, punishable as

12  provided in s. 775.082, s. 774.083, or s. 775.084, if the

13  insurance policy involved is valued at any amount less than

14  $20,000.

15         (b)  A felony of the second degree, punishable as

16  provided in s. 775.082, s. 774.083, or s. 775.084, if the

17  insurance policy involved is valued at $20,000 or more, but

18  less than $100,000.

19         (c)  A felony of the first degree, punishable as

20  provided in s. 775.082, s. 774.083, or s. 775.084, if the

21  insurance policy involved is valued at $100,000 or more.

22         Section 10.  Section 626.99278, Florida Statutes, is

23  created to read:

24         626.99278  Viatical provider anti-fraud plan.--Every

25  licensed viatical settlement provider must adopt an anti-fraud

26  plan and file it with the Division of Insurance Fraud of the

27  department on or before December 1, 2000. Each viatical

28  settlement provider's anti-fraud plan shall include:

29         (1)  A description of the procedures for detecting and

30  investigating possible fraudulent acts and procedures for

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  1  resolving material inconsistencies between medical records and

  2  insurance applications;

  3         (2)  A description of the viatical settlement

  4  provider's procedures for the mandatory reporting of possible

  5  fraudulent insurance acts to the Division of Insurance Fraud

  6  of the department;

  7         (3)  A description of the viatical settlement

  8  provider's plan for anti-fraud education and training of its

  9  underwriters or other personnel; and

10         (4)  A written description or chart outlining the

11  organizational arrangement of the viatical settlement

12  provider's anti-fraud personnel who are responsible for the

13  investigation and reporting of possible fraudulent insurance

14  acts, and investigating unresolved material inconsistencies

15  between medical records and insurance applications.

16         Section 11.  Section 626.99285, Florida Statutes, is

17  created to read:

18         626.99285  Applicability of Insurance Code.--In

19  addition to other applicable provisions cited in the Insurance

20  Code, the department has the authority granted under ss.

21  624.310, 626.901, and 626.989 to regulate viatical settlement

22  providers, viatical settlement brokers, viatical settlement

23  sales agents, viatical settlement contracts, viatical

24  settlement purchase agreements, and viatical settlement

25  transactions.

26         Section 12.  Section 626.99287, Florida Statutes, is

27  created to read:

28         626.99287  Contestability of viaticated

29  policies.--Except as hereinafter provided, if a viatical

30  settlement contract is entered into within the 2-year period

31  commencing with the date of issuance of the insurance policy

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  1  or certificate to be acquired, the viatical settlement

  2  contract is void and unenforceable by either party.

  3  Notwithstanding this limitation, such a viatical settlement

  4  contract is not void and unenforceable if:

  5         (1)  The policy was issued upon the owner's exercise of

  6  conversion rights arising out of a group or term policy;

  7         (2)  The owner of the policy is a charitable

  8  organization exempt from taxation under 26 U.S.C. s.

  9  501(c)(3);

10         (3)  The owner of the policy is not a natural person;

11         (4)  The viatical settlement contract was entered into

12  before July 1, 2000;

13         (5)  The viator certifies by producing independent

14  evidence to the viatical settlement provider that one or more

15  of the following conditions have been met within the 2-year

16  period;

17         (a)1.  The viator or insured is diagnosed with an

18  illness or condition that is either;

19         a.  Catastrophic or life threatening; or

20         b.  Requires a course of treatment for a period of at

21  least 3 years of long-term care or home-health care; and

22         2.  The condition could not be disclosed at the time

23  the life insurance contract was entered into.

24         (b)  The viator's spouse dies;

25         (c)  The viator divorces his or her spouse;

26         (d)  The viator retires from full-time employment;

27         (e)  The viator becomes physically or mentally disabled

28  and a physician determines that the disability prevents the

29  viator from maintaining full-time employment;

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  1         (f)  The owner of the policy was that the insured's

  2  employer at the time the policy or certificate was issued and

  3  the employment relationship terminated;

  4         (g)  A final order, judgment, or decree is entered by a

  5  court of competent jurisdiction, on the application of a

  6  creditor of the viator, adjudicating the viator bankrupt or

  7  insolvent, or approving a petition seeking reorganization of

  8  the viator or appointing a receiver, trustee, or liquidator to

  9  all or a substantial part of the viator's assets; or

10         (h)  The viator experiences a significant decrease in

11  income which is unexpected by the viator and which impairs his

12  or her reasonable ability to pay the policy premium.

13

14  If the viatical settlement provider submits to the insurer a

15  copy of the viator's or owner's certification described above

16  then the provider submits a request to the insurer to effect

17  the transfer of the policy or certificate to the viatical

18  settlement provider, the viatical settlement agreement shall

19  not be void or unenforceable by operation of this section. The

20  insurer shall timely respond to such request. Nothing in this

21  section shall prohibit an insurer from exercising its right

22  during the contestability period to contest the validity of

23  any policy on grounds of fraud.

24         Section 13.  Section 626.99295, Florida Statutes, is

25  created to read:

26         626.99295  Grace period.--An unlicensed viatical

27  settlement provider that was legally transacting business in

28  this state on June 30, 2000, may continue to transact such

29  business, in the absence of any orders by the department to

30  the contrary, until the department approves or disapproves the

31  viatical settlement provider's application for licensure if

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  1  the viatical settlement provider files with the department an

  2  application for licensure no later than August 1, 2000, and if

  3  the viatical settlement provider complies with all other

  4  provisions of this act. Any form for which department approval

  5  is required under this part must be filed by August 1, 2000,

  6  and may continue to be used until disapproved by the

  7  department.

  8         Section 14.  This act shall take effect July 1, 2000.

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    Florida Senate - 2000                           CS for SB 1956
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  1          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
  2                         Senate Bill 1956

  3

  4  Expands the meaning of the term "viatical settlement contract"
    to include an agreement to transfer ownership or change the
  5  beneficiary of a life insurance policy at a later date,
    regardless of the date compensation is paid to the viator.
  6
    Provides that a "financing entity" is not included within the
  7  term "viatical settlement provider." Corrects an error in the
    law by inserting the term "viator."
  8
    Expands the definition of "viator" to include "life settlement
  9  contracts" by deleting the provision that the viator must be
    an individual with a catastrophic or life threatening illness
10  or condition.

11  Provides that accredited investors sign an affidavit stating
    they are investors, the basis for claiming such status, and
12  that they understand they are not entitled to certain
    (disclosure) protections under the viatical settlement act.
13
    Creates the following definitions:
14
    "Viaticated policy" is a life insurance policy or certificate
15  under a group policy which is the subject of a viatical
    settlement contract.
16
    "Related form" is any form, created by or on behalf of a
17  licensee, which a viator or purchaser is required to sign or
    initial.
18
    "Special purpose entity" is established by a viatical
19  settlement provider, which may be a corporation, formed solely
    to act as a vehicle to permit a lender to the provider to
20  access institutional capital markets for the provider.

21  "Financing entity" is an underwriter, agent or lender whose
    sole activity is to provide funds to effect the viatical
22  settlement.

23  Removes an obsolete effective date and requires that viatical
    settlement purchase agreement and escrow forms be approved by
24  the department. Deletes the requirement that providers submit
    rating manuals and authorizes the department to adopt
25  standardized forms by rule. Expands department licensure
    review to other persons who exercise control of certain
26  entities.

27  Deletes a provision that allowed persons applying for viatical
    settlement provider licenses to not be considered incompetent
28  and untrustworthy under certain circumstances.

29  Defines a licensee's "home office" to mean principal place of
    business and provides for records to be made available to the
30  department. Deletes penalty for failure to maintain and make
    certain records available to the department.
31
    Requires viatical settlement provider to timely furnish in
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  1  writing enumerated disclosures to a viatical settlement
    purchaser (investor). Authorizes a rescission period. Provides
  2  the purchaser must sign an affidavit acknowledging receipt and
    understanding of disclosures. Removes the provision revealing
  3  the author of the viator's "Mortality Profile Report."

  4  Removes the requirement the viator unconditionally waive any
    statutory or constitutional right to privacy as to medical
  5  reports.

  6  Revises the time frame for providers to notify insurers as to
    the viatication of the life insurance policy. Provides for
  7  certain documents to be given with the notice.

  8  Provides notice and other requirements as to the conflict of
    regulation of viaticals by different states.
  9
    Clarifies prohibited practice provisions and removes the term
10  Viatical Settlement Insurance Fraud.

11  Authorizes the department to promulgate rules for disclosures,
    reporting of life expectancies, definition of terms and record
12  keeping requirements. Provides for the department to regulate
    parties to viatical settlement transactions as to
13  administrative remedies, unauthorized insurers, and criminal
    investigations.
14
    Requires viatical settlement providers to file viatical
15  anti-fraud plans with the Fraud Division.

16  Narrows the applicability for the contestability of viaticated
    policies and provides exceptions thereto.
17
    Provides for a grace period for unlicensed viatical settlement
18  providers to become licensed by the department.

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