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Appendix A: Digest of sample state laws.

FLORIDA STATUTE

Chapter 626 Viatical Settlements

626.991 Short title.

626.9911 Definitions.

626.9912 Viatical settlement provider license required; application for license.

626.9913 Viatical settlement provider license continuance; annual report; fees; deposit.

626.9914 Suspension, revocation, denial, or nonrenewal of viatical settlement provider license; grounds; administrative fine.

626.9915 Effect of suspension or revocation of viatical settlement provider license; duration of suspension; reinstatement.

626.9916 Viatical settlement broker license required.

626.99175 Life expectancy providers; registration required; denial, suspension, revocation.

626.99181 Viatical settlement broker's compensation.

626.9919 Notice of change of licensee or registrant's address or name.

626.992 Use of licensed viatical settlement providers, viatical settlement brokers, and registered life expectancy providers required.

626.9921 Filing of forms; required procedures; approval.

626.9922 Examination.

626.9923 Viatical settlement contracts; required disclosures.

626.9924 Viatical settlement contracts; procedures; rescission.

626.99245 Conflict of regulation of viaticals.

626.9925 Rules.

626.9926 Rate regulation not authorized.

626.9927 Unfair trade practices; cease and desist; injunctions; civil remedy.

626.99272 Cease and desist orders and fines.

626.99275 Prohibited practices; penalties.

626.99278 Viatical provider anti-fraud plan.

626.9928 Acquisitions.

626.99285 Applicability of insurance code.

626.99287 Contestability of viaticated policies.

626.99295 Grace period.

626.991 Short title.-This act may be referred to as the "Viatical Settlement Act."

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

(1) "Financing entity" means an underwriter, placement agent, lender, purchaser of securities, or purchaser of a policy or certificate from a viatical settlement provider, credit enhancer, or any entity that has direct ownership in a policy or certificate that is the subject of a viatical settlement contract, but whose principal activity related to the transaction is providing funds or credit enhancement to effect the viatical settlement or the purchase of one or more viaticated policies and who has an agreement in writing with one or more licensed viatical settlement providers to finance the acquisition of viatical settlement contracts. The term does not include a nonaccredited investor or other natural person. A financing entity may not enter into a viatical settlement contract.

(2) "Independent third-party trustee or escrow agent" means an attorney, certified public accountant, financial institution, or other person providing escrow services under the authority of a regulatory body. The term does not include any person associated, affiliated, or under common control with a viatical settlement provider or viatical settlement broker.

(3) "Life expectancy" means an opinion or evaluation as to how long a particular person is to live, or relating to such person's expected demise.

(4) "Life expectancy provider" means a person who determines, or holds himself or herself out as determining, life expectancies or mortality ratings used to determine life expectancies:

(a) On behalf of a viatical settlement provider, viatical settlement broker, life agent, or person engaged in the business of viatical settlements;

(b) In connection with a viatical settlement investment, pursuant to s. 517.021(23); or

(c) On residents of this state in connection with a viatical settlement contract or viatical settlement investment.

(5) "Person" has the meaning specified in s. 1.01.

(6) "Related form" means any form, created by or on behalf of a licensee, which a viator is required to sign or initial. The forms include, but are not limited to, a power of attorney, a release of medical information form, a suitability questionnaire, a disclosure document, or any addendum, schedule, or amendment to a viatical settlement contract considered necessary by a provider to effectuate a viatical settlement transaction.

(7) "Related provider trust" means a titling trust or other trust established by a licensed viatical settlement provider or financing entity for the sole purpose of holding the ownership or beneficial interest in purchased policies in connection with a financing transaction. The trust must have a written agreement with a licensed viatical settlement provider or financing entity under which the licensed viatical settlement provider or financing entity is responsible for insuring compliance with all statutory and regulatory requirements and under which the trust agrees to make all records and files relating to viatical settlement transactions available to the office as if those records and files were maintained directly by the licensed viatical settlement provider. This term does not include an independent third-party trustee or escrow agent or a trust that does not enter into agreements with a viator. A related provider trust shall be subject to all provisions of this act that apply to the viatical settlement provider who established the related provider trust, except s. 626.9912, which shall not be applicable. A viatical settlement provider may establish no more than one related provider trust, and the sole trustee of such related provider trust shall be the viatical settlement provider licensed under s. 626.9912. The name of the licensed viatical settlement provider shall be included within the name of the related provider trust.

(8) "Special purpose entity" means an entity established by a licensed viatical settlement provider or by a financing entity, which may be a corporation, partnership, trust, limited liability company, or other similar entity formed solely to provide, either directly or indirectly, access to institutional capital markets to a viatical settlement provider or financing entity. A special purpose entity may not obtain capital from any natural person or entity with less than $50 million in assets and may not enter into a viatical settlement contract.

(9) "Viatical settlement broker" means a person who, on behalf of a viator and for a fee, commission, or other valuable consideration, offers or attempts to negotiate viatical settlement contracts between a viator resident in this state and one or more viatical settlement providers. Notwithstanding the manner in which the viatical settlement broker is compensated, a viatical settlement broker is deemed to represent only the viator and owes a fiduciary duty to the viator to act according to the viator's instructions and in the best interest of the viator. The term does not include an attorney, licensed Certified Public Accountant, or investment adviser lawfully registered under chapter 517, who is retained to represent the viator and whose compensation is paid directly by or at the direction and on behalf of the viator.

(10) "Viatical settlement contract" means a written agreement entered into between a viatical settlement provider, or its related provider trust, and a viator. The viatical settlement contract includes an agreement to transfer ownership or change the beneficiary designation of a life insurance policy at a later date, regardless of the date that compensation is paid to the viator. The agreement must establish the terms under which the viatical settlement provider will pay compensation or anything of value, which compensation or value is less than the expected death benefit of the insurance policy or certificate, in return for the viator's assignment, transfer, sale, devise, or bequest of the death benefit or ownership of all or a portion of the insurance policy or certificate of insurance to the viatical settlement provider. A viatical settlement contract also includes a contract for a loan or other financial transaction secured primarily by an individual or group life insurance policy, other than a loan by a life insurance company pursuant to the terms of the life insurance contract, or a loan secured by the cash value of a policy.

(11) "Viatical settlement investment" has the same meaning as specified in s. 517.021.

(12) "Viatical settlement provider" means a person who, in this state, from this state, or with a resident of this state, effectuates a viatical settlement contract. The term does not include:

(a) Any bank, savings bank, savings and loan association, credit union, or other licensed lending institution that takes an assignment of a life insurance policy as collateral for a loan.

(b) A life and health insurer that has lawfully issued a life insurance policy that provides accelerated benefits to terminally ill policyholders or certificateholders.

(c) Any natural person who enters into no more than one viatical settlement contract with a viator in 1 calendar year, unless such natural person has previously been licensed under this act or is currently licensed under this act.

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

(e) A viator in this state.

(f) A financing entity.

(13) "Viaticated policy" means a life insurance policy, or a certificate under a group policy, which is the subject of a viatical settlement contract.

(14) "Viator" means the owner of a life insurance policy or a certificateholder under a group policy, which policy is not a previously viaticated policy, who enters or seeks to enter into a viatical settlement contract. This term does not include a viatical settlement provider or any person acquiring a policy or interest in a policy from a viatical settlement provider, nor does it include an independent third-party trustee or escrow agent.

626.9912 Viatical settlement provider license required; application for license.

(1) A person may not perform the functions of a viatical settlement provider as defined in this act or enter into or solicit a viatical settlement contract without first having obtained a license from the office.

(2) Application for a viatical settlement provider license must be made to the office by the applicant on a form prescribed by the commission, under oath and signed by the applicant. The application must be accompanied by a fee of $500. If the applicant is a corporation, the application must be under oath and signed by the president and the secretary of the corporation.

(3) In the application, the applicant must provide all of the following:

(a) The applicant's full name, age, residence address, and business address, and all occupations engaged in by the applicant during the 5 years preceding the date of the application.

(b) A copy of the applicant's basic organizational documents, if any, including the articles of incorporation, articles of association, partnership agreement, trust agreement, or other similar documents, together with all amendments to such documents.

(c) Copies of all bylaws, rules, regulations, or similar documents regulating the conduct of the applicant's internal affairs.

(d) A list showing the name, business and residence addresses, and official position of each individual who is responsible for conduct of the applicant's affairs, including, but not limited to, any member of the applicant's board of directors, board of trustees, executive committee, or other governing board or committee and any other person or entity owning or having the right to acquire 10 percent or more of the voting securities of the applicant.

(e) With respect to each individual identified under paragraph (d):

1. A sworn biographical statement on forms adopted by the commission and supplied by the office.

2. A set of fingerprints on forms prescribed by the commission, certified by a law enforcement officer, and accompanied by the fingerprinting fee specified in s. 624.501.

3. Authority for release of information relating to the investigation of the individual's background.

(f) All applications, viatical settlement contract forms, escrow forms, and other related forms proposed to be used by the applicant.

(g) A general description of the method the viatical settlement provider will use in determining life expectancies, including a description of the applicant's intended receipt of life expectancies, the applicant's intended use of life expectancy providers, and the written plan or plans of policies and procedures used to determine life expectancies.

(h) Such other information as the commission or office deems necessary to determine that the applicant and the individuals identified under paragraph (d) are competent and trustworthy and can lawfully and successfully act as a viatical settlement provider.

(4) The office may not issue a license to an entity other than a natural person if it is not satisfied that all officers, directors, employees, stockholders, partners, and any other persons who exercise or have the ability to exercise effective control of the entity or who have the ability to influence the transaction of business by the entity meet the standards of this act and have not violated any provision of this act or rules of the commission related to the business of viatical settlement contracts.

(5) Upon the filing of a sworn application and the payment of the license fee, the office shall investigate each applicant and may issue the applicant a license if the office finds that the applicant:

(a) Has provided a detailed plan of operation.

(b) Is competent and trustworthy and intends to act in good faith in the business authorized by the license applied for.

(c) Has a good business reputation and has had experience, training, or education that qualifies the applicant to conduct the business authorized by the license applied for.

(d) If the applicant is a corporation, is a corporation incorporated under the laws of this state, or is a foreign corporation authorized to transact business in this state.

(e) Has designated the Chief Financial Officer as its agent for service of process.

(f) Has made the deposit required by s. 626.9913(3).

626.9913 Viatical settlement provider license continuance; annual report; fees; deposit.

(1) A viatical settlement provider license continues in force until suspended or revoked.

(2) Annually, on or before March 1, the viatical settlement provider licensee shall file a statement containing information the commission requires and shall pay to the office a license fee in the amount of $500. After December 31, 2007, the annual statement shall include an annual audited financial statement of the viatical settlement provider prepared in accordance with generally accepted accounting principles by an independent certified public accountant covering a 12-month period ending on a day falling during the last 6 months of the preceding calendar year. If the audited financial statement has not been completed, however, the licensee shall include in its annual statement an unaudited financial statement for the preceding calendar year and an affidavit from an officer of the licensee stating that the audit has not been completed. In this event, the licensee shall submit the audited statement on or before June 1. The annual statement, due on or before March 1 each year, shall also provide the office with a report of all life expectancy providers who have provided life expectancies directly or indirectly to the viatical settlement provider for use in connection with a viatical settlement contract or a viatical settlement investment. A viatical settlement provider shall include in all statements filed with the office all information requested by the office regarding a related provider trust established by the viatical settlement provider. The office may require more frequent reporting. Failure to timely file the annual statement or the audited financial statement or to timely pay the license fee is grounds for immediate suspension of the license. The commission may by rule require all or part of the statements or filings required under this section to be submitted by electronic means in a computer-readable form compatible with the electronic data format specified by the commission.

(3) To ensure the faithful performance of its obligations to its viators in the event of insolvency or the loss of its license, a viatical settlement provider licensee must deposit and maintain deposited in trust with the department securities eligible for deposit under s. 625.52, having at all times a value of not less than $100,000; however, a viatical settlement provider licensed in this state prior to June 1, 2004, which has deposited and maintains continuously deposited in trust with the department securities in the amount of $25,000 and which posted and maintains continuously posted a security bond acceptable to the department in the amount of $75,000, has until June 1, 2005, to comply with the requirements of this subsection.

(4) There shall be no additional annual license fee or deposit requirements under this act for a related provider trust established by a viatical settlement provider.

(5) A judgment creditor or other claimant of a viatical settlement provider does not have the right to levy upon any of the assets or securities held in this state pursuant to this section.

626.9914 Suspension, revocation, denial, or nonrenewal of viatical settlement provider license; grounds; administrative fine.

(1) The office shall suspend, revoke, deny, or refuse to renew the license of any viatical settlement provider if the office finds that the licensee:

(a) Has made a misrepresentation in the application for the license;

(b) Has engaged in fraudulent or dishonest practices, or otherwise has been shown to be untrustworthy or incompetent to act as a viatical settlement provider;

(c) Demonstrates a pattern of unreasonable payments to viators;

(d) Has been found guilty of, or has pleaded guilty or nolo contendere to, any felony, or a misdemeanor involving fraud or moral turpitude, regardless of whether a judgment of conviction has been entered by the court;

(e) Has issued viatical settlement contracts that have not been approved pursuant to this act;

(f) Has failed to honor contractual obligations related to the business of viatical settlement contracts;

(g) Deals in bad faith with viators;

(h) Has violated any provision of the insurance code or of this act;

(i) Employs any person who materially influences the licensee's conduct and who fails to meet the requirements of this act;

(j) No longer meets the requirements for initial licensure; or

(k) Obtains or utilizes life expectancies from life expectancy providers who are not registered with the office pursuant to this act.

(2) The office may, in lieu of or in addition to any suspension or revocation, assess an administrative fine not to exceed $2,500 for each nonwillful violation or $10,000 for each willful violation by a viatical settlement provider licensee. The office may also place a viatical settlement provider licensee on probation for a period not to exceed 2 years.

(3) If an employee of a viatical settlement provider violates any provision of this act, the office may take disciplinary action against such employee as if the employee were licensed under this act, including suspending or otherwise prohibiting the employee from performing the functions of a viatical settlement provider or viatical settlement broker as defined in this act.

(4) If a viatical settlement provider establishes a related provider trust as permitted by this act, the viatical settlement provider shall be liable and responsible for the performance of all obligations of the related provider trust under all viatical settlement contracts entered into by the related provider trust, and for the compliance of the related provider trust with all provisions of this act. Any violation of this act by the related provider trust shall be deemed a violation of this act by the viatical settlement provider as well as the related provider trust. If the related provider trust violates any provisions of this act, the office may exercise all remedies set forth in this act for such violations against the viatical settlement provider, as well as the related provider trust.

626.9915 Effect of suspension or revocation of viatical settlement provider license; duration of suspension; reinstatement.

(1) When its license is suspended or revoked, the provider must proceed, immediately following the effective date of the suspension or revocation, to conclude the affairs it is transacting under its license. The provider may not solicit, negotiate, advertise, or effectuate new contracts. The office retains jurisdiction over the provider until all contracts have been fulfilled or canceled or have expired. A provider whose license is suspended or revoked may continue to maintain and service viaticated policies subject to the approval of the office.

(2) The suspension of the license of a viatical settlement provider licensee may be for such period, not to exceed 2 years, as determined by the office. The office may shorten, rescind, or modify the suspension.

(3) During the period of suspension, the licensee shall file its annual statement and pay license fees as if the license had continued in full force.

(4) If, upon expiration of the suspension order, the license has not otherwise been terminated, the office must reinstate the license only upon written request by the suspended licensee unless the office finds that the grounds giving rise to the suspension have not been removed or that the licensee is otherwise not in compliance with the requirements of this act. The office shall give the licensee notice of its findings no later than 90 days after receipt of the request or upon expiration of the suspension order, whichever occurs later. If a license is not reinstated pursuant to the procedures set forth in this subsection, it expires at the end of the suspension or on the date it otherwise would have expired, whichever is sooner.

626.9916 Viatical settlement broker license required.

(1) After October 1, 2006, a person, other than a life agent licensed under this chapter, may not in this state, from this state, or with a resident of this state perform the functions of a viatical settlement broker.

(2) Before performing the functions of a viatical settlement broker, a life agent shall appoint himself or herself with the department and pay applicable fees pursuant to s. 624.501(7)(a).

(3) Each natural person who on July 1, 2005, held a viatical settlement broker's license and self-appointment may, upon obtaining a life agent license on or before October 1, 2006, transfer an existing broker self-appointment to such license.

(4) All viatical settlement broker licenses shall terminate on October 1, 2006, and shall not be subject to continuation or renewal.

(5) Notwithstanding the manner in which the viatical settlement broker is compensated, he or she is deemed to represent only the viator and owes a fiduciary duty to the viator to act according to the viator's instructions and in the best interest of the viator.

(6) The compensation received by a life agent for activities performed as a viatical settlement broker may not be divided or shared with another person unless such other person is a life agent licensed under this chapter and appointed as provided in this part.

626.99175 Life expectancy providers; registration required; denial, suspension, revocation.

(1) After July 1, 2006, a person may not perform the functions of a life expectancy provider without first having registered as a life expectancy provider, except as provided in subsection (6).

(2) Application for registration as a life expectancy provider must be made to the office by the applicant on a form prescribed by the office, under oath and signed by the applicant. The application must be accompanied by a fee of $500.

(3) A completed application shall be evidenced on a form and in a manner prescribed by the office and shall require the registered life expectancy provider to update such information and renew such registration as required by the office.

(4) In the application, the applicant must provide all of the following:

(a) The full name, age, residence address, and business address, and all occupations engaged in by the applicant during the 5 years preceding the date of the application.

(b) A copy of the applicant's basic organizational documents, if any, including the articles of incorporation, articles of association, partnership agreement, trust agreement, or other similar documents, together with all amendments to such documents.

(c) Copies of all bylaws, rules, regulations, or similar documents regulating the conduct of the applicant's internal affairs.

(d) A list showing the name, business and residence addresses, and official position of each individual who is responsible for conduct of the applicant's affairs, including, but not limited to, any member of the board of directors, board of trustees, executive committee, or other governing board or committee and any other person or entity owning or having the right to acquire 10 percent or more of the voting securities of the applicant, and any person performing life expectancies by the applicant.

(e) A sworn biographical statement on forms supplied by the office with respect to each individual identified under paragraph (d), including whether such individual has been associated with any other life expectancy provider or has performed any services for a person in the business of viatical settlements.

(f) A sworn statement of any criminal and civil actions pending or final against the registrant or any individual identified under paragraph (d).

(g) A general description of the following policies and procedures covering all life expectancy determination criteria and protocols:

1. The plan or plans of policies and procedures used to determine life expectancies.

2. A description of the training, including continuing training, of the individuals who determine life expectancies.

3. A description of how the life expectancy provider updates its manuals, underwriting guides, mortality tables, and other reference works and ensures that the provider bases its determination of life expectancies on current data.

(h) A plan for assuring confidentiality of personal, medical, and financial information in accordance with federal and state laws.

(i) An anti-fraud plan as required pursuant to s. 626.99278.

(j) A list of any agreements, contracts, or any other arrangement to provide life expectancies to a viatical settlement provider, viatical settlement broker, or any other person in the business of viatical settlements in connection with any viatical settlement contract or viatical settlement investment.

(5) As part of the application, and on or before March 1 of every 3 years thereafter, a registered life expectancy provider shall file with the office an audit of all life expectancies by the life expectancy provider for the 5 calendar years immediately preceding such audit, which audit shall be conducted and certified by a nationally recognized actuarial firm and shall include only the following:

(a) A mortality table.

(b) The number, percentage, and an actual-to-expected ratio of life expectancies in the following categories: life expectancies of less than 24 months, life expectancies of 25 months to 48 months, life expectancies of 49 months to 72 months, life expectancies of 73 months to 108 months, life expectancies of 109 months to 144 months, life expectancies of 145 months to 180 months, and life expectancies of more than 180 months.

(6) No viatical settlement broker, viatical settlement provider, or insurance agent in the business of viatical settlements in this state shall directly or indirectly own or be an officer, director, or employee of a life expectancy provider.

(7) Each registered life expectancy provider shall provide the office, as applicable, at least 30 days' advance notice of any change in the registrant's name, residence address, principal business address, or mailing address.

(8) A person required to be registered by this section shall for 5 years retain copies of all life expectancies and supporting documents and medical records unless those personal medical records are subject to different retention or destruction requirements of a federal or state personal health information law.

(9) An application for life expectancy provider registration shall be approved or denied by the commissioner within 60 calendar days following receipt of a completed application by the commissioner. The office shall notify the applicant that the application is complete. A completed application that is not approved or denied in 60 calendar days following its receipt shall be deemed approved.

(10) The office may, in its discretion, deny the application for a life expectancy provider registration or suspend, revoke, or refuse to renew or continue the registration of a life expectancy provider if the office finds:

(a) Any cause for which registration could have been refused had it then existed and been known to the office;

(b) A violation of any provision of this code or of any other law applicable to the applicant or registrant;

(c) A violation of any lawful order or rule of the department, commission, or office; or

(d) That the applicant or registrant:

1. Has been found guilty of or pled guilty or nolo contendere to a felony or a crime punishable by imprisonment of 1 year or more under the law of the United States of America or of any state thereof or under the law of any other country;

2. Has knowingly and willfully aided, assisted, procured, advised, or abetted any person in the violation of a provision of the insurance code or any order or rule of the department, commission, or office;

3. Has knowingly and with intent to defraud, provided a life expectancy that does not conform to an applicant's or registrant's general practice;

4. Does not have a good business reputation or does not have experience, training, or education that qualifies the applicant or registrant to conduct the business of a life expectancy provider; or

5. Has demonstrated a lack of fitness or trustworthiness to engage in the business of issuing life expectancies.

(11) The office may, in lieu of or in addition to any suspension or revocation, assess an administrative fine not to exceed $2,500 for each nonwillful violation or $10,000 for each willful violation by a registered life expectancy provider. The office may also place a registered life expectancy provider on probation for a period not to exceed 2 years.

(12) It is a violation of this section for a person to represent, orally or in writing, that a life expectancy provider's registration pursuant to this act is in any way a recommendation or approval of the entity or means that the qualifications or abilities have in any way been approved of.

(13) The Financial Services Commission may, by rule, require that all or part of the statements or filings required under this section be submitted by electronic means and in a computer-readable format specified by the commission.

626.99181 Viatical settlement broker's compensation.-A viatical settlement broker shall disclose to a prospective viator the amount and method of calculating the broker's compensation. The term "compensation" includes anything of value paid or given to a viatical settlement broker for the placement of a policy.

626.9919 Notice of change of licensee or registrant's address or name.-Each viatical settlement provider licensee and registered life expectancy provider must provide the office at least 30 days' advance notice of any change in the licensee's or registrant's name, residence address, principal business address, or mailing address.

626.992 Use of licensed viatical settlement providers, viatical settlement brokers, and registered life expectancy providers required.

(1) A licensed viatical settlement provider may not use any person to perform the functions of a viatical settlement broker as defined in this act unless such person holds a current, valid life agent license and has appointed himself or herself in conformance with this chapter.

(2) A viatical settlement broker may not use any person to perform the functions of a viatical settlement provider as defined in this act unless such person holds a current, valid license as a viatical settlement provider.

(3) After July 1, 2006, a person may not operate as a life expectancy provider unless such person is registered as a life expectancy provider pursuant to this act.

(4) After July 1, 2006, a viatical settlement provider, viatical settlement broker, or any other person in the business of viatical settlements may not obtain life expectancies from a person who is not registered as a life expectancy provider pursuant to this act.

626.9921 Filing of forms; required procedures; approval.

(1) A viatical settlement contract form, escrow form, or related form may be used in this state only after the form has been filed with the office and only after the form has been approved by the office.

(2) The viatical settlement contract form, escrow form, or related form must be filed with the office at least 60 days before its use. The form is considered approved on the 60th day after its date of filing unless it has been previously disapproved by the office. The office must disapprove a viatical settlement contract form, escrow form, or related form that is unreasonable, contrary to the public interest, discriminatory, misleading, or unfair to the viator.

(3) If a viatical settlement provider elects to use a related provider trust in accordance with this act, the viatical settlement provider shall file notice of its intention to use a related provider trust with the office, including a copy of the trust agreement of the related provider trust. The organizational documents of the trust must be submitted to and approved by the office before the transacting of business by the trust.

(4) The commission may adopt, by rule, standardized forms to be used by licensees, at the licensee's option in place of separately approved forms.

626.9922 Examination.

(1) The office or department may examine the business and affairs of any of its respective licensees or applicants for a license. The office or department may order any such licensee or applicant to produce any records, books, files, advertising and solicitation materials, or other information and may take statements under oath to determine whether the licensee or applicant is in violation of the law or is acting contrary to the public interest. The expenses incurred in conducting any examination or investigation must be paid by the licensee or applicant. Examinations and investigations must be conducted as provided in chapter 624, and licensees are subject to all applicable provisions of the insurance code.

(2) All accounts, books and records, documents, files, contracts, and other information relating to all transactions of viatical settlement contracts, life expectancies, or viatical settlement purchase agreements made before July 1, 2005, must be maintained by the licensee for a period of at least 3 years after the death of the insured and must be available to the office or department for inspection during reasonable business hours.

(3) All such records or accurate copies of such records must be maintained at the licensee's home office. As used in this section, the term "home office" means the principal place of business and any other single storage facility, the street address of which shall be disclosed to the office or department within 20 days after its initial use, or within 20 days of the effective date of this subsection.

(4) The originals of records required to be maintained under this section must be made available to the office or department for examination at the office's or department's request.

(5) The office has jurisdiction over all viatical settlement purchase agreements made before July 1, 2005, including, but not limited to, the authority to examine persons in possession of records relating to viatical settlement purchase agreements made before July 1, 2005, and that authority set forth in s. 624.319.

(6) If the office makes the determination that a viatical settlement provider does not have the financial ability to perform its present or future obligations under the viatical settlement purchase agreements made before July 1, 2005, the office shall make a referral to the United States Securities and Exchange Commission or the Office of Financial Regulation for further administrative action pursuant to s. 517.191, including, but not limited to, the appointment of a receiver by the court.

(7) Subsections (1), (2), (3), and (4) apply to life expectancy providers providing life expectancies in the state and providing life expectancies to viatical settlement providers in the state, as if life expectancy providers were licensees.

626.9923 Viatical settlement contracts; required disclosures.-The viatical settlement broker, or the viatical settlement provider in transactions in which no broker is used, must inform the viator by the date of application for a viatical settlement contract:

(1) That there are possible alternatives to viatical settlement contracts for persons who have a catastrophic or life-threatening illness, including, but not limited to, accelerated benefits offered by the issuer of a life insurance policy.

(2) That proceeds of the viatical settlement could be taxable, and assistance should be sought from a personal tax advisor.

(3) That viatical settlement proceeds could be subject to the claims of creditors.

(4) That receipt of viatical settlement proceeds could adversely affect the recipient's eligibility for Medicaid or other government benefits or entitlements, and advice should be obtained from the appropriate agencies.

(5) That all viatical settlement contracts entered into in this state must contain an unconditional rescission provision which allows the viator to rescind the contract within 15 days after the viator receives the viatical settlement proceeds, conditioned on the return of such proceeds.

(6) The name, business address, and telephone number of the independent third-party escrow agent, and the fact that the viator may inspect or receive copies of the relevant escrow or trust agreements or documents.

626.9924 Viatical settlement contracts; procedures; rescission.

(1) A viatical settlement provider entering into a viatical settlement contract with any viator must first obtain a witnessed document in which the viator consents to the viatical settlement contract, represents that he or she has a full and complete understanding of the viatical settlement contract and the benefits of the life insurance policy, releases his or her medical records, and acknowledges that he or she has entered into the viatical settlement contract freely and voluntarily.

(2) All viatical settlement contracts subject to this act must contain an unconditional rescission provision which allows the viator to rescind the contract within 15 days after the viator receives the viatical settlement proceeds, conditioned on the return of such proceeds.

(3) A viatical settlement transaction may be completed only through the use of an independent third-party trustee or escrow agent. Immediately upon receipt by the independent third-party trustee or escrow agent of documents from the viator to effect the transfer of the insurance policy, the viatical settlement provider must pay the proceeds of the settlement to an escrow or trust account managed by the independent third-party trustee or escrow agent in a financial institution licensed under Florida law or a federally chartered financial institution that is a member of the Federal Reserve System, pending acknowledgment of the transfer by the issuer of the policy. An advance or partial payment of the proceeds due under a viatical settlement contract may not be used to effect transfer of the subject policy; any such advance or partial payment is made at the sole discretion and risk of the viatical settlement provider.

(4) Upon receipt of all viatical settlement contract proceeds, the independent third-party trustee or escrow agent must release to the viatical settlement provider all documents necessary to complete the transfer of the insurance policy or certificate of insurance so that the transfer, assignment, sale, bequest, or devise may be effected.

(5) The independent third-party trustee or escrow agent must transfer all proceeds of the viatical settlement contract within 3 business days after receiving from the issuer of the subject policy acknowledgment of the transfer, assignment, bequest, sale, or devise. Failure to transfer proceeds as required by this subsection renders the viatical settlement contract and the transfer, assignment, bequest, sale, or devise voidable.

(6) A viatical settlement provider may not negotiate or enter into a viatical settlement contract with a viator if the subject policy contains an accelerated benefits provision allowing benefits to be paid for a period in advance of the expected death which is equal to or exceeds the time period available under the viatical settlement contract, and at an amount which is equal to or exceeds the amount available under the viatical settlement contract, unless the issuer of the policy, in writing, denies, declines, or refuses to provide such accelerated benefits. If the insurer does not respond to a request to effectuate an accelerated benefits provision sent by certified mail within 30 days after receiving the request, the insurer shall be deemed to have denied, declined, or refused to provide such accelerated benefits.

(7) At any time during the contestable period, within 20 days after a viator executes documents necessary to transfer rights under an insurance policy or within 20 days of any agreement, option, promise, or any other form of understanding, express or implied, to viaticate the policy, the provider must give notice to the insurer of the policy that the policy has or will become a viaticated policy. The notice must be accompanied by the documents required by s. 626.99287(5)(a) in their entirety.

(8) If the owner of the insurance policy is not the insured, the provider shall notify the insured that the policy has become the subject of a viatical settlement contract within 20 days after the transfer of rights under the contract.

(9) If the provider transfers ownership or changes the beneficiary of the insurance policy, the provider must communicate the initial change in ownership or beneficiary to the insured within 20 days after the change.

(10) The viatical settlement provider who effectuated the viatical settlement contract with the viator (the "initial provider") is responsible for tracking the insured, including, but not limited to, keeping track of the insured's whereabouts and health status, submission of death claims or assisting the beneficiary in the submission of death claims, and the status of the payment of premiums until the death of the insured. This responsibility may be contracted out to a third party; however, the ultimate responsibility remains with the initial provider. This responsibility continues with the initial provider, notwithstanding any transfers of the viaticated policy in the secondary market. This subsection applies only to those viaticated policies that are or are to become the subject of viatical settlement purchase agreements.

626.99245 Conflict of regulation of viaticals.

(1) A viatical settlement provider who from this state enters into a viatical settlement contract with a viator who is a resident of another state that has enacted statutes or adopted regulations governing viatical settlement contracts shall be governed in the effectuation of that viatical settlement contract by the statutes and regulations of the viator's state of residence. If the state in which the viator is a resident has not enacted statutes or regulations governing viatical settlement agreements, the provider shall give the viator notice that neither Florida nor his or her state regulates the transaction upon which he or she is entering. For transactions in those states, however, the viatical settlement provider is to maintain all records required as if the transactions were executed in Florida. The forms used in those states need not be approved by the office.

(2) This section does not affect the requirement of ss. 626.9911(12) and 626.9912(1) that a viatical settlement provider doing business from this state must obtain a viatical settlement license from the office. As used in this subsection, the term "doing business from this state" includes effectuating viatical settlement contracts from offices in this state, regardless of the state of residence of the viator.

626.9925 Rules.-The commission may adopt rules to administer this act, including rules establishing standards for evaluating advertising by licensees; rules providing for the collection of data, for disclosures to viators, for the reporting of life expectancies, and for the registration of life expectancy providers; and rules defining terms used in this act and prescribing recordkeeping requirements relating to executed viatical settlement contracts.

626.9926 Rate regulation not authorized.-Nothing in this act shall be construed to authorize the office or department to directly or indirectly regulate the amount paid as consideration for entry into a viatical settlement contract.

626.9927 Unfair trade practices; cease and desist; injunctions; civil remedy.

(1) A violation of this act is an unfair trade practice under ss. 626.9521 and 626.9541 and is subject to the penalties provided in the insurance code. Part IX of this chapter, entitled Unfair Insurance Trade Practices, applies to a licensee under this act or a transaction subject to this act as if a viatical settlement contract were an insurance policy.

(2) In addition to the penalties and other enforcement provisions of this act, if any person violates this act or any rule implementing this act, the office or department, as appropriate, may seek an injunction in the circuit court of the county where the person resides or has a principal place of business and may apply for temporary and permanent orders that the office or department determines necessary to restrain the person from committing the violation.

(3) Any person damaged by the acts of a person in violation of this act may bring a civil action against the person committing the violation in the circuit court of the county in which the alleged violator resides or has a principal place of business or in the county wherein the alleged violation occurred. Upon an adverse adjudication, the defendant is liable for damages, together with court costs and reasonable attorney's fees incurred by the plaintiff. When so awarded, court costs and attorney's fees must be included in the judgment or decree rendered in the case. If it appears to the court that the suit brought by the plaintiff is frivolous or brought for purposes of harassment, the plaintiff is liable for court costs and reasonable attorney's fees incurred by the defendant.

626.99272 Cease and desist orders and fines.

(1) The office or department as appropriate may issue a cease and desist order upon a person that violates any provision of this part, any rule or order adopted by the commission, office, or department, or any written agreement entered into with the office or department.

(2) When the office or department finds that such an action presents an immediate danger to the public which requires an immediate final order, it may issue an emergency cease and desist order reciting with particularity the facts underlying such findings. The emergency cease and desist order is effective immediately upon service of a copy of the order on the respondent and remains effective for 90 days. If the office or department begins nonemergency cease and desist proceedings under subsection (1), the emergency cease and desist order remains effective, absent an order by an appellate court of competent jurisdiction pursuant to s. 120.68, until the conclusion of proceedings under ss. 120.569 and 120.57.

(3) The office or department may impose and collect an administrative fine not to exceed $10,000 for each nonwillful violation and $25,000 for each willful violation of any provision of this part.

626.99275 Prohibited practices; penalties.

(1) It is unlawful for any person:

(a) To knowingly enter into, broker, or otherwise deal in a viatical settlement contract the subject of which is a life insurance policy, knowing that the policy was obtained by presenting materially false information concerning any fact material to the policy or by concealing, for the purpose of misleading another, information concerning any fact material to the policy, where the viator or the viator's agent intended to defraud the policy's issuer.

(b) To knowingly or with the intent to defraud, for the purpose of depriving another of property or for pecuniary gain, issue or use a pattern of false, misleading, or deceptive life expectancies.

(c) To knowingly engage in any transaction, practice, or course of business intending thereby to avoid the notice requirements of s. 626.9924(7).

(d) To knowingly or intentionally facilitate the change of state of residency of a viator to avoid the provisions of this chapter.

(2) A person who violates any provision of this section commits:

(a) A felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084, if the insurance policy involved is valued at any amount less than $20,000.

(b) A felony of the second degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084, if the insurance policy involved is valued at $20,000 or more, but less than $100,000.

(c) A felony of the first degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084, if the insurance policy involved is valued at $100,000 or more.

626.99278 Viatical provider anti-fraud plan.-Every licensed viatical settlement provider and registered life expectancy provider must adopt an anti-fraud plan and file it with the Division of Insurance Fraud of the department. Each anti-fraud plan shall include:

(1) A description of the procedures for detecting and investigating possible fraudulent acts and procedures for resolving material inconsistencies between medical records and insurance applications.

(2) A description of the procedures for the mandatory reporting of possible fraudulent insurance acts and prohibited practices set forth in s. 626.99275 to the Division of Insurance Fraud of the department.

(3) A description of the plan for anti-fraud education and training of its underwriters or other personnel.

(4) A written description or chart outlining the organizational arrangement of the anti-fraud personnel who are responsible for the investigation and reporting of possible fraudulent insurance acts and for the investigation of unresolved material inconsistencies between medical records and insurance applications.

(5) For viatical settlement providers, a description of the procedures used to perform initial and continuing review of the accuracy of life expectancies used in connection with a viatical settlement contract or viatical settlement investment.

626.9928 Acquisitions.-Acquisition of interest in a viatical settlement provider is subject to s. 628.4615.

626.99285 Applicability of insurance code.-In addition to other applicable provisions cited in the insurance code, the office or department, as appropriate, has the authority granted under ss. 624.310, 626.901, and 626.989 to regulate viatical settlement providers, viatical settlement brokers, viatical settlement contracts, and viatical settlement transactions.

626.99287 Contestability of viaticated policies.-Except as hereinafter provided, if a viatical settlement contract is entered into within the 2-year period commencing with the date of issuance of the insurance policy or certificate to be acquired, the viatical settlement contract is void and unenforceable by either party. Notwithstanding this limitation, such a viatical settlement contract is not void and unenforceable if:

(1) The policy was issued upon the owner's exercise of conversion rights arising out of a group or term policy;

(2) The owner of the policy is a charitable organization exempt from taxation under 26 U.S.C. s. 501(c)(3);

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

(4) The viatical settlement contract was entered into before July 1, 2000;

(5) The viator certifies by producing independent evidence to the viatical settlement provider that one or more of the following conditions have been met within the 2-year period:

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

illness or condition that is either:

a. Catastrophic or life threatening; or

b. Requires a course of treatment for a period of at least 3 years of long-term care or home health care; and

2. The condition was not known to the insured at the time the life insurance contract was entered into.

(b) The viator's spouse dies;

(c) The viator divorces his or her spouse;

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

(e) The viator becomes physically or mentally disabled and a physician determines that the disability prevents the viator from maintaining full-time employment;

(f) The owner of the policy was the insured's employer at the time the policy or certificate was issued and the employment relationship terminated;

(g) A final order, judgment, or decree is entered by a court of competent jurisdiction, on the application of a creditor of the viator, adjudicating the viator bankrupt or insolvent, or approving a petition seeking reorganization of the viator or appointing a receiver, trustee, or liquidator to all or a substantial part of the viator's assets; or

(h) The viator experiences a significant decrease in income which is unexpected by the viator and which impairs his or her reasonable ability to pay the policy premium. If the viatical settlement provider submits to the insurer a copy of the viator's or owner's certification described above, then the provider submits a request to the insurer to effect the transfer of the policy or certificate to the viatical settlement provider, the viatical settlement agreement shall not be void or unenforceable by operation of this section. The insurer shall timely respond to such request. Nothing in this section shall prohibit an insurer from exercising its right during the contestability period to contest the validity of any policy on grounds of fraud.

626.99295 Grace period.--Any person who, on July 1, 2005, is effectuating a viatical settlement purchase agreement made before July 1, 2005, under provisions of law in effect before such date, which viatical settlement purchase agreement was not registered pursuant to chapter 517, must proceed within 30 days after July 1, 2005, to conclude all viatical settlement purchase transactions in progress, provided, if funds have not been matched with a viaticated policy, such funds, or any unmatched portion of such funds, shall be returned to the viatical settlement purchaser within 30 days after July 1, 2005. The provider may not solicit, negotiate, advertise, or effectuate new viatical settlement purchase agreements after July 1, 2005.

GEORGIA STATUTE

Title 33. Insurance Chapter 59. Life Settlements

[section] 33-59-1. Short title

This chapter shall be known and may be cited as the "Life Settlements Act."

[section] 33-59-2. Definitions

As used in this chapter, the term:

(1) "Advertising" means any written, electronic, or printed communication or any communication by means of recorded telephone messages or any communication transmitted on radio, television, the Internet, or similar communications media, including film strips, motion pictures, and videos, published, disseminated, circulated, or placed directly before the public in this state for the purpose of creating an interest in or inducing a person to sell, assign, devise, bequeath, or transfer the death benefit or ownership of a policy pursuant to a life settlement contract.

(2) "Business of life settlements" means an activity including, but not limited to, the offering, solicitation, negotiation, procurement, effectuation, purchasing, investing, financing, monitoring, tracking, underwriting, selling, transferring, assigning, pledging, hypothecating, or in any other manner involving, life settlement contracts.

(3) "Chronically ill" or "having a chronic illness" means:

(A) Being unable to perform at least two activities of daily living including, but not limited to, eating, toileting, transferring, bathing, dressing, or continence;

(B) Requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment; or

(C) Having a level of disability similar to that described in subparagraph (A) of this paragraph as determined by the Secretary of the United States Department of Health and Human Services.

(4) (A) "Financing entity" means an underwriter, placement agent, lender, purchaser of securities, purchaser of a policy or certificate from a life settlement provider, credit enhancer, or an entity that has a direct ownership in a policy that is the subject of a life settlement contract, but:

(i) Whose principal activity related to the transaction is providing funds to effect the life settlement or purchase of one or more purchased policies; and

(ii) Who has an agreement in writing with one or more licensed life settlement providers to finance the acquisition of life settlement contracts or to provide stop-loss insurance.

(B) "Financing entity" does not include a non-accredited investor.

(5) "Fraudulent life settlement act" includes:

(A) Acts or omissions committed by a person who, knowingly or with intent to defraud, for the purpose of depriving another of property or for pecuniary gain, commits, engages, or permits its employees or its agents to engage, in acts including:

(i) Presenting, causing to be presented, or preparing with knowledge or belief that it will be presented to or by a life settlement provider, financing entity, insurer, insurance producer, or another person, false material information, or concealing material information, as part of, in support of, or concerning a fact material to one or more of the following:

(I) An application for the issuance of a life settlement contract or policy;

(II) The underwriting of a life settlement contract or policy;

(III) A claim for payment or benefit pursuant to a life settlement contract or policy;

(IV) Premiums paid on a policy;

(V) Payments and changes in ownership or beneficiary made in accordance with the terms of a life settlement contract or policy;

(VI) The reinstatement or conversion of a policy;

(VII) In the solicitation, offer, effectuation, or sale of a life settlement contract or policy;

(VIII) The issuance of written evidence of a life settlement contract or insurance; or

(IX) A financing transaction;

(ii) Employing any device, scheme, or artifice to defraud related to purchased policies; or

(B) In the furtherance of a fraud or to prevent the detection of a fraud a person commits or permits its employees or its agents to commit any of the following acts:

(i) Remove, conceal, alter, destroy, or sequester from the Commissioner the assets or records of a licensee or other person engaged in the business of life settlements;

(ii) Misrepresent or conceal the financial condition of a licensee, financing entity, insurer, or other person;

(iii) Transact the business of life settlements in violation of laws requiring a license, certificate of authority, or other legal authority for the transaction of the business of life settlements; or

(iv) File with the Commissioner or the chief insurance regulatory official of another jurisdiction a document containing false information or otherwise conceal information about a material fact from the Commissioner;

(C) Embezzlement, theft, misappropriation, or conversion of moneys, funds, premiums, credits, or other property of a life settlement provider, life insurance producer, insurer, insured, seller, policy owner, or another person engaged in the business of life settlements or insurance;

(D) Recklessly entering into, negotiating, or otherwise dealing in a life settlement contract, the subject of which is a policy that was obtained by presenting false information concerning a fact material to the policy, or by concealing, for the purpose of misleading another, information concerning a fact material to the policy, where the seller or the seller's agent intended to defraud the insurance company that issued the policy. As used in this subparagraph, "recklessly" means engaging in the conduct in conscious and clearly unjustifiable disregard of a substantial likelihood of the existence of the relevant facts or risks, this disregard involving a gross deviation from acceptable standards of conduct; or

(E) Attempting to commit, assist, aid, or abet in the commission of, or conspiracy to commit, the acts or omissions specified in this paragraph.

(6) "Life insurance producer" means a person licensed as a resident or nonresident insurance producer pursuant to Chapter 23 of this title who has received qualification for life insurance coverage or a life line of coverage.

(7) "Life settlement contract" means a written agreement establishing the terms under which compensation or anything of value is paid, which compensation or value is less than the expected death benefit of the policy, in return for the seller's assignment, transfer, sale, devise, or bequest of the death benefit or ownership of any portion of the policy. A life settlement contract also includes a contract for a loan or other financing transaction with a seller secured primarily by an individual or group life insurance policy, other than a loan by a life insurance company pursuant to the terms of the policy or a loan secured by the cash value of a policy. A life settlement contract includes an agreement with a seller to transfer ownership or change the beneficiary designation at a later date regardless of the date that compensation is paid to the seller. A life settlement contract does not mean a written agreement entered into between a seller and a person having an insurable interest in the insured's life.

(8) "Life settlement provider" means a person, other than a seller, who enters into or effectuates a life settlement contract. Life settlement provider does not include:

(A) A bank, savings bank, savings and loan association, credit union, or other licensed lending institution that takes an assignment of a policy as collateral for a loan;

(B) The issuer of a policy providing accelerated benefits pursuant to the policy;

(C) An authorized or eligible insurer that provides stop-loss coverage to a life settlement provider, financing entity, special purpose entity, or related provider trust;

(D) A natural person who enters into or effectuates no more than one agreement in a calendar year for the transfer of policies for any value less than the expected death benefit;

(E) A financing entity;

(F) A special purpose entity;

(G) A related provider trust; or

(H) An accredited investor or qualified institutional buyer as defined, respectively, in Regulation D, Rule 501, or Rule 144A of the Federal Securities Act of 1933, as amended, and who purchases a purchased policy from a life settlement provider.

(9) "Person" means a natural person or a legal entity including, but not limited to, an individual, partnership, limited liability company, association, trust, or corporation.

(10) "Policy" means an individual or group policy, group certificate, contract, or arrangement of life insurance affecting the rights of a resident of this state or bearing a reasonable relation to this state, regardless of whether delivered or issued for delivery in this state.

(11) "Purchased policy" means a policy that has been acquired by a life settlement provider pursuant to a life settlement contract.

(12) "Related provider trust" means a titling trust or other trust established by a licensed life settlement provider or a financing entity for the sole purpose of holding the ownership or beneficial interest in purchased policies in connection with a financing transaction. The trust shall have a written agreement with the licensed life settlement provider under which the licensed life settlement provider is responsible for ensuring compliance with all statutory and regulatory requirements and under which the trust agrees to make all records and files related to life settlement transactions available to the Commissioner as if those records and files were maintained directly by the licensed life settlement provider.

(13) "Seller" means the owner of a policy who is a resident of this state who enters or seeks to enter into a life settlement contract. For the purposes of this chapter, a seller is not limited to an owner of a policy insuring the life of an individual with a terminal or chronic illness or condition except where specifically addressed. If there is more than one owner on a single policy and the owners are residents of different states, the transaction shall be governed by the law of the state in which the owner having the largest percentage ownership resides or, if the owners hold equal ownership, the state of residence of one owner agreed upon in writing by all owners. Seller does not include:

(A) A licensee as provided by this chapter, including a life insurance producer;

(B) An accredited investor or qualified institutional buyer as defined, respectively, in Regulation D, Rule 501, or Rule 144A of the Federal Securities Act of 1933, as amended;

(C) A financing entity;

(D) A special purpose entity; or

(E) A related provider trust.

(14) "Special purpose entity" means a corporation, partnership, trust, limited liability company, or other similar entity formed only to provide either, directly or indirectly, access to institutional capital markets for a financing entity or licensed life settlement provider.

(15) "Terminally ill" or "having a terminal illness" means having an illness or sickness that reasonably is expected to result in death in 24 months or less.

[section] 33-59-3. License requirements; representation of producers; exceptions; application and renewal; fees; licenses for legal entities; investigation by Commissioner and issuance of license; nonresident applicants; required information from providers

(a)(1) A person shall not negotiate life settlement contracts between a seller and one or more life settlement providers or otherwise act on behalf of a seller unless such person is a life insurance producer.

(2) A life insurance producer, as defined in paragraph (10) of subsection (a) of Code Section 33-23-1, who has been licensed for at least one year, shall be permitted to negotiate, as defined in paragraph (11) of subsection (a) of Code Section 33-23-1, life settlement contracts between a seller residing in this state and one or more life settlement providers. For purposes of this Code section, the one-year requirement is deemed to be satisfied if such person has been licensed as a resident life insurance producer in his or her home state for at least one year.

(3) Not later than 30 days from the first day of negotiating a life settlement on behalf of a seller, the life insurance producer shall notify the Commissioner of the activity on a form prescribed by the Commissioner and shall pay any applicable fees to be determined by the Commissioner. Notification shall include an acknowledgment by the life insurance producer that he or she operates in accordance with this chapter.

(4) Irrespective of the manner in which the life insurance producer is compensated, a life insurance producer is deemed to represent only the seller and not the life settlement provider or any insurer, and the insurer that issued the seller's policy shall not be liable for any act or omission of the life insurance producer or the life settlement provider arising out of or in connection with the life settlement transaction, provided that the insurer shall remain liable for any of its own acts or omissions.

(5) Notwithstanding paragraph (1) of this subsection, a person licensed as an attorney, certified public accountant, or financial planner accredited by a nationally recognized accreditation agency, who is retained to represent the seller, whose compensation is not paid directly or indirectly by the life settlement provider, may negotiate life settlement contracts without having to obtain a license as a life insurance producer.

(b)(1) A person may not operate as a life settlement provider without first obtaining a life settlement provider license from the insurance commissioner of the state of residence of the seller.

(2) Application for a life settlement provider license shall be made to the Commissioner by the applicant on a form prescribed by the Commissioner, and an application shall be accompanied by the fees to be determined by the Commissioner. Applications for license under this Code section shall be approved or denied by the Commissioner within 60 calendar days following receipt of a completed application by the Commissioner. The Commissioner shall notify applicants that the application is complete. Applications for such license shall be deemed approved after such time if not disapproved.

(3) A license may be renewed from year to year on the anniversary date upon payment of the annual renewal fees to be determined by the Commissioner. Failure to pay the fees by the renewal date shall result in the expiration of the license.

(4) Notwithstanding paragraphs (2) and (3) of this subsection, the license and renewal fees for a life settlement provider license may not exceed that established for an insurer as provided in Code Section 33-8-1.

(5) The applicant for a life settlement provider license shall provide information on forms prescribed by the Commissioner. The Commissioner has authority, at any time, to require the applicant to fully disclose the identity of all stockholders, partners, officers, members, and employees, except stockholders owning fewer than 5 percent of the shares of an applicant whose shares are publicly traded, and the Commissioner may refuse to issue a license in the name of a legal entity if not satisfied that any officer, employee, stockholder, partner, or member of it who may materially influence the applicant's conduct meets the standards of this chapter.

(6) A license issued to a legal entity authorizes all partners, officers, members, and designated employees to act as life settlement providers, as applicable, under the license, and all those persons shall be named in the application and any supplements to the application.

(7) Upon the filing of an application and the payment of the license fee, the Commissioner shall make an investigation of each applicant for a license as a life settlement provider and issue a license if the Commissioner finds that the applicant:

(A) Has provided a detailed plan of operation;

(B) Is competent and trustworthy and intends to act in good faith in the capacity involved by the license for which he or she has applied;

(C) Has a good business reputation and has had experience, training, or education so as to be qualified in the business for the license for which he or she has applied;

(D) If a legal entity, has provided a certificate of good standing from the state of its domicile; and

(E) Has provided an antifraud plan that meets the requirements of this chapter.

(8) The Commissioner may not issue a license to a nonresident applicant unless a written designation of an agent for service of process is filed and maintained with the Commissioner or the applicant has filed with the Commissioner the applicant's written irrevocable consent that any action against the applicant may be commenced against the applicant by service of process on the Commissioner.

(9) A life settlement provider shall provide to the Commissioner new or revised information about officers, stockholders of 10 percent or more, partners, directors, members, or designated employees within 30 days of the change.

[section] 33-59-4. Denial, revocation, suspension, or refusal of licenses; grounds; hearing required

(a) The Commissioner may refuse to issue, suspend, revoke, or refuse to renew the license of a life settlement provider if the Commissioner finds that:

(1) There was any material misrepresentation in the application for the license;

(2) The licensee or any officer, partner, member, or key management personnel has been convicted of fraudulent or dishonest practices, is subject to a final administrative action, or is otherwise shown to be untrustworthy or incompetent;

(3) The licensee demonstrates a pattern of unreasonable payments to sellers;

(4) The licensee or any officer, partner, member, or key management personnel has been found guilty of, or has pleaded guilty or nolo contendere to, any felony, or to a misdemeanor involving fraud or moral turpitude, regardless of whether a judgment or conviction has been entered by the court;

(5) The licensee has entered into any life settlement contract that has not been approved pursuant to this chapter;

(6) The licensee has failed to honor contractual obligations set out in a life settlement contract;

(7) The licensee no longer meets the requirements for initial licensure;

(8) The licensee has assigned, transferred, or pledged a purchased policy to a person other than a life settlement provider licensed in this state, an accredited investor or qualified institutional buyer as defined, respectively, in Regulation D, Rule 501, or Rule 144A of the Federal Securities Act of 1933, as amended, a financing entity, a special purpose entity, or a related provider trust; or

(9) The applicant or licensee or any officer, partner, member, or key management personnel or any life insurance producer has violated a provision of this chapter.

(b) The Commissioner may suspend, revoke, or refuse to renew the license of a life insurance producer if the Commissioner finds that such life insurance producer has violated the provisions of this chapter.

(c) If the Commissioner denies a license application or suspends, revokes, or refuses to renew the license of a life settlement provider or suspends, revokes, or refuses to renew a license of a life insurance producer pursuant to this chapter, the Commissioner shall conduct a hearing in accordance with Chapter 13 of Title 50.

[section] 33-59-5. Filing of contracts and disclosure statements with the Commissioner; approval or disapproval

A person may not use a life settlement contract or provide to a seller a disclosure statement form in this state unless filed with and approved by the Commissioner. Any life settlement contract form or disclosure form filed with the Commissioner shall be deemed approved if it has not been disapproved within 60 days of the filing. The Commissioner shall disapprove a life settlement contract form or disclosure statement form if, in the Commissioner's opinion, the contract or provisions contained in it are unreasonable, contrary to the interests of the public, or otherwise misleading or unfair to the seller.

[section] 3-59-6. Filing of annual statement with the Commissioner; confidential information

(a) Each life settlement provider shall file with the Commissioner by March first of each year an annual statement containing such information as the Commissioner prescribes by regulation. This information is limited to only those transactions where the seller is a resident of this state and does not include individual transaction data regarding the business of life settlements or data which compromises the privacy of personal, financial, and health information of the seller or insured.

(b) Except as otherwise allowed or required by law, a life settlement provider, life insurance producer, information bureau, rating agency or company, or another person with actual knowledge of a seller's or insured's identity may not disclose that identity as a seller or insured or the seller's or insured's financial or medical information to another person unless the disclosure is:

(1) Necessary to effect a life settlement contract between the seller and a life settlement provider and the seller or insured or both, as may be required, have provided prior written consent to the disclosure;

(2) Provided in response to an investigation or examination by the Commissioner or another governmental officer or agency;

(3) A term of or condition to the transfer of a policy by one life settlement provider to another life settlement provider;

(4) Necessary to permit a financing entity, related provider trust, or special purpose entity to finance the purchase of policies by a life settlement provider and the seller and insured have provided prior written consent to the disclosure;

(5) Necessary to allow the life settlement provider or its authorized representatives to make contacts for the purpose of determining health status; or

(6) Required to purchase stop-loss coverage.

[section] 33-59-7. Examination of licenses; record retention requirements; examination reports; orders; hearings; confidentiality of examination information; conflict of interest; cost of examinations; immunity; investigative authority of the Commissioner

(a) Authority, scope, and scheduling of examinations.

(1) The Commissioner may conduct an examination under this chapter of a licensee as often as the Commissioner in his or her sole discretion deems appropriate.

(2) For purposes of completing an examination of a licensee under this chapter, the Commissioner may examine or investigate any person, or the business of any person, in so far as the examination or investigation is, in the sole discretion of the Commissioner, necessary or material to the examination of the licensee.

(3) In lieu of an examination under this chapter of any foreign or alien licensee licensed in this state, the Commissioner may, at the Commissioner's discretion, accept an examination report on the licensee as prepared by the commissioner for the licensee's state of domicile or port-of-entry state.

(b) Record retention requirements.

(1) A person required to be licensed by this chapter shall for five years retain copies of all:

(A) Proposed, offered, or executed contracts, underwriting documents, policy forms, and applications from the date of the proposal, offer, or execution of the contract, whichever is later;

(B) All checks, drafts, or other evidence and documentation related to the payment, transfer, deposit, or release of funds from the date of the transaction; and

(C) All other records and documents related to the requirements of this chapter.

(2) This Code section does not relieve a person of the obligation to produce these documents to the Commissioner after the retention period has expired if the person has retained the documents.

(3) Records required to be retained by this Code section shall be legible and complete and may be retained in paper, photograph, micro process, magnetic, mechanical, or electronic media or by any process that accurately reproduces or forms a durable medium for the reproduction of a record.

(c) Conduct of examinations.

(1) Upon determining that an examination should be conducted, the Commissioner shall issue an examination warrant appointing one or more examiners to perform the examination and instructing them as to the scope of the examination. In conducting the examination, the examiner shall observe those guidelines and procedures set forth in the Examiners' Handbook adopted by the National Association of Insurance Commissioners. The Commissioner may also employ such other guidelines or procedures as the Commissioner may deem appropriate.

(2) Every licensee or person from whom information is sought and its officers, directors, and agents shall provide to the examiners timely, convenient, and free access at all reasonable hours at its offices to all books, records, accounts, papers, documents, assets, and computer or other recordings relating to the property, assets, business, and affairs of the licensee being examined. The officers, directors, employees, and agents of the licensee or person shall facilitate the examination and aid in the examination so far as it is in their power to do so. The refusal of a licensee, by its officers, directors, employees, or agents, to submit to examination or to comply with any reasonable written request of the Commissioner shall be grounds for suspension or refusal of or nonrenewal of any license or authority held by the licensee to engage in the life settlement business or other business subject to the Commissioner's jurisdiction. Any proceedings for suspension, revocation, or refusal of any license or authority shall be conducted pursuant to Code Section 33-2-24.

(3) The Commissioner shall have the power to issue subpoenas, to administer oaths, and to examine under oath any person as to any matter pertinent to the examination. Upon the failure or refusal of a person to obey a subpoena, the Commissioner may petition a court of competent jurisdiction and, upon proper showing, the court may enter an order compelling the witness to appear and testify or produce documentary evidence. Failure to obey the court order shall be punishable as contempt of court.

(4) When making an examination under this chapter, the Commissioner may retain attorneys, appraisers, independent actuaries, independent certified public accountants, or other professionals and specialists as examiners, the reasonable cost of which shall be borne by the licensee that is the subject of the examination.

(5) Nothing contained in this chapter shall be construed to limit the Commissioner's authority to terminate or suspend an examination in order to pursue other legal or regulatory action pursuant to the insurance laws of this state. Findings of fact and conclusions made pursuant to any examination shall be prima-facie evidence in any legal or regulatory action.

(6) Nothing contained in this chapter shall be construed to limit the Commissioner's authority to use and, if appropriate, to make public any final or preliminary examination report, any examiner or licensee work papers or other documents, or any other information discovered or developed during the course of any examination in the furtherance of any legal or regulatory action which the Commissioner may, in his or her sole discretion, deem appropriate.

(7) The licensee shall pay the charges incurred in the examination, including the expenses of the Commissioner or his or her designee and the expenses and compensation of the Commissioner's examiners and assistants. If a licensee feels the fees assessed are unreasonable in relation to the examination performed, the licensee may appeal the assessments pursuant to Chapter 13 of Title 50. If no hearing is requested or if after a hearing and appeal process the licensee refuses or fails to pay, the Commissioner or his or her designee shall promptly institute a civil action to recover the expenses of examination against a licensee.

(d) Examination reports.

(1) Examination reports shall comprise only facts appearing upon the books, records, or other documents of the licensee, its agents, or other persons examined or as ascertained from the testimony of its officers or agents or other persons examined concerning its affairs and such conclusions and recommendations as the examiners find reasonably warranted from the facts.

(2) No later than 60 days following completion of the examination, the examiner in charge shall file with the Commissioner a verified written report of examination under oath. Upon receipt of the verified report, the Commissioner shall transmit the report to the licensee examined, together with a notice that shall afford the licensee examined a reasonable opportunity of not more than 30 days to make a written submission or rebuttal with respect to any matters contained in the examination report.

(3) Within 30 days of the end of the period allowed for the receipt of written submissions or rebuttals, the Commissioner shall fully consider and review the report, together with any written submissions or rebuttals and any relevant portions of the examiner's work papers and enter an order:

(A) Adopting the examination report as filed or with modification or corrections. If the examination report reveals that the company is operating in violation of any law, rule, or prior order of the Commissioner, the Commissioner may order the company to take any action the Commissioner considers necessary and appropriate to cure the violation;

(B) Rejecting the examination report with directions to the examiners to reopen the examination for purposes of obtaining additional data, documentation, or information and refiling; or

(C) Calling for an investigatory hearing with no less than 20 days' notice to the company for purposes of obtaining additional documentation, data, information, and testimony.

(4) All orders entered pursuant to this subsection shall be accompanied by findings and conclusions resulting from the Commissioner's consideration and review of the examination report, relevant examiner work papers, and any written submissions or rebuttals. Any order issued pursuant to subparagraph (A) of paragraph (3) of this subsection shall be considered a final administrative decision and may be appealed pursuant to Chapter 13 of Title 50 and shall be served upon the company by certified mail or statutory overnight delivery, together with a copy of the adopted examination report. Within 30 days of the issuance of the adopted report the company shall file affidavits executed by each of its directors stating under oath that they have received a copy of the adopted report and related orders.

(5) Hearings conducted pursuant to this Code section shall be subject to the following requirements:

(A) Any hearing conducted pursuant to this Code section by the Commissioner or the Commissioner's authorized representative shall be conducted as a nonadversarial confidential investigatory proceeding as necessary for the resolution of any inconsistencies, discrepancies, or disputed issues apparent upon the face of the filed examination report or raised by or as a result of the Commissioner's review of relevant work papers or by the written submission or rebuttal of the company. Within 20 days of the conclusion of any hearing, the Commissioner shall enter an order pursuant to paragraph (3) of this subsection;

(B) The Commissioner may not appoint an examiner as an authorized representative to conduct the hearing. The hearing shall proceed expeditiously with discovery by the company limited to the examiner's work papers which tend to substantiate any assertions set forth in any written submission or rebuttal. The Commissioner or the Commissioner's representative may issue subpoenas for the attendance of any witnesses or the production of any documents considered relevant to the investigation whether under the control of the Commissioner, the company, or other persons. The documents produced shall be included in the record and testimony taken by the Commissioner or the Commissioner's representative shall be under oath and preserved for the record. Nothing contained in this Code section shall require the Commissioner to disclose any information or records which would indicate or show the existence or content of any investigation or activity of a criminal justice agency; and

(C) The hearing shall proceed with the Commissioner or the Commissioner's representative posing questions to the persons subpoenaed. Thereafter, the company and the department may present testimony relevant to the investigation. Cross-examination may be conducted only by the Commissioner or the Commissioner's representative. The company and the Commissioner shall be permitted to make closing statements and may be represented by counsel of their choice.

(6) In the event the Commissioner determines that regulatory action is appropriate as a result of an examination, the Commissioner may initiate any proceedings or actions provided by law.

(e) Confidentiality of examination information.

(1) Names and individual identification data for all sellers shall be considered private and confidential information and shall not be disclosed by the Commissioner, unless required by law.

(2) (A) Except as otherwise provided in this chap ter, all examination reports, working papers, recorded information, documents, and copies thereof produced by, obtained by, or disclosed to the Commissioner or any other person in the course of an examination made under this chapter or in the course of analysis or investigation by the Commissioner of the financial condition or market conduct of a licensee are:

(i) Confidential by law and privileged;

(ii) Not subject to the provisions of Chapter 18 of Title 50;

(iii) Not subject to subpoena; and

(iv) Not subject to discovery or admissible in evidence in any private civil action.

(B) The Commissioner is authorized to use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as part of the Commissioner's official duties.

(3) Documents, materials, or other information, including, but not limited to, all working papers, and copies thereof, in the possession or control of the National Association of Insurance Commissioners and its affiliates and subsidiaries are:

(A) Confidential by law and privileged;

(B) Not subject to subpoena; and

(C) Not subject to discovery or admissible in evidence in any private civil action if they are:

(i) Created, produced, or obtained by or disclosed to the National Association of Insurance Commissioners and its affiliates and subsidiaries in the course of assisting an examination made under this chapter or assisting an insurance commissioner in the analysis or investigation of the financial condition or market conduct of a licensee; or

(ii) Disclosed to the National Association of Insurance Commissioners and its affiliates and subsidiaries under paragraph (5) of this subsection by the Commissioner.

(4) For the purposes of paragraph (2) of this subsection, "chapter" includes the law of another state or jurisdiction that is substantially similar to this chapter.

(5) The Commissioner or any person that received the documents, material, or other information while acting under the authority of the Commissioner, including the National Association of Insurance Commissioners and its affiliates and subsidiaries, is permitted to testify in any private civil action concerning any confidential documents, materials, or information subject to paragraph (1) of this subsection.

(6) In order to assist in the performance of the Commissioner's duties, the Commissioner:

(A) May share documents, materials, or other information, including the confidential and privileged documents, materials, or information subject to paragraph (1) of this subsection, with other state, federal, and international regulatory agencies, with the National Association of Insurance Commissioners and its affiliates and subsidiaries, and with state, federal, and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material, communication, or other information;

(B) May receive documents, materials, communications, or information, including otherwise confidential and privileged documents, materials, or information, from the National Association of Insurance Commissioners and its affiliates and subsidiaries and from regulatory and law enforcement officials of other foreign or domestic jurisdictions and shall maintain as confidential or privileged any document, material, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information; and

(C) May enter into agreements governing sharing and use of information consistent with this subsection.

(7) No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information shall occur as a result of disclosure to the Commissioner under this Code section or as a result of sharing as authorized in paragraph (5) of this subsection.

(8) A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under this subsection shall be available and enforced in any proceeding in and in any court of this state.

(9) Nothing contained in this chapter shall prevent or be construed as prohibiting the Commissioner from disclosing the content of an examination report, preliminary examination report, or results, or any matter relating thereto, to the insurance commissioner of any other state or country or to law enforcement officials of this or any other state or agency of the federal government at any time or to the National Association of Insurance Commissioners, so long as such agency or office receiving the report or matters relating thereto agrees in writing to hold it confidential and in a manner consistent with this chapter.

(f) Conflict of interest.

(1) An examiner may not be appointed by the Commissioner if the examiner, either directly or indirectly, has a conflict of interest or is affiliated with the management of or owns a pecuniary interest in any person subject to examination under this chapter. This Code section shall not be construed to automatically preclude an examiner from being:

(A) A seller;

(B) An insured in a purchased policy; or

(C) A beneficiary in an insurance policy that is proposed to be the subject of a life settlement contract.

(2) Notwithstanding the requirements of this subsection, the Commissioner may retain from time to time, on an individual basis, qualified actuaries, certified public accountants, or other similar individuals who are independently practicing their professions even though these persons may from time to time be similarly employed or retained by persons subject to examination under this chapter.

(g) Cost of examinations.

The expenses incurred in conducting any examination shall be paid by the licensee or applicant.

(h) Immunity from liability.

(1) No cause of action shall arise nor shall any liability be imposed against the Commissioner, the Commissioner's authorized representatives, or any examiner appointed by the Commissioner for any statements made or conduct performed in good faith while carrying out the provisions of this chapter.

(2) No cause of action shall arise, nor shall any liability be imposed against any person, for the act of communicating or delivering information or data to the Commissioner or the Commissioner's authorized representative or examiner pursuant to an examination made under this chapter, if the act of communication or delivery was performed in good faith and without fraudulent intent or the intent to deceive. This paragraph does not abrogate or modify in any way any common law or statutory privilege or immunity heretofore enjoyed by any person identified in paragraph (1) of this subsection.

(3) A person identified in paragraph (1) or (2) of this subsection shall be entitled to an award of attorney's fees and costs if he or she is the prevailing party in a civil cause of action for libel, slander, or any other relevant tort arising out of activities in carrying out the provisions of this chapter and the party bringing the action was not substantially justified in doing so. For purposes of this paragraph a proceeding is "substantially justified" if it had a reasonable basis in law or fact at the time that it was initiated.

(i) Investigative authority of the commissioner.

The Commissioner may investigate suspected fraudulent life settlement acts and persons engaged in the business of life settlements.

[section] 33-59-8. Required disclosures

(a) With each application for a life settlement contract, a life settlement provider or life insurance producer shall provide the seller with at least the following disclosures no later than the time the application for the life settlement contract is signed by all parties. The disclosures shall be provided in a separate document that is signed by the seller and the life settlement provider or life insurance producer and shall provide the following information:

(1) That there exist possible alternatives to a life settlement contract including any accelerated death benefits or policy loans offered under the seller's life insurance policy;

(2) That some or all of the proceeds of the life settlement contract may be taxable under federal income tax and state franchise and income taxes and assistance may be sought from a professional tax adviser;

(3) That proceeds of the life settlement contract may be subject to the claims of creditors;

(4) That receipt of the proceeds of a life settlement contract may adversely affect the seller's eligibility for Medicaid or other government benefits or entitlements and advice may be obtained from the appropriate government agencies;

(5) That the seller has the right to rescind a life settlement contract before the earlier of 30 calendar days after the date upon which the life settlement contract is executed by all parties or for 15 calendar days after the receipt of the life settlement proceeds by the seller. Rescission, if exercised by the seller, is effective only if both notice of the rescission is given and repayment of all proceeds and any premiums, loans, and loan interest to the life settlement provider is made within the rescission period. If the insured dies during the rescission period, the life settlement contract is deemed to have been rescinded, subject to repayment being made to the life settlement provider within the rescission period of all life settlement proceeds and any premiums, loans, and loan interest;

(6) That funds shall be sent to the seller within three business days after the life settlement provider has received the insurer or group administrator's acknowledgment that ownership of the purchased policy has been transferred and the beneficiary has been designated;

(7) That entering into a life settlement contract may cause other rights or benefits, including conversion rights and waiver of premium benefits that may exist under the policy, to be forfeited by the seller and assistance may be sought from a financial adviser;

(8) That the disclosure to a seller shall include distribution of a brochure, approved by the Commissioner, describing the process of life settlements;

(9) That the disclosure document shall contain the following language: "All medical, financial, or personal information solicited or obtained by a life settlement provider or a life insurance producer about an insured, including the insured's identity or the identity of family members, a spouse, or a significant other, may be disclosed as necessary to effect the life settlement contract between the seller and the life settlement provider. If you are asked to provide this information, you will be asked to consent to the disclosure. The information may be provided to someone who buys the policy or provides funds for the purchase. You may be asked to renew your permission to share information every two years."; and

(10) That the insured may be contacted by either the life settlement provider or its authorized representative for the purpose of determining the insured's health status. This contact is limited to once every three months if the insured has a life expectancy of more than one year and no more than once each month if the insured has a life expectancy of one year or less.

(b) A life settlement provider shall provide the seller with at least the following disclosures no later than the date the life settlement contract is signed by all parties. The disclosures shall be displayed conspicuously in the life settlement contract or in a separate document signed by the seller and the life settlement provider and provide the following information:

(1) The affiliation, if any, between the life settlement provider and the issuer of the insurance policy to be acquired pursuant to a life settlement contract;

(2) The name, address, and telephone number of the life settlement provider;

(3) If a policy to be acquired pursuant to a life settlement contract has been issued as a joint policy or involves family riders or any coverage of a life other than the insured under the policy to be acquired pursuant to a life settlement contract, the seller shall be informed of the possible loss of coverage on the other lives under the policy and shall be advised to consult with his or her insurance producer or the insurer issuing the policy for advice on the proposed life settlement contract;

(4) The dollar amount of the current death benefit payable to the life settlement provider under the policy. If known, the life settlement provider also shall disclose the availability of additional guaranteed insurance benefits, the dollar amount of accidental death and dismemberment benefits under the policy or certificate, and the life settlement provider's interest in those benefits; and

(5) The name, business address, and telephone number of the independent third-party escrow agent and the fact that the seller may inspect or receive copies of the relevant escrow or trust agreements or documents.

(c) If the life settlement provider transfers ownership or changes the beneficiary of the policy, the life settlement provider shall communicate the change in ownership or beneficiary to the insured within 20 days after the change.

[section] 33-59-9. Required documents and information; confidentiality; seller's right to rescind; escrow proceedings; failure to tender consideration; limitation on contracts with the insured for the purpose of determining the insured's health status

(a)(1) A life settlement provider entering into a life settlement contract first shall obtain:

(A) If the seller is the insured, a written statement from a licensed attending physician that the seller is of sound mind and under no constraint or undue influence to enter into a life settlement contract; and

(B) A document in which the insured consents to the release of his or her medical records to a life settlement provider or insurance producer and, if the policy was issued less than two years from the date of application for a life settlement contract, to the insurance company that issued the policy.

(2) The insurer shall respond to a request for verification of coverage submitted by a life settlement provider or life insurance producer not later than 30 calendar days from the date the request is received. The request for verification of coverage shall be made on a form approved by the Commissioner. The insurer shall complete and issue the verification of coverage or indicate in which respects it is unable to respond. In its response, the insurer shall indicate whether, based on the medical evidence and documents provided, the insurer intends to pursue an investigation at this time regarding the validity of the insurance contract or possible fraud and shall provide sufficient detail of all reasons for the investigation to the life settlement provider or the life insurance producer.

(3) Before or at the time of execution of the life settlement contract, the life settlement provider shall obtain a witnessed document in which the seller consents to the life settlement contract, represents that the seller has a full and complete understanding of the life settlement contract, represents that the seller has a full and complete understanding of the benefits of the policy, acknowledges that the seller is entering into the life settlement contract freely and voluntarily, and, for persons with a terminal or chronic illness or condition, acknowledges that the insured has a terminal or chronic illness and that the terminal or chronic illness or condition was diagnosed after the policy was issued.

(4) If a life insurance producer performs any of these activities required of the life settlement provider, the life settlement provider is deemed to have fulfilled the requirements of this Code section.

(b) Medical information solicited or obtained by a licensee is subject to the applicable provisions of state law relating to confidentiality of medical or protected health information.

(c) A life settlement contract entered into in this state shall provide the seller with an unconditional right to rescind the contract before the earlier of 30 calendar days after the date upon which the life settlement contract is executed by all parties or 15 calendar days after the receipt of the life settlement proceeds by the seller. Rescission, if exercised by the seller, is effective only if both notice of the rescission is given and repayment of all proceeds and any premiums, loans, and loan interest to the life settlement provider is made within the rescission period. If the insured dies during the rescission period, the life settlement contract shall be deemed to have been rescinded, subject to repayment of all life settlement proceeds and any premiums, loans, and loan interest to the life settlement provider.

(d) The life settlement provider shall instruct the seller to send the executed documents required to effect the change in ownership, assignment, or change in beneficiary directly to the independent escrow agent. Within three business days after the date the escrow agent receives the documents or from the date the life settlement provider receives the documents, if the seller erroneously provides the documents directly to the life settlement provider, the life settlement provider shall pay or transfer the proceeds of the life settlement contract into an escrow or trust account maintained in a state or federally chartered financial institution whose deposits are insured by the Federal Deposit Insurance Corporation. Upon payment of the life settlement proceeds into the escrow account, the escrow agent shall deliver the original change in ownership, assignment, or change in beneficiary forms to the life settlement provider or related provider trust. Upon the escrow agent's receipt of the acknowledgment of the properly completed transfer of ownership, assignment, or designation of beneficiary from the insurance company, the escrow agent shall pay the life settlement proceeds to the seller.

(e) Failure to tender consideration to the seller for the life settlement contract within the time disclosed renders the life settlement contract voidable by the seller for lack of consideration until the time consideration is tendered to and accepted by the seller.

(f) A contact with the insured, for the purpose of determining the health status of the insured by the life settlement provider after the life settlement contract has been executed, may only be made by the licensed life settlement provider or its authorized representatives and is limited to once every three months for insureds with a life expectancy of more than one year and not more than once each month for insureds with a life expectancy of one year or less. The life settlement provider shall explain the procedure for these contacts at the time the life settlement contract is entered into. The limitations provided for in this subsection do not apply to a contact with an insured for reasons other than determining the insured's health status. A life settlement provider is responsible for the actions of his or her authorized representatives.

[section] 33-59-10. Contracts entered into within two years of the issuance of the policy prohibited; exceptions

It is a violation of this chapter for a person to enter into a life settlement contract within a two-year period commencing with the date of issuance of the policy unless the seller certifies to the life settlement provider that one or more of the following conditions have been met within the two-year period:

(1) The policy was issued upon the seller's exercise of conversion rights arising out of a group or individual policy, provided the total of the time covered under the conversion policy plus the time covered under the prior policy is at least 24 months. The time covered under a group policy shall be calculated without regard to a change in insurance carriers, provided the coverage has been continuous and under the same group sponsorship; or

(2) (A) The seller submits independent evidence to the life settlement provider that one or more of the following conditions have been met within the two-year period:

(1) The seller or insured is terminally or chronically ill; or

(ii) The seller or insured disposes of his or her ownership interests in a closely held corporation, pursuant to the terms of a buyout or other similar agreement in effect at the time the insurance policy was initially issued.

(B) Copies of the independent evidence described in paragraph (2) of this Code section and documents required in subsection (a) of Code Section 33-59-9 shall be submitted to the insurer when the life settlement provider submits a request to the insurer for verification of coverage. The copies shall be accompanied by a letter of attestation from the life settlement provider that the copies are true and correct copies of the documents received by the life settlement provider;

(C) If the life settlement provider submits to the insurer a copy of independent evidence provided for in subparagraph (A) of paragraph (2) of this Code section when the life settlement provider submits a request to the insurer to effect the transfer of the policy to the life settlement provider, the copy is deemed to conclusively establish that the life settlement contract satisfies the requirements of this Code section and the insurer shall respond timely to the request.

[section] 33-59-11. Permissible and impermissible conduct in advertising

(a) The purpose of this Code section is to provide a prospective seller with clear and unambiguous statements in the advertisement of a life settlement contract and to assure the clear, truthful, and ad equate disclosure of the benefits, risks, limitations, and exclusions of a life settlement contract. This purpose is to be accomplished by the establishment of guidelines and standards of permissible and impermissible conduct in the advertising of a life settlement contract to assure that a product description is presented in a manner that prevents unfair, deceptive, or misleading advertising and is conducive to accurate presentation and description of a life settlement contract through the advertising media and material used by a licensee.

(b) This Code section applies to an advertising of a life settlement contract or a related product or service intended for dissemination in this state, including Internet advertising viewed by a person located in this state. Where disclosure requirements are established pursuant to federal regulation, this Code section shall be interpreted so as to minimize or eliminate conflict with federal regulation wherever possible.

(c) Each life settlement licensee shall establish and at all times maintain a system of control over the content, form, and method of dissemination of an advertisement of its contracts, products, and services. An advertisement regardless of by whom written, created, designed, or presented, is the responsibility of the licensee, as well as the individual who created or presented the advertisement. A system of control by the licensee shall include regular routine notification, at least once a year, to agents and others authorized to disseminate advertisements of the requirements and procedures for approval before the use of an advertisement not furnished by the licensee.

(d) An advertisement shall be truthful and not misleading in fact or by implication. The form and content of an advertisement of a life settlement contract shall be sufficiently complete and clear so as to avoid deception. It may not have the capacity or tendency to mislead or deceive. Whether an advertisement has the capacity or tendency to mislead or deceive shall be determined by the Commissioner from the overall impression that the advertisement may be reasonably expected to create upon a person of average education or intelligence within the segment of the public to which it is directed.

(e) (1) The information required to be disclosed under this Code section may not be minimized, rendered obscure, or presented in an ambiguous fashion or intermingled with the text of the advertisement so as to be confusing or misleading.

(2) An advertisement may not omit material information or use words, phrases, statements, references, or illustrations if the omission or use has the capacity, tendency, or effect of misleading or deceiving the public as to the nature or extent of any benefit, loss covered, or state or federal tax consequence. The fact that the life settlement contract offered is made available for inspection before consummation of the sale or an offer is made to refund the payment if the seller is not satisfied or that the life settlement contract includes a "free look" period that satisfies or exceeds legal requirements does not remedy misleading statements.

(3) An advertisement may not use the name or title of a life insurance company or a life insurance policy unless the advertisement has been approved by the insurer.

(4) An advertisement may not state or imply that interest charged on an accelerated death benefit or a policy loan is unfair, inequitable, or in any manner an incorrect or improper practice.

(5) The words "free," "no cost," "without cost," "no additional cost," "at no extra cost," or words of similar import may not be used with respect to a benefit or service unless true. An advertisement may specify the charge for a benefit or service or may state that a charge is included in the payment or use other appropriate language.

(6) (A) Any testimonial, appraisal, or analysis used in an advertisement shall:

(i) Be genuine;

(ii) Represent the current opinion of the author;

(iii) Be applicable to the life settlement contract, product, or service advertised, if any; and

(iv) Be accurately reproduced with sufficient completeness to avoid misleading or deceiving prospective sellers as to the nature or scope of any testimonial, appraisal, analysis, or endorsement.

(B) In using any testimonials, appraisals, or analyses, the life settlement licensee makes as its own all the statements contained in them, and the statements are subject to all the provisions of this Code section.

(C) If the individual making a testimonial, appraisal, analysis, or an endorsement has a financial interest in the life settlement provider or related entity as a stockholder, director, officer, employee, or otherwise, or receives a benefit, directly or indirectly, other than required union scale wages, that fact shall be disclosed prominently in the advertisement.

(D) An advertisement may not state or imply that a life settlement contract, benefit, or service has been approved or endorsed by a group of individuals, society, association, or other organization, unless that is the fact and unless any relationship between an organization and the licensee is disclosed. If the entity making the endorsement or testimonial is owned, controlled, or managed by the licensee or receives payment or other consideration from the licensee for making an endorsement or testimonial, that fact shall be disclosed in the advertisement.

(E) If an endorsement refers to benefits received under a life settlement contract, all pertinent information shall be retained for a period of five years after its use.

(f) An advertisement may not contain statistical information unless it accurately reflects recent and relevant facts. The source of all statistics used in an advertisement shall be identified.

(g) An advertisement may not disparage insurers, life settlement providers, insurance producers, policies, services, or methods of marketing.

(h) The name of the life settlement licensee shall be identified clearly in all advertisements about the licensee or its life settlement contract, products, or services and, if any specific life settlement contract is advertised, the life settlement contract shall be identified either by form number or some other appropriate description. If an application is part of the advertisement, the name of the life settlement provider shall be shown on the application.

(i) An advertisement may not use a trade name, group designation, name of the parent company of a licensee, name of a particular division of the licensee, service mark, slogan, symbol, or other device or reference without disclosing the name of the licensee, if the advertisement has the capacity or tendency to mislead or deceive as to the true identity of the licensee, or to create the impression that a company other than the licensee has any responsibility for the financial obligation under a life settlement contract.

(j) An advertisement may not use any combination of words, symbols, or physical materials that by their content, phraseology, shape, color, or other characteristics are so similar to a combination of words, symbols, or physical materials used by a government program or agency or otherwise appear to be of such a nature that they tend to mislead prospective sellers into believing that the solicitation is in some manner connected with a government program or agency.

(k) An advertisement may state that a licensee is licensed in the state where the advertisement appears, provided it does not exaggerate that fact or suggest or imply that the competing licensee may not be so licensed. The advertisement may ask the audience to consult the licensee's website or contact the Department of Insurance to find out if that state requires licensing and, if so, whether the licensee or any other company is licensed.

(l) An advertisement may not create the impression that the life settlement provider, its financial condition or status, the payment of its claims, or the merits, desirability, or advisability of its life settlement contracts are recommended or endorsed by any government entity.

(m) The name of the actual licensee shall be stated in all of its advertisements. An advertisement may not use a trade name, any group designation, name of any affiliate or controlling entity of the licensee, service mark, slogan, symbol, or other device in a manner that has the capacity or tendency to mislead or deceive as to the true identity of the actual licensee or create the false impression that an affiliate or controlling entity has any responsibility for the financial obligation of the licensee.

(n) An advertisement may not, directly or indirectly, create the impression that any division or agency of the state or of the United States government endorses, approves, or favors:

(1) A licensee or its business practices or methods of operation;

(2) The merits, desirability, or advisability of a life settlement contract;

(3) Any life settlement contract; or

(4) Any policy or life insurance company.

(o) If the advertiser emphasizes the speed with which the life settlement contract occurs, the advertising shall disclose the average time frame from completed application to the date of offer and from acceptance of the offer to receipt of the funds by the seller.

(p) If the advertising emphasizes the dollar amounts available to sellers, the advertising shall disclose the average purchase price as a percent of face value obtained by sellers contracting with the licensee during the past six months.

[section] 33-59-12. Violations; required statement; reporting of fraudulent acts to the Commissioner; immunity for providing information concerning fraudulent acts; confidentiality of documents and evidence; mandatory adoption of antifraud initiatives by providers

(a) (1) A person shall not commit a fraudulent life settlement act.

(2) A person, knowingly or intentionally, shall not interfere with the enforcement of the provisions of this chapter or investigations of suspected or actual violations of this chapter.

(3) A person in the business of life settlements, knowingly or intentionally, shall not permit a person convicted of a felony involving dishonesty or breach of trust to participate in the business of life settlements.

(b) (1) A life settlement contract and an application for a life settlement contract, regardless of the form of transmission, shall contain the following statement or a substantially similar statement:

"Any person who knowingly presents false information in an application for insurance or life settlement contract is guilty of a crime and, upon conviction, may be subject to fines or confinement in prison, or both."

(2) The lack of a statement as provided for in paragraph (1) of this subsection does not constitute a defense in any prosecution for a fraudulent life settlement act.

(c) (1) A person engaged in the business of life settlements having knowledge or a reasonable belief that a fraudulent life settlement act is being, will be, or has been committed shall provide to the Commissioner the information required by and in a manner prescribed by the Commissioner.

(2) Another person having knowledge or a reasonable belief that a fraudulent life settlement act is being, will be, or has been committed may provide to the Commissioner the information required by and in a manner prescribed by the Commissioner.

(d) (1) A civil liability may not be imposed on and a cause of action may not arise from a person's furnishing information concerning suspected, anticipated, or completed fraudulent life settlement acts or suspected or completed fraudulent insurance acts, if the information is provided to or received from:

(A) The Commissioner or the Commissioner's employees, agents, or representatives;

(B) Federal, state, or local law enforcement or regulatory officials or their employees, agents, or representatives;

(C) A person involved in the prevention and detection of fraudulent life settlement acts or that person's agents, employees, or representatives;

(D) The National Association of Insurance Commissioners, National Association of Securities Dealers, the North American Securities Administrators Association, or their employees, agents, or representatives or any other regulatory body overseeing life insurance or life settlement contracts; or

(E) The insurer that issued the policy covering the life of the insured.

(2) Paragraph (1) of this subsection does not apply to a statement made with actual malice. In an action brought against a person for filing a report or furnishing other information concerning a fraudulent life settlement act or a fraudulent insurance act, the party bringing the action shall plead specifically any allegation that paragraph (1) of this subsection does not apply because the person filing the report or furnishing the information did so with actual malice.

(3) A person identified in paragraph (1) of this subsection is entitled to an award of attorney's fees and costs if he or she is the prevailing party in a civil cause of action for libel, slander, or another relevant tort arising out of activities in carrying out the provisions of this chapter and the party bringing the action was not substantially justified in doing so. For purposes of this Code section, a proceeding is "substantially justified" if it had a reasonable basis in law or fact at the time that it was initiated.

(4) This Code section does not abrogate or modify common law or statutory privileges or immunities enjoyed by a person described in paragraph (1) of this subsection.

(5) Paragraph (1) of this subsection does not apply to a person's furnishing information concerning his or her own suspected, anticipated, or completed fraudulent life settlement acts or suspected, anticipated, or completed fraudulent insurance acts.

(e)(1) The documents and evidence provided pursuant to subsection (d) of this Code section or obtained by the Commissioner in an investigation of suspected or actual fraudulent life settlement acts are privileged and confidential and are not a public record and are not subject to discovery or subpoena in a civil or criminal action.

(2) Paragraph (1) of this subsection does not prohibit release by the Commissioner of documents and evidence obtained in an investigation of suspected or actual fraudulent life settlement acts:

(A) In administrative or judicial proceedings to enforce laws administered by the Commissioner;

(B) To federal, state, or local law enforcement or regulatory agencies, to an organization established for the purpose of detecting and preventing fraudulent life settlement acts, or to the National Association of Insurance Commissioners; or

(C) At the discretion of the Commissioner, to a person in the business of life settlements that is aggrieved by a fraudulent life settlement act.

(3) Release of documents and evidence provided by paragraph (2) of this subsection does not abrogate or modify the privilege granted in paragraph (1) of this subsection.

(f) This chapter does not:

(1) Preempt the authority or relieve the duty of other law enforcement or regulatory agencies to investigate, examine, and prosecute suspected violations of law;

(2) Prevent or prohibit a person from disclosing voluntarily information concerning fraudulent life settlement acts to a law enforcement or regulatory agency other than the insurance department; or

(3) Limit the powers granted elsewhere by the laws of this state to the Commissioner or an insurance fraud unit to investigate and examine possible violations of law and to take appropriate action against wrongdoers.

(g) A life settlement provider shall adopt antifraud initiatives reasonably calculated to detect, assist in the prosecution of, and prevent fraudulent life settlement acts. The Commissioner may order or, if a licensee requests, may grant these modifications of the following required initiatives as necessary to ensure an effective antifraud program. The modifications may be more or less restrictive than the required initiatives so long as the modifications reasonably may be expected to accomplish the purpose of this Code section. Antifraud initiatives include:

(1) Fraud investigators, who may be life settlement providers or employees or independent contractors of those life settlement providers; and

(2) An antifraud plan that is submitted to the Commissioner. The antifraud plan shall include, but not be limited to, a description:

(A) Of the procedures for detecting and investigating possible fraudulent life settlement acts and procedures for resolving material inconsistencies between medical records and insurance applications;

(B) Of the procedures for reporting possible fraudulent life settlement acts to the Commissioner;

(C) Of the plan for antifraud education and training of underwriters and other personnel; and

(D) A chart outlining the organizational arrangement of the antifraud personnel who are responsible for the investigation and reporting of possible fraudulent life settlement acts and investigating unresolved material inconsistencies between medical records and insurance applications.

(3) Antifraud plans submitted to the Commissioner are privileged and confidential, are not a public record, and are not subject to discovery or subpoena in a civil or criminal action.

[section] 33-59-13. Remedies and penalties for violations

(a) In addition to the penalties and other enforcement provisions of this chapter, if a person violates the provisions of this chapter or any regulation implementing this chapter, the Commissioner may seek an injunction in a court of competent jurisdiction and may apply for temporary and permanent orders as the Commissioner determines are necessary to restrain the person from committing the violation.

(b) A person damaged by the acts of a person in violation of this chapter may bring a civil action against the person committing the violation in a court of competent jurisdiction.

(c) The Commissioner may issue, in accordance with Code Section 33-2-24, a cease and desist order upon a person that violates any provision of this chapter, any regulation or order adopted by the Commissioner, or any written agreement entered into with the Commissioner.

(d) When the Commissioner finds that an activity in violation of this chapter presents an immediate danger to the public that requires an immediate final order, the Commissioner may issue an emergency cease and desist order reciting with particularity the facts underlying the findings. The emergency cease and desist order is effective immediately upon service of a copy of the order on the respondent and remains effective for 90 days. If the Commissioner begins nonemergency cease and desist proceedings, the emergency cease and desist order remains effective absent an order by a court of competent jurisdiction pursuant to Code Section 33-2-24.

(e) In addition to the penalties and other enforcement provisions of this chapter, a person who violates this chapter is subject to civil penalties of up to $25,000.00 for each violation. Imposition of civil penalties is pursuant to an order of the Commissioner issued under Chapter 2 of this title. The Commissioner's order may require a person found to be in violation of this chapter to make restitution to a person aggrieved by violations of this chapter.

(f) (1) A person convicted of a violation of this chapter by a court of competent jurisdiction shall be ordered to pay restitution to a person aggrieved by the violation of this chapter. Restitution shall be ordered in addition to a fine or imprisonment but not in lieu of a fine or imprisonment.

(2) A person who is convicted of a violation of this chapter may be sentenced based on the greater of the value of property, services, or other benefits wrongfully obtained or attempted to be obtained or the aggregate economic loss suffered by any person as a result of the violation. A person may be sentenced to:

(A) Imprisonment for not less than one nor more than 20 years or to payment of a fine of not more than $100,000.00, or both, if the value of life settlement contract is more than $35,000.00;

(B) Imprisonment for not less than one nor more than ten years or to payment of a fine of not more than $20,000.00, or both, if the value of life settlement contract is more than $2,500.00 but not more than $35,000.00;

(C) Imprisonment for not less than one nor more than five years or to payment of a fine of not more than $10,000.00, or both, if the value of life settlement contract is more than $500.00 but not more than $2,500.00; or

(D) Imprisonment for not less than one year nor more than three years or to payment of a fine of not more than $3,000.00, or both, if the value of life settlement contract is $500.00 or less.

(3) A person convicted of a fraudulent life settlement act shall be ordered to pay restitution to a person aggrieved by the fraudulent life settlement act. Restitution shall be ordered in addition to a fine or imprisonment but not instead of a fine or imprisonment.

(4) In a prosecution under this Code section, the value of a life settlement contract within a six-month period may be aggregated and the defendant charged accordingly in applying the provisions of this Code section. If two or more offenses are committed by the same person in two or more counties, the accused may be prosecuted in a county in which one of the offenses was committed for all of the offenses aggregated as provided by this Code section. The statute of limitations shall not begin to run until the insurance company or law enforcement agency is aware of the fraud, but the prosecution may not be commenced later than seven years after the act has occurred.

[section] 33-59-14. Unfair trade practice

A violation of this chapter shall be considered an unfair trade practice under Chapter 6 of this title and subject to the penalties contained in that chapter.

[section] 33-59-15. Authority of Commissioner with respect to this chapter

The Commissioner shall have the authority to:

(1) Promulgate rules and regulations implementing this chapter;

(2) Establish standards for evaluating reasonableness of payments under a life settlement contract for a person who is terminally or chronically ill. This authority includes, but is not limited to, regulation of discount rates used to determine the amount paid in exchange for assignment, transfer, sale, devise, or bequest of a benefit under a policy. A life settlement provider, where the insured is not terminally or chronically ill, shall pay an amount greater than the cash surrender value or accelerated death benefit then available;

(3) Establish appropriate licensing requirements, fees, and standards for continued licensure for a life settlement provider and a fee for life insurance producers;

(4) Require a bond or other mechanism for financial accountability for a life settlement provider; and

(5) Adopt rules and regulations governing the relationship and responsibilities of an insurer and a life settlement provider, life insurance producer, and others in the business of life settlements during the period of consideration or effectuation of a life settlement contract.

[section] 33-59-16. Compliance with securities laws

Nothing in this chapter preempts or otherwise limits the provisions of Chapter 5 of Title 10, the "Georgia Securities Act of 1973," or any regulations, orders, policy statements, notices, bulletins, or other interpretations issued by or through the commissioner of securities or his or her designee acting pursuant to Chapter 5 of Title 10. Compliance with this chapter does not constitute compliance with any applicable provision of Chapter 5 of Title 10 and any amendments thereto or any regulations, orders, policy statements, notices, bulletins, or other interpretations issued by or through the commissioner of securities or his or her designee acting pursuant to Chapter 5 of Title 10.

[section] 33-59-17. Transacting business permitted while the provider's license application is pending

A life settlement provider lawfully transacting business in this state may continue to do so pending approval or disapproval of the person's application for a license so long as the application is filed with the Commissioner not later than 30 days after publication by the Commissioner of an application form for licensure of these life settlement providers. If the publication of the application form is prior to November 5, 2005, then the filing of the application shall not be later than 30 days after November 5, 2005.

33-59-18. One-year exception to license requirement for persons who have lawfully negotiated life settlement contracts for at least one year; registration with the Commissioner

Notwithstanding the provisions of this chapter to the contrary, a person who has lawfully negotiated life settlement contracts between a seller and one or more life settlement providers for at least one year immediately prior to November 5, 2005, may continue to negotiate life settlements in this state for a period of one year from November 5, 2005, provided that such person registers with the Commissioner on a form prescribed by the Commissioner. Such registration form shall be published by the Commissioner not later than December 5, 2005, and shall require a person registering to evidence that he or she has lawfully negotiated life settlement contracts and include an acknowledgment by such person that he or she will operate in accordance with and comply with this chapter.

NEW JERSEY STATUTE

17B:30B-1 Short title.

1. This act shall be known and may be cited as the "Viatical Settlements Act."

L.2005,c.229,s.1.

17B:30B-2 Definitions relative to viatical settlements.

2. As used in this act:

"Advertising" means any written, electronic or printed communication or any communication by means of recorded telephone messages or transmitted on radio, television, the Internet or similar communications media, including film strips, motion pictures and videos, published, disseminated, circulated or placed before the public, directly or indirectly, for the purpose of creating an interest in or inducing a person to sell a life insurance policy pursuant to a viatical settlement contract.

"Business of viatical settlements" means an activity involved in, but not limited to, the offering, solicitation, negotiation, procurement, effectuation, financing, monitoring, tracking, underwriting, selling, transferring, assigning, pledging, hypothecating of, or in any other manner involving, viatical settlement contracts.

"Chronically ill" means:

(1) Being unable to perform at least two activities of daily living, including, but not limited, to eating, toileting, transferring, bathing, dressing or continence;

(2) Requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment; or

(3) Having a level of disability similar to that described in paragraph (1) of this subsection as determined by the United States Secretary of Health and Human Services.

"Commissioner" means the Commissioner of Banking and Insurance.

"Department" means the Department of Banking and Insurance.

"Financing entity" means:

(1) an underwriter, placement agent, lender, purchaser of securities, purchaser of a policy from a viatical settlement provider, credit enhancer, or any entity that has a direct ownership in a policy that is the subject of a viatical settlement contract but:

(a) whose principal activity related to the transaction is providing funds to effect the viatical settlement contract or purchase of one or more viaticated policies; and

(b) who has an agreement in writing with one or more licensed viatical settlement providers to finance the acquisition of viatical settlement contracts.

(2) "Financing entity" does not include a non-accredited investor or purchaser of a policy from a viatical settlement provider.

"Fraudulent viatical settlement act" means and includes:

(1) Acts or omissions committed by any person who, knowingly or with intent to defraud, for the purpose of depriving another of property or for pecuniary gain, commits, or permits its employees or its agents to engage in acts including:

(a) Presenting, causing to be presented or preparing with knowledge or belief that it will be presented to or by a viatical settlement provider, life insurance producer, financing entity, insurer or any other person, false material information, or concealing material information, as part of, in support of or concerning a fact material to one or more of the following:

(i) An application for the issuance of a viatical settlement contract or insurance policy;

(ii) The underwriting of a viatical settlement contract or insurance policy;

(iii) A claim for payment or benefit pursuant to a viatical settlement contract or insurance policy;

(iv) Premiums paid on an insurance policy;

(v) Payments and changes in ownership or beneficiary made in accordance with the terms of a viatical settlement contract or insurance policy;

(vi) The reinstatement or conversion of an insurance policy;

(vii) The solicitation, offer, effectuation or sale of a settlement contract or insurance policy;

(viii) The issuance of written evidence of a viatical settlement contract or insurance; or

(ix) A financing transaction;

(b) Employing any device, scheme, or artifice to defraud related to viaticated policies;

(2) In the furtherance of a fraud or to prevent the detection of a fraud any person commits or permits its employees or its agents to:

(a) Remove, conceal, alter, destroy or sequester from the commissioner the assets or records of a viatical settlement provider licensee or other person engaged in the business of viatical settlements;

(b) Misrepresent or conceal the financial condition of a licensee, financing entity, insurer or other person;

(c) Transact the business of viatical settlements in violation of laws requiring a license, certificate of authority or other legal authority for the transaction of the business of viatical settlements; or

(d) File with the commissioner or the chief insurance regulatory official of another jurisdiction a document containing false information or otherwise concealing information about a material fact from the commissioner;

(3) Embezzlement, theft, misappropriation or conversion of monies, funds, premiums, credits or other property of a viatical settlement provider, insurer, insured, viator, insurance policy owner or any other person engaged in the business of viatical settlements or insurance;

(4) Recklessly entering into, brokering or otherwise dealing in a viatical settlement contract, the subject of which is a life insurance policy that was obtained by presenting false information concerning any fact material to the policy or by concealing, for the purpose of misleading another, information concerning any fact material to the policy, where the viator or the viator's agent intended to defraud the policy's issuer. For the purposes of this paragraph, "recklessly" means engaging in the conduct in conscious and clearly unjustifiable disregard of a substantial likelihood of the existence of the relevant facts or risks, such disregard involving a gross deviation from acceptable standards of conduct; or

(5) Attempting to commit, assisting, aiding or abetting in the commission of, or conspiracy to commit the acts or omissions specified in this subsection.

"Life insurance producer" means any person licensed as a resident or nonresident insurance producer with a life insurance line of authority pursuant to the "New Jersey Insurance Producer Licensing Act of 2001," P.L.2001, c.210 (C.17:22A-26 et seq.).

"Person" means a natural person or a legal entity, including, but not limited to, an individual, partnership, limited liability partnership, limited liability company, association, trust or corporation.

"Policy" means an individual or group policy, group certificate, contract or arrangement of life insurance affecting the rights of a resident of this State or bearing a reasonable relation to this State, regardless of whether delivered or issued for delivery in this State.

"Related provider trust" means a titling trust or other trust established by a licensed viatical settlement provider or a financing entity for the sole purpose of holding the ownership or beneficial interest in viaticated policies in connection with a financing transaction. The trust shall have a written agreement with the licensed viatical settlement provider under which the licensed viatical settlement provider is responsible for ensuring compliance with all statutory and regulatory requirements and under which the trust agrees to make all records and files related to viatical settlement transactions available to the commissioner as if those records and files were maintained directly by the licensed viatical settlement provider.

"Special purpose entity" means a corporation, partnership, trust, limited liability company or other similar entity formed solely to provide, either directly or indirectly, access to institutional capital markets for a financing entity or licensed viatical settlement provider.

"Terminally ill" means having an illness or sickness that can reasonably be expected to result in death in 24 months or less.

"Viatical settlement contract" means a written agreement establishing the terms under which compensation or anything of value will be paid, which compensation or value is less than the expected death benefit of the policy, in return for the viator's assignment, transfer, sale, devise or bequest of the death benefit or ownership of any portion of the policy. A viatical settlement contract also includes a contract for a loan or other financing transaction with a viator secured primarily by an individual or group life insurance policy, other than a loan by a life insurance company pursuant to the terms of the life insurance contract, or a loan secured by the cash value of a policy. A viatical settlement contract includes an agreement with a viator to transfer ownership or change the beneficiary designation at a later date regardless of the date that compensation is paid to the viator. A viatical settlement contract does not mean or include a written agreement between a viator and a person having an insurable interest in the insured's life. A viatical settlement contract shall not include any accelerated benefit pursuant to the terms of a life insurance policy issued in accordance with Title 17B of the New Jersey Statutes.

"Viatical settlement provider" means a person, other than a viator, that enters into or effectuates a viatical settlement contract. Viatical settlement provider does not include:

(1) A bank, savings bank, savings and loan association, credit union or other licensed lending institution that takes an assignment of a life insurance policy as collateral for a loan;

(2) The issuer of a life insurance policy providing accelerated benefits pursuant to regulations prescribed by the commissioner and pursuant to the policy;

(3) An authorized or eligible insurer that provides stop loss coverage to a viatical settlement provider, financing entity, special purpose entity or related provider trust;

(4) A natural person who enters into or effectuates no more than one agreement in a calendar year for the transfer of life insurance policies for any value less than the expected death benefit;

(5) A financing entity;

(6) A special purpose entity;

(7) A related provider trust; or

(8) An accredited investor or qualified institutional buyer as defined respectively in Regulation D, Rule 501 (17 C.F.R. 230.501 through 230.508) or Rule 144A (17 C.F.R. 230.144A) of the federal "Securities Act of 1933" (15 U.S.C. s.77a et seq.) as amended, and who purchases a viaticated policy from a viatical settlement provider.

"Viaticated policy" means a life insurance policy or certificate that has been acquired by a viatical settlement provider pursuant to a viatical settlement contract.

"Viator" means the owner of a policy who enters or seeks to enter into a viatical settlement contract. For the purposes of this act, a viator shall not be limited to an owner of a policy insuring the life of an individual with a terminal or chronic illness or condition except where specifically addressed. If there is more than one viator on a single policy and the viators are residents of different states, the transaction shall be governed by the law of the state in which the viator having the largest percentage ownership resides or, if the viators hold equal ownership, the state of residence of one viator agreed upon in writing by all viators. Viator shall not include:

(1) A viatical settlement provider licensed under this act;

(2) An accredited investor or qualified institutional buyer as defined respectively in Regulation D, Rule 501 (17 C.F.R. 230.501 through 230.508) or

Rule 144A (17 C.F.R. 230.144A) of the federal

"Securities Act of 1933" (15 U.S.C. s.77a et seq.), as amended;

(3) A financing entity;

(4) A special purpose entity; or

(5) A related provider trust.

17B:30B-3 License to operate as viatical settlement provider.

3. a. A person shall not operate as a viatical settlement provider without first obtaining a license from the commissioner of the state of residence of the viator.

b. (1) No person shall act on behalf of a viator residing in this State, or otherwise negotiate, as that term is defined in section 3 of P.L.2001, c.210 (C.17:22A-28), viatical settlement contracts between a viator residing in this State and one or more viatical settlement providers unless that person is licensed as a life insurance producer pursuant to the "New Jersey Insurance Producer Licensing Act of 2001," P.L.2001, c.210 (C.17:22A-26 et seq.) and has been licensed as a resident insurance producer in his home state for not less than one year.

(2) Irrespective of the manner in which the life insurance producer is compensated, a life insurance producer is deemed to represent only the viator and not the viatical settlement provider or any insurer, and owes a fiduciary duty to the viator to act according to the viator's instructions and in the best interest of the viator.

(3) Not later than 30 days from the first day of negotiating a viatical settlement contract on behalf of a viator, such producer shall notify the commissioner of that activity on a form or in a manner that may be prescribed by, and shall pay any applicable fees determined by, the commissioner by regulation. The notification shall include an acknowledgment by the producer that he will operate in accordance with the provisions of this act.

(4) Notwithstanding paragraph (1) of this subsection, a person licensed as an attorney, or a certified public accountant, representing a viator, and whose compensation is not paid directly or indirectly by the viatical settlement provider, may negotiate a viatical settlement contract without a license as a life insurance producer.

c. Application for a viatical settlement provider license pursuant to subsection a. of this section shall be made to the commissioner by the applicant on a form prescribed by the commissioner, and the application shall be accompanied by a fee, the amount of which shall be set by the commissioner by regulation, provided, however, that the license and renewal fees for a viatical settlement license shall not exceed that established by law or regulation for a domestic stock life insurance company.

d. A viatical settlement provider license may be renewed from year to year on the anniversary date upon payment of the annual renewal fee in an amount set by the commissioner by regulation. Failure to pay the fee by the renewal date shall result in expiration of the license.

e. The applicant for a license pursuant to subsection a. of this section shall provide information on forms required by the commissioner. The commissioner shall have the authority, at any time, to require the applicant to fully disclose the identity of all stockholders except those owning fewer than five percent of the shares of an applicant whose shares are publicly traded, partners, officers, members and employees, and the commissioner may, in his discretion, refuse to issue a license in the name of a legal entity if not satisfied that any officer, employee, stockholder, partner or member thereof who may materially influence the applicant's conduct meets the standards of this act.

f. A license pursuant to subsection a. of this section issued to a legal entity authorizes all partners, officers, members and designated employees to act as viatical settlement providers, under the license, and all those persons shall be named in the application and any supplements to the application.

g. Upon the filing of an application and the payment of the license fee, the commissioner shall make an investigation of each applicant and issue a license if the commissioner finds that the applicant:

(1) Has provided a detailed plan of operation;

(2) Is competent and trustworthy and intends to act in good faith in the capacity involved by the license applied for;

(3) Has a good business reputation and has had experience, training or education so as to be qualified in the business for which the license is applied for;

(4) If a legal entity, provides a certificate of good standing from the state of its domicile; and

(5) Has provided an anti-fraud plan that meets the requirements of section 12 of this act.

h. The commissioner shall not issue a license to a nonresident applicant unless a written designation of an agent for service of process is filed and maintained with the commissioner, or the applicant has filed with the commissioner, the applicant's written irrevocable consent that any action against the applicant may be commenced against the applicant by service of process on the commissioner.

i. A viatical settlement provider shall provide to the commissioner any new or revised information about officers, stockholders holding 10% or more of the outstanding shares, partners, directors, members or designated employees within 30 days of the change.

L.2005,c.229,s.3.

17B:30B-4 Refusal to issue, suspension, revocation, refusal to renew license.

4. a. The commissioner may refuse to issue, suspend, revoke or refuse to renew the license of a viatical settlement provider, if the commissioner finds that:

(1) There was any material misrepresentation in the application for the license;

(2) The licensee or any officer, partner, member or key management personnel has been convicted of fraudulent or dishonest practices, is subject to a final administrative action or is otherwise shown to be untrustworthy or incompetent to act as a licensee;

(3) The licensee demonstrates a pattern of unreasonable payments to viators;

(4) The licensee or any officer, partner, member or key management personnel has been found guilty of, or has pleaded guilty or nolo contendere to, any felony, or to a misdemeanor involving fraud or moral turpitude, regardless of whether a judgment of conviction has been entered by the court;

(5) The licensee has entered into any settlement contract that has not been approved pursuant to this act;

(6) The licensee has failed to honor contractual obligations set out in a viatical settlement contract;

(7) The licensee no longer meets the requirements for initial licensure;

(8) The licensee has assigned, transferred or pledged a viaticated policy to a person other than a viatical settlement provider licensed in this State, an accredited investor or qualified institutional buyer as defined respectively in Regulation D, Rule 501 (17 C.F.R. 230.501 through 230.508) or Rule 144A (17 C.F.R. 230.144A) of the federal "Securities Act of 1933" (15 U.S.C. s.77a et seq.), as amended, financing entity, special purpose entity or related provider trust; or

(9) The licensee or any officer, partner, member or key management personnel has violated any provision of this act.

b. The commissioner may suspend, revoke or refuse to renew the license of a life insurance producer if the commissioner finds that the life insurance producer has violated the provisions of this act.

c. Before the commissioner denies a license application or suspends, revokes or refuses to renew the license of a viatical settlement provider or suspends, revokes or refuses to renew the license of a life insurance producer pursuant to this act, the commissioner shall conduct a hearing in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).

L.2005,c.229,s.4.

17B:30B-5 Approval of viatical settlement forms by commissioner.

5. A person shall not use a viatical settlement contract form or provide a disclosure statement or application form to a viator in this State unless it has been filed with and approved by the commissioner. The commissioner shall disapprove a viatical settlement contract form or disclosure statement form if, in the commissioner's opinion, the contract form, disclosure form, or provisions contained therein are unreasonable, contrary to the interests of the public, or otherwise misleading or unfair to the viator. The commissioner may require the submission of advertising material used in connection with a viatical settlement contract.

L.2005,c.229,s.5.

17B:30B-6 Filing of annual statement.

6. a. Each viatical settlement provider licensee shall file with the commissioner on or before March 1 of each year an annual statement containing that information which the commissioner by regulation may prescribe. This information is limited to only those transactions in which the viator is a resident of this State and shall not include individual transaction data or data which compromises the privacy of personal, financial, and health information of the viator or insured.

b. Except as otherwise allowed or required by law, a viatical settlement provider, insurance company, life insurance producer, information bureau, rating agency or company, or any other person with actual knowledge of the identity of the insured, shall not disclose that identity, or the insured's financial or medical information, to any other person unless the disclosure:

(1) Is necessary to effect a viatical settlement contract between the viator and a viatical settlement provider and the viator and insured have provided prior written consent to the disclosure;

(2) Is provided in response to an investigation or examination by the commissioner or any other governmental officer or agency or pursuant to the requirements of subsection e. of section 12 of this act;

(3) Is a term of or condition to the transfer of a policy by one viatical settlement provider to another viatical settlement provider;

(4) Is necessary to permit a financing entity, related provider trust or special purpose entity to finance the purchase of policies by a viatical settlement provider and the viator and insured have provided prior written consent to the disclosure;

(5) Is necessary to allow the viatical settlement provider or its authorized representative to make contacts for the purpose of determining health status; or

(6) Is required to purchase stop loss coverage.

c. In addition to the information required in this section, the commissioner may require that either or both viatical settlement providers and life insurance producers provide to the commissioner that information the commissioner determines by regulation, regarding the amount and method of compensation paid to life insurance producers for negotiating a viatical settlement contract pursuant to this act.

L.2005,c.229,s.6.

17B:30B-7 Examinations of licensees by commissioner.

7.a. (1) The commissioner may conduct an examination of a licensee under this act as often as the commissioner, in his sole discretion, deems appropriate.

(2) For purposes of completing an examination of a licensee under this act, the commissioner may examine or investigate any person, or the business of any person, insofar as the examination or investigation is, in the sole discretion of the commissioner, necessary or material to the examination of the licensee.

(3) In lieu of an examination under this act of any foreign or alien licensee licensed in this State, the commissioner may, at the commissioner's discretion, accept an examination report on the licensee as prepared by the commissioner or other regulator for the licensee's state of domicile or port-of-entry state.

b. (1) A person required to be licensed by this act shall for five years retain copies of all:

(a) Proposed, offered or executed viatical settlement contracts, underwriting documents, policy forms and applications from the date of the proposal, offer, or execution of the viatical settlement contract, whichever is later;

(b) All checks, drafts or other evidence and documentation related to the payment, transfer, deposit or release of funds from the date of the transaction; and

(c) All other records and documents related to the requirements of this act.

(2) This subsection shall not relieve a person of the obligation to produce these documents to the commissioner after the retention period has expired if that person has retained the documents.

(3) Records required to be retained pursuant to this subsection shall be legible and complete and may be retained in paper, photograph, microprocess, magnetic, mechanical or electronic media, or by any process that accurately reproduces or forms a durable medium for the reproduction of a record.

c. (1) Upon determining that an examination should be conducted, the commissioner shall issue an examination warrant appointing one or more examiners to perform the examination and instructing them as to the scope of the examination. In conducting the examination, the examiner shall observe those guidelines and procedures set forth in the Examiners' Handbook adopted by the National Association of Insurance Commissioners (NAIC). The commissioner may also employ other guidelines or procedures as the commissioner deems appropriate.

(2) Every licensee or person from whom information is sought, its officers, directors and agents shall provide to the examiners timely, convenient and free access at all reasonable hours at its offices to all books, records, accounts, papers, documents, assets and computer or other recordings relating to the property, assets, business and affairs of the licensee being examined. The officers, directors, employees and agents of the licensee or person shall facilitate the examination and aid in the examination so far as it is in their power to do so. The refusal of a licensee, by its officers, directors, employees or agents, to submit to examination or to comply with any reasonable written request of the commissioner shall be grounds for suspension or refusal of, or nonrenewal of any license or authority held by the licensee to engage in the business of viatical settlements or other business subject to the commissioner's jurisdiction. Any proceedings for suspension, revocation or refusal of any license or authority shall be conducted pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).

(3) The commissioner shall have the power to issue subpoenas, to administer oaths and to examine under oath any person as to any matter pertinent to the examination. Upon the failure or refusal of a person to obey a subpoena, the commissioner may petition a court of competent jurisdiction, and upon proper showing, the court may enter an order compelling the witness to appear and testify or produce documentary evidence. Failure to obey the court order shall be punishable as contempt of court.

(4) When making an examination under this act, the commissioner may retain attorneys, appraisers, independent actuaries, independent certified public accountants or other professionals and specialists as examiners, the reasonable cost of which shall be borne by the licensee that is the subject of the examination.

(5) Nothing contained in this act shall be construed to limit the commissioner's authority to terminate or suspend an examination in order to pursue other legal or regulatory action pursuant to the insurance laws of this State. Findings of fact and conclusions made pursuant to any examination shall be prima facie evidence in any legal or regulatory action.

(6) Nothing contained in this act shall be construed to limit the commissioner's authority to use and, if appropriate, to make public any final or preliminary examination report, any examiner or licensee work papers or other documents, or any other information discovered or developed during the course of any examination in the furtherance of any legal or regulatory action which the commissioner may, in his or her sole discretion, deem appropriate.

d. (1) Examination reports shall be comprised of only facts appearing upon the books, records or other documents of the licensee, its agents or other persons examined, or as ascertained from the testimony of its officers or agents or other persons examined concerning its affairs, and such conclusions and recommendations as the examiners find reasonably warranted from the facts.

(2) No later than 60 days following completion of the examination, the examiner in charge shall file with the commissioner a verified written report of examination under oath. Upon receipt of the verified report, the commissioner shall transmit the report to the licensee examined, together with a notice that shall afford the licensee examined a reasonable opportunity of not more than 30 days to make a written submission or rebuttal with respect to any matters contained in the examination report.

(3) Within 30 days of the end of the period allowed for the receipt of written submissions or rebuttals, the commissioner shall fully consider and review the report, together with any written submissions or rebuttals, and any relevant portions of the examiner's workpapers and either:

(a) Adopt the examination as filed or with modification or corrections. If the examination report reveals that the company is operating in violation of any law, regulation or prior order of the commissioner, the commissioner may order the company to take any action the commissioner considers necessary and appropriate to cure the violation; or

(b) Reject the examination report with directions to the examiners to reopen the examination for purposes of obtaining additional data, documentation or information, and refiling pursuant to paragraph (1) of this subsection; or

(c) Call for an investigatory hearing with no less than 20 days' notice to the company for purposes of obtaining additional documentation, data, information and testimony.

(4) (a) All determinations made pursuant to subparagraph (a) of paragraph (3) of this subsection shall be accompanied by findings and conclusions resulting from the commissioner's consideration and review of the examination report, relevant examiner workpapers and any written submissions or rebuttals. Any such determination shall be served upon the company, together with a copy of the adopted examination report. Within 30 days of the issuance of the adopted report, the company shall file affidavits executed by each of its directors stating under oath that they have received a copy of the adopted report and related orders.

(b) Any hearing under subparagraph (c) of paragraph (3) of this subsection shall be conducted by the commissioner or an authorized representative of the commissioner as a nonadversarial, confidential investigatory proceeding, as necessary for the resolution of any inconsistencies, discrepancies or disputed issues apparent upon the face of the filed examination report or raised by or as a result of the commissioner's review of relevant workpapers or by the written submission or rebuttal of the company. Within 20 days of the conclusion of any such hearing, the commissioner shall make a determination pursuant to subparagraph (a) of paragraph (3) of this subsection.

(i) The hearing shall proceed expeditiously with discovery by the company limited to the examiner's workpapers which tend to substantiate any assertions set forth in any written submission or rebuttal. The commissioner or his representative may issue subpoenas for the attendance of any witnesses or the production of any documents relevant to the investigation whether under the control of the department, the company or other persons. Nothing contained in this section shall require the department to disclose any information or records which would indicate or show the existence or content of any investigation or activity of a criminal justice agency.

(ii) The hearing shall proceed with the commissioner or his representative posing questions to the persons subpoenaed. Thereafter the company and the department may present testimony relevant to the investigation. Cross-examination shall be conducted only by the commissioner or his representative. The company and the department shall be permitted to make closing statements and may be represented by counsel of their choice.

(5) Upon the adoption of the examination report under subparagraph (a) of paragraph (3) of this subsection, the commissioner may continue to hold the content of the examination report as private and confidential information for a period of 90 days except to the extent provided in paragraph (6) of subsection c. of this section.

(6) If the commissioner determines that regulatory action is appropriate as a result of an examination, the commissioner may initiate any proceedings or actions provided by law.

e. (1) Names and individual identification data for all viators shall be considered private and confidential information and shall not be disclosed by the commissioner, unless required by law.

(2) Except as otherwise provided in this act, all examination reports, working papers, recorded information, documents and copies thereof produced by, obtained by or disclosed to the commissioner or any other person in the course of an examination made under this act, or in the course of analysis or investigation by the commissioner of the financial condition or market conduct of a licensee shall be confidential by law and privileged, shall not be subject to any State or federal freedom of information law, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. The commissioner is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as part of the commissioner's official duties.

(3) Documents, materials or other information, including, but not limited to, all working papers, and copies thereof, in the possession or control of the NAIC and its affiliates and subsidiaries shall be confidential by law and privileged, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action if they are:

(a) Created, produced or obtained by or disclosed to the NAIC and its affiliates and subsidiaries in the course of assisting an examination made under this act, or assisting the commissioner in the analysis or investigation of the financial condition or market conduct of a licensee; or

(b) Disclosed to the NAIC and its affiliates and subsidiaries under paragraph (4) of this subsection by the commissioner.

(c) For the purposes of paragraph (2) of this subsection, "act" includes the law of another state or jurisdiction that is substantially similar to this act.

(4) Neither the commissioner nor any person that received the documents, material or other information while acting under the authority of the commissioner, including the NAIC and its affiliates and subsidiaries, shall be permitted to testify in any private civil action concerning any confidential documents, materials or information subject to paragraph (1) of this subsection.

(5) In order to assist in the performance of the commissioner's duties, the commissioner:

(a) May share documents, materials or other information, including the confidential and privileged documents, materials or information subject to paragraph (1) of this subsection, with other state, federal and international regulatory agencies, with the NAIC and its affiliates and subsidiaries, and with state, federal and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material, communication or other information; and

(b) May receive documents, materials, communications or information, including otherwise confidential and privileged documents, materials or information, from the NAIC and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information.

(6) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in paragraph (5) of this subsection.

(7) A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under this subsection shall be available and enforced in any proceeding in, and in any court of, this State.

(8) Nothing contained in this act shall prevent or be construed as prohibiting the commissioner from disclosing the content of an examination report, preliminary examination report or results, or any matter relating thereto, to the commissioner of any other state or country, or to law enforcement officials of this or any other state or agency of the federal government at any time or to the NAIC, so long as that agency or office receiving the report or matters relating thereto agrees in writing to hold it confidential and in a manner consistent with this act.

f. (1) An examiner may not be appointed by the commissioner if the examiner, either directly or indirectly, has a conflict of interest or is affiliated with the management of or owns a pecuniary interest in any person subject to examination under this act. This subsection shall not be construed to automatically preclude an examiner from being:

(a) A viator;

(b) An insured in a viaticated insurance policy; or

(c) A beneficiary in an insurance policy that is proposed to be viaticated.

(2) Notwithstanding the requirements of this subsection, the commissioner may retain from time to time, on an individual basis, qualified actuaries, certified public accountants, or other similar individuals who are independently practicing their professions, even though these persons may from time to time be similarly employed or retained by persons subject to examination under this act.

g. (1) No cause of action shall arise nor shall any liability be imposed against the commissioner, the commissioner's authorized representatives or any examiner appointed by the commissioner for any statements made or conduct performed in good faith while carrying out the provisions of this act.

(2) No cause of action shall arise nor shall any liability be imposed against any person for the act of communicating or delivering information or data to the commissioner or the commissioner's authorized representative or examiner pursuant to an examination made under this act, if the act of communication or delivery was performed in good faith and without fraudulent intent or the intent to deceive. This paragraph shall not abrogate or modify in any way any common law or statutory privilege or immunity heretofore enjoyed by any person identified in paragraph (1) of this subsection.

(3) A person identified in paragraph (1) or (2) of this subsection shall be entitled to an award of attorney's fees and costs if that person is the prevailing party in a civil cause of action for libel, slander or any other relevant tort arising out of activities in carrying out the provisions of this act and the party bringing the action was not substantially justified in doing so. For purposes of this section, a proceeding is "substantially justified" if it had a reasonable basis in law or fact at the time that it was initiated.

h. The commissioner may investigate suspected fraudulent viatical settlement acts and persons engaged in the business of viatical settlements.

L.2005,c.229,s.7.

17B:30B-8 Disclosures to viator, procedure.

8. a. With each application for a viatical settlement, a viatical settlement provider or life insurance producer shall provide the viator with at least the following disclosures no later than the time the application for the viatical settlement contract is signed by all parties. The disclosures shall be provided in a separate document that is signed by the viator and the viatical settlement provider, and shall provide the following information:

(1) There are possible alternatives to viatical settlement contracts, including any accelerated death benefits or policy loans offered under the viator's life insurance policy;

(2) Some or all of the proceeds of the viatical settlement contract may be taxable under federal income tax and state franchise and income taxes, and assistance should be sought from a professional tax advisor;

(3) Proceeds of the viatical settlement contract could be subject to the claims of creditors;

(4) Receipt of the proceeds of a viatical settlement contract may adversely affect the viator's eligibility for Medicaid or other government benefits or entitlements, and advice should be obtained from the appropriate government agencies;

(5) The viator has the right to rescind a viatical settlement contract before the earlier of 30 calendar days after the date upon which the settlement contract is executed by all parties or 15 calendar days after the receipt of the viatical settlement proceeds by the viator, as provided in subsection c. of section 9 of this act. If exercised by the viator, rescission is effective only if both notice of the rescission is given and repayment of all proceeds and any premiums, loans and loan interest to the settlement provider is made within the rescission period. If the insured dies during the rescission period, the viatical settlement contract shall be deemed to have been rescinded, subject to repayment of all viatical settlement proceeds and any premiums, loans and loan interest to the viatical settlement provider;

(6) Funds will be sent to the viator within three business days after the viatical settlement provider has received the insurer or group administrator's acknowledgment that ownership of the policy has been transferred and the beneficiary has been designated pursuant to the viatical settlement contract;

(7) Entering into a viatical settlement contract may cause other rights or benefits, including conversion rights and waiver of premium benefits that may exist under the policy, to be forfeited by the viator and that assistance should be sought from a financial adviser;

(8) Disclosure to a viator shall include distribution of a brochure, describing the process of viatical settlements approved by the commissioner. The National Association of Insurance Commissioners (NAIC) form for the brochure shall be used unless one is developed by the commissioner;

(9) The disclosure document shall contain the following language:

"All medical, financial or personal information solicited or obtained by a viatical settlement provider or life insurance producer about an insured, including the insured's identity or the identity of family members, a spouse or a significant other, may be disclosed as necessary to effect the viatical settlement between the viator and the viatical settlement provider. If you are asked to provide this information, you will be asked to consent to the disclosure. The information may be provided to someone who buys the policy or provides funds for the purchase. You may be asked to renew your permission to share information every two years."; and

(10) The insured may be contacted by the viatical settlement provider or its authorized representative for the purpose of determining the insured's health status. This contact shall be limited to once every three months if the insured has a life expectancy of more than one year, and no more than once per month if the insured has a life expectancy of one year or less.

b. A viatical settlement provider shall provide the viator with at least the following disclosures no later than the date the viatical settlement contract is signed by all parties. The disclosures shall be conspicuously displayed in the viatical settlement contract or in a separate document signed by the viator and the viatical settlement provider and provide the following information:

(1) State the affiliation, if any, between the viatical settlement provider and the issuer of the insurance policy to be acquired pursuant to a viatical settlement contract;

(2) The document shall include the name, address and telephone number of the viatical settlement provider;

(3) If the policy to be acquired pursuant to a viatical settlement contract has been issued as a joint policy or involves family riders or any coverage of a life other than the insured under the policy to be acquired pursuant to a viatical settlement contract, the viator shall be informed of the possible loss of coverage on the other lives;

(4) State the dollar amount of the current death benefit payable to the viatical settlement provider under the policy. The viatical settlement provider shall, if known, also disclose the availability of any additional guaranteed insurance benefits, the dollar amount of any accidental death and dismemberment benefits under the policy and the viatical settlement provider's interest in those benefits; and

(5) State the name, business address and telephone number of the independent third party escrow agent, and the fact that the viator or owner may inspect or receive copies of the relevant escrow or trust agreements or documents.

c. If the viatical settlement provider transfers ownership or changes the beneficiary of the policy, the viatical settlement provider shall communicate the change in ownership or beneficiary to the insured within 20 days after the change.

L.2005,c.229,s.8.

17B:30B-9 Material required prior to entering into viatical settlement contract.

9. a. (1) A viatical settlement provider entering into a viatical settlement contract shall first obtain:

(a) If the viator is the insured, a written statement from a licensed attending physician that the viator is of sound mind and under no constraint or undue influence to enter into a viatical settlement contract; and

(b) A document in which the insured consents to the release of his medical records to a viatical settlement provider, life insurance producer and, if the policy was issued less than two years from the date of application for a viatical settlement contract, to the insurance company that issued the policy covering the life of the insured.

(2) The insurer shall respond to a request for verification of coverage submitted by a viatical settlement provider not later than 30 calendar days after the date the request is received. The request for verification of coverage shall be made on a form approved by the commissioner. The insurer shall complete and issue the verification of coverage or indicate in which respects it is unable to respond. In its response, the insurer shall indicate whether, based on the medical evidence and documents provided, the insurer intends to pursue an investigation at that time regarding the validity of the insurance contract.

(3) Prior to or at the time of execution of the viatical settlement contract, the viatical settlement provider shall obtain a witnessed document in which the viator consents to the viatical settlement contract, represents that the viator has a full and complete understanding of the viatical settlement contract, that the viator has a full and complete understanding of the benefits of the life insurance policy, acknowledges that the viator is entering into the viatical settlement contract freely and voluntarily and, for persons with a terminal or chronic illness or condition, acknowledges that the insured has a terminal or chronic illness and that the terminal or chronic illness was diagnosed after the life insurance policy was issued.

(4) If a life insurance producer performs any of the activities required of the viatical settlement provider, the viatical settlement provider is deemed to have fulfilled the requirements of this section.

b. All medical information solicited or obtained by any licensee shall be subject to the applicable provisions of State law relating to confidentiality of medical information.

c. All viatical settlement contracts entered into in this State shall provide the viator with an unconditional right to rescind the contract before the earlier of 30 calendar days after the date upon which the settlement contract is executed by all parties or 15 calendar days after the receipt of the viatical settlement proceeds by the viator. If exercised by the viator, rescission is effective only if both notice of the rescission is given and a full repayment of all proceeds and any premiums, loans and loan interest to the settlement provider is made within the rescission period. If the insured dies during the rescission period, the viatical settlement contract shall be deemed to have been rescinded, subject to repayment to the viatical settlement provider or purchaser of all viatical settlement proceeds, and any premiums, loans and loan interest that have been paid by the settlement provider.

d. The viatical settlement provider shall instruct the viator to send the executed documents required to effect the change in ownership, assignment or change in beneficiary directly to the independent escrow agent. Within three business days after the date the escrow agent receives the documents (or from the date the viatical settlement provider receives the documents, if the viator erroneously provides the documents directly to the provider), the provider shall pay or transfer the proceeds of the viatical settlement into an escrow or trust account maintained in a State or federally-chartered financial institution whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC). Upon payment of the settlement proceeds into the escrow account, the escrow agent shall deliver the original change in ownership, assignment or change in beneficiary forms to the viatical settlement provider or related provider trust. Upon the escrow agent's receipt of the acknowledgment of the properly completed transfer of ownership or designation of beneficiary from the insurance company, the escrow agent shall pay the viatical settlement proceeds to the viator.

e. Failure to tender consideration to the viator for the viatical settlement contract within the time disclosed pursuant to paragraph (6) of subsection a. of section 8 of this act renders the viatical settlement contract voidable by the viator for lack of consideration until the time consideration is tendered to and accepted by the viator.

f. Contacts with the insured for the purpose of determining the health status of the insured by the viatical settlement provider after the viatical settlement has occurred shall only be made by the settlement provider licensed in this State or its authorized representatives and shall be limited to once every three months for insureds with a life expectancy of more than one year, and to no more than once per month for insureds with a life expectancy of one year or less. The provider shall explain to the insured the procedure for these contacts at the time the viatical settlement contract is entered into. The limitations set forth in this subsection shall not apply to any contacts with an insured for reasons other than determining the insured's health status. Viatical settlement providers shall be responsible for the actions of their authorized representatives.

g. If the insured is not terminally or chronically ill, viatical settlement providers shall pay an amount greater than the cash surrender value or accelerated death benefit then available.

L.2005,c.229,s.9.

17B:30B-10 Two-year period required between issuance of policy and viatical settlement; exceptions.

10. a. It is a violation of this act for any person to enter into a viatical settlement contract within a two-year period commencing with the date of issuance of the insurance policy unless the viator certifies to the viatical settlement provider that one or more of the following conditions have been met within the two-year period:

(1) The policy was issued upon the viator's exercise of conversion rights arising out of a group or individual life insurance policy, so long as the total amount of time covered under the conversion policy plus the time covered under the prior policy is at least 24 months. The time covered under a group policy shall be calculated without regard to any change in insurance carriers, provided the coverage has been continuous and under the same group sponsorship;

(2) The viator submits independent evidence to the viatical settlement provider that within the two-year period: (a) the viator or insured was terminally ill or chronically ill; or (b) the viator or insured disposed of his ownership interests in a closely held corporation pursuant to a buyout or other similar agreement in effect at the time the insurance policy was initially issued; or

(c) both.

b. Copies of the independent evidence described in paragraph (2) of subsection a. of this section and documents required by subsection a. of section 9 of this act shall be submitted to the insurer when the viatical settlement provider submits a request to the insurer for verification of coverage. The copies shall be accompanied by a letter of attestation from the viatical settlement provider that the copies are true and correct copies of the documents received by the viatical settlement provider.

c. If the viatical settlement provider submits to the insurer a copy of the owner or insured's certification described in subsection a. of this section when the provider submits a request to the insurer to effect the transfer of the policy to the viatical settlement provider, the copy shall be deemed to conclusively establish that the viatical settlement contract satisfies the requirements of this section and the insurer shall timely respond to the request.

L.2005,c.229,s.10.

17B:30B-11 Advertisement of viatical settlement contracts; guidelines, standards.

11. The purpose of this section is to provide prospective viators with clear and unambiguous statements in the advertisement of viatical settlement contracts and to assure the clear, truthful and adequate disclosure of the benefits, risks, limitations and exclusions of any viatical settlement contract. This purpose is intended to be accomplished by the establishment of guidelines and standards of permissible and impermissible conduct in the advertising of viatical settlement contracts to assure that product descriptions are presented in a manner that prevents unfair, deceptive or misleading advertising and is conducive to accurate presentation and description of viatical settlements through the advertising media and material used by licensees under this act.

a. This section shall apply to any advertising of viatical settlement contracts or related products or services intended for dissemination in this State, including Internet advertising viewed by persons located in this State. Where disclosure requirements are established pursuant to federal regulation, this section shall be interpreted so as to minimize or eliminate conflict with federal regulation wherever possible.

b. Every viatical settlement provider licensee shall establish and at all times maintain a system of control over the content, form and method of dissemination of all advertisements of its contracts, products and services. All advertisements, regardless of by whom written, created, designed or presented, shall be the responsibility of the viatical settlement provider licensee, as well as the individual who created or presented the advertisement. A system of control shall include regular, routine notification, at least once a year, to life insurance producers and others authorized by the viatical settlement provider who disseminates advertisements, of the requirements and procedures for approval prior to the use of any advertisements not furnished by the viatical settlement provider.

c. Advertisements shall be truthful and not misleading in fact or by implication. The form and content of an advertisement of a viatical settlement contract, product or service shall be sufficiently complete and clear so as to avoid deception. It shall not have the capacity or tendency to mislead or deceive. Whether an advertisement has the capacity or tendency to mislead or deceive shall be determined by the commissioner from the overall impression that the advertisement may be reasonably expected to create upon a person of average education or intelligence within the segment of the public to which it is directed.

d. Certain advertisements are deemed false and misleading on their face and are prohibited. False and misleading advertisements include, but are not limited to, the following representations:

(1) "Guaranteed," "fully secured," "100 percent secured," "fully insured," "secure," "safe," "backed by rated insurance companies," "backed by federal law," "backed by state law," or "state guaranty funds," or similar representations;

(2) "No risk," "minimal risk," "low risk," "no speculation," "no fluctuation," or similar representations;

(3) "Qualified or approved for individual retirement accounts (IRAs), Roth IRAs, 401(k) plans, simplified employee pensions (SEP), 403(b), Keogh plans, TSA, other retirement account rollovers," "tax deferred," or similar representations;

(4) Utilization of the word "guaranteed" to describe the fixed return, annual return, principal, earnings, profits, investment, or similar representations;

(5) "No sales charges or fees" or similar representations; and

(6) "High yield," "superior return," "excellent return," "high return," "quick profit," or similar representations;

(7) Purported favorable representations or testimonials about the benefits of viatical settlement contracts taken out of context from newspapers, trade papers, journals, radio and television programs, and all other forms of print and electronic media.

e. The information required to be disclosed under this section shall not be minimized, rendered obscure, or presented in an ambiguous fashion or intermingled with the text of the advertisement so as to be confusing or misleading.

(1) An advertisement shall not omit material information or use words, phrases, statements, references or illustrations if the omission or use has the capacity, tendency or effect of misleading or deceiving viators as to the nature or extent of any benefit, loss covered, premium payable, or state or federal tax consequence. The fact that the viatical settlement contract offered is made available for inspection prior to consummation of the sale, or an offer is made to refund the payment if the viator is not satisfied or that the viatical settlement contract includes a "free look" period that satisfies or exceeds legal requirements, does not remedy misleading statements.

(2) An advertisement shall not use the name or title of a life insurance company or a life insurance policy unless the advertisement has been approved by the insurer.

(3) An advertisement shall not represent that premium payments will not be required to be paid on the life insurance policy that is the subject of a viatical settlement contract in order to maintain that policy, unless that is the fact.

(4) An advertisement shall not state or imply that interest charged on an accelerated death benefit or a policy loan is unfair, inequitable or in any manner an incorrect or improper practice.

(5) The words "free," "no cost," "without cost," "no additional cost," "at no extra cost," or words of similar import shall not be used with respect to any benefit or service unless true. An advertisement may specify the charge for a benefit or a service or may state that a charge is included in the payment or use other appropriate language.

(6) Testimonials, appraisals or analysis used in advertisements must be genuine; represent the current opinion of the author; be applicable to the viatical settlement contract, product or service advertised, if any, and be accurately reproduced with sufficient completeness to avoid misleading or deceiving prospective viators as to the nature or scope of the testimonials, appraisal, analysis or endorsement. In using testimonials, appraisals or analysis, the viatical settlement provider licensee makes as its own all the statements contained therein, and the statements are subject to all the provisions of this section.

(a) If the individual making a testimonial, appraisal, analysis or an endorsement has a financial interest in the viatical settlement provider or related entity as a stockholder, director, officer, employee or otherwise, or receives any benefit directly or indirectly other than required union scale wages, that fact shall be prominently disclosed in the advertisement.

(b) An advertisement shall not state or imply that a viatical settlement contract, benefit or service has been approved or endorsed by a group of individuals, society, association or other organization unless that is the fact and unless any relationship between an organization and the licensee is disclosed. If the entity making the endorsement or testimonial is owned, controlled or managed by the licensee, or receives any payment or other consideration from the licensee for making an endorsement or testimonial, that fact shall be disclosed in the advertisement.

(c) When an endorsement refers to benefits received under a viatical settlement contract all pertinent information shall be retained for a period of five years after its use.

f. An advertisement shall not contain statistical information unless it accurately reflects recent and relevant facts. The source of all statistics used in an advertisement shall be identified.

g. An advertisement shall not disparage insurers, viatical settlement providers, life insurance producers, policies, services or methods of marketing.

h. The name of the licensee shall be clearly identified in all advertisements about the licensee or its viatical settlement contract, products or services, and if any specific viatical settlement contract is advertised, the viatical settlement contract shall be identified either by form number or some other appropriate description. If an application is part of the advertisement, the name of the viatical settlement provider shall be shown on the application.

i. An advertisement shall not use a trade name, group designation, name of the parent company of a licensee, name of a particular division of the licensee, service mark, slogan, symbol or other device or reference without disclosing the name of the licensee, if the advertisement would have the capacity or tendency to mislead or deceive as to the true identity of the licensee, or to create the impression that a company other than the licensee would have any responsibility for the financial obligation under a viatical settlement contract.

j. An advertisement shall not use any combination of words, symbols or physical materials that by their content, phraseology, shape, color or other characteristics are so similar to a combination of words, symbols or physical materials used by a government program or agency or otherwise appear to be of such a nature that they tend to mislead prospective viators into believing that the solicitation is in some manner connected with a government program or agency.

k. An advertisement may state that a licensee is licensed in the state where the advertisement appears so long as it does not exaggerate that fact or suggest or imply that competing licensees may not be so licensed. The advertisement may ask the audience to consult the licensee's website or contact the department to find out if the state requires licensing and, if so, whether the viatical settlement provider, or life insurance producer is licensed.

l. An advertisement shall not create the impression that the viatical settlement provider, its financial condition or status, the payment of its claims or the merits, desirability, or advisability of its viatical settlement contracts forms are recommended or endorsed by any government entity.

m. The name of the actual licensee shall be stated in all of its advertisements. An advertisement shall not use a trade name, any group designation, name of any affiliate or controlling entity of the licensee, service mark, slogan, symbol or other device in a manner that would have the capacity or tendency to mislead or deceive as to the true identity of the actual licensee or create the false impression that an affiliate or controlling entity would have any responsibility for the financial obligation of the licensee.

n. An advertisement shall not directly or indirectly create the impression that any division or agency of the State or of the federal government endorses, approves or favors:

(1) Any viatical settlement provider licensee or its business practices or methods of operation;

(2) The merits, desirability or advisability of any viatical settlement contract;

(3) Any viatical settlement contract; or

(4) Any life insurance policy or life insurance company.

o. If the advertiser emphasizes the speed with which the viatication will occur, the advertising shall disclose the average time from the date of the completed application to the date of offer and from acceptance of the offer to receipt of the funds by the viator.

p. If the advertising emphasizes the dollar amounts available to viators, the advertising shall disclose the average purchase price as a percent of face value obtained by viators contracting with the licensee during the past six months.

L.2005,c.229,s.11.

17B:30B-12 Fraudulent viatical settlement acts, prohibited, reporting, investigation, prosecution.

12. a. A person shall not commit a fraudulent viatical settlement act as defined in section 2 of this act.

b. A person shall not knowingly or intentionally interfere with the enforcement of the provisions of this act or investigations of suspected or actual violations of this act.

c. A person in the business of viatical settlements shall not knowingly or intentionally permit any person convicted of a felony involving dishonesty or breach of trust to participate in the business of viatical settlements.

d. (1) Viatical settlement contracts and applications for viatical settlement contracts, regardless of the form of transmission, shall contain the following statement or a substantially similar statement: "Any person who knowingly presents false information in an application for insurance or viatical settlement contract is guilty of a crime and may be subject to fines and confinement in prison."

(2) The lack of a statement as required in paragraph (1) of this subsection does not constitute a defense in any prosecution for a fraudulent viatical settlement act.

e. (1) Any person engaged in the business of viatical settlements having knowledge or a reasonable belief that a fraudulent viatical settlement act is being, will be or has been committed shall provide to the commissioner the information required by, and in a manner prescribed by, the commissioner.

(2) Any other person having knowledge or a reasonable belief that a fraudulent viatical settlement act is being, will be or has been committed may provide to the commissioner the information required by, and in a manner prescribed by, the commissioner.

f. (1) No civil liability shall be imposed on and no cause of action shall arise from the furnishing of information concerning suspected, anticipated or completed fraudulent viatical settlement acts or suspected or completed fraudulent insurance acts, if the information is provided to or received from:

(a) The commissioner or the commissioner's employees, agents or representatives;

(b) Federal, state or local law enforcement or regulatory officials or their employees, agents or representatives;

(c) A person involved in the prevention and detection of fraudulent viatical settlement acts or that person's agents, employees or representatives;

(d) The National Association of Insurance Commissioners (NAIC), National Association of Securities Dealers (NASD), the North American Securities Administration Association or their employees, agents or representatives, or other regulatory body overseeing life insurance, viatical settlements, securities or investment fraud; or

(e) The life insurer, including its agents and employees, that issued the life insurance policy covering the life of the insured.

(2) Paragraph (1) of this subsection shall not apply to statements made with actual malice. In an action brought against a person for filing a report or furnishing other information concerning a fraudulent viatical settlement act or a fraudulent insurance act, the party bringing the action shall plead specifically any allegation that paragraph (1) does not apply because the person filing the report or furnishing the information did so with actual malice.

(3) A person identified in paragraph (1) of this subsection shall be entitled to an award of attorney's fees and costs if he is the prevailing party in a civil cause of action for libel, slander or any other relevant tort arising out of activities in carrying out the provisions of this act and the party bringing the action was not substantially justified in doing so.

For purposes of this section a proceeding is "substantially justified" if it had a reasonable basis in law or fact at the time that it was initiated.

(4) This section does not abrogate or modify common law or statutory privileges or immunities enjoyed by a person described in paragraph (1) of this subsection.

g. (1) The documents and evidence provided pursuant to subsection e. of this section or obtained by the commissioner in an investigation of suspected or actual fraudulent viatical settlement acts shall be privileged and confidential and shall not be a public record and shall not be subject to discovery or subpoena in a civil or criminal action.

(2) The provisions of paragraph (1) of this subsection shall not prohibit release by the commissioner of documents and evidence obtained in an investigation of suspected or actual fraudulent viatical settlement acts:

(a) In administrative or judicial proceedings to enforce laws administered by the commissioner;

(b) To federal, state or local law enforcement or regulatory agencies, to an organization established for the purpose of detecting and preventing fraudulent viatical settlement acts or to the National Association of Insurance Commissioners (NAIC); or

(c) At the discretion of the commissioner, to a person in the business of viatical settlements or the business of life insurance that is aggrieved by a fraudulent viatical settlement act.

(3) Release of documents and evidence under paragraph (2) of this subsection shall not abrogate or modify the privilege granted in paragraph (1) of this subsection.

h. This act shall not:

(1) Preempt the authority or relieve the duty of other law enforcement or regulatory agencies to investigate, examine and prosecute suspected violations of law;

(2) Prevent or prohibit a person from disclosing voluntarily information concerning a fraudulent viatical settlement act to a law enforcement or regulatory agency other than the department; or

(3) Limit the powers granted elsewhere by the laws of this State to the commissioner or the Insurance Fraud Prosecutor to investigate and examine possible violations of law and to take appropriate action against wrongdoers.

i. Viatical settlement providers shall have in place antifraud initiatives reasonably calculated to detect, prosecute and prevent fraudulent viatical settlement acts. At the discretion of the commissioner, the commissioner may order, or a licensee may request and the commissioner may grant, modifications of the following required initiatives as necessary to ensure an effective antifraud program. The modifications may be more or less restrictive than the required initiatives so long as the modifications may reasonably be expected to accomplish the purpose of this section. Antifraud initiatives shall include:

(1) Fraud investigators, who may be viatical settlement provider employees or independent contractors; and

(2) An antifraud plan, which shall be submitted to the commissioner. The antifraud plan shall include, but not be limited to:

(a) A description of the procedures for detecting and investigating possible fraudulent viatical settlement acts and procedures for resolving material inconsistencies between medical records and insurance applications;

(b) A description of the procedures for reporting possible fraudulent viatical settlement acts to the commissioner;

(c) A description of the plan for antifraud education and training of underwriters and other personnel; and

(d) A description or chart outlining the organizational arrangement of the antifraud personnel who are responsible for

the investigation and reporting of possible fraudulent viatical settlement acts and investigating unresolved material inconsistencies between medical records and insurance applications.

(3) Antifraud plans submitted to the commissioner shall be privileged and confidential and shall not be a public record and shall not be subject to discovery or subpoena in a civil or criminal action.

(4) The commissioner may refer suspected fraudulent viatical settlement acts to the Department of Law and Public Safety, Office of Insurance Fraud Prosecutor, for investigation, prosecution or other action or disposition involving such suspected fraudulent viatical settlement acts.

L.2005,c.229,s.12.

17B:30B-13 Injunction in addition to penalties, enforcement provisions.

13. a. In addition to the penalties and other enforcement provisions of this act, if any person violates this act or any regulation implementing this act, the commissioner may seek an injunction in a court of competent jurisdiction and may apply for temporary and permanent orders that the commissioner determines are necessary to restrain the person from committing the violation.

b. Any person damaged by the acts of a person in violation of this act may bring a civil action against the person committing the violation in a court of competent jurisdiction.

c. The commissioner may issue, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), a cease and desist order upon a person that violates any provision of this act, any regulation or order adopted by the commissioner, or any written agreement entered into with the commissioner.

d. When the commissioner finds that an activity in violation of this act presents an immediate danger to the public that requires an immediate final order, the commissioner may issue an emergency cease and desist order reciting with particularity the facts underlying the findings.

The emergency cease and desist order is effective immediately upon service of a copy of the order on the respondent and remains effective for 90 days. If the commissioner begins non-emergency cease and desist proceedings, the emergency cease and desist order remains effective, absent an order by a court of competent jurisdiction pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).

e. In addition to the penalties and other enforcement provisions of this act, any person who violates this act shall be subject to civil penalties of up to $10,000 per violation which may be collected in a summary proceeding pursuant to the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.). The commissioner's order may require a person found to be in violation of this act to make restitution to persons aggrieved by violations of this act.

f. A person convicted of a violation of this act shall be ordered to pay restitution to persons aggrieved by the violation of this act. Restitution shall be ordered in addition to a fine or imprisonment, but not in lieu of a fine or imprisonment.

g. A person convicted of a violation of this act may be sentenced in accordance with paragraph (1), (2), (3) or (4) of this subsection based on the greater of: the value of property, services, or other benefit wrongfully obtained or attempted to be obtained; or the aggregate economic loss suffered by any person as a result of the violation. A person convicted of a fraudulent viatical settlement act shall be ordered to pay restitution to persons aggrieved by the fraudulent viatical settlement act. Restitution shall be ordered in addition to a fine or imprisonment but not in lieu of a fine or imprisonment.

(1) Imprisonment for not more than 20 years or payment of a fine of not more than $100,000, or both, if the value of the viatical settlement contract is more than $35,000;

(2) Imprisonment for not more than 10 years or payment of a fine of not more than $20,000, or both, if the value of the viatical settlement contract is more than $2,500 but not more than $35,000;

(3) Imprisonment for not more than five years or payment of a fine of not more than $10,000, or both, if the value of the viatical settlement contract is more than $500 but not more than $2,500; or

(4) Imprisonment for not more than one year or payment of a fine of not more than $3,000, or both, if the value of the viatical settlement contract is $500 or less.

h. In any prosecution under paragraphs (1), (2), (3) and (4) of subsection g. of this section the value of the viatical settlement contracts within any six-month period may be aggregated and the defendant charged accordingly in applying the provisions of this section; provided that, when two or more offenses are committed by the same person in two or more counties, the accused may be prosecuted in any county in which one of the offenses was committed for all of the offenses aggregated under this section. The applicable statute of limitations provision shall not begin to run until the insurance company or law enforcement agency is aware of the fraud, but in no event may the prosecution be commenced later than seven years after the act has occurred.

L.2005,c.229,s.13.

17B:30B-14 Violation considered unfair trade practice; penalties.

14. A violation of this act shall be considered an unfair trade practice pursuant to N.J.S.17B:30-1 et seq. and shall be subject to the penalties contained in N.J.S.17B:30-17. L.2005,c.229,s.14.

17B:30B-15 Regulations, authority of commissioner.

15. The commissioner shall have the authority to promulgate regulations implementing the provisions of this act pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) including, but not limited to, the following:

a. Establishing standards for evaluating reasonableness of payments under viatical settlement contracts for persons terminally or chronically ill;

b. Establishing appropriate licensing requirements, fees and standards for continued licensure for viatical settlement providers;

c. Requiring a bond or other mechanism for financial accountability for viatical settlement providers; and

d. Governing the relationship and responsibilities of insurers, viatical settlement providers, life insurance producers and others in the business of viatical settlements during the period of consideration or effectuation of a viatical settlement contract.

L.2005,c.229,s.15.

17B:30B-16 Construction of act with Uniform Securities Law.

16. Nothing in this act shall be construed to preempt or otherwise limit the provisions of the "Uniform Securities Law (1967)," P.L.1967, c.93 (C.49:3-47 et seq.) or any regulations, orders, policy statements, notices, bulletins, or other interpretations issued by or through the Attorney General or his designee acting pursuant thereto. Compliance with the provisions of this act does not constitute compliance with any applicable provisions of the "Uniform Securities Law (1967)."

L.2005,c.229,s.16.

17B:30B-17 Continuation of negotiating viatical settlements, certain circumstances prior to act.

17. a. Notwithstanding the provisions of sections 1 through 16 of this act, a person who has lawfully negotiated viatical settlement contracts between a viator and one or more viatical settlement providers for at least one year immediately prior to the effective date of this act may continue to negotiate viatical settlements in this State for a period of one year from the effective date of this act, provided that person registers with the department on a form prescribed by the department. The registration form shall be published by the department not later than 30 days from the effective date of this act and shall require a person registering to evidence that he has lawfully negotiated viatical settlement contracts and include an acknowledgment by that person that he will operate in accordance with and comply with this act.

b. A viatical settlement provider that is either licensed or is lawfully transacting business in this State immediately prior to the effective date of this act may continue to do so pending approval or disapproval of the viatical settlement provider's application for a license pursuant to this act.
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Publication:Tools & Techniques of Life Settlement Planning
Date:Jan 1, 2008
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Previous Article:Chapter 13: Future of life settlements.
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