Florida Senate - 2009 SB 1924
By Senator Gaetz
4-00629A-09 20091924__
1 A bill to be entitled
2 An act relating to viatical settlements; amending s.
3 626.9911, F.S.; limiting the definition of “life
4 expectancy provider” to those determining life
5 expectancies for the purpose of a viatical settlement
6 contract governed by state law; defining the terms
7 “premium finance loan” and “stranger-originated life
8 insurance”; modifying the definition of “viatical
9 settlement contract” to include additional
10 transactions and specify transactions not constituting
11 such a contract; conforming other definitions to
12 changes made by the act; amending s. 626.9913, F.S.;
13 requiring that a viatical settlement provider annually
14 file a statement containing information required by
15 state law on or before a specified date; providing
16 requirements for such statements; authorizing the
17 Office of Insurance Regulation to adopt rules;
18 amending s. 626.9914, F.S.; clarifying grounds for
19 which the office may suspend, revoke, deny, or refuse
20 to renew the license of a viatical settlement
21 provider; amending s. 626.99175, F.S.; prohibiting a
22 person from performing the functions of a life
23 expectancy provider regarding viatical settlement
24 contracts without first having registered as a life
25 expectancy provider; amending s. 626.992, F.S.;
26 clarifying restrictions on the use of viatical
27 settlement brokers, viatical settlement providers, and
28 registered life expectancy providers; clarifying a
29 requirement that a person operating as a life
30 expectancy provider register as such; amending s.
31 626.9922, F.S.; limiting the scope of an examination
32 of the business affairs of certain licensees by the
33 office or Department of Financial Services; clarifying
34 provisions relating to parties to whom such
35 examination requirements apply; creating s. 626.99234,
36 F.S.; authorizing insurers to make certain inquiries
37 to an applicant for a life insurance policy;
38 authorizing an insurer to reject certain applications;
39 prohibiting an insurer from rejecting an application
40 solely because the premiums will be financed under
41 certain circumstances; authorizing an insurer to make
42 certain disclosures to an applicant; authorizing an
43 insurer to require certain certifications from an
44 applicant or insured; amending s. 626.9924, F.S.;
45 requiring that a viatical settlement provider obtain a
46 witnessed document containing certain provisions
47 before the execution of a viatical settlement
48 contract; providing for the use of a third-party
49 trustee or escrow agent during a viatical settlement
50 transaction; amending s. 626.99245, F.S.; deleting
51 provisions requiring the maintenance of certain
52 records from viatical settlement transactions
53 completed in other states; amending s. 626.9925, F.S.;
54 deleting a provision authorizing the Financial
55 Services Commission to adopt rules defining terms for
56 use in the Viatical Settlement Act; amending s.
57 626.99275, F.S.; prohibiting any person from engaging
58 in stranger-originated life insurance; providing
59 penalties; amending s. 626.99287, F.S.; providing that
60 a viatical settlement contract is void under certain
61 circumstances; providing an effective date.
62
63 Be It Enacted by the Legislature of the State of Florida:
64
65 Section 1. Section 626.9911, Florida Statutes, is amended
66 to read:
67 626.9911 Definitions.—As used in this act, the term:
68 (1) “Financing entity” means an underwriter, placement
69 agent, lender, purchaser of securities, or purchaser of a policy
70 or certificate from a viatical settlement provider, credit
71 enhancer, or any entity that has direct ownership in a policy or
72 certificate that is the subject of a viatical settlement
73 contract, but whose principal activity related to the
74 transaction is providing funds or credit enhancement to effect
75 the viatical settlement or the purchase of one or more
76 viaticated policies and who has an agreement in writing with one
77 or more licensed viatical settlement providers to finance the
78 acquisition of viatical settlement contracts. The term does not
79 include a nonaccredited investor or other natural person. A
80 financing entity may not enter into a viatical settlement
81 contract.
82 (2) “Independent third-party trustee or escrow agent” means
83 an attorney, certified public accountant, financial institution,
84 or other person providing escrow services under the authority of
85 a regulatory body. The term does not include any person
86 associated, affiliated, or under common control with a viatical
87 settlement provider or viatical settlement broker.
88 (3) “Life expectancy” means an opinion or evaluation as to
89 how long a particular person is to live, or relating to such
90 person’s expected demise regarding a viatical settlement
91 contract.
92 (4) “Life expectancy provider” means a person who
93 determines, or holds himself or herself out as determining, life
94 expectancies or mortality ratings used to determine life
95 expectancies for the purposes of a viatical settlement contract
96 governed by state law:
97 (a) On behalf of a viatical settlement provider, viatical
98 settlement broker, life agent, or person engaged in the business
99 of viatical settlements;
100 (b) In connection with a viatical settlement investment,
101 pursuant to s. 517.021(23); or
102 (c) On residents of this state in connection with a
103 viatical settlement contract or viatical settlement investment.
104 (5) “Person” has the meaning specified in s. 1.01.
105 (6) “Premium finance loan” means a loan made primarily for
106 the purpose of making premium payments on a life insurance
107 policy issued or to be issued to a resident of this state, which
108 loan is secured by an interest in such life insurance policy.
109 (7)(6) “Related form” means any form, created by or on
110 behalf of a licensee, which a viator is required to sign or
111 initial. The forms include, but are not limited to, a power of
112 attorney, a release of medical information form, a suitability
113 questionnaire, a disclosure document, or any addendum, schedule,
114 or amendment to a viatical settlement contract considered
115 necessary by a provider to effectuate a viatical settlement
116 transaction.
117 (8)(7) “Related provider trust” means a titling trust or
118 other trust established by a licensed viatical settlement
119 provider or financing entity for the sole purpose of holding the
120 ownership or beneficial interest in purchased policies in
121 connection with a financing transaction. The trust must have a
122 written agreement with a licensed viatical settlement provider
123 or financing entity under which the licensed viatical settlement
124 provider or financing entity is responsible for insuring
125 compliance with all statutory and regulatory requirements and
126 under which the trust agrees to make all records and files
127 relating to viatical settlement transactions available to the
128 office as if those records and files were maintained directly by
129 the licensed viatical settlement provider. This term does not
130 include an independent third-party trustee or escrow agent or a
131 trust that does not enter into agreements with a viator. A
132 related provider trust shall be subject to all provisions of
133 this act that apply to the viatical settlement provider who
134 established the related provider trust, except s. 626.9912,
135 which shall not be applicable. A viatical settlement provider
136 may establish no more than one related provider trust, and the
137 sole trustee of such related provider trust shall be the
138 viatical settlement provider licensed under s. 626.9912. The
139 name of the licensed viatical settlement provider shall be
140 included within the name of the related provider trust.
141 (9)(8) “Special purpose entity” means an entity established
142 by a licensed viatical settlement provider or by a financing
143 entity, which may be a corporation, partnership, trust, limited
144 liability company, or other similar entity formed solely to
145 provide, either directly or indirectly, access to institutional
146 capital markets to a viatical settlement provider or financing
147 entity. A special purpose entity may not obtain capital from any
148 natural person or entity with less than $50 million in assets
149 and may not enter into a viatical settlement contract.
150 (10) “Stranger-originated life insurance” or “STOLI” means
151 an act, practice, or arrangement to initiate the issuance of a
152 life insurance policy in this state for the benefit of a third
153 party investor who, at the time of policy origination, has no
154 insurable interest under the laws of this state in the life of
155 the insured. STOLI practices include, but are not limited to,
156 cases in which life insurance is purchased with resources or
157 guarantees from or through a person or entity, that, at the time
158 of inception of the policy, could not lawfully initiate the
159 policy himself, herself, or itself, and where, at the time of
160 inception, there is an arrangement or agreement to directly or
161 indirectly transfer the ownership of the policy or the policy’s
162 benefits to a third party. Trusts created to give the appearance
163 of insurable interest and used to initiate policies for
164 investors violate insurable interest laws and the prohibition
165 against wagering on life. STOLI arrangements do not include
166 otherwise lawful viatical settlement contracts as permitted by
167 state law or those acts, practices, or arrangements set forth in
168 paragraph (12)(c).
169 (11)(9) “Viatical settlement broker” means a person who, on
170 behalf of a viator and for a fee, commission, or other valuable
171 consideration, offers or attempts to negotiate viatical
172 settlement contracts between a viator resident in this state and
173 one or more viatical settlement providers. Notwithstanding the
174 manner in which the viatical settlement broker is compensated, a
175 viatical settlement broker is deemed to represent only the
176 viator and owes a fiduciary duty to the viator to act according
177 to the viator’s instructions and in the best interest of the
178 viator. The term does not include an attorney, licensed
179 Certified Public Accountant, or investment adviser lawfully
180 registered under chapter 517, who is retained to represent the
181 viator and whose compensation is paid directly by or at the
182 direction and on behalf of the viator.
183 (12)(10) “Viatical settlement contract” means:
184 (a) A written agreement entered into between a viatical
185 settlement provider, or its related provider trust, and a viator
186 who is a resident of this state. The viatical settlement
187 contract includes an agreement to transfer ownership or change
188 the beneficiary designation of a life insurance policy at a
189 later date, regardless of the date that compensation is paid to
190 the viator. The agreement must establish the terms under which
191 the viatical settlement provider will pay compensation or
192 anything of value, which compensation or value is less than the
193 expected death benefit of the insurance policy or certificate,
194 in return for the viator’s assignment, transfer, sale, devise,
195 or bequest of the death benefit or ownership of all or a portion
196 of the insurance policy or certificate of insurance to the
197 viatical settlement provider.
198 (b) A viatical settlement contract also includes:
199 1. The transfer for compensation or value of ownership or
200 beneficial interest in a trust or other entity owning such
201 policy if the trust or other entity was formed or availed of for
202 the principal purpose of acquiring one or more life insurance
203 contracts owned by a resident of this state.
204 2. A premium finance loan made for a policy on or before
205 the date of issuance of the policy if one or more of the
206 following conditions apply:
207 a. The loan proceeds are not used solely to pay premiums
208 for the policy and any costs or expenses incurred by the lender
209 or the borrower in connection with the financing.
210 b. The owner receives on the date of the origination of the
211 premium-finance loan a guarantee of the future viatical
212 settlement value of the policy.
213 c. The owner agrees on the date of origination of the
214 premium finance loan to sell the policy or any portion of the
215 policy’s death benefit on any date following the issuance of the
216 policy, not including an agreement to sell the policy in the
217 event of a default, if the default is not pursuant to an
218 agreement or understanding with any other person for the purpose
219 of evading regulation under this act.
220 (c) A viatical settlement contract does not include:
221 1. A policy loan by a life insurance company pursuant to
222 the terms of the life insurance policy or accelerated death
223 provisions contained in the life insurance policy issued with
224 the original policy or as a rider.
225 2. A premium finance loan or any loan made by a bank or
226 other licensed financial institution, if neither party defaults
227 on such loan or the transfer of the policy in connection with
228 such default is pursuant to an agreement or understanding with
229 any other person for the purpose of evading regulation under
230 this act.
231 3. A collateral assignment of a life insurance policy by an
232 owner of a policy.
233 4. A loan made by a lender which is not described in
234 subparagraph (b)2. and is not otherwise within the scope of the
235 definition of viatical settlement contract.
236 5. An agreement for which all of the parties satisfy at
237 least one of the following conditions:
238 a. The parties are closely related to the insured by blood
239 or law.
240 b. The parties have a lawful substantial economic interest
241 in the continued life, health, and bodily safety of the person
242 insured.
243 c. The parties are trusts established primarily for the
244 benefit of those parties.
245 6. Any designation, consent, or agreement by an insured who
246 is an employee of an employer in connection with the purchase by
247 the employer or by a trust established by the employer of life
248 insurance on the life of the employee.
249 7. A bona fide business succession planning arrangement
250 between:
251 a. One or more shareholders in a corporation;
252 b. A corporation and one or more of its shareholders or one
253 or more trusts established by its shareholders;
254 c. One or more partners in a partnership;
255 d. A partnership and one or more of its partners or one or
256 more trusts established by its partners;
257 e. One or more members in a limited liability company; or
258 f. A limited liability company and one or more of its
259 members or one or more trusts established by its members.
260 8. An agreement entered into by a service recipient or a
261 trust established by the service recipient, or a service
262 provider or a trust established by the service provider
263 performing significant services for the service recipient’s
264 trade or business.
265 9. Any other contract, transaction, or arrangement that the
266 commissioner determines is not of the type intended to be
267 regulated by this act a contract for a loan or other financial
268 transaction secured primarily by an individual or group life
269 insurance policy, other than a loan by a life insurance company
270 pursuant to the terms of the life insurance contract, or a loan
271 secured by the cash value of a policy.
272 (13)(11) “Viatical settlement investment” has the same
273 meaning as specified in s. 517.021.
274 (14)(12) “Viatical settlement provider” means a person who,
275 in this state, from this state, or with a resident of this
276 state, effectuates a viatical settlement contract. The term does
277 not include:
278 (a) Any bank, savings bank, savings and loan association,
279 credit union, or other licensed lending institution that takes
280 an assignment of a life insurance policy as collateral for a
281 loan.
282 (b) A life and health insurer that has lawfully issued a
283 life insurance policy that provides accelerated benefits to
284 terminally ill policyholders or certificateholders.
285 (c) Any natural person who enters into no more than one
286 viatical settlement contract with a viator in 1 calendar year,
287 unless such natural person has previously been licensed under
288 this act or is currently licensed under this act.
289 (d) A trust that meets the definition of a “related
290 provider trust.”
291 (e) A viator in this state.
292 (f) A financing entity.
293 (15)(13) “Viaticated policy” means a life insurance policy,
294 or a certificate under a group policy, which is the subject of a
295 viatical settlement contract.
296 (16)(14) “Viator” means a resident of this state who is the
297 owner of a life insurance policy or a certificateholder under a
298 group policy, which policy is not a previously viaticated
299 policy, who enters or seeks to enter into a viatical settlement
300 contract. This term does not include a viatical settlement
301 provider or any person acquiring a policy or interest in a
302 policy from a viatical settlement provider, nor does it include
303 an independent third-party trustee or escrow agent.
304 Section 2. Subsection (2) of section 626.9913, Florida
305 Statutes, is amended to read:
306 626.9913 Viatical settlement provider license continuance;
307 annual report; fees; deposit.—
308 (2) Annually, on or before March 1, the viatical settlement
309 provider licensee shall file a statement containing information
310 required by statute the commission requires and shall pay to the
311 office a license fee in the amount of $500. After December 31,
312 2007, the annual statement shall include an annual audited
313 financial statement of the viatical settlement provider prepared
314 in accordance with generally accepted accounting principles by
315 an independent certified public accountant covering a 12-month
316 period ending on a day falling during the last 6 months of the
317 preceding calendar year. If the audited financial statement has
318 not been completed, however, the licensee shall include in its
319 annual statement an unaudited financial statement for the
320 preceding calendar year and an affidavit from an officer of the
321 licensee stating that the audit has not been completed. In this
322 event, the licensee shall submit the audited statement on or
323 before June 1. The audited and unaudited financial statements
324 are subject to the provisions of chapter 688 and ss. 812.081 and
325 815.045 and may be protected as trade secrets. The annual
326 statement, due on or before March 1 each year, shall also
327 provide the office with a report of all life expectancy
328 providers who have provided life expectancies directly or
329 indirectly to the viatical settlement provider for use in
330 connection with a viatical settlement contract or a viatical
331 settlement investment. A viatical settlement provider shall
332 include in all statements filed with the office all information
333 requested by the office regarding a related provider trust
334 established by the viatical settlement provider. The office may
335 adopt rules requiring that the annual statement contain
336 information, in the aggregate, regarding viatical settlement
337 contracts entered into with a resident of this state. The office
338 may require more frequent reporting. Failure to timely file the
339 annual statement or the audited financial statement or to timely
340 pay the license fee is grounds for immediate suspension of the
341 license. The commission may by rule require all or part of the
342 statements or filings required under this section to be
343 submitted by electronic means in a computer-readable form
344 compatible with the electronic data format specified by the
345 commission.
346 Section 3. Subsection (1) of section 626.9914, Florida
347 Statutes, is amended to read:
348 626.9914 Suspension, revocation, denial, or nonrenewal of
349 viatical settlement provider license; grounds; administrative
350 fine.—
351 (1) The office shall suspend, revoke, deny, or refuse to
352 renew the license of any viatical settlement provider if the
353 office finds that the licensee:
354 (a) Has made a misrepresentation in the application for the
355 license;
356 (b) Has engaged in fraudulent or dishonest practices, or
357 otherwise has been shown to be untrustworthy or incompetent to
358 act as a viatical settlement provider;
359 (c) Demonstrates a pattern of unreasonable payments to
360 viators;
361 (d) Has been found guilty of, or has pleaded guilty or nolo
362 contendere to, any felony, or a misdemeanor involving fraud or
363 moral turpitude, regardless of whether a judgment of conviction
364 has been entered by the court;
365 (e) Has issued viatical settlement contracts using a
366 viatical settlement contract form that has have not been
367 approved pursuant to this act;
368 (f) Has failed to honor contractual obligations related to
369 the business of viatical settlement contracts;
370 (g) Deals in bad faith with viators;
371 (h) Has violated any provision of the insurance code or of
372 this act;
373 (i) Employs any person who materially influences the
374 licensee’s conduct and who fails to meet the requirements of
375 this act;
376 (j) No longer meets the requirements for initial licensure;
377 or
378 (k) Obtains or utilizes life expectancies regarding
379 viatical settlement contracts from life expectancy providers who
380 are not registered with the office pursuant to this act.
381 Section 4. Subsection (1) of section 626.99175, Florida
382 Statutes, is amended to read:
383 626.99175 Life expectancy providers; registration required;
384 denial, suspension, revocation.—
385 (1) After July 1, 2006, A person may not perform the
386 functions of a life expectancy provider regarding viatical
387 settlement contracts without first having registered as a life
388 expectancy provider, except as provided in subsection (6).
389 Section 5. Section 626.992, Florida Statutes, is amended to
390 read:
391 626.992 Use of licensed viatical settlement providers,
392 viatical settlement brokers, and registered life expectancy
393 providers required.—
394 (1) A licensed viatical settlement provider may not use any
395 person to perform the functions of a viatical settlement broker
396 as defined in this act regarding a viatical settlement contract
397 unless such person holds a current, valid life agent license and
398 has appointed himself or herself in conformance with this
399 chapter.
400 (2) A viatical settlement broker may not use any person to
401 perform the functions of a viatical settlement provider as
402 defined in this act regarding a viatical settlement contract
403 unless such person holds a current, valid license as a viatical
404 settlement provider.
405 (3) After July 1, 2006, A person may not operate as a life
406 expectancy provider regarding a viatical settlement contract
407 unless such person is registered as a life expectancy provider
408 pursuant to this act.
409 (4) After July 1, 2006, A viatical settlement provider,
410 viatical settlement broker, or any other person in the business
411 of viatical settlements may not obtain life expectancies
412 regarding a viatical settlement contract from a person who is
413 not registered as a life expectancy provider pursuant to this
414 act.
415 Section 6. Subsections (1), (2), (4), and (7) of section
416 626.9922, Florida Statutes, are amended to read:
417 626.9922 Examination.—
418 (1) The office or department may examine the business and
419 affairs of any of its respective licensees or applicants for a
420 license. The office or department may order any such licensee or
421 applicant to produce any records, books, files, advertising and
422 solicitation materials, or other information and may take
423 statements under oath to determine whether the licensee or
424 applicant is in violation of the law or is acting contrary to
425 the public interest. With respect to licensees, the examination
426 is limited to information regarding viatical settlement
427 contracts executed in this state, from this state, or with a
428 resident of this state. The expenses incurred in conducting any
429 examination or investigation must be paid by the licensee or
430 applicant. Examinations and investigations must be conducted as
431 provided in chapter 624, and licensees are subject to all
432 applicable provisions of the insurance code.
433 (2) All accounts, books and records, documents, files,
434 contracts, and other information relating to all transactions of
435 viatical settlement contracts, or life expectancies regarding
436 viatical settlement contracts, or viatical settlement purchase
437 agreements made before July 1, 2005, must be maintained by the
438 licensee for a period of at least 3 years after the death of the
439 insured and must be available to the office or department for
440 inspection during reasonable business hours.
441 (4) Such information The originals of records required to
442 be maintained under this section must be made available to the
443 office or department for examination at the office’s or
444 department’s request.
445 (7) Subsections (1), (2), (3), and (4) apply to life
446 expectancy providers providing life expectancies regarding
447 viatical settlement contracts in the state and providing life
448 expectancies regarding viatical settlement contracts to viatical
449 settlement providers in the state, as if life expectancy
450 providers were licensees.
451 Section 7. Section 626.99234, Florida Statutes, is created
452 to read:
453 626.99234 Disclosures by insurers.—In addition to other
454 questions that an insurance carrier may lawfully pose to an
455 applicant for a life insurance policy, insurance carriers may
456 inquire in the application as to whether the proposed owner
457 intends to pay premiums with the assistance of financing from a
458 lender that will use the policy as collateral to support the
459 financing.
460 (1) If the premium finance loan provides funds that can be
461 used for a purpose other than paying for the premiums, costs,
462 and expenses associated with obtaining and maintaining the life
463 insurance policy and loan, the application shall be rejected as
464 a prohibited practice under this act.
465 (2) If the financing does not violate subsection (1) or the
466 insurer’s lawful underwriting guidelines, the insurer may not
467 reject the life insurance application solely because the
468 premiums will be financed.
469 (3) The insurance carrier may make a disclosure to the
470 applicant, either on the application or an amendment to the
471 application to be completed no later than the date of delivery
472 of the policy, including, but not limited to, the following:
473 IF YOU HAVE ENTERED INTO A LOAN ARRANGEMENT IN WHICH THE POLICY
474 IS USED AS COLLATERAL AND THE POLICY CHANGES OWNERSHIP AT SOME
475 POINT IN THE FUTURE IN SATISFACTION OF THE LOAN, YOU SHOULD BE
476 AWARE THAT A CHANGE OF OWNERSHIP COULD LEAD TO A STRANGER OWNING
477 AN INTEREST IN THE INSURED’S LIFE AND COULD IN THE FUTURE LIMIT
478 YOUR ABILITY TO PURCHASE INSURANCE ON THE INSURED’S LIFE BECAUSE
479 THERE IS A LIMIT AS TO HOW MUCH COVERAGE INSURERS WILL ISSUE ON
480 A LIFE. YOU SHOULD CONSULT A PROFESSIONAL ADVISOR SINCE A CHANGE
481 IN OWNERSHIP IN SATISFACTION OF THE LOAN MAY RESULT IN TAX
482 CONSEQUENCES TO THE OWNER, DEPENDING ON THE STRUCTURE OF THE
483 LOAN.
484 (4) In addition to the disclosures in subsection (3), the
485 insurance carrier may require any of the following
486 certifications from the applicant or the insured:
487 (a) I HAVE NOT ENTERED INTO ANY AGREEMENT OR ARRANGEMENT
488 UNDER WHICH I HAVE AGREED TO MAKE A FUTURE SALE OF THIS LIFE
489 INSURANCE POLICY.
490 (b) MY LOAN ARRANGEMENT FOR THIS POLICY PROVIDES FUNDS
491 SUFFICIENT TO PAY FOR SOME OR ALL OF THE PREMIUMS, COSTS, AND
492 EXPENSES ASSOCIATED WITH OBTAINING AND MAINTAINING MY LIFE
493 INSURANCE POLICY, BUT I HAVE NOT ENTERED INTO ANY AGREEMENT
494 PURSUANT TO WHICH I AM TO RECEIVE CONSIDERATION IN EXCHANGE FOR
495 PROCURING THIS POLICY.
496 (c) THE BORROWER HAS AN INSURABLE INTEREST IN THE INSURED.
497 Section 8. Subsections (1) and (3) of section 626.9924,
498 Florida Statutes, are amended to read:
499 626.9924 Viatical settlement contracts; procedures;
500 rescission.—
501 (1) Before the execution of a viatical settlement contract
502 by all parties, the A viatical settlement provider entering into
503 a viatical settlement contract with any viator must first obtain
504 a witnessed document in which the viator consents to the
505 viatical settlement contract, represents that he or she has a
506 full and complete understanding of the viatical settlement
507 contract and the benefits of the life insurance policy, releases
508 his or her medical records, and acknowledges that he or she is
509 entering has entered into the viatical settlement contract
510 freely and voluntarily.
511 (3) A viatical settlement transaction may be completed only
512 through the use of an independent third-party trustee or escrow
513 agent. Immediately upon receipt by the independent third-party
514 trustee or escrow agent of documents from the viatical
515 settlement provider viator to effect the transfer of the
516 insurance policy, the viatical settlement provider must pay the
517 proceeds of the settlement to an escrow or trust account managed
518 by the independent third-party trustee or escrow agent in a
519 financial institution licensed under Florida law or a federally
520 chartered financial institution that is a member of the Federal
521 Reserve System, pending acknowledgment of the transfer by the
522 issuer of the policy. An advance or partial payment of the
523 proceeds due under a viatical settlement contract may not be
524 used to effect transfer of the subject policy; any such advance
525 or partial payment is made at the sole discretion and risk of
526 the viatical settlement provider.
527 Section 9. Section 626.99245, Florida Statutes, is amended
528 to read:
529 626.99245 Conflict of regulation of viaticals.—
530 (1) A viatical settlement provider who from this state
531 enters into a viatical settlement contract with a viator who is
532 a resident of another state that has enacted statutes or adopted
533 regulations governing viatical settlement contracts shall be
534 governed in the effectuation of that viatical settlement
535 contract by the statutes and regulations of the viator’s state
536 of residence. If the state in which the viator is a resident has
537 not enacted statutes or regulations governing viatical
538 settlement agreements, the provider shall give the viator notice
539 that neither Florida nor his or her state regulates the
540 transaction upon which he or she is entering. For transactions
541 in those states, however, the viatical settlement provider is to
542 maintain all records required as if the transactions were
543 executed in Florida. The forms used in those states need not be
544 approved by the office.
545 (2) This section does not affect the requirement of s. ss.
546 626.9911(12) and 626.9912(1) that a viatical settlement provider
547 doing business from this state must obtain a viatical settlement
548 license from the office. As used in this subsection, the term
549 “doing business from this state” includes effectuating viatical
550 settlement contracts from offices in this state, regardless of
551 the state of residence of the viator.
552 Section 10. Section 626.9925, Florida Statutes, is amended
553 to read:
554 626.9925 Rules.—The commission may adopt rules to
555 administer this act, including rules establishing standards for
556 evaluating advertising by licensees; rules providing for the
557 collection of data, for disclosures to viators, for the
558 reporting of life expectancies, and for the registration of life
559 expectancy providers; and rules defining terms used in this act
560 and prescribing recordkeeping requirements relating to executed
561 viatical settlement contracts.
562 Section 11. Paragraph (e) is added to subsection (1) of
563 section 626.99275, Florida Statutes, to read:
564 626.99275 Prohibited practices; penalties.—
565 (1) It is unlawful for any person:
566 (e) To engage in stranger-originated life insurance.
567 Section 12. Section 626.99287, Florida Statutes, is amended
568 to read:
569 626.99287 Contestability of viaticated policies.—Except as
570 hereinafter provided, if a viatical settlement contract is
571 entered into at any time before the date of issuance of a policy
572 or within the 2-year period commencing with the date of issuance
573 of the insurance policy or certificate to be acquired, the
574 viatical settlement contract is void and unenforceable by either
575 party. Notwithstanding this limitation, such a viatical
576 settlement contract is not void and unenforceable if:
577 (1) The policy was issued upon the owner’s exercise of
578 conversion rights arising out of a group or term policy;
579 (2) The owner of the policy is a charitable organization
580 exempt from taxation under 26 U.S.C. s. 501(c)(3);
581 (3) The owner of the policy is not a natural person;
582 (4) The viatical settlement contract was entered into
583 before July 1, 2000;
584 (5) The viator certifies by producing independent evidence
585 to the viatical settlement provider that one or more of the
586 following conditions have been met within the 2-year period:
587 (a)1. The viator or insured is diagnosed with an illness or
588 condition that is either:
589 a. Catastrophic or life threatening; or
590 b. Requires a course of treatment for a period of at least
591 3 years of long-term care or home health care; and
592 2. The condition was not known to the insured at the time
593 the life insurance contract was entered into.
594 (b) The viator’s spouse dies;
595 (c) The viator divorces his or her spouse;
596 (d) The viator retires from full-time employment;
597 (e) The viator becomes physically or mentally disabled and
598 a physician determines that the disability prevents the viator
599 from maintaining full-time employment;
600 (f) The owner of the policy was the insured’s employer at
601 the time the policy or certificate was issued and the employment
602 relationship terminated;
603 (g) A final order, judgment, or decree is entered by a
604 court of competent jurisdiction, on the application of a
605 creditor of the viator, adjudicating the viator bankrupt or
606 insolvent, or approving a petition seeking reorganization of the
607 viator or appointing a receiver, trustee, or liquidator to all
608 or a substantial part of the viator’s assets; or
609 (h) The viator experiences a significant decrease in income
610 which is unexpected by the viator and which impairs his or her
611 reasonable ability to pay the policy premium.
612 If the viatical settlement provider submits to the insurer a
613 copy of the viator’s or owner’s certification described above,
614 then the provider submits a request to the insurer to effect the
615 transfer of the policy or certificate to the viatical settlement
616 provider, the viatical settlement agreement shall not be void or
617 unenforceable by operation of this section. The insurer shall
618 timely respond to such request. Nothing in this section shall
619 prohibit an insurer from exercising its right during the
620 contestability period to contest the validity of any policy on
621 grounds of fraud.
622 Section 13. This act shall take effect July 1, 2009.