1 | A bill to be entitled |
2 | An act relating to viatical settlements; amending s. |
3 | 626.9911, F.S.; providing and revising definitions; |
4 | amending s. 626.9913, F.S.; requiring additional |
5 | information in an annual statement; revising a deposit |
6 | requirement; amending s. 626.9914, F.S.; adding an |
7 | additional ground for imposing adverse consequences on |
8 | viatical settlement provider licenses; increasing |
9 | administrative fines; amending s. 626.99175, F.S.; |
10 | deleting an exception from registration requirements for |
11 | life expectancy providers; creating s. 626.99185, F.S.; |
12 | requiring viatical settlement providers to provide viators |
13 | with a disbursement disclosure statement; providing |
14 | statement requirements and procedures; amending ss. |
15 | 626.9924 and 626.99245, F.S.; conforming cross-references; |
16 | creating s. 626.99273, F.S.; prohibiting certain practices |
17 | or activities relating to viatical settlement contracts or |
18 | insurance policies; specifying that such practices or |
19 | activities are fraudulent; requiring certain materials to |
20 | be filed with the Office of Insurance Regulation before |
21 | entering into viatical settlement contracts; prohibiting |
22 | certain references in marketing materials; prohibiting |
23 | certain statements or representations to applicants or |
24 | policyholders; amending s. 626.99275, F.S.; specifying an |
25 | additional prohibited practice; prohibiting any person |
26 | from entering into a viatical settlement contract and from |
27 | issuing, soliciting, marketing, or otherwise promoting the |
28 | purchase of a policy under certain circumstances; |
29 | providing criteria; providing criminal penalties; creating |
30 | s. 626.99276, F.S.; providing insurer notification |
31 | requirements for viatical settlement providers; providing |
32 | insurer requirements for provider requests for transfers |
33 | of certain policies; specifying prohibitions against |
34 | insurers relating to such transfers; providing insurer |
35 | response requirements for requests for such transfers; |
36 | amending s. 626.99278, F.S.; specifying certain |
37 | information required to be maintained and reported |
38 | relating to anti-fraud plans and procedures, medical |
39 | records and insurance applications, and reporting of |
40 | fraudulent acts and prohibited practices; creating s. |
41 | 626.99289, F.S.; providing that certain contracts, |
42 | agreements, arrangements, and transactions are void and |
43 | unenforceable; repealing s. 626.99287, F.S., relating to |
44 | the contestability of viaticated policies; providing an |
45 | effective date. |
46 |
|
47 | Be It Enacted by the Legislature of the State of Florida: |
48 |
|
49 | Section 1. Section 626.9911, Florida Statutes, is amended |
50 | to read: |
51 | 626.9911 Definitions.--As used in this act, the term: |
52 | (1) "Business of viatical settlements" means an activity |
53 | involved in, but not limited to, the offering, soliciting, |
54 | negotiating, procuring, effectuating, purchasing, investing, |
55 | monitoring, tracking, underwriting, selling, transferring, |
56 | assigning, pledging, hypothecating, or in any other manner |
57 | acquiring an interest in a life insurance policy by means of a |
58 | viatical settlement contract. |
59 | (2)(1) "Financing entity" means an underwriter, placement |
60 | agent, lender, purchaser of securities, or purchaser of a policy |
61 | or certificate from a viatical settlement provider, credit |
62 | enhancer, or any entity that has direct ownership in a policy or |
63 | certificate that is the subject of a viatical settlement |
64 | contract, but whose principal activity related to the |
65 | transaction is providing funds or credit enhancement to effect |
66 | the viatical settlement or the purchase of one or more |
67 | viaticated policies and who has an agreement in writing with one |
68 | or more licensed viatical settlement providers to finance the |
69 | acquisition of viatical settlement contracts. The term does not |
70 | include a nonaccredited investor or other natural person. A |
71 | financing entity may not enter into a viatical settlement |
72 | contract. |
73 | (3) "Fraudulent viatical settlement act" means an act or |
74 | omission committed by any person who, knowingly or with intent |
75 | to defraud, for the purpose of depriving another of property or |
76 | for pecuniary gain, commits or permits its employees or its |
77 | agents to engage in acts including: |
78 | (a)1. Presenting, causing to be presented, or preparing |
79 | with knowledge or belief that it will be presented to or by a |
80 | viatical settlement provider, viatical settlement broker, |
81 | financing entity, insurer, insurance producer, or any other |
82 | person false material information or concealing material |
83 | information as part of, in support of, or concerning a fact |
84 | material to one or more of the following: |
85 | a. An application for the issuance of a viatical |
86 | settlement contract or insurance policy; |
87 | b. The underwriting of a viatical settlement contract or |
88 | insurance policy; |
89 | c. A claim for payment or benefit pursuant to a viatical |
90 | settlement contract or insurance policy; |
91 | d. Premiums paid on an insurance policy; |
92 | e. Payments and changes in ownership or beneficiary made |
93 | in accordance with the terms of a viatical settlement contract |
94 | or insurance policy; |
95 | f. The reinstatement or conversion of an insurance policy; |
96 | g. The solicitation, offer, effectuation, or sale of a |
97 | viatical settlement contract or insurance policy; |
98 | h. The issuance of written evidence of a viatical |
99 | settlement contract or insurance policy; or |
100 | i. A financing transaction. |
101 | 2.a. Employing any plan, financial structure, device, |
102 | scheme, or artifice to defraud related to viaticated policies; |
103 | b. Entering into any practice or plan that involves |
104 | stranger-originated life insurance; or |
105 | c. Failing to disclose to the insurer when requested by |
106 | the insurer that the prospective insured has undergone a life |
107 | expectancy evaluation by any person or entity other than the |
108 | insurer or its authorized representatives in connection with the |
109 | issuance of the policy. |
110 | (b) In the furtherance of a fraud or to prevent the |
111 | detection of a fraud, any person who commits or permits its |
112 | employees or its agents to: |
113 | 1. Remove, conceal, alter, destroy, or sequester from the |
114 | office the assets or records of a licensee or other person |
115 | engaged in the business of viatical settlements; |
116 | 2. Misrepresent or conceal the financial condition of a |
117 | licensee, financing entity, insurer, or other person; |
118 | 3. Transact the business of viatical settlements in |
119 | violation of laws requiring a license, certificate of authority, |
120 | or other legal authority for the transaction of the business of |
121 | viatical settlements; or |
122 | 4. File with the office or the equivalent chief insurance |
123 | regulatory official of another jurisdiction a document that |
124 | contains false information or otherwise conceals information |
125 | about a material fact from the office or other regulatory |
126 | official; |
127 | (c) Embezzlement, theft, misappropriation, or conversion |
128 | of moneys, funds, premiums, credits, or other property of a |
129 | viatical settlement provider, insurer, insured, viator, |
130 | insurance policyowner, or any other person engaged in the |
131 | business of viatical settlements or insurance; |
132 | (d) Recklessly entering into, negotiating, brokering, or |
133 | otherwise dealing in a viatical settlement contract, the subject |
134 | of which is a life insurance policy that was obtained by |
135 | presenting false information concerning any fact material to the |
136 | policy or by concealing, for the purpose of misleading another, |
137 | information concerning any fact material to the policy, in which |
138 | the person or persons intended to defraud the policy's issuer, |
139 | viatical settlement provider, or viator. For purposes of this |
140 | paragraph, the term "recklessly" means consciously and with |
141 | clear, unjustifiable disregard for the substantial likelihood of |
142 | the relevant facts or risks, which disregard involves a gross |
143 | deviation from acceptable standards of conduct; |
144 | (e) Knowingly or intentionally facilitating the viator's |
145 | change of residency state to avoid the provisions of this act; |
146 | (f) Knowingly or intentionally, directly or indirectly, |
147 | facilitating or causing the creation of a trust with a non- |
148 | Florida situs or other nonresident entity for the purpose of |
149 | being a policyowner of a life insurance policy covering a |
150 | Florida resident insured to avoid the provisions of this act; |
151 | (g) Knowingly or intentionally, directly or indirectly, |
152 | facilitating or causing the transfer of the ownership of a |
153 | policy covering a Florida resident insured to a trust with a |
154 | non-Florida situs or other nonresident entity to avoid the |
155 | provisions of this act; |
156 | (h) Attempting to commit, assisting, aiding, or abetting |
157 | in the commission of or conspiring to commit the acts or |
158 | omissions specified in this subsection; |
159 | (i) Any application for, the existence of, or any payments |
160 | related to a loan secured directly or indirectly by any interest |
161 | in a life insurance policy; or |
162 | (j) Failing to disclose to the insurer when the request |
163 | for such disclosure has been asked for by the insurer that the |
164 | prospective insured has undergone a life expectancy evaluation |
165 | by any person or entity other than the insurer or its authorized |
166 | representatives in connection with the issuance of the policy. |
167 | (4)(2) "Independent third-party trustee or escrow agent" |
168 | means an attorney, certified public accountant, financial |
169 | institution, or other person providing escrow services under the |
170 | authority of a regulatory body. The term does not include any |
171 | person associated, affiliated, or under common control with a |
172 | viatical settlement provider or viatical settlement broker. |
173 | (5)(3) "Life expectancy" means an opinion or evaluation as |
174 | to how long a particular person is to live, or relating to such |
175 | person's expected demise. |
176 | (6)(4) "Life expectancy provider" means a person who |
177 | determines, or holds himself or herself out as determining, life |
178 | expectancies or mortality ratings used to determine life |
179 | expectancies: |
180 | (a) On behalf of a viatical settlement provider, viatical |
181 | settlement broker, life agent, or person engaged in the business |
182 | of viatical settlements; |
183 | (b) In connection with a viatical settlement investment, |
184 | pursuant to s. 517.021(23); or |
185 | (c) On residents of this state in connection with a |
186 | viatical settlement contract or viatical settlement investment. |
187 | (7)(5) "Person" has the meaning specified in s. 1.01. |
188 | (8)(6) "Related form" means any form, created by or on |
189 | behalf of a licensee, which a viator or insured is required to |
190 | sign or initial. The forms include, but are not limited to, a |
191 | power of attorney, a release of medical information form, a |
192 | suitability questionnaire, a disclosure document, or any |
193 | addendum, schedule, or amendment to a viatical settlement |
194 | contract considered necessary by a provider to effectuate a |
195 | viatical settlement transaction. |
196 | (9)(7) "Related provider trust" means a titling trust or |
197 | other trust established by a licensed viatical settlement |
198 | provider or financing entity for the sole purpose of holding the |
199 | ownership or beneficial interest in purchased policies in |
200 | connection with a financing transaction. The trust must have a |
201 | written agreement with a licensed viatical settlement provider |
202 | or financing entity under which the licensed viatical settlement |
203 | provider or financing entity is responsible for insuring |
204 | compliance with all statutory and regulatory requirements and |
205 | under which the trust agrees to make all records and files |
206 | relating to viatical settlement transactions available to the |
207 | office as if those records and files were maintained directly by |
208 | the licensed viatical settlement provider. This term does not |
209 | include an independent third-party trustee or escrow agent or a |
210 | trust that does not enter into agreements with a viator. A |
211 | related provider trust shall be subject to all provisions of |
212 | this act that apply to the viatical settlement provider who |
213 | established the related provider trust, except s. 626.9912, |
214 | which shall not be applicable. A viatical settlement provider |
215 | may establish no more than one related provider trust, and the |
216 | sole trustee of such related provider trust shall be the |
217 | viatical settlement provider licensed under s. 626.9912. The |
218 | name of the licensed viatical settlement provider shall be |
219 | included within the name of the related provider trust. |
220 | (10)(8) "Special purpose entity" means an entity |
221 | established by a licensed viatical settlement provider or by a |
222 | financing entity, which may be a corporation, partnership, |
223 | trust, limited liability company, or other similar entity formed |
224 | solely to provide, either directly or indirectly, access to |
225 | institutional capital markets to a viatical settlement provider |
226 | or financing entity. A special purpose entity may not obtain |
227 | capital from any natural person or entity with less than $50 |
228 | million in assets and may not enter into a viatical settlement |
229 | contract. |
230 | (11) "Stranger-originated life insurance" means a practice |
231 | or plan to initiate a life insurance policy for the benefit of a |
232 | third-party investor who, at the time of policy origination, has |
233 | no insurable interest in the insured. Stranger-originated life |
234 | insurance practices include, but are not limited to, cases in |
235 | which life insurance is purchased with resources or guarantees |
236 | from or through a person or entity who, at the time of policy |
237 | inception, could not lawfully initiate the policy himself, |
238 | herself, or itself and when, at the time of inception, there is |
239 | a verbal or written arrangement or agreement to directly or |
240 | indirectly transfer the ownership of the policy or policy |
241 | benefits to a third party. Trusts that are created to give the |
242 | appearance of an insurable interest and are used to initiate |
243 | policies for investors violate insurable interest laws and the |
244 | prohibition against wagering on life. |
245 | (12)(9) "Viatical settlement broker" means a person who, |
246 | on behalf of a viator and for a fee, commission, or other |
247 | valuable consideration, offers or attempts to negotiate viatical |
248 | settlement contracts between a viator resident in this state and |
249 | one or more viatical settlement providers. Notwithstanding the |
250 | manner in which the viatical settlement broker is compensated, a |
251 | viatical settlement broker is deemed to represent only the |
252 | viator and owes a fiduciary duty to the viator to act according |
253 | to the viator's instructions and in the best interest of the |
254 | viator. The term does not include an attorney, licensed |
255 | Certified Public Accountant, or investment adviser lawfully |
256 | registered under chapter 517, who is retained to represent the |
257 | viator and whose compensation is paid directly by or at the |
258 | direction and on behalf of the viator. |
259 | (13)(10) "Viatical settlement contract" means a written |
260 | agreement entered into between a viatical settlement provider, |
261 | or its related provider trust, and a viator. The viatical |
262 | settlement contract includes an agreement to transfer ownership |
263 | or change the beneficiary designation of a life insurance policy |
264 | at a later date, regardless of the date that compensation is |
265 | paid to the viator. The agreement must establish the terms under |
266 | which the viatical settlement provider will pay compensation or |
267 | anything of value, which compensation or value is less than the |
268 | expected death benefit of the insurance policy or certificate, |
269 | in return for the viator's assignment, transfer, sale, devise, |
270 | or bequest of the death benefit or ownership of all or a portion |
271 | of the insurance policy or certificate of insurance to the |
272 | viatical settlement provider. The term "viatical settlement |
273 | contract" also includes the transfer for compensation or value |
274 | of ownership or beneficial interest in a trust or other entity |
275 | that owns such policy if the trust or other entity was formed or |
276 | used for the principal purpose of acquiring one or more life |
277 | insurance contracts, which contract or contracts insure the life |
278 | of a person residing in this state. A viatical settlement |
279 | contract also includes a contract for a loan or other financial |
280 | transaction secured primarily by an individual or group life |
281 | insurance policy. The term "viatical settlement contract" does |
282 | not include, other than a policy loan by a life insurance |
283 | company pursuant to the terms of the life insurance contract or |
284 | accelerated death provisions contained in a life insurance |
285 | policy, whether issued with the original policy or as a rider, |
286 | or a loan secured by the cash surrender value of a policy as |
287 | determined by the policy issuer and the life insurance policy |
288 | terms, or any loan or advance from the issuer of the policy to |
289 | the policyowner. |
290 | (14)(11) "Viatical settlement investment" has the same |
291 | meaning as specified in s. 517.021. |
292 | (15)(12) "Viatical settlement provider" means a person |
293 | who, in this state, from this state, or with a resident of this |
294 | state, effectuates a viatical settlement contract. The term does |
295 | not include: |
296 | (a) Any bank, savings bank, savings and loan association, |
297 | or credit union, or other licensed lending institution that |
298 | takes an assignment of a life insurance policy as collateral for |
299 | a loan. |
300 | (b) A life and health insurer that has lawfully issued a |
301 | life insurance policy that provides accelerated benefits to |
302 | terminally ill policyholders or certificateholders. |
303 | (c) Any natural person who enters into no more than one |
304 | viatical settlement contract with a viator in 1 calendar year, |
305 | unless such natural person has previously been licensed under |
306 | this act or is currently licensed under this act. |
307 | (d) A trust that meets the definition of a "related |
308 | provider trust." |
309 | (e) A viator in this state. |
310 | (f) A financing entity. |
311 | (16)(13) "Viaticated policy" means a life insurance |
312 | policy, or a certificate under a group policy, which is the |
313 | subject of a viatical settlement contract. |
314 | (17)(14) "Viator" means the owner of a life insurance |
315 | policy or a certificateholder under a group policy, which policy |
316 | is not a previously viaticated policy, who enters or seeks to |
317 | enter into a viatical settlement contract. This term does not |
318 | include a viatical settlement provider or any person acquiring a |
319 | policy or interest in a policy from a viatical settlement |
320 | provider, nor does it include an independent third-party trustee |
321 | or escrow agent. |
322 | Section 2. Subsections (2) and (3) of section 626.9913, |
323 | Florida Statutes, are amended to read: |
324 | 626.9913 Viatical settlement provider license continuance; |
325 | annual report; fees; deposit.-- |
326 | (2)(a) Annually, on or before March 1, the viatical |
327 | settlement provider licensee shall file a statement containing |
328 | information the commission requires and shall pay to the office |
329 | a license fee in the amount of $500. |
330 | (b) In addition to any other requirements, the annual |
331 | statement shall specify: |
332 | 1. The total number of unsettled viatical settlement |
333 | contracts and corresponding total amount due viators on viatical |
334 | settlement contracts that have been signed by the viator but |
335 | have not been settled as of December 31 of the preceding |
336 | calendar year, categorized by the number of days since the |
337 | viator signed the contract for transactions regulated by this |
338 | state. |
339 | 2. The total number of policies purchased in any state, |
340 | territory, or jurisdiction; total gross amount paid for policies |
341 | purchased in any state, territory, or jurisdiction; and the |
342 | total face value of policies purchased for the preceding |
343 | calendar year and most recent 5 years in any state, territory, |
344 | or jurisdiction. |
345 | 3. The total number of policies purchased, total gross |
346 | amount paid for policies purchased, total commissions or |
347 | compensation paid for policies purchased, and total face value |
348 | of policies purchased, allocated by state, territory, or |
349 | jurisdiction. |
350 | 4. The total amount of proceeds or compensation paid to |
351 | policyowners, allocated by state, territory, or jurisdiction. |
352 | (c) After December 31, 2007, The annual statement shall |
353 | include an annual audited financial statement of the viatical |
354 | settlement provider prepared in accordance with generally |
355 | accepted accounting principles by an independent certified |
356 | public accountant covering a 12-month period ending on a day |
357 | falling during the last 6 months of the preceding calendar year. |
358 | If the audited financial statement has not been completed, |
359 | however, the licensee shall include in its annual statement an |
360 | unaudited financial statement for the preceding calendar year |
361 | and an affidavit from an officer of the licensee stating that |
362 | the audit has not been completed. In this event, the licensee |
363 | shall submit the audited statement on or before June 1. The |
364 | annual statement, due on or before March 1 each year, shall also |
365 | provide the office with a report of all life expectancy |
366 | providers who have provided life expectancies directly or |
367 | indirectly to the viatical settlement provider for use in |
368 | connection with a viatical settlement contract or a viatical |
369 | settlement investment. A viatical settlement provider shall |
370 | include in all statements filed with the office all information |
371 | requested by the office regarding a related provider trust |
372 | established by the viatical settlement provider. The office may |
373 | require more frequent reporting. Failure to timely file the |
374 | annual statement or the audited financial statement or to timely |
375 | pay the license fee is grounds for immediate suspension of the |
376 | license. The commission may by rule require all or part of the |
377 | statements or filings required under this section to be |
378 | submitted by electronic means in a computer-readable form |
379 | compatible with the electronic data format specified by the |
380 | commission. |
381 | (3) To ensure the faithful performance of its obligations |
382 | to its viators in the event of insolvency or the loss of its |
383 | license, a viatical settlement provider licensee must deposit |
384 | and maintain deposited in trust with the department securities |
385 | eligible for deposit under s. 625.52, having at all times a |
386 | value of not less than $100,000; however, a viatical settlement |
387 | provider licensed in this state prior to June 1, 2004, which has |
388 | deposited and maintains continuously deposited in trust with the |
389 | department securities in the amount of $25,000 and which posted |
390 | and maintains continuously posted a security bond acceptable to |
391 | the department in the amount of $75,000, has until June 1, 2005, |
392 | to comply with the requirements of this subsection. |
393 | Section 3. Subsections (1) and (2) of section 626.9914, |
394 | Florida Statutes, are amended to read: |
395 | 626.9914 Suspension, revocation, denial, or nonrenewal of |
396 | viatical settlement provider license; grounds; administrative |
397 | fine.-- |
398 | (1) The office shall suspend, revoke, deny, or refuse to |
399 | renew the license of any viatical settlement provider if the |
400 | office finds that the licensee: |
401 | (a) Has made a misrepresentation in the application for |
402 | the license; |
403 | (b) Has engaged in fraudulent or dishonest practices, or |
404 | otherwise has been shown to be untrustworthy or incompetent to |
405 | act as a viatical settlement provider; |
406 | (c) Demonstrates a pattern of unreasonable payments to |
407 | viators; |
408 | (d) Has been found guilty of, or has pleaded guilty or |
409 | nolo contendere to, any felony, or a misdemeanor involving fraud |
410 | or moral turpitude, regardless of whether a judgment of |
411 | conviction has been entered by the court; |
412 | (e) Has issued viatical settlement contracts that have not |
413 | been approved pursuant to this act; |
414 | (f) Has failed to honor contractual obligations related to |
415 | the business of viatical settlement contracts; |
416 | (g) Deals in bad faith with viators; |
417 | (h) Has violated any provision of the insurance code or of |
418 | this act; |
419 | (i) Employs any person who materially influences the |
420 | licensee's conduct and who fails to meet the requirements of |
421 | this act; |
422 | (j) No longer meets the requirements for initial |
423 | licensure; or |
424 | (k) Obtains or utilizes life expectancies from life |
425 | expectancy providers who are not registered with the office |
426 | pursuant to this act; or |
427 | (l) Has engaged in a fraudulent viatical settlement act. |
428 | (2) The office may, in lieu of or in addition to any |
429 | suspension or revocation, assess an administrative fine not to |
430 | exceed $10,000 $2,500 for each nonwillful violation or $25,000 |
431 | $10,000 for each willful violation by a viatical settlement |
432 | provider licensee. The office may also place a viatical |
433 | settlement provider licensee on probation for a period not to |
434 | exceed 2 years. |
435 | Section 4. Subsection (1) of section 626.99175, Florida |
436 | Statutes, is amended to read: |
437 | 626.99175 Life expectancy providers; registration |
438 | required; denial, suspension, revocation.-- |
439 | (1) After July 1, 2006, A person may not perform the |
440 | functions of a life expectancy provider without first having |
441 | registered as a life expectancy provider, except as provided in |
442 | subsection (6). |
443 | Section 5. Section 626.99185, Florida Statutes, is created |
444 | to read: |
445 | 626.99185 Disclosures to viator of disbursement.-- |
446 | (1) Prior to or concurrently with a viator's execution of |
447 | a viatical settlement contract, the viatical settlement provider |
448 | shall provide to the viator, in duplicate, a disclosure |
449 | statement in legible written form disclosing: |
450 | (a) The name of each viatical settlement broker who |
451 | receives or is to receive compensation and the amount of each |
452 | broker's compensation related to that transaction. For the |
453 | purpose of this subsection, compensation includes anything of |
454 | value paid or given by or at the direction of a viatical |
455 | settlement provider or person acquiring an interest in one or |
456 | more life insurance policies to a viatical settlement broker in |
457 | connection with the viatical settlement contract. |
458 | (b) A complete reconciliation of the gross offer or bid by |
459 | the viatical settlement provider to the net amount of proceeds |
460 | or value to be received by the viator related to that |
461 | transaction. The terms "gross offer" or "bid" means the total |
462 | amount or value offered by the viatical settlement provider for |
463 | the purchase of an interest in one or more life insurance |
464 | policies, inclusive of commissions, compensation, or other |
465 | proceeds or value being deducted from the gross offer or bid. |
466 | (2) The disclosure statement shall be signed and dated by |
467 | the viator prior to or concurrently with the viator's execution |
468 | of a viatical settlement contract with the duplicate copy of the |
469 | disclosure statement to be retained by the viator. |
470 | (3) If a viatical settlement contract has been entered |
471 | into and the contract is subsequently amended or if there is any |
472 | change in the viatical settlement provider's gross offer or bid |
473 | amount, change in the net amount of proceeds or value to be |
474 | received by the viator, or change in the information provided in |
475 | the disclosure statement to the viator, the viatical settlement |
476 | provider shall provide, in duplicate, an amended disclosure |
477 | statement to the viator containing the information in subsection |
478 | (1). The amended disclosure statement shall be signed and dated |
479 | by the viator with the duplicate copy of the amended disclosure |
480 | statement to be retained by the viator. The viatical settlement |
481 | provider shall obtain the signed and dated amended disclosure |
482 | statement. |
483 | (4) Prior to a viatical settlement provider's execution of |
484 | a viatical settlement contract, the viatical settlement provider |
485 | must have obtained the signed and dated disclosure statement and |
486 | any amended disclosure statement required by this section. In |
487 | transactions for which no broker is used, the viatical |
488 | settlement provider must have obtained the signed and dated |
489 | disclosure statement from the viator. |
490 | (5) The viatical settlement provider shall maintain the |
491 | documentation required by this section pursuant to the |
492 | provisions set forth in s. 626.9922(2) and shall make such |
493 | documentation available to the office at any time for copying |
494 | and inspection upon reasonable notice by the office to the |
495 | viatical settlement provider. |
496 | Section 6. Subsection (7) of section 626.9924, Florida |
497 | Statutes, is amended to read: |
498 | 626.9924 Viatical settlement contracts; procedures; |
499 | rescission.-- |
500 | (7) At any time during the contestable period, within 20 |
501 | days after a viator executes documents necessary to transfer |
502 | rights under an insurance policy or within 20 days of any |
503 | agreement, option, promise, or any other form of understanding, |
504 | express or implied, to viaticate the policy, the provider must |
505 | give notice to the insurer of the policy that the policy has or |
506 | will become a viaticated policy. The notice must be accompanied |
507 | by the documents required by s. 626.99287(5)(a) in their |
508 | entirety. |
509 | Section 7. Subsection (2) of section 626.99245, Florida |
510 | Statutes, is amended to read: |
511 | 626.99245 Conflict of regulation of viaticals.-- |
512 | (2) This section does not affect the requirement of ss. |
513 | 626.9911(15)(12) and 626.9912(1) that a viatical settlement |
514 | provider doing business from this state must obtain a viatical |
515 | settlement license from the office. As used in this subsection, |
516 | the term "doing business from this state" includes effectuating |
517 | viatical settlement contracts from offices in this state, |
518 | regardless of the state of residence of the viator. |
519 | Section 8. Section 626.99273, Florida Statutes, is created |
520 | to read: |
521 | 626.99273 Prohibited practices and conflicts of |
522 | interest.-- |
523 | (1) With respect to any viatical settlement contract or |
524 | insurance policy, a viatical settlement broker may not knowingly |
525 | solicit an offer from, effectuate a viatical settlement with, or |
526 | make a sale to any viatical settlement provider, financing |
527 | entity, or related provider trust that is controlling, |
528 | controlled by, or under common control with such viatical |
529 | settlement broker. |
530 | (2) With respect to any viatical settlement contract or |
531 | insurance policy, a viatical settlement provider may not |
532 | knowingly enter into a viatical settlement contract with a |
533 | viator if, in connection with such viatical settlement contract, |
534 | anything of value will be paid to a viatical settlement broker |
535 | that is controlling, controlled by, or under common control with |
536 | such viatical settlement provider, financing entity, or related |
537 | provider trust that is involved in such viatical settlement |
538 | contract. |
539 | (3) A violation of subsection (1) or subsection (2) is a |
540 | fraudulent viatical settlement act. |
541 | (4) A viatical settlement provider may not enter into a |
542 | viatical settlement contract unless the viatical settlement |
543 | promotional, advertising, and marketing materials, as may be |
544 | prescribed by rule, have been filed with the office. In no event |
545 | may any marketing materials expressly indicate that the |
546 | insurance is free for any period of time. The inclusion of any |
547 | reference in the marketing materials that would cause a viator |
548 | to reasonably believe that the insurance is free for any period |
549 | of time is a violation of this section. |
550 | (5) A life insurance producer, insurer, viatical |
551 | settlement broker, or viatical settlement provider may not make |
552 | any statement or representation to an applicant or policyholder |
553 | in connection with the sale of a life insurance policy to the |
554 | effect that the insurance is free or without cost to the |
555 | policyholder for any period of time. |
556 | Section 9. Section 626.99275, Florida Statutes, is amended |
557 | to read: |
558 | 626.99275 Prohibited practices; penalties.-- |
559 | (1) It is unlawful for any person to: |
560 | (a) To Knowingly enter into, broker, or otherwise deal in |
561 | a viatical settlement contract the subject of which is a life |
562 | insurance policy, knowing that the policy was obtained by |
563 | presenting materially false information concerning any fact |
564 | material to the policy or by concealing, for the purpose of |
565 | misleading another, information concerning any fact material to |
566 | the policy, where the viator or the viator's agent intended to |
567 | defraud the policy's issuer. |
568 | (b) To Knowingly or with the intent to defraud, for the |
569 | purpose of depriving another of property or for pecuniary gain, |
570 | issue or use a pattern of false, misleading, or deceptive life |
571 | expectancies. |
572 | (c) To Knowingly engage in any transaction, practice, or |
573 | course of business intending thereby to avoid the notice |
574 | requirements of s. 626.9924(7). |
575 | (d) To Knowingly or intentionally facilitate the change of |
576 | state of residency of a viator to avoid the provisions of this |
577 | chapter. |
578 | (e) Engage in a fraudulent viatical settlement act. |
579 | (2) A person who violates any provision of this section |
580 | commits: |
581 | (a) A felony of the third degree, punishable as provided |
582 | in s. 775.082, s. 775.083, or s. 775.084, if the insurance |
583 | policy involved is valued at any amount less than $20,000. |
584 | (b) A felony of the second degree, punishable as provided |
585 | in s. 775.082, s. 775.083, or s. 775.084, if the insurance |
586 | policy involved is valued at $20,000 or more, but less than |
587 | $100,000. |
588 | (c) A felony of the first degree, punishable as provided |
589 | in s. 775.082, s. 775.083, or s. 775.084, if the insurance |
590 | policy involved is valued at $100,000 or more. |
591 | (3) It is a violation of this section for any person to |
592 | enter into a viatical settlement contract at any time prior to |
593 | the application or issuance of a policy that is the subject of a |
594 | viatical settlement contract or within a 5-year period |
595 | commencing with the date of issuance of the insurance policy or |
596 | certificate, unless the viator provides a sworn affidavit and |
597 | accompanying documentation that certifies to the viatical |
598 | settlement provider that one or more of the following conditions |
599 | have been met within the 5-year period: |
600 | (a) The policy was issued upon the viator's exercise of |
601 | conversion rights arising out of a group or individual policy, |
602 | provided the total of the time covered under the conversion |
603 | policy plus the time covered under the prior policy is at least |
604 | 60 months. The time covered under a group policy shall be |
605 | calculated without regard to any change in insurance carriers, |
606 | provided the coverage has been continuous and under the same |
607 | group sponsorship; |
608 | (b) The viator submits independent evidence to the |
609 | viatical settlement provider that one or more of the following |
610 | conditions have been met within the 5-year period: |
611 | 1. The viator or insured is terminally or chronically ill; |
612 | 2. The viator's spouse dies; |
613 | 3. The viator divorces his or her spouse; |
614 | 4. The viator retires from full-time employment; |
615 | 5. The viator becomes physically or mentally disabled and |
616 | a physician determines that the disability prevents the viator |
617 | from maintaining full-time employment; or |
618 | 6. A final order, judgment, or decree is entered by a |
619 | court of competent jurisdiction, upon the application by a |
620 | viator's creditor, adjudicating the viator bankrupt or insolvent |
621 | or approving a petition seeking reorganization of the viator or |
622 | appointing a receiver, trustee, or liquidator to all or a |
623 | substantial part of the viator's assets; or |
624 | (c) The viator enters into a viatical settlement contract |
625 | more than 2 years after a policy's issuance date and, with |
626 | respect to the policy, at all times prior to such date the |
627 | following conditions are met: |
628 | 1. Policy premiums have been funded exclusively with |
629 | unencumbered assets, including an interest in the life insurance |
630 | policy being financed only to the extent of its net cash |
631 | surrender value provided by, or full recourse liability incurred |
632 | by, the insured. |
633 | 2. There is no agreement or understanding with any other |
634 | person to guarantee any such liability or to purchase, or be |
635 | ready to purchase, the policy, including through an assumption |
636 | or forgiveness of the loan. |
637 | 3. Neither the insured nor the policy has been evaluated |
638 | for settlement. |
639 | (4) It is a violation of this section for any person to |
640 | issue, solicit, market, or otherwise promote the purchase of a |
641 | policy for the purpose of or with an emphasis on selling the |
642 | policy. |
643 | Section 10. Section 626.99276, Florida Statutes, is |
644 | created to read: |
645 | 626.99276 Notification to insurer required.-- |
646 | (1) A copy of the sworn affidavit and the documentation |
647 | required in s. 626.99275(3) shall be submitted to the insurer |
648 | when the viatical settlement provider or other party entering |
649 | into a viatical settlement contract with a viator submits a |
650 | request to the insurer for verification of coverage. The copy |
651 | shall be accompanied by a sworn affidavit from the viatical |
652 | settlement provider affirming that the copy is a true and |
653 | correct copy of the documents received by the viatical |
654 | settlement provider. |
655 | (2) If the viatical settlement provider submits to the |
656 | insurer a copy of the owner's or insured's certification |
657 | described in and the independent evidence required by s. |
658 | 626.99275(3) when the provider submits a request to the insurer |
659 | to effect the transfer of the policy or certificate to the |
660 | viatical settlement provider, the copy conclusively establishes |
661 | that the viatical settlement contract satisfies the requirements |
662 | of this section and the insurer shall timely respond to the |
663 | request. |
664 | (3) An insurer may not require, as a condition of |
665 | responding to a request for verification of coverage or |
666 | effecting the transfer of a policy pursuant to a viatical |
667 | settlement contract, that the viator, insured, viatical |
668 | settlement provider, or viatical settlement broker sign any |
669 | forms, disclosures, consent, or waiver form that has not been |
670 | expressly approved by the office for use in connection with |
671 | viatical settlement contracts in this state. |
672 | (4) Upon receipt of a properly completed request for |
673 | change of ownership or beneficiary of a policy, the insurer |
674 | shall respond in writing within 30 calendar days with written |
675 | acknowledgement confirming that the change has been effectuated |
676 | or specifying the reasons why the requested change cannot be |
677 | processed. The insurer may not unreasonably delay effectuating |
678 | change of ownership or beneficiary and may not otherwise seek to |
679 | interfere with any viatical settlement contract lawfully entered |
680 | into in this state. |
681 | Section 11. Section 626.99278, Florida Statutes, is |
682 | amended to read: |
683 | 626.99278 Viatical provider anti-fraud plan.-- |
684 | (1) Every licensed viatical settlement provider and |
685 | registered life expectancy provider must adopt an anti-fraud |
686 | plan and file it with the Division of Insurance Fraud of the |
687 | department. Each anti-fraud plan shall include: |
688 | (a)(1) A description of the procedures for detecting and |
689 | investigating possible fraudulent acts and procedures for |
690 | resolving material inconsistencies between medical records and |
691 | insurance applications. |
692 | (b)(2) A description of the procedures for the mandatory |
693 | reporting of possible fraudulent insurance acts and prohibited |
694 | practices set forth in s. 626.99275 to the Division of Insurance |
695 | Fraud of the department. |
696 | (c)(3) A description of the plan for anti-fraud education |
697 | and training of its underwriters or other personnel. |
698 | (d)(4) A written description or chart outlining the |
699 | organizational arrangement of the anti-fraud personnel who are |
700 | responsible for the investigation and reporting of possible |
701 | fraudulent insurance acts and for the investigation of |
702 | unresolved material inconsistencies between medical records and |
703 | insurance applications. |
704 | (e)(5) For viatical settlement providers, a description of |
705 | the procedures used to perform initial and continuing review of |
706 | the accuracy of life expectancies used in connection with a |
707 | viatical settlement contract or viatical settlement investment. |
708 | (2) Every licensed viatical settlement provider shall |
709 | establish and maintain in accordance with the provisions of s. |
710 | 626.9922: |
711 | (a) Documentation of compliance with its anti-fraud plan |
712 | and procedures filed in accordance with this section. |
713 | (b) Documentation pertaining to resolved and unresolved |
714 | material inconsistencies between medical records and insurance |
715 | applications. |
716 | (c) Documentation pertaining to the mandatory reporting of |
717 | possible fraudulent acts and prohibited practices set forth in |
718 | s. 626.99275 to the Division of Insurance Fraud of the |
719 | department. |
720 | Section 12. Section 626.99289, Florida Statutes, is |
721 | created to read: |
722 | 626.99289 Void and unenforceable contracts, agreements, |
723 | arrangements, and transactions.--Any contract, agreement, |
724 | arrangement, or transaction, including, but not limited to, any |
725 | financing agreement or any other arrangement or understanding |
726 | entered into, whether written or verbal, for the furtherance or |
727 | aid of a stranger-originated life insurance act, practice, |
728 | arrangement, or agreement is void and unenforceable. |
729 | Section 13. Section 626.99287, Florida Statutes, is |
730 | repealed. |
731 | Section 14. This act shall take effect July 1, 2009. |