Florida Senate - 2009                                    SB 1882
       
       
       
       By Senator Fasano
       
       
       
       
       11-01414A-09                                          20091882__
    1                        A bill to be entitled                      
    2         An act relating to viatical settlements; amending s.
    3         626.9911, F.S.; defining the terms “business of
    4         viatical settlements,” “fraudulent viatical settlement
    5         act,” and “stranger-originated life insurance”;
    6         clarifying the definition of “viatical settlement
    7         contract” by specifying items included and excluded by
    8         the term; amending s. 626.9913, F.S.; requiring that a
    9         viatical settlement provider's required annual
   10         statement include certain information; removing an
   11         obsolete provision relating to requirements for
   12         viatical settlement providers; amending s. 626.9914,
   13         F.S.; providing additional grounds pursuant to which
   14         the Office of Insurance Regulation may suspend,
   15         revoke, deny, or refuse to renew the license of a
   16         viatical settlement provider; increasing the maximum
   17         amount of administrative fines that may be assessed by
   18         the office; amending s. 626.99175, F.S.; deleting
   19         obsolete provisions; removing an incorrect cross
   20         reference; creating s. 626.99185, F.S.; requiring that
   21         a viatical settlement provider provide to the viator a
   22         disclosure statement before or concurrently with the
   23         viator's execution of a viatical settlement contract;
   24         requiring that such disclosure contain certain
   25         information; requiring that the viator retain a
   26         duplicate copy of such disclosure; requiring that the
   27         viatical settlement provider provide an amended
   28         disclosure under certain circumstances; requiring that
   29         certain documentation be maintained by a viatical
   30         settlement provider in accordance with state law;
   31         requiring that such documentation be available to the
   32         office at any time for copying or inspection upon
   33         reasonable notice; amending s. 626.9924, F.S.;
   34         conforming a cross-reference to changes made by the
   35         act; amending s. 626.99245, F.S., relating to
   36         conflicts of regulation; correcting a cross-reference;
   37         creating s. 626.99273, F.S.; prohibiting a viatical
   38         settlement broker or viatical settlement provider from
   39         knowingly carrying out certain actions; providing that
   40         certain actions constitute fraudulent viatical
   41         settlement acts; prohibiting a viatical settlement
   42         provider from entering into a viatical settlement
   43         contract unless promotional, marketing, and
   44         advertising materials have been filed with the office;
   45         prohibiting marketing materials, life insurance
   46         producers, insurers, viatical settlement brokers, and
   47         viatical settlement providers from making certain
   48         representations regarding a policy; amending s.
   49         626.99275, F.S.; providing that it is unlawful for any
   50         person to engage in a fraudulent viatical settlement
   51         act; providing that it is a violation of state law for
   52         any person to enter into a viatical settlement
   53         contract at any time before the application or
   54         issuance of a policy that is the subject of a viatical
   55         settlement contract or within a specified period after
   56         the date of issuance of the insurance policy or
   57         certificate; providing exceptions; providing that it
   58         is a violation of state law for any person to issue,
   59         solicit, market, or otherwise promote the purchase of
   60         a policy for the purpose of or with an emphasis on
   61         selling the policy; creating s. 626.99276, F.S.;
   62         requiring the submission of a copy of certain
   63         documentation to the insurer when a party entering a
   64         viatical settlement contract with a viator submits a
   65         request to the insurer for verification of coverage;
   66         requiring that a sworn affidavit attesting to certain
   67         information accompany the submission of such
   68         documentation; providing circumstances under which
   69         such copy shall be considered conclusive evidence that
   70         a viaitical settlement contract satisfies the
   71         requirements of state law; prohibiting an insurer from
   72         imposing certain requirements as a condition of
   73         responding to a request for verification of coverage
   74         or transferring a policy; requiring that an insurer
   75         confirm that a change to a policy has been made or
   76         specify why a change could not be made within a
   77         specified period after receipt of a request for change
   78         of ownership or beneficiary of a policy; prohibiting
   79         an insurer from unreasonable delaying effecting a
   80         change of ownership or beneficiary or otherwise
   81         interfering with a viatical settlement contract;
   82         amending s. 626.99278, F.S.; requiring that every
   83         licensed viatical settlement provider establish and
   84         maintain certain documentation in accordance with
   85         certain provisions of state law; repealing s.
   86         626.99287, F.S., relating to contestability of
   87         viaticated policies; creating s. 626.99289, F.S.;
   88         providing that certain contracts, agreements,
   89         arrangements, or transactions are void and
   90         unenforceable; providing an effective date.
   91         
   92  Be It Enacted by the Legislature of the State of Florida:
   93         
   94         Section 1. Section 626.9911, Florida Statutes, is amended
   95  to read:
   96         626.9911 Definitions.—As used in this act, the term:
   97         (1)“Business of viatical settlements” means an activity
   98  involved in, but not limited to, the offering, soliciting,
   99  negotiating, procuring, effectuating, purchasing, investing,
  100  monitoring, tracking, underwriting, selling, transferring,
  101  assigning, pledging, hypothecating, or acquiring in any other
  102  manner an interest in a life insurance policy by means of a
  103  viatical settlement contract.
  104         (2)(1) “Financing entity” means an underwriter, placement
  105  agent, lender, purchaser of securities, or purchaser of a policy
  106  or certificate from a viatical settlement provider, credit
  107  enhancer, or any entity that has direct ownership in a policy or
  108  certificate that is the subject of a viatical settlement
  109  contract, but whose principal activity related to the
  110  transaction is providing funds or credit enhancement to effect
  111  the viatical settlement or the purchase of one or more
  112  viaticated policies and who has an agreement in writing with one
  113  or more licensed viatical settlement providers to finance the
  114  acquisition of viatical settlement contracts. The term does not
  115  include a nonaccredited investor or other natural person. A
  116  financing entity may not enter into a viatical settlement
  117  contract.
  118         (3)“Fraudulent viatical settlement act” means acts or
  119  omissions committed by any person who, knowingly or with intent
  120  to defraud, for the purpose of depriving another of property, or
  121  for pecuniary gain, commits or permits its employees or its
  122  agents to engage in acts including:
  123         (a)Presenting, causing to be presented, or preparing with
  124  knowledge or belief that it will be presented to or by a
  125  viatical settlement provider, viatical settlement broker,
  126  financing entity, insurer, insurance producer, or any other
  127  person, false material information, or concealing material
  128  information as part of, in support of, or concerning a fact
  129  material to one or more of the following:
  130         1.An application for the issuance of a viatical settlement
  131  contract or insurance policy;
  132         2.The underwriting of a viatical settlement contract or
  133  insurance policy;
  134         3.A claim for payment or benefit pursuant to a viatical
  135  settlement contract or insurance policy;
  136         4.Premiums paid on an insurance policy;
  137         5.Payments and changes in ownership or beneficiary made in
  138  accordance with the terms of a viatical settlement contract or
  139  insurance policy;
  140         6.The reinstatement or conversion of an insurance policy;
  141         7.The solicitation, offer, effectuation, or sale of a
  142  viatical settlement contract or insurance policy;
  143         8.The issuance of written evidence of a viatical
  144  settlement contract or insurance; or
  145         9.A financing transaction.
  146         (b)Employing any plan, financial structure, device,
  147  scheme, or artifice to defraud related to viaticated policies.
  148         (c)Entering into any practice or plan involving stranger
  149  originated life insurance.
  150         (d)Failing to disclose to the insurer when requested by
  151  the insurer that the prospective insured has undergone a life
  152  expectancy evaluation by any person or entity other than the
  153  insurer or its authorized representatives in connection with the
  154  issuance of the policy.
  155         (e)Furtherance of a fraud or preventing the detection of a
  156  fraud, including committing or permitting its employees or its
  157  agents to:
  158         1.Remove, conceal, alter, destroy, or sequester from the
  159  office the assets or records of a licensee or other person
  160  engaged in the business of viatical settlements;
  161         2.Misrepresent or conceal the financial condition of a
  162  licensee, financing entity, insurer, or other person;
  163         3.Transact the business of viatical settlements in
  164  violation of laws requiring a license, certificate of authority,
  165  or other legal authority for the transaction of the business of
  166  viatical settlements; or
  167         4.File with the office or the equivalent chief insurance
  168  regulatory official of another jurisdiction a document
  169  containing false information or otherwise conceal information
  170  about a material fact from the office or other regulatory
  171  official.
  172         (f)Embezzlement, theft, misappropriation, or conversion of
  173  moneys, funds, premiums, credits, or other property of a
  174  viatical settlement provider, insurer, insured, viator,
  175  insurance policyowner, or any other person engaged in the
  176  business of viatical settlements or insurance.
  177         (g)Recklessly entering into, negotiating, brokering, or
  178  otherwise dealing in a viatical settlement contract, the subject
  179  of which is a life insurance policy obtained by presenting false
  180  information concerning any fact material to the policy or by
  181  concealing, for the purpose of misleading another, information
  182  concerning any fact material to the policy, if the person
  183  intended to defraud the policy’s issuer, the viatical settlement
  184  provider, or the viator. “Recklessly” means engaging in the
  185  conduct in conscious and clearly unjustifiable disregard of a
  186  substantial likelihood of the existence of the relevant facts or
  187  risks with a gross deviation from acceptable standards of
  188  conduct.
  189         (h)Knowingly or intentionally facilitating the change of
  190  state of residency of a viator to avoid the provisions of this
  191  act.
  192         (i)Knowingly or intentionally, directly or indirectly,
  193  facilitating or causing the creation of a trust that has a situs
  194  in a jurisdiction other than Florida for the purpose of being a
  195  policy owner of a life insurance policy covering a Florida
  196  resident insured to avoid the provisions of this part.
  197         (j)Knowingly or intentionally, directly or indirectly,
  198  facilitating or causing the creation of, or facilitating or
  199  causing the transfer of, the ownership of a policy covering a
  200  Florida resident insured to a trust that has a situs in a
  201  jurisdiction other than Florida or other nonresident person to
  202  avoid the provisions of this part.
  203         (k)Attempting to commit, assisting, aiding, or abetting in
  204  the commission of, or conspiring to commit, the acts or
  205  omissions specified in this subsection.
  206         (l)Making or facilitating any application for or payments
  207  related to a loan secured directly or indirectly by any interest
  208  in a life insurance policy.
  209         (4)(2) “Independent third-party trustee or escrow agent”
  210  means an attorney, certified public accountant, financial
  211  institution, or other person providing escrow services under the
  212  authority of a regulatory body. The term does not include any
  213  person associated, affiliated, or under common control with a
  214  viatical settlement provider or viatical settlement broker.
  215         (5)(3) “Life expectancy” means an opinion or evaluation as
  216  to how long a particular person is to live, or relating to such
  217  person's expected demise.
  218         (6)(4) “Life expectancy provider” means a person who
  219  determines, or holds himself or herself out as determining, life
  220  expectancies or mortality ratings used to determine life
  221  expectancies:
  222         (a) On behalf of a viatical settlement provider, viatical
  223  settlement broker, life agent, or person engaged in the business
  224  of viatical settlements;
  225         (b) In connection with a viatical settlement investment,
  226  pursuant to s. 517.021(23); or
  227         (c) On residents of this state in connection with a
  228  viatical settlement contract or viatical settlement investment.
  229         (7)(5) “Person” has the meaning specified in s. 1.01.
  230         (8)(6) “Related form” means any form, created by or on
  231  behalf of a licensee, which a viator or insured is required to
  232  sign or initial. The forms include, but are not limited to, a
  233  power of attorney, a release of medical information form, a
  234  suitability questionnaire, a disclosure document, or any
  235  addendum, schedule, or amendment to a viatical settlement
  236  contract considered necessary by a provider to effectuate a
  237  viatical settlement transaction.
  238         (9)(7) “Related provider trust” means a titling trust or
  239  other trust established by a licensed viatical settlement
  240  provider or financing entity for the sole purpose of holding the
  241  ownership or beneficial interest in purchased policies in
  242  connection with a financing transaction. The trust must have a
  243  written agreement with a licensed viatical settlement provider
  244  or financing entity under which the licensed viatical settlement
  245  provider or financing entity is responsible for insuring
  246  compliance with all statutory and regulatory requirements and
  247  under which the trust agrees to make all records and files
  248  relating to viatical settlement transactions available to the
  249  office as if those records and files were maintained directly by
  250  the licensed viatical settlement provider. This term does not
  251  include an independent third-party trustee or escrow agent or a
  252  trust that does not enter into agreements with a viator. A
  253  related provider trust shall be subject to all provisions of
  254  this act that apply to the viatical settlement provider who
  255  established the related provider trust, except s. 626.9912,
  256  which shall not be applicable. A viatical settlement provider
  257  may establish no more than one related provider trust, and the
  258  sole trustee of such related provider trust shall be the
  259  viatical settlement provider licensed under s. 626.9912. The
  260  name of the licensed viatical settlement provider shall be
  261  included within the name of the related provider trust.
  262         (10)(8) “Special purpose entity” means an entity
  263  established by a licensed viatical settlement provider or by a
  264  financing entity, which may be a corporation, partnership,
  265  trust, limited liability company, or other similar entity formed
  266  solely to provide, either directly or indirectly, access to
  267  institutional capital markets to a viatical settlement provider
  268  or financing entity. A special purpose entity may not obtain
  269  capital from any natural person or entity with less than $50
  270  million in assets and may not enter into a viatical settlement
  271  contract.
  272         (11)“Stranger-originated life insurance” or “STOLI” means
  273  a practice or plan to initiate a life insurance policy for the
  274  benefit of a third-party investor who, at the time of policy
  275  origination, has no insurable interest in the insured. STOLI
  276  practices include, but are not limited to, cases in which life
  277  insurance is purchased with resources or guarantees from or
  278  through a person or entity who, at the time of the policy's
  279  inception, could not lawfully initiate the policy himself,
  280  herself, or itself, and where, at the time of inception, there
  281  is a verbal or written arrangement, express or implied, or an
  282  agreement to directly or indirectly transfer the ownership or
  283  benefits of the policy to a third party. Trusts created to give
  284  the appearance of insurable interest and used to initiate
  285  policies for investors violate insurable interest laws and the
  286  prohibition against wagering on life.
  287         (12)(9) “Viatical settlement broker” means a person who, on
  288  behalf of a viator and for a fee, commission, or other valuable
  289  consideration, offers or attempts to negotiate viatical
  290  settlement contracts between a viator resident in this state and
  291  one or more viatical settlement providers. Notwithstanding the
  292  manner in which the viatical settlement broker is compensated, a
  293  viatical settlement broker is deemed to represent only the
  294  viator and owes a fiduciary duty to the viator to act according
  295  to the viator's instructions and in the best interest of the
  296  viator. The term does not include an attorney, licensed
  297  Certified Public Accountant, or investment adviser lawfully
  298  registered under chapter 517, who is retained to represent the
  299  viator and whose compensation is paid directly by or at the
  300  direction and on behalf of the viator.
  301         (13)(10) “Viatical settlement contract” means a written
  302  agreement entered into between a viatical settlement provider,
  303  or its related provider trust, and a viator. The viatical
  304  settlement contract includes an agreement to transfer ownership
  305  or change the beneficiary designation of a life insurance policy
  306  at a later date, regardless of the date that compensation is
  307  paid to the viator. The agreement must establish the terms under
  308  which the viatical settlement provider will pay compensation or
  309  anything of value, which compensation or value is less than the
  310  expected death benefit of the insurance policy or certificate,
  311  in return for the viator's assignment, transfer, sale, devise,
  312  or bequest of the death benefit or ownership of all or a portion
  313  of the insurance policy or certificate of insurance to the
  314  viatical settlement provider. A viatical settlement contract
  315  also includes the transfer for compensation or value of
  316  ownership or beneficial interest in a trust or other entity that
  317  owns such policy if the trust or other entity was formed or
  318  availed of for the principal purpose of acquiring one or more
  319  life insurance contracts insuring the life of a person residing
  320  in this state. A viatical settlement contract also includes a
  321  contract for a loan or other financial transaction secured
  322  primarily by an individual or group life insurance policy. A
  323  viatical settlement contract does not include, other than a
  324  policy loan by a life insurance company pursuant to the terms of
  325  the life insurance contract or accelerated death provisions
  326  contained in a life insurance policy, whether issued with the
  327  original policy or as a rider, or a loan secured by the cash
  328  surrender value of a policy as determined by the policy issuer
  329  and the life insurance policy terms, or any loan or advance from
  330  the issuer of the policy to the policy owner.
  331         (14)(11) “Viatical settlement investment” has the same
  332  meaning as specified in s. 517.021.
  333         (15)(12) “Viatical settlement provider” means a person who,
  334  in this state, from this state, or with a resident of this
  335  state, effectuates a viatical settlement contract. The term does
  336  not include:
  337         (a) Any bank, savings bank, savings and loan association,
  338  or credit union, or other licensed lending institution that
  339  takes an assignment of a life insurance policy as collateral for
  340  a loan.
  341         (b) A life and health insurer that has lawfully issued a
  342  life insurance policy that provides accelerated benefits to
  343  terminally ill policyholders or certificateholders.
  344         (c) Any natural person who enters into no more than one
  345  viatical settlement contract with a viator in 1 calendar year,
  346  unless such natural person has previously been licensed under
  347  this act or is currently licensed under this act.
  348         (d) A trust that meets the definition of a “related
  349  provider trust.”
  350         (e) A viator in this state.
  351         (f) A financing entity.
  352         (16)(13) “Viaticated policy” means a life insurance policy,
  353  or a certificate under a group policy, which is the subject of a
  354  viatical settlement contract.
  355         (17)(14) “Viator” means the owner of a life insurance
  356  policy or a certificateholder under a group policy, which policy
  357  is not a previously viaticated policy, who enters or seeks to
  358  enter into a viatical settlement contract. This term does not
  359  include a viatical settlement provider or any person acquiring a
  360  policy or interest in a policy from a viatical settlement
  361  provider, nor does it include an independent third-party trustee
  362  or escrow agent.
  363         Section 2. Subsections (2) and (3) of section 626.9913,
  364  Florida Statutes, are amended to read:
  365         626.9913 Viatical settlement provider license continuance;
  366  annual report; fees; deposit.—
  367         (2)(a) Annually, on or before March 1, the viatical
  368  settlement provider licensee shall file a statement containing
  369  information the commission requires and shall pay to the office
  370  a license fee in the amount of $500.
  371         (b)In addition to any other requirements, the annual
  372  statement shall specify:
  373         1.For Florida-regulated transactions, the total number of
  374  unsettled viatical settlement contracts and corresponding total
  375  amount due viators on viatical settlement contracts that have
  376  been signed by the viator but not settled as of December 31 of
  377  the preceding calendar year categorized by the number of days
  378  since the viator signed the contract.
  379         2.The total number of policies purchased in any state,
  380  territory, or jurisdiction; the total gross amount paid for
  381  policies purchased in any state, territory, or jurisdiction; and
  382  the total face value of policies purchased for the preceding
  383  calendar year and most recent 5 years in any state, territory,
  384  or jurisdiction.
  385         3.The total number of policies purchased, the total gross
  386  amount paid for such policies, the total commissions or
  387  compensation paid for such policies, and the total face value of
  388  such policies, allocated by state, territory, or jurisdiction;
  389  and
  390         4.The total amount of proceeds or compensation paid to
  391  policyowners, allocated by state, territory, or jurisdiction.
  392         (c)After December 31, 2007, The annual statement shall
  393  include an annual audited financial statement of the viatical
  394  settlement provider prepared in accordance with generally
  395  accepted accounting principles by an independent certified
  396  public accountant covering a 12-month period ending on a day
  397  falling during the last 6 months of the preceding calendar year.
  398  If the audited financial statement has not been completed,
  399  however, the licensee shall include in its annual statement an
  400  unaudited financial statement for the preceding calendar year
  401  and an affidavit from an officer of the licensee stating that
  402  the audit has not been completed. In this event, the licensee
  403  shall submit the audited statement on or before June 1. The
  404  annual statement, due on or before March 1 each year, shall also
  405  provide the office with a report of all life expectancy
  406  providers who have provided life expectancies directly or
  407  indirectly to the viatical settlement provider for use in
  408  connection with a viatical settlement contract or a viatical
  409  settlement investment. A viatical settlement provider shall
  410  include in all statements filed with the office all information
  411  requested by the office regarding a related provider trust
  412  established by the viatical settlement provider. The office may
  413  require more frequent reporting. Failure to timely file the
  414  annual statement or the audited financial statement or to timely
  415  pay the license fee is grounds for immediate suspension of the
  416  license. The commission may by rule require all or part of the
  417  statements or filings required under this section to be
  418  submitted by electronic means in a computer-readable form
  419  compatible with the electronic data format specified by the
  420  commission.
  421         (3) To ensure the faithful performance of its obligations
  422  to its viators in the event of insolvency or the loss of its
  423  license, a viatical settlement provider licensee must deposit
  424  and maintain deposited in trust with the department securities
  425  eligible for deposit under s. 625.52, having at all times a
  426  value of not less than $100,000; however, a viatical settlement
  427  provider licensed in this state prior to June 1, 2004, which has
  428  deposited and maintains continuously deposited in trust with the
  429  department securities in the amount of $25,000 and which posted
  430  and maintains continuously posted a security bond acceptable to
  431  the department in the amount of $75,000, has until June 1, 2005,
  432  to comply with the requirements of this subsection.
  433         Section 3. Subsections (1) and (2) of section 626.9914,
  434  Florida Statutes, are amended to read:
  435         626.9914 Suspension, revocation, denial, or nonrenewal of
  436  viatical settlement provider license; grounds; administrative
  437  fine.—
  438         (1) The office shall suspend, revoke, deny, or refuse to
  439  renew the license of any viatical settlement provider if the
  440  office finds that the licensee:
  441         (a) Has made a misrepresentation in the application for the
  442  license;
  443         (b) Has engaged in fraudulent or dishonest practices, or
  444  otherwise has been shown to be untrustworthy or incompetent to
  445  act as a viatical settlement provider;
  446         (c) Demonstrates a pattern of unreasonable payments to
  447  viators;
  448         (d) Has been found guilty of, or has pleaded guilty or nolo
  449  contendere to, any felony, or a misdemeanor involving fraud or
  450  moral turpitude, regardless of whether a judgment of conviction
  451  has been entered by the court;
  452         (e) Has issued viatical settlement contracts that have not
  453  been approved pursuant to this act;
  454         (f) Has failed to honor contractual obligations related to
  455  the business of viatical settlement contracts;
  456         (g) Deals in bad faith with viators;
  457         (h) Has violated any provision of the insurance code or of
  458  this act;
  459         (i) Employs any person who materially influences the
  460  licensee's conduct and who fails to meet the requirements of
  461  this act;
  462         (j) No longer meets the requirements for initial licensure;
  463  or
  464         (k) Obtains or utilizes life expectancies from life
  465  expectancy providers who are not registered with the office
  466  pursuant to this act; or.
  467         (l)Has engaged in a fraudulent viatical settlement act.
  468         (2) The office may, in lieu of or in addition to any
  469  suspension or revocation, assess an administrative fine not to
  470  exceed $10,000 $2,500 for each nonwillful violation or $25,000
  471  $10,000 for each willful violation by a viatical settlement
  472  provider licensee. The office may also place a viatical
  473  settlement provider licensee on probation for a period not to
  474  exceed 2 years.
  475         Section 4. Subsection (1) of section 626.99175, Florida
  476  Statutes, is amended to read:
  477         626.99175 Life expectancy providers; registration required;
  478  denial, suspension, revocation.—
  479         (1) After July 1, 2006, A person may not perform the
  480  functions of a life expectancy provider without first having
  481  registered as a life expectancy provider, except as provided in
  482  subsection (6).
  483         Section 5. Section 626.99185, Florida Statutes, is created
  484  to read:
  485         626.99185Disclosures of disbursement to viator.—
  486         (1)Before or concurrently with a viator’s execution of a
  487  viatical settlement contract, the viatical settlement provider
  488  shall sign, date, and provide to the viator, in duplicate, a
  489  disclosure statement in legible written form disclosing:
  490         (a)The name of each viatical settlement broker who
  491  receives or is to receive compensation and the amount of each
  492  broker’s compensation related to that transaction.For the
  493  purpose of this subsection, “compensation” includes anything of
  494  value paid or given by or at the direction of a viatical
  495  settlement provider or person acquiring an interest in one or
  496  more life insurance policies to a viatical settlement broker in
  497  connection with the viatical settlement contract; and
  498         (b)A complete reconciliation of the gross offer or bid by
  499  the viatical settlement provider to the net amount of proceeds
  500  or value to be received by the viator related to that
  501  transaction. For purposes of this subsection, the term “gross
  502  offer” or “bid” means the total amount or value offered by the
  503  viatical settlement provider for the purchase of an interest in
  504  one or more life insurance policies, inclusive of commissions,
  505  compensation, or other proceeds or value being deducted from the
  506  gross offer or bid.
  507         (2)The disclosure statement shall be signed and dated by
  508  the viator before or concurrently with the viator's execution of
  509  a viatical settlement contract. A duplicate copy of the
  510  disclosure statement shall be retained by the viator.
  511         (3)If a viatical settlement contract has been entered into
  512  and the contract is subsequently amended, if there is any change
  513  in the viatical settlement provider’s gross offer or bid amount
  514  or change in the net amount of proceeds or value to be received
  515  by the viator, or if there is any change in the information
  516  provided in the disclosure statement to the viator, the viatical
  517  settlement provider shall provide, in duplicate, an amended
  518  disclosure statement to the viator containing the information
  519  described in subsection (1). The amended disclosure statement
  520  shall be signed and dated by the viator and the duplicate copy
  521  of the amended disclosure statement shall be retained by the
  522  viator.
  523         (4)The documentation required by this section shall be
  524  maintained by the viatical settlement provider pursuant to s.
  525  626.9922(2) and shall be available to the office at any time for
  526  copying and inspection upon reasonable notice to the viatical
  527  settlement provider.
  528         Section 6. Subsection (7) of section 626.9924, Florida
  529  Statutes, is amended to read:
  530         626.9924 Viatical settlement contracts; procedures;
  531  rescission.—
  532         (7) At any time during the contestable period, within 20
  533  days after a viator executes documents necessary to transfer
  534  rights under an insurance policy or within 20 days of any
  535  agreement, option, promise, or any other form of understanding,
  536  express or implied, to viaticate the policy, the provider must
  537  give notice to the insurer of the policy that the policy has or
  538  will become a viaticated policy. The notice must be accompanied
  539  by the documents required by s. 626.99275(3)(b) s.
  540  626.99287(5)(a) in their entirety.
  541         Section 7. Subsection (2) of section 626.99245, Florida
  542  Statutes, is amended to read:
  543         626.99245 Conflict of regulation of viaticals.—
  544         (2) This section does not affect the requirement of s. ss.
  545  626.9911(12) and 626.9912(1) that a viatical settlement provider
  546  doing business from this state must obtain a viatical settlement
  547  license from the office. As used in this subsection, the term
  548  “doing business from this state” includes effectuating viatical
  549  settlement contracts from offices in this state, regardless of
  550  the state of residence of the viator.
  551         Section 8. Section 626.99273, Florida Statutes, is created
  552  to read:
  553         626.99273Prohibited practices and conflicts of interest.—
  554         (1)With respect to any viatical settlement contract or
  555  insurance policy, a viatical settlement broker may not knowingly
  556  solicit an offer from, carry out a viatical settlement with, or
  557  make a sale to any viatical settlement provider, financing
  558  entity, or related provider trust that is controlling,
  559  controlled by, or under common control with such viatical
  560  settlement broker.
  561         (2)With respect to any viatical settlement contract or
  562  insurance policy, a viatical settlement provider may not
  563  knowingly enter into a viatical settlement contract with a
  564  viator if, in connection with such viatical settlement contract,
  565  anything of value will be paid to a viatical settlement broker
  566  that is controlling, controlled by, or under common control with
  567  such viatical settlement provider, financing entity, or related
  568  provider trust involved in such viatical settlement contract.
  569         (3) A violation of subsection (1) or subsection (2) is a
  570  fraudulent viatical settlement act.
  571         (4) A viatical settlement provider may not enter into a
  572  viatical settlement contract unless the viatical settlement
  573  promotional, advertising, and marketing materials, as may be
  574  prescribed by rule, have been filed with the office. Marketing
  575  materials may not expressly reference that the insurance is
  576  “free” for any period of time. The inclusion of any reference in
  577  the marketing materials which would cause a viator to reasonably
  578  believe that the insurance is free for any period of time is a
  579  violation of this act.
  580         (5) A life insurance producer, insurer, viatical settlement
  581  broker, or viatical settlement provider may not make any
  582  statement or representation to the applicant or policyholder in
  583  connection with the sale of a life insurance policy to the
  584  effect that the insurance is free or without cost to the
  585  policyholder for any period of time.
  586         Section 9. Paragraph (e) is added to subsection (1) of
  587  section 626.99275, Florida Statutes, and subsections (3) and (4)
  588  are added to that section, to read:
  589         626.99275 Prohibited practices; penalties.—
  590         (1) It is unlawful for any person:
  591         (e)To engage in a fraudulent viatical settlement act.
  592         (3)It is a violation of this act for any person to enter
  593  into a viatical settlement contract at any time before the
  594  application or issuance of a policy that is the subject of a
  595  viatical settlement contract or within a 5-year period
  596  commencing with the date of issuance of the insurance policy or
  597  certificate, unless the viator provides a sworn affidavit and
  598  accompanying documentation certifying to the viatical settlement
  599  provider that one or more of the following conditions have been
  600  met within the 5-year period:
  601         (a)The policy was issued upon the viator’s exercise of
  602  conversion rights arising out of a group or individual policy,
  603  if the total of the time covered under the conversion policy
  604  plus the time covered under the previous policy is at least 60
  605  months. The time covered under a group policy shall be
  606  calculated without regard to any change in insurance carriers if
  607  the coverage has been continuous and under the same group
  608  sponsorship.
  609         (b)Independent evidence of one or more of the following:
  610         1.The viator or insured is terminally or chronically ill;
  611         2.The viator’s spouse dies;
  612         3.The viator divorces his or her spouse;
  613         4.The viator retires from full-time employment;
  614         5.The viator becomes physically or mentally disabled and a
  615  physician determines that the disability prevents the viator
  616  from maintaining full-time employment; or
  617         6.A final order, judgment, or decree is entered by a court
  618  of competent jurisdiction on the application of a creditor of
  619  the viator adjudicating the viator bankrupt or insolvent, or
  620  approving a petition seeking reorganization of the viator or
  621  appointing a receiver, trustee, or liquidator to all or a
  622  substantial part of the viator’s assets.
  623         (c)The viator enters into a viatical settlement contract
  624  more than 2 years after the date of issuance of a policy and,
  625  with respect to the policy, at all times before the date that is
  626  2 years after issuance of the policy, the following conditions
  627  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 fully recourse-liability
  632  incurred 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 stand
  635  ready to purchase the policy, including through an assumption or
  636  forgiveness of the loan; and
  637         3. Neither the insured nor the policy has been evaluated
  638  for settlement.
  639         (4)It is a violation of this act for any person to issue,
  640  solicit, market, or otherwise promote the purchase of a policy
  641  for the purpose of or with an emphasis on selling the policy.
  642         Section 10. Section 626.99276, Florida Statutes, is created
  643  to read:
  644         626.99276Notification to insurer required.—
  645         (1)A copy of the sworn affidavit and the documentation
  646  required in s. 626.99275(3) shall be submitted to the insurer
  647  when the viatical settlement provider or other party entering
  648  into a viatical settlement contract with a viator submits a
  649  request to the insurer for verification of coverage. The copy
  650  shall be accompanied by a sworn affidavit from the viatical
  651  settlement provider affirming that the copy is a true and
  652  correct copy of the documents received by the viatical
  653  settlement provider.
  654         (2)If the viatical settlement provider submits to the
  655  insurer a copy of the owner’s or insured’s certification
  656  described in and the independent evidence required by s.
  657  626.99275(3) when the provider submits a request to the insurer
  658  to carry out the transfer of the policy or certificate to the
  659  viatical settlement provider, the copy shall be deemed to
  660  conclusively establish that the viatical settlement contract
  661  satisfies the requirements of this section and the insurer shall
  662  timely respond to the request.
  663         (3)An insurer may not, as a condition of responding to a
  664  request for verification of coverage or carrying out the
  665  transfer of a policy pursuant to a viatical settlement contract,
  666  require that the viator, insured, viatical settlement provider,
  667  or viatical settlement broker sign any forms, disclosures,
  668  consent, or waiver form that has not been expressly approved by
  669  the office for use in connection with viatical settlement
  670  contracts in this state.
  671         (4)Upon receipt of a properly completed request for change
  672  of ownership or beneficiary of a policy, the insurer shall
  673  respond in writing within 30 calendar days with written
  674  acknowledgement confirming that the change has been made or
  675  specifying the reasons why the requested change cannot be
  676  processed. The insurer may not unreasonably delay effecting
  677  change of ownership or beneficiary and may not otherwise seek to
  678  interfere with any viatical settlement contract lawfully entered
  679  into in this state.
  680         Section 11. Section 626.99278, Florida Statutes, is amended
  681  to read:
  682         626.99278 Viatical provider anti-fraud plan.—
  683         (1) Every licensed viatical settlement provider and
  684  registered life expectancy provider must adopt an anti-fraud
  685  plan and file it with the Division of Insurance Fraud of the
  686  department. Each anti-fraud plan shall include:
  687         (a)(1) A description of the procedures for detecting and
  688  investigating possible fraudulent acts and procedures for
  689  resolving material inconsistencies between medical records and
  690  insurance applications.
  691         (b)(2) A description of the procedures for the mandatory
  692  reporting of possible fraudulent insurance acts and prohibited
  693  practices set forth in s. 626.99275 to the Division of Insurance
  694  Fraud of the department.
  695         (c)(3) A description of the plan for anti-fraud education
  696  and training of its underwriters or other personnel.
  697         (d)(4) A written description or chart outlining the
  698  organizational arrangement of the anti-fraud personnel who are
  699  responsible for the investigation and reporting of possible
  700  fraudulent insurance acts and for the investigation of
  701  unresolved material inconsistencies between medical records and
  702  insurance applications.
  703         (e)(5) For viatical settlement providers, a description of
  704  the procedures used to perform initial and continuing review of
  705  the accuracy of life expectancies used in connection with a
  706  viatical settlement contract or viatical settlement investment.
  707         (2)Every licensed viatical settlement provider shall
  708  establish and maintain, in accordance with the provisions of s.
  709  626.9922:
  710         (a)Documentation of compliance with its anti-fraud plan
  711  and procedures filed in accordance with this section;
  712         (b)All documentation pertaining to resolved and unresolved
  713  material inconsistencies between medical records and insurance
  714  applications; and
  715         (c)Documentation pertaining to the mandatory reporting of
  716  possible fraudulent acts and prohibited practices set forth in s
  717  626.99275, a copy of which shall be submitted to the Division of
  718  Insurance Fraud of the department.
  719         Section 12. Section 626.99287, Florida Statutes, is
  720  repealed.
  721         Section 13. Section 626.99289, Florida Statutes, is created
  722  to read:
  723         626.99289Void and unenforceable contracts, agreements,
  724  arrangements, and transactions.—Any contract, agreement,
  725  arrangement, or transaction, including, but not limited to, any
  726  financing agreement, any written or verbal arrangement or
  727  understanding, express or implied, entered into for the
  728  furtherance or aid of a stranger-originated life insurance act,
  729  practice, arrangement, or agreement is void and unenforceable.
  730         Section 14. This act shall take effect July 1, 2009.