On June 4,2007, after what has been reported as an intense debate, the National Association of Insurance Commissioners (NAIC) adopted amendments to the Viatical Settlements Model Act at the NAIC's Summer National Meeting in San Francisco. The new version addresses several key issues in the life settlement marketplace, including an emerging and often controversial type of life insurance practice sometimes referred to as Stranger-Originated Life Insurance (STOLI). It imposes a five-year ban settling a life insurance policy with specified elements indicative of a STOLI transaction. The amended Model also reportedly strengthens several consumer protections.
Some of the so-called "Poolman amendments" have application with regard to potential regulation concerning the business practices of companies engaging in structured settlement factoring transactions. Among them:
-
enhanced compensation disclosure transparency rules,
-
prohibitions on what can and cannot be said in settlement marketing materials,
-
an expanded definition of what constitutes fraudulent activity
It is the kind of resolve that resulted in the above that the structured settlement industry, including NSSTA and the SSP, the trial lawyer community and, perhaps, any responsible and willing members of NASP must have in order to prevent the abhorrent practice of factoring or attempting to factor structured settlements within a short period after issue. I am familiar with a guardian who attempted and has thus far failed to factor his ward's structured settlement payments before the annuity was even issued. And a prominent NASP member in an act of shameless corpulence, was only too willing to consider it. This kind of practice erodes lawyers comfort level with structured settlements and begs for regulatory intervention. I will remind those who have maligned Allstate's AFEN exchange, that Allstate told me that it will NOT consider a transaction within 2 years of issue.
Leave a Reply