NCOIL Group Meets to Discuss Life Settlements, STOLI

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The National Conference of Insurance Legislators’ Life Settlements Subcommittee held an interim meeting on October 25. The purpose of the meeting was to discuss outstanding issues in connection with NCOIL’s ongoing efforts to amend the NCOIL Life Settlement Model Act to address stranger-originated life insurance transactions (STOLI). NAIFA has been working closely with NCOIL on this project and has urged the legislators to take strong measures that would prevent STOLI while not impacting legitimate life settlements.

By way of background, in June 2007, the NAIC adopted amendments to its Viatical Settlements Model Act which address STOLI through a five year ban on certain types of transactions that are indicators of STOLI. NAIFA, along with AALU and the ACLI, support the NAIC amendments. NCOIL has been pursuing a different approach to STOLI, focusing its efforts on enhanced disclosures, penalties and the inclusion of a specific prohibition of STOLI transactions. NAIFA, AALU and the ACLI have proposed additional amendments to the NCOIL model that, among other things, would strengthen the model’s disclosure and advertising requirements and broaden key definitions in the model in order to bring a wider variety of STOLI transactions within the model’s scope.

At the meeting, the Subcommittee heard extensive testimony from NAIFA/AALU/ACLI, the life settlement and premium financing industries, and state securities regulators on a broad range of issues. The Subcommittee’s goal is to complete its work on the amendments in time for final adoption by NCOIL at its Annual Meeting in mid-November.