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Assembly Actions -
Lowercase Senate Actions - UPPERCASE |
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|---|---|
| Jan 06, 2010 |
referred to insurance |
| Jan 12, 2009 |
referred to insurance |
Assembly Bill A1873
2009-2010 Legislative Session
Relates to viatical settlements; repealer
download bill text pdfSponsored By
WRIGHT
Archive: Last Bill Status - In Assembly Committee
- Introduced
-
- In Committee Assembly
- In Committee Senate
-
- On Floor Calendar Assembly
- On Floor Calendar Senate
-
- Passed Assembly
- Passed Senate
- Delivered to Governor
- Signed By Governor
Actions
2009-A1873 (ACTIVE) - Details
- Current Committee:
- Assembly Insurance
- Law Section:
- Insurance Law
- Laws Affected:
- Rpld Art 78, amd Ins L, generally; add §§176.40 - 176.70, Pen L; amd §570, Bank L
2009-A1873 (ACTIVE) - Bill Text download pdf
S T A T E O F N E W Y O R K
________________________________________________________________________
1873
2009-2010 Regular Sessions
I N A S S E M B L Y
January 12, 2009
___________
Introduced by M. of A. WRIGHT -- read once and referred to the Committee
on Insurance
AN ACT to amend the insurance law, the penal law and the banking law, in
relation to viatical settlements; and to repeal certain provisions of
the insurance law relating thereto
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Paragraphs 6 and 7 of subsection (r) of section 2101 of the
insurance law, as added by chapter 687 of the laws of 2003, are amended
and a new paragraph 8 is added to read as follows:
(6) personal lines: property/casualty insurance coverage sold to indi-
viduals and families for primarily noncommercial purposes; [and]
(7) any other line of insurance permitted pursuant to this chapter[.];
AND
(8) VIATICAL SETTLEMENT TRANSACTIONS PURSUANT TO ARTICLE SEVENTY-EIGHT
OF THIS CHAPTER.
S 2. Section 2101 of the insurance law is amended by adding a new
subsection (v) to read as follows:
(V) IN THIS ARTICLE, "VIATICAL SETTLEMENT BROKER" SHALL HAVE THE MEAN-
ING CONTAINED IN SUBSECTION (H) OF SECTION SEVEN THOUSAND EIGHT HUNDRED
TWO OF THIS CHAPTER.
S 3. Paragraph 1 of subsection (a) of section 2102 of the insurance
law, as amended by chapter 687 of the laws of 2003, is amended to read
as follows:
(1) No person, firm, association or corporation shall act as an insur-
ance producer [or], insurance adjuster, OR VIATICAL SETTLEMENT BROKER in
this state without having authority to do so by virtue of a license
issued and in force pursuant to the provisions of this chapter.
S 4. The insurance law is amended by adding a new section 2104-a to
read as follows:
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00466-01-9
A. 1873 2
S 2104-A. VIATICAL SETTLEMENT BROKERS; LICENSING. (A) THE SUPERINTEN-
DENT MAY ISSUE A LICENSE TO ANY INDIVIDUAL, FIRM, ASSOCIATION OR CORPO-
RATION WHO OR WHICH HAS COMPLIED WITH THE REQUIREMENTS OF THIS CHAPTER,
AUTHORIZING THE LICENSEE TO ACT AS A VIATICAL SETTLEMENT BROKER.
(B) ANY SUCH LICENSE ISSUED TO A FIRM OR ASSOCIATION SHALL AUTHORIZE
ONLY THE MEMBERS AND KEY EMPLOYEES THEREOF, NAMED IN SUCH LICENSE AS
SUB-LICENSEES, TO ACT INDIVIDUALLY AS VIATICAL SETTLEMENT BROKERS THERE-
UNDER, AND ANY SUCH LICENSE ISSUED TO A CORPORATION SHALL AUTHORIZE ONLY
THE OFFICERS, DIRECTORS AND KEY EMPLOYEES THEREOF, NAMED IN SUCH LICENSE
AS SUB-LICENSEES, TO ACT INDIVIDUALLY AS VIATICAL SETTLEMENT BROKERS
THEREUNDER. EVERY SUB-LICENSEE, ACTING AS A VIATICAL SETTLEMENT BROKER
PURSUANT TO SUCH A LICENSE SHALL BE AUTHORIZED SO TO ACT ONLY IN THE
NAME OF THE LICENSEE.
(C) EVERY INDIVIDUAL APPLICANT FOR A LICENSE UNDER THIS SECTION AND
EVERY PROPOSED SUB-LICENSEE SHALL BE EIGHTEEN YEARS OF AGE OR OVER AT
THE TIME OF THE ISSUANCE OF SUCH LICENSE.
(D) (1) BEFORE ANY ORIGINAL VIATICAL SETTLEMENT BROKER'S LICENSE IS
ISSUED THERE SHALL BE ON FILE IN THE OFFICE OF THE SUPERINTENDENT AN
APPLICATION BY THE PROPOSED LICENSEE IN SUCH FORM OR FORMS, AND SUPPLE-
MENTS THERETO, AND CONTAINING INFORMATION THE SUPERINTENDENT PRESCRIBES
AND FOR EACH BUSINESS ENTITY, THE SUB-LICENSEE OR SUB-LICENSEES NAMED IN
THE APPLICATION SHALL BE DESIGNATED RESPONSIBLE FOR THE BUSINESS ENTI-
TY'S COMPLIANCE WITH THE INSURANCE LAWS, RULES AND REGULATIONS OF THIS
STATE. THE APPLICANT SHALL FULLY DISCLOSE THE IDENTITY OF ALL STOCKHOLD-
ERS (EXCEPT STOCKHOLDERS OWNING FEWER THAN TEN PERCENT OF THE VOTING
SHARES OF A VIATICAL SETTLEMENT BROKER WHOSE SHARES ARE PUBLICLY TRAD-
ED), PARTNERS, OFFICERS, MEMBERS, DIRECTORS AND PERSONS WITH A CONTROL-
LING INTEREST AND THE SUPERINTENDENT MAY, IN THE EXERCISE OF THE SUPER-
INTENDENT'S DISCRETION, REFUSE TO ISSUE A LICENSE IN THE NAME OF A LEGAL
ENTITY IF NOT SATISFIED THAT ANY EMPLOYEE, STOCKHOLDER, PARTNER, OFFI-
CER, MEMBER, DIRECTOR OR PERSON WITH A CONTROLLING INTEREST THEREOF WHO
MAY MATERIALLY INFLUENCE THE APPLICANT'S CONDUCT MEETS THE STANDARDS OF
THIS ARTICLE AND ARTICLE SEVENTY-EIGHT OF THIS CHAPTER. THEREAFTER, THE
APPLICANT AND, IF A LICENSE HAS BEEN ISSUED, THE LICENSEE SHALL PROVIDE
TO THE SUPERINTENDENT NEW OR REVISED INFORMATION ABOUT STOCKHOLDERS
(EXCEPT STOCKHOLDERS OWNING FEWER THAN TEN PERCENT OF THE VOTING SHARES
OF A VIATICAL SETTLEMENT BROKER WHOSE SHARES ARE PUBLICLY TRADED), PART-
NERS, OFFICERS, MEMBERS, DIRECTORS AND PERSONS WITH A CONTROLLING INTER-
EST WITHIN THIRTY DAYS OF THE CHANGE. FOR PURPOSES OF THIS SECTION,
"CONTROLLING INTEREST" MEANS A PERSON WHO DIRECTLY OR INDIRECTLY, HAS
THE POWER TO CAUSE TO BE DIRECTED THE MANAGEMENT, CONTROL OR ACTIVITIES
OF SUCH LICENSEE.
(2) EACH INDIVIDUAL SIGNING SUCH APPLICATION SHALL, UNLESS LICENSED AS
AN INSURANCE PRODUCER WITH A LIFE LINE OF AUTHORITY, WITH SUCH APPLICA-
TION, SUBMIT TO THE SUPERINTENDENT FINGERPRINTS OF HIS OR HER TWO HANDS
RECORDED IN SUCH MANNER AS MAY BE SPECIFIED BY THE SUPERINTENDENT. SUCH
FINGERPRINTS SHALL BE SUBMITTED TO THE DIVISION OF CRIMINAL JUSTICE
SERVICES FOR A STATE CRIMINAL HISTORY RECORD CHECK, AS DEFINED IN SUBDI-
VISION ONE OF SECTION THREE THOUSAND THIRTY-FIVE OF THE EDUCATION LAW,
AND MAY BE SUBMITTED TO THE FEDERAL BUREAU OF INVESTIGATION FOR A
NATIONAL CRIMINAL HISTORY RECORD CHECK.
(E) (1) THE SUPERINTENDENT SHALL, IN ORDER TO DETERMINE THE COMPETENCY
OF EVERY INDIVIDUAL APPLICANT AND OF EVERY PROPOSED SUB-LICENSEE FOR THE
VIATICAL SETTLEMENT BROKER LICENSE REQUIRE SUCH INDIVIDUAL TO SUBMIT TO
A PERSONAL WRITTEN EXAMINATION AND TO PASS THE SAME TO THE SATISFACTION
OF THE SUPERINTENDENT. SUCH EXAMINATION SHALL BE HELD AT SUCH TIMES AND
A. 1873 3
PLACES AS THE SUPERINTENDENT SHALL FROM TIME TO TIME DETERMINE. EVERY
INDIVIDUAL APPLYING TO TAKE ANY WRITTEN EXAMINATION SHALL, AT THE TIME
OF APPLYING THEREFOR, PAY TO THE SUPERINTENDENT OR, AT THE DISCRETION OF
THE SUPERINTENDENT, DIRECTLY TO ANY ORGANIZATION THAT IS UNDER CONTRACT
TO PROVIDE EXAMINATION SERVICES, AN EXAMINATION FEE OF AN AMOUNT WHICH
IS THE ACTUAL DOCUMENTED ADMINISTRATIVE COST OF CONDUCTING SAID QUALIFY-
ING EXAMINATION AS CERTIFIED BY THE SUPERINTENDENT FROM TIME TO TIME. AN
EXAMINATION FEE REPRESENTS AN ADMINISTRATIVE EXPENSE AND IS NOT REFUNDA-
BLE. THE SUPERINTENDENT MAY ACCEPT, IN LIEU OF ANY SUCH EXAMINATION, THE
RESULT OF ANY PREVIOUS WRITTEN EXAMINATION, GIVEN BY THE SUPERINTENDENT
OR BY THE CHIEF INSURANCE REGULATOR OF ANOTHER STATE, WHICH IN THE
SUPERINTENDENT'S JUDGMENT IS EQUIVALENT TO THE EXAMINATION FOR WHICH IT
IS SUBSTITUTED.
(2) FOR INDIVIDUALS SEEKING TO QUALIFY TO OBTAIN A VIATICAL SETTLEMENT
BROKER'S LICENSE, THE SUPERINTENDENT SHALL PRESCRIBE ONE EXAMINATION TO
TEST THE QUALIFICATIONS OF AN INDIVIDUAL WITH RESPECT TO VIATICAL
SETTLEMENTS. EVERY SUCH INDIVIDUAL SHALL BE REQUIRED TO PASS SUCH EXAM-
INATION BEFORE BECOMING LICENSED AS A VIATICAL SETTLEMENT BROKER. NO
INDIVIDUAL SHALL BE DEEMED QUALIFIED TO TAKE THE EXAMINATION UNLESS HE
OR SHE SHALL HAVE SUCCESSFULLY COMPLETED A COURSE OR COURSES, APPROVED
AS TO METHOD AND CONTENT BY THE SUPERINTENDENT, COVERING THE PRINCIPAL
BRANCHES OF VIATICAL SETTLEMENT TRANSACTIONS AND REQUIRING NOT LESS THAN
FORTY HOURS OF CLASSROOM WORK.
(F)(1) NO SUCH WRITTEN EXAMINATION OR PRELICENSING EDUCATION SHALL BE
REQUIRED:
(A) OF ANY INSURANCE PRODUCER WITH A LIFE LINE OF AUTHORITY LICENSED
IN THIS STATE OR IN SUCH INSURANCE PRODUCER'S HOME STATE FOR AT LEAST
ONE YEAR;
(B) IN THE DISCRETION OF THE SUPERINTENDENT, OF ANY INDIVIDUAL WHOSE
LICENSE HAS BEEN REVOKED OR SUSPENDED;
(C) OF ANY APPLICANT WHO HAS PASSED THE WRITTEN EXAMINATION GIVEN BY
THE SUPERINTENDENT FOR A VIATICAL SETTLEMENT BROKER'S LICENSE AND WAS
LICENSED AS SUCH, OR OF AN APPLICANT WHO WAS LICENSED AS A VIATICAL
SETTLEMENT BROKER BUT DID NOT PASS SUCH AN EXAMINATION; PROVIDED THE
APPLICANT APPLIES WITHIN TWO YEARS FOLLOWING THE DATE OF TERMINATION OF
THE APPLICANT'S LICENSE;
(D) IN THE DISCRETION OF THE SUPERINTENDENT, AS TO ALL OR ANY PART OF
THE WRITTEN EXAMINATION OR THE PREREQUISITE MINIMUM FORTY-HOUR COURSE
SPECIFIED IN PARAGRAPH TWO OF SUBSECTION (E) OF THIS SECTION, OF ANY
INDIVIDUAL SEEKING TO BE NAMED A LICENSEE OR SUB-LICENSEE, UPON WHOM HAS
BEEN CONFERRED THE CHARTERED LIFE UNDERWRITER (C.L.U.) OR CHARTERED LIFE
UNDERWRITER ASSOCIATE DESIGNATION BY THE AMERICAN COLLEGE; OR
(E) IN THE DISCRETION OF THE SUPERINTENDENT, AS TO ALL OR ANY PART OF
THE WRITTEN EXAMINATION OR THE PREREQUISITE MINIMUM FORTY-HOUR COURSE
SPECIFIED IN PARAGRAPH TWO OF SUBSECTION (E) OF THIS SECTION, OF ANY
INDIVIDUAL SEEKING TO BE NAMED A LICENSEE OR SUB-LICENSEE, WHO IS A
NON-RESIDENT WHO IS LICENSED AS AN INSURANCE PRODUCER WITH A LIFE LINE
OF AUTHORITY OR A VIATICAL SETTLEMENT BROKER IN HIS OR HER HOME STATE,
PROVIDED, HOWEVER, THAT THE INDIVIDUAL'S HOME STATE GRANTS NON-RESIDENT
LICENSES TO RESIDENTS OF THIS STATE ON THE SAME BASIS.
(2) NO PRELICENSING EDUCATION SHALL BE REQUIRED:
(A) OF ANY INDIVIDUAL REGULARLY EMPLOYED BY A VIATICAL SETTLEMENT
PROVIDER, LIFE INSURANCE COMPANY, VIATICAL SETTLEMENT BROKER, OR AN
INSURANCE PRODUCER WITH A LIFE LINE OF AUTHORITY, FOR A PERIOD OR PERI-
ODS AGGREGATING NOT LESS THAN ONE YEAR DURING THE THREE YEARS NEXT
PRECEDING THE DATE OF APPLICATION, IN RESPONSIBLE DUTIES RELATING TO THE
A. 1873 4
USE OF LIFE INSURANCE AND ANNUITY CONTRACTS IN THE DESIGN AND ADMINIS-
TRATION OF PLANS FOR ESTATE CONSERVATION AND DISTRIBUTION, EMPLOYEE
BENEFITS AND BUSINESS CONTINUATION, AND SETTLEMENTS OF LIFE INSURANCE
AND ANNUITY CONTRACTS, PROVIDED THAT THE APPLICANT SUBMITS WITH THE
APPLICATION A STATEMENT SUBSCRIBED AND AFFIRMED AS TRUE UNDER THE PENAL-
TIES OF PERJURY BY SUCH EMPLOYER OR EMPLOYERS STATING FACTS WHICH SHOW
COMPLIANCE WITH THIS REQUIREMENT; OR
(B) OF ANY INDIVIDUAL REGULARLY EMPLOYED BY A VIATICAL SETTLEMENT
PROVIDER, LIFE INSURANCE COMPANY, VIATICAL SETTLEMENT BROKER, OR AN
INSURANCE PRODUCER WITH A LIFE LINE OF AUTHORITY, FOR A PERIOD OR PERI-
ODS AGGREGATING NOT LESS THAN ONE YEAR, DURING THE THREE YEARS NEXT
PRECEDING THE DATE OF ENTRANCE INTO THE SERVICE OF THE ARMED FORCES OF
THE UNITED STATES OR IMMEDIATELY FOLLOWING HIS OR HER DISCHARGE THERE-
FROM, IN RESPONSIBLE DUTIES RELATING TO THE USE OF LIFE INSURANCE AND
ANNUITY CONTRACTS IN THE DESIGN AND ADMINISTRATION OF PLANS FOR ESTATE
CONSERVATION AND DISTRIBUTION, EMPLOYEE BENEFITS AND BUSINESS CONTINUA-
TION, AND SETTLEMENTS OF LIFE INSURANCE AND ANNUITY CONTRACTS; PROVIDED
THE APPLICATION FOR SUCH LICENSE IS FILED WITHIN ONE YEAR FOLLOWING THE
DATE OF DISCHARGE, AND THE APPLICANT SUBMITS WITH THE APPLICATION A
STATEMENT SUBSCRIBED AND AFFIRMED AS TRUE UNDER THE PENALTIES OF PERJURY
BY SUCH EMPLOYER OR EMPLOYERS STATING FACTS WHICH SHOW COMPLIANCE WITH
THIS REQUIREMENT.
(G) THE SUPERINTENDENT MAY REFUSE TO ISSUE ANY VIATICAL SETTLEMENT
BROKER'S LICENSE IF, IN THE SUPERINTENDENT'S JUDGMENT, THE PROPOSED
LICENSEE OR ANY SUB-LICENSEE IS NOT TRUSTWORTHY AND COMPETENT TO ACT AS
SUCH BROKER, OR HAS GIVEN CAUSE FOR LICENSE REVOCATION OR SUSPENSION, OR
HAS FAILED TO COMPLY WITH ANY PREREQUISITE FOR THE ISSUANCE OF SUCH
LICENSE.
(H) (1) EVERY LICENSE ISSUED TO A BUSINESS ENTITY PURSUANT TO
SUBSECTION (A) OF THIS SECTION SHALL EXPIRE ON JUNE THIRTIETH OF
ODD-NUMBERED YEARS.
(2) EVERY LICENSE ISSUED PURSUANT TO THIS SECTION TO AN INDIVIDUAL,
WHO WAS BORN IN AN ODD-NUMBERED YEAR, SHALL EXPIRE ON THE INDIVIDUAL'S
BIRTHDAY IN EACH ODD-NUMBERED YEAR. EVERY LICENSE ISSUED PURSUANT TO
THIS SECTION TO AN INDIVIDUAL, WHO WAS BORN IN AN EVEN-NUMBERED YEAR,
SHALL EXPIRE ON THE INDIVIDUAL'S BIRTHDAY IN EACH EVEN-NUMBERED YEAR.
EVERY SUCH LICENSE MAY BE RENEWED FOR THE ENSUING PERIOD OF TWENTY-FOUR
MONTHS UPON THE FILING OF AN APPLICATION IN CONFORMITY WITH THIS
SUBSECTION.
(3) SUCH LICENSES MAY BE ISSUED FOR ALL OF SUCH TWO-YEAR TERMS, OR
UPON APPLICATION MADE DURING ANY SUCH TERM, FOR THE BALANCE THEREOF.
(4) ANY LICENSE SHALL BE CONSIDERED IN GOOD STANDING WITHIN THE
LICENSE TERM UNLESS:
(A) REVOKED OR SUSPENDED BY THE SUPERINTENDENT PURSUANT TO THIS ARTI-
CLE; OR
(B) IF AT THE EXPIRATION DATE OF THE LICENSE TERM, PROVIDED THE
LICENSE WAS IN GOOD STANDING DURING THE TERM, THE LICENSEE FAILS TO FILE
A RENEWAL APPLICATION.
(5) BEFORE THE RENEWAL OF ANY VIATICAL SETTLEMENT BROKER'S LICENSE
SHALL BE ISSUED, THE LICENSEE SHALL HAVE:
(A) FILED A COMPLETED RENEWAL APPLICATION IN SUCH FORM OR FORMS, AND
SUPPLEMENTS THERETO, AND CONTAINING SUCH INFORMATION AS THE SUPERINTEN-
DENT MAY PRESCRIBE; AND
(B) PAID SUCH FEES AS ARE PRESCRIBED BY THE SUPERINTENDENT.
(6) IF AN APPLICATION FOR A RENEWAL LICENSE SHALL HAVE BEEN FILED WITH
THE SUPERINTENDENT BEFORE THE EXPIRATION OF SUCH LICENSE, THE LICENSE
A. 1873 5
SOUGHT TO BE RENEWED SHALL CONTINUE IN FULL FORCE AND EFFECT EITHER
UNTIL THE ISSUANCE BY THE SUPERINTENDENT OF THE RENEWAL LICENSE APPLIED
FOR OR UNTIL FIVE DAYS AFTER THE SUPERINTENDENT SHALL HAVE REFUSED TO
ISSUE SUCH RENEWAL LICENSE AND SHALL HAVE GIVEN NOTICE OF SUCH REFUSAL
TO THE APPLICANT AND TO EACH PROPOSED SUB-LICENSEE. BEFORE REFUSING TO
RENEW ANY SUCH LICENSE, EXCEPT ON THE GROUND OF FAILURE TO PASS A WRIT-
TEN EXAMINATION, THE SUPERINTENDENT SHALL NOTIFY THE APPLICANT OF THE
SUPERINTENDENT'S INTENTION TO DO SO AND SHALL GIVE SUCH APPLICANT A
HEARING.
(7) (A) THE SUPERINTENDENT MAY, IN ISSUING A RENEWAL LICENSE, DISPENSE
WITH THE REQUIREMENTS OF A VERIFIED APPLICATION BY ANY INDIVIDUAL LICEN-
SEE OR SUB-LICENSEE WHO, BY REASON OF BEING ENGAGED IN ANY MILITARY
SERVICE FOR THE UNITED STATES, IS UNABLE TO MAKE PERSONAL APPLICATION
FOR SUCH RENEWAL LICENSE, UPON THE FILING OF AN APPLICATION ON BEHALF OF
SUCH INDIVIDUAL, IN SUCH FORM AS THE SUPERINTENDENT SHALL PRESCRIBE, BY
SOME PERSON WHO IN HIS OR HER JUDGMENT HAS KNOWLEDGE OF THE FACTS AND
WHO MAKES AFFIDAVIT SHOWING SUCH MILITARY SERVICE AND THE INABILITY OF
SUCH VIATICAL SETTLEMENT BROKER TO MAKE PERSONAL APPLICATION.
(B) AN INDIVIDUAL LICENSEE OR SUB-LICENSEE WHO IS UNABLE TO COMPLY
WITH LICENSE RENEWAL PROCEDURES DUE TO OTHER EXTENUATING CIRCUMSTANCES,
SUCH AS A LONG-TERM MEDICAL DISABILITY, MAY REQUEST A WAIVER OF SUCH
PROCEDURES, IN SUCH FORM AS THE SUPERINTENDENT SHALL PRESCRIBE. THE
LICENSEE OR SUB-LICENSEE MAY ALSO REQUEST A WAIVER OF ANY EXAMINATION
REQUIREMENT OR ANY OTHER FINE OR SANCTION IMPOSED FOR FAILURE TO COMPLY
WITH RENEWAL PROCEDURES.
(8) IN ADDITION TO ANY EXAMINATION FEE REQUIRED BY SUBSECTION (E) OF
THIS SECTION, THERE SHALL BE PAID TO THE SUPERINTENDENT FOR EACH INDI-
VIDUAL LICENSE APPLICANT AND EACH PROPOSED SUB-LICENSEE A LICENSING OR
RENEWAL FEE TO BE DETERMINED BY THE SUPERINTENDENT.
(9) AN APPLICATION FOR THE RENEWAL OF A LICENSE SHALL BE FILED WITH
THE SUPERINTENDENT NOT LESS THAN SIXTY DAYS PRIOR TO THE DATE THE
LICENSE EXPIRES OR THE APPLICANT SHALL BE SUBJECT TO A FURTHER FEE FOR
LATE FILING OF TEN DOLLARS.
(10) NO LICENSE FEE SHALL BE REQUIRED OF ANY PERSON WHO SERVED AS A
MEMBER OF THE ARMED FORCES OF THE UNITED STATES AT ANY TIME AND WHO
SHALL HAVE BEEN DISCHARGED THEREFROM, UNDER CONDITIONS OTHER THAN
DISHONORABLE, IN A CURRENT LICENSING PERIOD, FOR THE DURATION OF SUCH
PERIOD.
(11) EXCEPT WHERE A CORPORATION, ASSOCIATION OR FIRM LICENSED AS A
VIATICAL SETTLEMENT BROKER IS APPLYING TO ADD A SUB-LICENSEE, THERE
SHALL BE NO FEE REQUIRED FOR THE ISSUANCE OF AN AMENDED LICENSE.
(12) THE LICENSE SHALL CONTAIN THE LICENSEE'S NAME, ADDRESS, PERSONAL
IDENTIFICATION NUMBER, THE DATE OF ISSUANCE, AND ANY OTHER INFORMATION
THE SUPERINTENDENT DEEMS NECESSARY. THE SUPERINTENDENT MAY ISSUE THE
VIATICAL SETTLEMENT BROKER'S LICENSE IN CONJUNCTION WITH ANY OTHER
LICENSE, OR ITS RENEWAL, HELD BY THE APPLICANT.
(I) IF THE SUPERINTENDENT DEEMS IT NECESSARY, THE SUPERINTENDENT MAY
REQUIRE ANY LICENSED VIATICAL SETTLEMENT BROKER TO SUBMIT A NEW APPLICA-
TION AT ANY TIME.
(J) THE SUPERINTENDENT MAY ISSUE A REPLACEMENT FOR A CURRENTLY
IN-FORCE LICENSE THAT HAS BEEN LOST OR DESTROYED. BEFORE SUCH REPLACE-
MENT LICENSE SHALL BE ISSUED, THERE SHALL BE ON FILE IN THE OFFICE OF
THE SUPERINTENDENT A WRITTEN APPLICATION FOR SUCH REPLACEMENT LICENSE,
AFFIRMING UNDER PENALTY OF PERJURY THAT THE ORIGINAL LICENSE HAS BEEN
LOST OR DESTROYED, TOGETHER WITH A FEE OF FIFTEEN DOLLARS.
A. 1873 6
S 5. The section heading of section 2119 of the insurance law is
amended, and a new subsection (e) is added to read as follows:
Insurance agents, brokers, consultants, AND VIATICAL SETTLEMENT
BROKERS; written contract for compensation; excess charges prohibited.
(E)(1) NO PERSON LICENSED AS A VIATICAL SETTLEMENT BROKER MAY RECEIVE
ANY COMPENSATION FROM ANY VIATOR, PROPOSED VIATOR OR INSURED FOR EXAMIN-
ING, APPRAISING, REVIEWING OR EVALUATING ANY VIATICAL SETTLEMENT
CONTRACT OR FOR MAKING RECOMMENDATIONS OR GIVING ADVICE WITH REGARD TO
SUCH CONTRACT; OR RECEIVE ANY COMPENSATION FROM ANY VIATOR OR PROPOSED
VIATOR FOR OR ON ACCOUNT OF THE SOLICITATION OR NEGOTIATION OF, OR OTHER
SERVICES IN CONNECTION WITH, ANY VIATICAL SETTLEMENT CONTRACT SUBJECT TO
THIS CHAPTER OR FOR ANY OTHER SERVICES ON ACCOUNT OF SUCH CONTRACT;
UNLESS SUCH COMPENSATION IS BASED UPON A WRITTEN MEMORANDUM SIGNED BY
THE PARTY TO BE CHARGED AND SPECIFYING OR CLEARLY DEFINING THE AMOUNT OR
EXTENT OF SUCH COMPENSATION.
(2) A COPY OF EVERY SUCH MEMORANDUM OR CONTRACT SHALL BE RETAINED BY
THE LICENSEE FOR NOT LESS THAN THREE YEARS AFTER SUCH SERVICES HAVE BEEN
FULLY PERFORMED.
(3) NO PERSON LICENSED AS A VIATICAL SETTLEMENT BROKER MAY RECEIVE ANY
DIRECT OR INDIRECT COMPENSATION FOR OR ON ACCOUNT OF THE SOLICITATION OR
NEGOTIATION OF, OR OTHER SERVICES IN CONNECTION WITH A VIATICAL SETTLE-
MENT CONTRACT SUBJECT TO THIS CHAPTER FROM ANY PERSON FOR WHOM ANY SUCH
LICENSEE HAS PERFORMED ANY RELATED CONSULTING SERVICE FOR WHICH THE
LICENSEE HAS RECEIVED A FEE OR CONTRACTED TO RECEIVE A FEE WITHIN THE
PRECEDING TWELVE MONTHS UNLESS SUCH COMPENSATION IS PROVIDED FOR IN A
WRITTEN MEMORANDUM OR CONTRACT REQUIRED PURSUANT TO PARAGRAPH ONE OF
THIS SUBSECTION.
S 6. Section 2120 of the insurance law, subsection (d) as added by
chapter 527 of the laws of 2004, is amended to read as follows:
S 2120. Fiduciary capacity of insurance agents, insurance brokers,
VIATICAL SETTLEMENT BROKERS and reinsurance intermediaries. (a) Every
insurance agent and every insurance broker acting as such in this state
shall be responsible in a fiduciary capacity for all funds received or
collected as insurance agent or insurance broker, and shall not, without
the express consent of his OR HER or its principal, mingle any such
funds with his OR HER or its own funds or with funds held by him OR HER
or it in any other capacity.
(b) Every reinsurance intermediary acting as such in this state shall
be responsible, in a fiduciary capacity for all funds received or
collected in such capacity, and shall not, without the express consent
of his OR HER or its principal or principals, mingle any such funds with
his OR HER or its own funds or with funds held by him OR HER or it in
any other capacity.
(c) EVERY VIATICAL SETTLEMENT BROKER ACTING AS SUCH IN THIS STATE
SHALL BE RESPONSIBLE IN A FIDUCIARY CAPACITY FOR ALL FUNDS RECEIVED OR
COLLECTED IN SUCH CAPACITY, AND SHALL NOT, WITHOUT THE EXPRESS CONSENT
OF THE VIATICAL SETTLEMENT BROKER'S PRINCIPAL OR PRINCIPALS, MINGLE ANY
SUCH FUNDS WITH THE VIATICAL SETTLEMENT BROKER'S OWN FUNDS OR WITH FUNDS
HELD BY THE VIATICAL SETTLEMENT BROKER IN ANY OTHER CAPACITY.
(D) This section shall not require any such agent, broker [or], rein-
surance intermediary, OR VIATICAL SETTLEMENT BROKER to maintain a sepa-
rate bank deposit for the funds of each such principal, if and as long
as the funds so held for each such principal are reasonably ascertaina-
ble from the books of account and records of such agent, broker [or],
reinsurance intermediary, OR VIATICAL SETTLEMENT BROKER, as the case may
be.
A. 1873 7
[(d)] (E) A retail insurance producer who violates paragraph (a) of
subdivision two of section five hundred seventy-seven-a of the banking
law shall be liable for actual damages for the failure to notify, in
writing, the premium finance agency of the information required pursuant
to such paragraph (a).
S 7. Subsections (a) and (b) of section 2132 of the insurance law, as
added by chapter 656 of the laws of 1992, are amended to read as
follows:
(a) This section shall apply to resident and non-resident persons
licensed pursuant to this article with respect to [the following types
of insurance]:
(1) life insurance, annuity contracts, variable annuity contracts and
variable life insurance;
(2) sickness, accident and health insurance; [and]
(3) all lines of property and casualty insurance; AND
(4) VIATICAL SETTLEMENTS.
(b) This section shall not apply to:
(1) those persons holding licenses for which an examination is not
required by the laws of this state; [or]
(2) any limited licensees or any other licensees as the superintendent
may exempt subject to any continuing education requirements deemed
appropriate by the superintendent; OR
(3) FOR PURPOSES OF THE CONTINUING EDUCATION REQUIREMENTS FOR VIATICAL
SETTLEMENTS, AN INSURANCE PRODUCER WITH A LIFE LINE OF AUTHORITY WHO IS
ACTING AS A VIATICAL SETTLEMENT BROKER PURSUANT TO SECTION TWO THOUSAND
ONE HUNDRED FOUR-A OF THIS ARTICLE.
S 8. The section heading and subsections (a) and (b) of section 2110
of the insurance law, as amended by chapter 687 of the laws of 2003, are
amended to read as follows:
Revocation or suspension of license of insurance producer, insurance
consultant [or], adjuster OR VIATICAL SETTLEMENT BROKER. (a) The super-
intendent may refuse to renew, revoke, or may suspend for a period the
superintendent determines the license of any insurance producer, insur-
ance consultant [or], adjuster OR VIATICAL SETTLEMENT BROKER, if, after
notice and hearing, the superintendent determines that the licensee or
any sub-licensee has:
(1) violated any insurance laws, or violated any regulation, subpoena
or order of the superintendent of insurance or of another state's insur-
ance commissioner, or has violated any law in the course of his dealings
in such capacity;
(2) provided materially incorrect, materially misleading, materially
incomplete or materially untrue information in the license application;
(3) obtained or attempted to obtain a license through misrepresen-
tation or fraud;
(4)(A) used fraudulent, coercive or dishonest practices;
(B) demonstrated incompetence;
(C) demonstrated untrustworthiness; or
(D) demonstrated financial irresponsibility in the conduct of business
in this state or elsewhere;
(5) improperly withheld, misappropriated or converted any monies or
properties received in the course of business in this state or else-
where;
(6) intentionally misrepresented the terms of an actual or proposed
insurance contract or application for insurance OR VIATICAL SETTLEMENT
CONTRACT;
(7) has been convicted of a felony;
A. 1873 8
(8) admitted or been found to have committed any insurance unfair
trade practice or fraud;
(9) had an insurance producer license OR A VIATICAL SETTLEMENT BROKER
LICENSE, or its equivalent, denied, suspended or revoked in any other
state, province, district or territory;
(10) forged another's name to an application for insurance OR VIATICAL
SETTLEMENT CONTRACT or to any document related to an insurance OR VIATI-
CAL SETTLEMENT transaction;
(11) improperly used notes or any other reference material to complete
an examination for an insurance license OR VIATICAL SETTLEMENT BROKER
LICENSE;
(12) knowingly accepted insurance OR VIATICAL SETTLEMENT business from
an individual who is not licensed;
(13) failed to comply with an administrative or court order imposing a
child support obligation; [or]
(14) failed to pay state income tax or comply with any administrative
or court order directing payment of state income tax; OR
(15) CEASED TO MEET THE REQUIREMENTS FOR INITIAL LICENSURE.
(b) Before revoking or suspending the license of any insurance produc-
er, VIATICAL SETTLEMENT BROKER or other licensee pursuant to the
provisions of this article, the superintendent shall, except when
proceeding pursuant to subsection (f) of this section, give notice to
the licensee and to every sub-licensee and shall hold, or cause to be
held, a hearing not less than ten days after the giving of such notice.
S 9. Subsection (a) of section 308 of the insurance law, as amended by
chapter 11 of the laws of 2008, is amended to read as follows:
(a) The superintendent may also address to any health maintenance
organization, ANY VIATICAL SETTLEMENT PROVIDER, any authorized insurer
or rate service organization, or officers thereof, any inquiry in
relation to its transactions or condition or any matter connected there-
with. Every corporation or person so addressed shall reply in writing to
such inquiry promptly and truthfully, and such reply shall be, if
required by the superintendent, subscribed by such individual, or by
such officer or officers of a corporation, as he OR SHE shall designate,
and affirmed by them as true under the penalties of perjury. In the
event any corporation or person does not provide a good faith response
to an inquiry from the superintendent pursuant to this section relating
to accident insurance, health insurance, accident and health insurance
or health maintenance organization coverage, within a time period speci-
fied by the superintendent of not less than fifteen business days, the
superintendent is authorized to levy a civil penalty, after notice and
hearing, against such corporation or person not to exceed five hundred
dollars per day for each day beyond the date specified by the super-
intendent for response, but in no event shall such penalty exceed seven
thousand five hundred dollars.
S 10. Section 2401 of the insurance law is amended to read as follows:
S 2401. Purpose. The purpose of this article is to regulate trade
practices in the business of insurance in accordance with the intent of
congress as expressed in Public Law 15, 79th Congress, AND VIATICAL
SETTLEMENTS, by defining, or providing for the determination of, all
such practices in this state which constitute unfair methods of competi-
tion or unfair or deceptive acts or practices and by prohibiting the
trade practices so defined or determined.
S 11. Subsections (a) and (b) of section 2402 of the insurance law,
subsection (b) as amended by chapter 631 of the laws of 2007, are
amended to read as follows:
A. 1873 9
(a) "Person" means any individual and any legal entity subject to any
provision of this chapter, engaged in the business of insurance in this
state, including any reciprocal exchange or Lloyds insurer, OR IN THE
BUSINESS OF VIATICAL SETTLEMENTS.
(b) "Defined violation" means the commission by a person of an act
prohibited by: section one thousand two hundred fourteen, one thousand
two hundred seventeen, one thousand two hundred twenty, one thousand
three hundred thirteen, subparagraph (B) of paragraph two of subsection
(i) of section one thousand three hundred twenty-two, subparagraph (B)
of paragraph two of subsection (i) of section one thousand three hundred
twenty-four, two thousand one hundred twenty-two, two thousand one
hundred twenty-three, subsection (p) of section two thousand three
hundred thirteen, section two thousand three hundred twenty-four, two
thousand five hundred two, two thousand five hundred three, two thousand
five hundred four, two thousand six hundred one, two thousand six
hundred two, two thousand six hundred three, two thousand six hundred
four, two thousand six hundred six, two thousand seven hundred three,
three thousand one hundred nine, three thousand two hundred
twenty-four-a, three thousand four hundred twenty-nine, three thousand
four hundred thirty-three, paragraph seven of subsection (e) of section
three thousand four hundred twenty-six, four thousand two hundred twen-
ty-four, four thousand two hundred twenty-five, ARTICLE SEVENTY-EIGHT or
SECTION four thousand two hundred twenty-six of this chapter; or section
135.60, 135.65, 175.05, 175.45, or 190.20, or article one hundred five
of the penal law.
S 12. Subsection (c) of section 3220 of the insurance law is amended
to read as follows:
(c) (1) Notwithstanding any provision of law, a person whose life is
insured under any policy of group life insurance, whether or not such
policy is otherwise subject to this section, is permitted to make an
assignment of all or any part of his incidents of ownership in such
insurance, including, without limitation, any right to designate a bene-
ficiary or beneficiaries thereunder and any right to have an individual
policy issued upon termination either of employment or of said policy of
group life insurance, provided that the insurer and the group policy-
holder may prohibit or restrict such assignment by appropriate policy
provisions EXCEPT AS OTHERWISE PROVIDED IN PARAGRAPH THREE OF THIS
SUBSECTION.
(2) [This] PARAGRAPH ONE OF THIS subsection shall be construed as
declaring the law as it existed prior to its enactment and not as modi-
fying it.
(3) A GROUP POLICY THAT PERMITS ASSIGNMENT OF AN INSURED PERSON'S
RIGHTS BY GIFT SHALL ALSO ALLOW ASSIGNMENT FOR VALUE TO THE SAME EXTENT
THAT IT ALLOWS ASSIGNMENT BY GIFT.
S 13. Article 78 of the insurance law is REPEALED and a new article 78
is added to read as follows:
ARTICLE 78
VIATICAL SETTLEMENTS
SECTION 7801. SHORT TITLE.
7802. DEFINITIONS.
7803. LICENSE REQUIREMENTS FOR VIATICAL SETTLEMENT PROVIDERS.
7804. LICENSE REVOCATION.
7805. VIATICAL SETTLEMENT CONTRACT FORMS AND DISCLOSURE FORMS.
7806. REPORTING REQUIREMENTS.
7807. EXAMINATIONS OR INVESTIGATIONS.
7808. PRIVACY.
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7809. DISCLOSURE.
7810. GENERAL RULES.
7811. PROHIBITED PRACTICES.
7812. AUTHORITY TO PROMULGATE REGULATIONS.
7813. NONCONFORMING CONTRACTS.
7814. APPLICABILITY.
7815. CONTRACT PROVISIONS REQUIRED BY LAWS OF OTHER JURISDIC-
TIONS.
7816. SEVERABILITY.
S 7801. SHORT TITLE. THIS ARTICLE SHALL BE KNOWN AND MAY BE CITED AS
THE "VIATICAL SETTLEMENTS ACT".
S 7802. DEFINITIONS. IN THIS ARTICLE:
(A) "ACCREDITED INVESTOR" SHALL HAVE THE MEANING SET FORTH IN RULE
501(A) OF THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED.
(B) "BANK" SHALL MEAN ANY BANK AS SUCH TERM IS DEFINED IN 12 U.S.C.
S1813(A), (B), (C) AND (S).
(C)(1) "BUSINESS OF VIATICAL SETTLEMENTS" SHALL MEAN AN ACTIVITY
INVOLVED IN, BUT NOT LIMITED TO, THE OFFERING, SOLICITATION, NEGOTI-
ATION, PROCUREMENT, EFFECTUATION, PURCHASING, INVESTING, FINANCING,
MONITORING, TRACKING, UNDERWRITING, SELLING, TRANSFERRING, ASSIGNING,
PLEDGING, OR HYPOTHECATING OF VIATICAL SETTLEMENT CONTRACTS SUBJECT TO
THIS CHAPTER.
(2) FOR PURPOSES OF THIS ARTICLE, "BUSINESS OF VIATICAL SETTLEMENTS"
SHALL INCLUDE SUCH ACTS OR TRANSACTIONS EFFECTUATED IN THIS STATE BY
MAIL OR OTHERWISE FROM OUTSIDE THIS STATE WITH RESPECT TO TRANSACTIONS
INVOLVING A VIATOR.
(D) "CHRONICALLY ILL" SHALL HAVE THE MEANING SET FORTH IN SECTION
7702B OF THE INTERNAL REVENUE CODE (26 U.S.C. SECTION 7702B(C)(2)), AS
AMENDED, AND REGULATIONS THEREUNDER.
(E) "COMPENSATION" SHALL MEAN ANYTHING OF VALUE, INCLUDING MONEY,
CREDITS, LOANS, INTEREST ON PREMIUM, FORGIVENESS OF PRINCIPAL OR INTER-
EST, VACATIONS, PRIZES, GIFTS OR THE PAYMENT OF EMPLOYEE SALARIES OR
EXPENSES, WHETHER PAID AS COMMISSION OR OTHERWISE.
(F)(1) "FINANCING ENTITY" SHALL MEAN AN UNDERWRITER, PLACEMENT AGENT,
LENDER, PURCHASER OF SECURITIES, PURCHASER OF A POLICY OR CERTIFICATE
FROM A VIATICAL SETTLEMENT PROVIDER, CREDIT ENHANCER, OR ANY ENTITY THAT
HAS A DIRECT OWNERSHIP IN A POLICY OR CERTIFICATE 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 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 VIATICAL SETTLEMENT PURCHAS-
ER, OR ANY ENTITY THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER.
(G) "FRAUDULENT VIATICAL SETTLEMENT ACT" SHALL HAVE THE MEANING SET
FORTH IN SECTION 176.40 OF THE PENAL LAW.
(H) "INSURER" SHALL MEAN A LIFE INSURANCE COMPANY OR A FRATERNAL BENE-
FIT SOCIETY.
(I) "PERSON" SHALL MEAN AN INDIVIDUAL OR A LEGAL ENTITY, INCLUDING A
PARTNERSHIP, LIMITED LIABILITY COMPANY, ASSOCIATION, TRUST, OR CORPO-
RATION.
(J) "POLICY" SHALL MEAN AN INDIVIDUAL OR GROUP POLICY, GROUP CERTIF-
ICATE OR OTHER CONTRACT OR ARRANGEMENT OF LIFE INSURANCE OWNED BY AN
INDIVIDUAL WHO HAS HIS OR HER PRIMARY RESIDENCE IN THIS STATE OR ANY
A. 1873 11
OTHER PERSON WHO HAS HIS OR HER PRINCIPAL PLACE OF BUSINESS OR TRUST
ADMINISTRATION IN THIS STATE, REGARDLESS OF WHETHER DELIVERED OR ISSUED
FOR DELIVERY IN THIS STATE. THE TERM "POLICY" DOES NOT INCLUDE ANY ANNU-
ITY CONTRACT OTHER THAN AN ANNUITY CONTRACT WITH A GUARANTEED MINIMUM
DEATH BENEFIT.
(K) "PREMIUM FINANCE COMPANY" SHALL MEAN A PREMIUM FINANCE AGENCY OR
PREMIUM FINANCE COMPANY (1) LICENSED PURSUANT TO THIS STATE'S PREMIUM
FINANCE AGENCY OR COMPANY LICENSING REQUIREMENTS; (2) EXEMPT FROM THIS
STATE'S LICENSING REQUIREMENTS; OR (3) OTHERWISE NOT REQUIRED TO BE
LICENSED PURSUANT TO THIS STATE'S LICENSING REQUIREMENTS.
(L) "QUALIFIED INSTITUTIONAL BUYER" SHALL HAVE THE MEANING SET FORTH
IN RULE 144A PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
(M) "RELATED PROVIDER TRUST" SHALL MEAN 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 PURCHASED POLICIES IN CONNECTION WITH A FINANCING TRANS-
ACTION. THE TRUST SHALL HAVE A WRITTEN AGREEMENT WITH THE LICENSED VIAT-
ICAL 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 SUPERINTENDENT AS IF THOSE RECORDS AND FILES WERE MAINTAINED
DIRECTLY BY THE LICENSED VIATICAL SETTLEMENT PROVIDER.
(N) "SPECIAL PURPOSE ENTITY" SHALL MEAN A CORPORATION, PARTNERSHIP,
TRUST, LIMITED LIABILITY COMPANY OR OTHER SIMILAR ENTITY FORMED SOLELY
TO PROVIDE EITHER DIRECTLY OR INDIRECTLY ACCESS TO INSTITUTIONAL CAPITAL
MARKETS;
(1) FOR A FINANCING ENTITY OR LICENSED VIATICAL SETTLEMENT PROVIDER;
OR
(2) IN CONNECTION WITH A TRANSACTION IN WHICH: (A) THE SECURITIES IN
THE SPECIAL PURPOSE ENTITY ARE ACQUIRED BY QUALIFIED INSTITUTIONAL
BUYERS; OR (B) THE SECURITIES PAY A FIXED RATE OF RETURN COMMENSURATE
WITH ESTABLISHED ASSET-BACKED INSTITUTIONAL CAPITAL MARKETS.
(O) "TERMINALLY ILL" SHALL MEAN HAVING AN ILLNESS OR SICKNESS THAT CAN
REASONABLY BE EXPECTED TO RESULT IN DEATH IN TWENTY-FOUR MONTHS OR LESS.
(P) "VIATICAL SETTLEMENT BROKER" SHALL MEAN A PERSON, INCLUDING A LIFE
INSURANCE PRODUCER, WHO WORKING EXCLUSIVELY ON BEHALF OF A VIATOR AND
FOR COMPENSATION, OFFERS OR ATTEMPTS TO NEGOTIATE VIATICAL SETTLEMENT
CONTRACTS BETWEEN A VIATOR AND ONE OR MORE VIATICAL SETTLEMENT PROVIDERS
OR ONE OR MORE VIATICAL SETTLEMENT BROKERS. NOTWITHSTANDING THE MANNER
IN WHICH THE VIATICAL SETTLEMENT BROKER IS COMPENSATED, A VIATICAL
SETTLEMENT BROKER IS DEEMED TO REPRESENT ONLY THE VIATOR, AND NOT THE
INSURER OR THE VIATICAL SETTLEMENT PROVIDER, AND OWES A FIDUCIARY DUTY
TO THE VIATOR TO ACT ACCORDING TO THE VIATOR'S INSTRUCTIONS AND IN THE
BEST INTEREST OF THE VIATOR. "VIATICAL SETTLEMENT BROKER" DOES NOT
INCLUDE AN ATTORNEY, A CERTIFIED PUBLIC ACCOUNTANT, OR A FINANCIAL PLAN-
NER ACCREDITED BY A NATIONALLY RECOGNIZED ACCREDITATION AGENCY, WHO IS
RETAINED TO REPRESENT THE VIATOR AND WHOSE COMPENSATION IS NOT PAID
DIRECTLY OR INDIRECTLY BY THE VIATICAL SETTLEMENT PROVIDER OR PURCHASER.
(Q) (1) "VIATICAL SETTLEMENT CONTRACT" SHALL MEAN A WRITTEN AGREEMENT
BETWEEN A VIATOR AND A VIATICAL SETTLEMENT PROVIDER ESTABLISHING THE
TERMS UNDER WHICH COMPENSATION IS OR WILL BE PAID, WHICH COMPENSATION OR
VALUE IS LESS THAN THE EXPECTED DEATH BENEFITS OF THE POLICY, IN RETURN
FOR THE VIATOR'S PRESENT OR FUTURE ASSIGNMENT, TRANSFER, SALE, DEVISE OR
BEQUEST OF THE DEATH BENEFIT OR OWNERSHIP OF ANY PORTION OF THE POLICY.
A. 1873 12
(2) "VIATICAL SETTLEMENT CONTRACT" INCLUDES A PREMIUM FINANCE LOAN
MADE FOR A POLICY BY A LENDER TO A VIATOR ON, BEFORE OR AFTER THE DATE
OF ISSUANCE OF THE POLICY WHERE:
(A) THE VIATOR OR THE INSURED RECEIVES ON THE DATE OF THE PREMIUM
FINANCE LOAN A GUARANTEE OF A FUTURE VIATICAL SETTLEMENT VALUE OF THE
POLICY;
(B) THE VIATOR OR THE INSURED AGREES ON THE DATE OF THE PREMIUM
FINANCE LOAN TO SELL THE POLICY OR ANY PORTION OF ITS DEATH BENEFIT ON
ANY DATE FOLLOWING THE ISSUANCE OF THE POLICY; OR
(C) THE VIATOR OR THE INSURED AGREES ON THE DATE OF THE PREMIUM
FINANCE LOAN TO SHARE ANY PORTION OF THE SETTLEMENT PROCEEDS, IF ANY;
PROVIDED, HOWEVER, THAT NOTHING IN THIS SECTION SHALL PREVENT OR PROHIB-
IT A BANK OR PREMIUM FINANCE COMPANY FROM COLLECTING ANY AMOUNT DUE AND
OWING UNDER THE PREMIUM FINANCE LOAN.
(3) "VIATICAL SETTLEMENT CONTRACT" DOES NOT INCLUDE:
(A) A POLICY LOAN OR ACCELERATED DEATH BENEFIT MADE BY THE INSURER
PURSUANT TO THE POLICY'S TERMS;
(B) A PREMIUM FINANCE LOAN MADE FOR A POLICY BY A BANK OR A PREMIUM
FINANCE COMPANY TO A VIATOR ON, BEFORE OR AFTER THE DATE OF ISSUANCE OF
THE POLICY WHERE THE LOAN PROCEEDS ARE USED SOLELY TO PAY:
(I) PREMIUMS FOR THE POLICY; AND
(II) THE COSTS OF THE LOAN, INCLUDING, WITHOUT LIMITATION, INTEREST,
ARRANGEMENT OR ORIGINATION FEES, UTILIZATION FEES AND SIMILAR FEES,
PREPAYMENT FEES AND CHARGES, CLOSING COSTS, LEGAL FEES AND EXPENSES,
TRUSTEE FEES AND EXPENSES, AND THIRD PARTY COLLATERAL PROVIDER FEES AND
EXPENSES, INCLUDING FEES PAYABLE TO LETTER OF CREDIT ISSUERS;
(C) A LOAN MADE BY A BANK OR PREMIUM FINANCE COMPANY IN WHICH THE
LENDER TAKES AN ASSIGNMENT OF A POLICY SOLELY AS COLLATERAL FOR A LOAN;
(D) ANY ACT OF FORECLOSURE ON A LOAN THAT PURSUANT TO THIS SECTION IS
NOT A VIATICAL SETTLEMENT CONTRACT AND ANY SALE, WHETHER AT FORECLOSURE
OR THEREAFTER, BY A BANK OR PREMIUM FINANCE COMPANY OF ANY POLICY THAT
IS COLLATERALLY ASSIGNED TO IT IN CONNECTION WITH ANY SUCH LOAN;
(E) A LOAN MADE BY A BANK OR PREMIUM FINANCE COMPANY THAT DOES NOT
VIOLATE THE PREMIUM FINANCE LAWS OF THIS STATE, PROVIDED THAT THE PREMI-
UM FINANCE LOAN IS NOT DESCRIBED IN PARAGRAPH TWO OF THIS SUBSECTION;
(F) AN AGREEMENT WHERE ALL THE PARTIES ARE CLOSELY RELATED TO THE
INSURED BY BLOOD OR LAW OR HAVE A LAWFUL SUBSTANTIAL ECONOMIC INTEREST
IN THE CONTINUED LIFE, HEALTH AND BODILY SAFETY OF THE INSURED, OR ARE
TRUSTS ESTABLISHED PRIMARILY FOR THE BENEFIT OF SUCH PARTIES;
(G) ANY DESIGNATION, CONSENT OR AGREEMENT BY AN INSURED WHO IS AN
EMPLOYEE OF AN EMPLOYER IN CONNECTION WITH THE PURCHASE BY THE EMPLOYER,
OR TRUST ESTABLISHED BY THE EMPLOYER, OF LIFE INSURANCE ON THE LIFE OF
THE EMPLOYEE;
(H) A BONA FIDE BUSINESS SUCCESSION PLANNING ARRANGEMENT:
(I) BETWEEN ONE OR MORE SHAREHOLDERS IN A CORPORATION OR BETWEEN A
CORPORATION AND ONE OR MORE OF ITS SHAREHOLDERS OR ONE OR MORE TRUSTS
ESTABLISHED BY ITS SHAREHOLDERS;
(II) BETWEEN ONE OR MORE PARTNERS IN A PARTNERSHIP OR BETWEEN A PART-
NERSHIP AND ONE OR MORE OF ITS PARTNERS OR ONE OR MORE TRUSTS ESTAB-
LISHED BY ITS PARTNERS; OR
(III) BETWEEN ONE OR MORE MEMBERS IN A LIMITED LIABILITY COMPANY OR
BETWEEN A LIMITED LIABILITY COMPANY AND ONE OR MORE OF ITS MEMBERS OR
ONE OR MORE TRUSTS ESTABLISHED BY ITS MEMBERS;
(I) AN AGREEMENT ENTERED INTO BY A SERVICE RECIPIENT, OR A TRUST
ESTABLISHED BY THE SERVICE RECIPIENT, AND A SERVICE PROVIDER, OR A TRUST
A. 1873 13
ESTABLISHED BY THE SERVICE PROVIDER, WHO PERFORMS SIGNIFICANT SERVICES
FOR THE SERVICE RECIPIENT'S TRADE OR BUSINESS; OR
(J) ANY OTHER CONTRACT, TRANSACTION OR ARRANGEMENT EXEMPTED FROM THE
DEFINITION OF VIATICAL SETTLEMENT CONTRACT BY THE SUPERINTENDENT BASED
ON A DETERMINATION THAT THE CONTRACT, TRANSACTION OR ARRANGEMENT IS NOT
OF THE TYPE INTENDED TO BE REGULATED BY THIS ARTICLE.
(R)(1) "VIATICAL SETTLEMENT PROVIDER" SHALL MEAN A PERSON, OTHER THAN
A VIATOR, THAT ENTERS INTO OR EFFECTUATES A VIATICAL SETTLEMENT CONTRACT
WITH A VIATOR.
(2) "VIATICAL SETTLEMENT PROVIDER" DOES NOT INCLUDE:
(A) A BANK THAT TAKES AN ASSIGNMENT OF A POLICY SOLELY AS COLLATERAL
FOR A LOAN;
(B) A PREMIUM FINANCE COMPANY MAKING PREMIUM FINANCE LOANS THAT TAKES
AN ASSIGNMENT OF A POLICY SOLELY AS COLLATERAL FOR A LOAN;
(C) THE ISSUER OF A POLICY;
(D) AN AUTHORIZED OR ELIGIBLE INSURER THAT PROVIDES STOP LOSS COVERAGE
OR FINANCIAL GUARANTY INSURANCE TO A VIATICAL SETTLEMENT PROVIDER, VIAT-
ICAL SETTLEMENT PURCHASER, FINANCING ENTITY, SPECIAL PURPOSE ENTITY OR
RELATED PROVIDER TRUST;
(E) 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;
(F) A FINANCING ENTITY;
(G) A SPECIAL PURPOSE ENTITY;
(H) A RELATED PROVIDER TRUST;
(I) A VIATICAL SETTLEMENT PURCHASER; OR
(J) ANY OTHER PERSON THAT THE SUPERINTENDENT DETERMINES IS NOT THE
TYPE OF PERSON INTENDED TO BE COVERED BY THE DEFINITION OF VIATICAL
SETTLEMENT PROVIDER.
(S)(1) "VIATICAL SETTLEMENT PURCHASER" SHALL MEAN A PERSON WHO
PROVIDES A SUM OF MONEY AS CONSIDERATION FOR A POLICY OR AN INTEREST IN
THE DEATH BENEFITS OF A POLICY, OR A PERSON WHO OWNS OR ACQUIRES OR IS
ENTITLED TO A BENEFICIAL INTEREST IN A TRUST THAT OWNS A VIATICAL
SETTLEMENT CONTRACT OR IS THE BENEFICIARY OF A POLICY THAT HAS BEEN OR
WILL BE THE SUBJECT OF A VIATICAL SETTLEMENT CONTRACT, FOR THE PURPOSE
OF DERIVING AN ECONOMIC BENEFIT.
(2) "VIATICAL SETTLEMENT PURCHASER" DOES NOT INCLUDE:
(A) A LICENSEE UNDER THIS ARTICLE;
(B) AN ACCREDITED INVESTOR, OR A QUALIFIED INSTITUTIONAL BUYER;
(C) A FINANCING ENTITY;
(D) A SPECIAL PURPOSE ENTITY; OR
(E) A RELATED PROVIDER TRUST.
(T) "VIATICATED POLICY" SHALL MEAN A POLICY THAT HAS BEEN ACQUIRED BY
A VIATICAL SETTLEMENT PROVIDER DIRECTLY OR ON BEHALF OF A RELATED
PROVIDER TRUST OR SPECIAL PURPOSE ENTITY PURSUANT TO A VIATICAL SETTLE-
MENT CONTRACT.
(U) (1) "VIATOR" SHALL MEAN THE OWNER OF A POLICY WHO: (A) IF AN INDI-
VIDUAL, HAS HIS OR HER PRIMARY RESIDENCE IN THIS STATE, AND IF ANY OTHER
PERSON, HAS HIS OR HER PRINCIPAL PLACE OF BUSINESS OR TRUST ADMINIS-
TRATION IN THIS STATE; AND (B) ENTERS OR SEEKS TO ENTER INTO A VIATICAL
SETTLEMENT CONTRACT. FOR THE PURPOSES OF THIS ARTICLE, A VIATOR SHALL
NOT BE LIMITED TO AN OWNER OF A POLICY INSURING THE LIFE OF AN INDIVID-
UAL WHO IS TERMINALLY ILL OR CHRONICALLY ILL EXCEPT WHERE SPECIFICALLY
ADDRESSED. IF THERE IS MORE THAN ONE OWNER OF 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
A. 1873 14
PERCENTAGE OWNERSHIP IN THE POLICY HAS HIS OR HER PRIMARY RESIDENCE OR
PRINCIPAL PLACE OF BUSINESS OR TRUST ADMINISTRATION, AS APPLICABLE.
ALTERNATIVELY, IF THE OWNERS HOLD EQUAL OWNERSHIP IN THE POLICY, THE
TRANSACTION SHALL BE GOVERNED BY THE STATE OF RESIDENCE OR PRINCIPAL
PLACE OF BUSINESS OR TRUST ADMINISTRATION OF AT LEAST ONE OWNER, AS
AGREED UPON IN WRITING BY ALL OWNERS OF THE POLICY.
(2) "VIATOR" DOES NOT INCLUDE:
(A) A LICENSEE UNDER THIS ARTICLE, INCLUDING A LIFE INSURANCE PRODUCER
ACTING AS A VIATICAL SETTLEMENT BROKER PURSUANT TO THIS ARTICLE;
(B) AN ACCREDITED INVESTOR;
(C) A QUALIFIED INSTITUTIONAL BUYER;
(D) A FINANCING ENTITY;
(E) A SPECIAL PURPOSE ENTITY; OR
(F) A RELATED PROVIDER TRUST.
S 7803. LICENSE REQUIREMENTS FOR VIATICAL SETTLEMENT PROVIDERS. (A)
(1) NO PERSON SHALL ENGAGE IN THE BUSINESS OF VIATICAL SETTLEMENTS AS A
VIATICAL SETTLEMENT PROVIDER IN THIS STATE WITHOUT HAVING AUTHORITY TO
DO SO BY VIRTUE OF A VIATICAL SETTLEMENT PROVIDER LICENSE ISSUED AND IN
FORCE PURSUANT TO THIS ARTICLE. A LICENSE ISSUED TO A LEGAL ENTITY
PURSUANT TO THIS ARTICLE AUTHORIZES ALL PARTNERS, OFFICERS, MEMBERS AND
DESIGNATED EMPLOYEES TO ACT AS VIATICAL SETTLEMENT PROVIDERS UNDER THE
LICENSE, AND ALL THOSE NATURAL PERSONS SHALL BE NAMED IN THE APPLICATION
AND ANY SUPPLEMENTS TO THE APPLICATION.
(2) NOTWITHSTANDING PARAGRAPH ONE OF THIS SUBSECTION, WITH RESPECT TO
A VIATICAL SETTLEMENT CONTRACT THAT IS LAWFULLY NEGOTIATED AND MADE
OUTSIDE THIS STATE, NO SUCH LICENSE SHALL BE REQUIRED IF THE VIATICAL
SETTLEMENT PROVIDER EFFECTUATES FROM OUTSIDE THE STATE ANY ACT OR TRANS-
ACTION OCCURRING SUBSEQUENT TO SUCH MAKING.
(B)(1) THE SUPERINTENDENT MAY ISSUE A VIATICAL SETTLEMENT PROVIDER
LICENSE TO ANY PERSON WHO IS DEEMED BY THE SUPERINTENDENT TO BE TRUST-
WORTHY AND COMPETENT TO ACT AS A VIATICAL SETTLEMENT PROVIDER AND WHO IS
OTHERWISE QUALIFIED AS REQUIRED IN THIS ARTICLE AND WHO HAS COMPLIED
WITH THE PREREQUISITES PRESCRIBED IN THIS ARTICLE.
(2) EVERY LICENSE ISSUED PURSUANT TO THIS SECTION SHALL EXPIRE ON JUNE
THIRTIETH OF ODD-NUMBERED YEARS.
(C) (1) APPLICATION FOR A VIATICAL SETTLEMENT PROVIDER LICENSE SHALL
BE MADE TO THE SUPERINTENDENT BY THE APPLICANT ON A FORM PRESCRIBED BY
THE SUPERINTENDENT, AND THE APPLICATION SHALL BE ACCOMPANIED BY A FEE IN
AN AMOUNT TO BE ESTABLISHED BY THE SUPERINTENDENT.
(2) THE APPLICANT FOR A VIATICAL SETTLEMENT PROVIDER LICENSE SHALL:
(A) FULLY DISCLOSE THE IDENTITY OF ALL STOCKHOLDERS (EXCEPT STOCKHOLD-
ERS OWNING FEWER THAN TEN PERCENT OF THE VOTING SHARES OF A VIATICAL
SETTLEMENT PROVIDER WHOSE SHARES ARE PUBLICLY TRADED), PARTNERS, OFFI-
CERS, MEMBERS, DIRECTORS AND PERSONS WITH A CONTROLLING INTEREST. FOR
PURPOSES OF THIS SECTION, "CONTROLLING INTEREST" MEANS A PERSON WHO
DIRECTLY OR INDIRECTLY, HAS THE POWER TO CAUSE TO BE DIRECTED THE
MANAGEMENT, CONTROL OR ACTIVITIES OF SUCH LICENSEE;
(B) PROVIDE A DETAILED PLAN OF OPERATION;
(C) PROVIDE, IF A LEGAL ENTITY, A CERTIFICATE OF GOOD STANDING FROM
THE STATE OF ITS DOMICILE;
(D) PROVIDE AN ANTI-FRAUD PLAN THAT MEETS THE REQUIREMENTS OF ARTICLE
FOUR OF THIS CHAPTER;
(E) DEMONSTRATE FINANCIAL ACCOUNTABILITY AS EVIDENCED BY EITHER A
SURETY BOND ISSUED BY AN AUTHORIZED CORPORATE SURETY OR DEPOSIT OF CASH,
CERTIFICATES OF DEPOSIT OR SECURITIES, OR ANY COMBINATION THEREOF, IN
THE AMOUNT OF ONE HUNDRED THOUSAND DOLLARS. THE SUPERINTENDENT SHALL
A. 1873 15
ACCEPT AS EVIDENCE OF FINANCIAL RESPONSIBILITY PROOF THAT FINANCIAL
INSTRUMENTS IN ACCORDANCE WITH THESE REQUIREMENTS HAVE BEEN FILED WITH
ONE OR MORE STATES WHERE THE APPLICANT IS LICENSED AS A VIATICAL OR LIFE
SETTLEMENT PROVIDER. EVIDENCE OF ERRORS AND OMISSIONS IN INSURANCE
COVERAGE IN THE AMOUNT OF NOT LESS THAN FIVE MILLION DOLLARS SHALL BE
ACCEPTED IN LIEU OF ANY BOND OR DEPOSIT REQUIRED BY THIS SECTION; AND
(F) PROVIDE ANY OTHER INFORMATION REQUIRED BY THE SUPERINTENDENT.
(D) EACH INDIVIDUAL NAMED IN SUCH APPLICATION SHALL, WITH SUCH APPLI-
CATION, SUBMIT TO THE SUPERINTENDENT FINGERPRINTS OF HIS OR HER TWO
HANDS RECORDED IN SUCH MANNER AS MAY BE SPECIFIED BY THE SUPERINTENDENT.
SUCH FINGERPRINTS SHALL BE SUBMITTED TO THE DIVISION OF CRIMINAL JUSTICE
SERVICES FOR A STATE CRIMINAL HISTORY RECORD CHECK, AS DEFINED IN SUBDI-
VISION ONE OF SECTION THREE THOUSAND THIRTY-FIVE OF THE EDUCATION LAW,
AND MAY BE SUBMITTED TO THE FEDERAL BUREAU OF INVESTIGATION FOR A
NATIONAL CRIMINAL HISTORY RECORD CHECK.
(E) THE SUPERINTENDENT SHALL NOT ISSUE A VIATICAL SETTLEMENT PROVIDER
LICENSE TO A NONRESIDENT APPLICANT UNLESS A WRITTEN DESIGNATION OF A
RESIDENT AGENT FOR SERVICE OF PROCESS IS FILED AND MAINTAINED WITH THE
SUPERINTENDENT OR THE APPLICANT HAS FILED WITH THE SUPERINTENDENT THE
APPLICANT'S WRITTEN IRREVOCABLE CONSENT THAT ANY ACTION AGAINST THE
APPLICANT MAY BE COMMENCED AGAINST THE APPLICANT BY SERVICE OF PROCESS
ON THE SUPERINTENDENT.
(F) THE SUPERINTENDENT, IN THE EXERCISE OF HIS OR HER DISCRETION, MAY
REFUSE TO ISSUE A VIATICAL SETTLEMENT PROVIDER LICENSE IN THE NAME OF
ANY FIRM, PARTNERSHIP, CORPORATION OR LEGAL ENTITY IF NOT SATISFIED THAT
ANY OFFICER, EMPLOYEE, STOCKHOLDER, PARTNER, DIRECTOR, MEMBER, OR AGENT
THEREOF WHO MAY MATERIALLY INFLUENCE THE APPLICANT'S CONDUCT MEETS THE
STANDARDS OF THIS ARTICLE.
(G) EVERY LICENSE ISSUED PURSUANT TO THIS SECTION MAY BE RENEWED FOR
THE ENSUING PERIOD OF TWENTY-FOUR MONTHS UPON THE FILING OF AN APPLICA-
TION IN CONFORMITY WITH THIS SECTION.
(H)(1) BEFORE THE RENEWAL OF ANY VIATICAL SETTLEMENT PROVIDER LICENSE
SHALL BE ISSUED, AN APPLICATION FOR RENEWAL OF SUCH LICENSE SHALL BE
MADE TO THE SUPERINTENDENT BY THE APPLICANT ON A FORM PRESCRIBED BY THE
SUPERINTENDENT AND CONTAINING SUCH INFORMATION AS THE SUPERINTENDENT MAY
PRESCRIBE, AND THE APPLICATION SHALL BE ACCOMPANIED BY A FEE IN AN
AMOUNT TO BE ESTABLISHED BY THE SUPERINTENDENT.
(2) IF AN APPLICATION FOR RENEWAL LICENSE SHALL HAVE BEEN FILED WITH
THE SUPERINTENDENT BEFORE THE EXPIRATION OF THE LICENSE, THE LICENSE
SOUGHT TO BE RENEWED SHALL CONTINUE IN FULL FORCE AND EFFECT EITHER
UNTIL THE ISSUANCE BY THE SUPERINTENDENT OF THE RENEWAL LICENSE APPLIED
FOR OR UNTIL FIVE DAYS AFTER THE SUPERINTENDENT SHALL HAVE REFUSED TO
ISSUE SUCH RENEWAL LICENSE AND SHALL HAVE GIVEN NOTICE OF SUCH REFUSAL
TO THE APPLICANT. BEFORE REFUSING TO RENEW ANY SUCH LICENSE, THE SUPER-
INTENDENT SHALL NOTIFY THE APPLICANT OF HIS OR HER INTENTION TO DO SO
AND SHALL GIVE SUCH APPLICANT A HEARING.
(3) AN APPLICATION FOR THE RENEWAL OF A LICENSE SHALL BE FILED WITH
THE SUPERINTENDENT NOT LESS THAN SIXTY DAYS PRIOR TO THE DATE THE
LICENSE EXPIRES OR THE APPLICANT MAY BE SUBJECT TO A FURTHER FEE FOR
LATE FILING, AS PRESCRIBED BY THE SUPERINTENDENT.
(I) A VIATICAL SETTLEMENT PROVIDER LICENSEE SHALL PROVIDE TO THE
SUPERINTENDENT NEW OR REVISED INFORMATION ABOUT STOCKHOLDERS (EXCEPT
STOCKHOLDERS OWNING FEWER THAN TEN PERCENT OF THE VOTING SHARES OF A
VIATICAL SETTLEMENT PROVIDER WHOSE SHARES ARE PUBLICLY TRADED), PART-
NERS, OFFICERS, MEMBERS, DIRECTORS, DESIGNATED EMPLOYEES OR PERSONS WITH
A CONTROLLING INTEREST WITHIN THIRTY DAYS OF THE CHANGE.
A. 1873 16
S 7804. LICENSE REVOCATION. (A) THE SUPERINTENDENT MAY REFUSE TO
RENEW, REVOKE, OR MAY SUSPEND FOR A PERIOD THE SUPERINTENDENT DETERMINES
THE LICENSE OF ANY VIATICAL SETTLEMENT PROVIDER, IF, AFTER NOTICE AND
HEARING, THE SUPERINTENDENT DETERMINES THAT THE VIATICAL SETTLEMENT
PROVIDER OR ANY OFFICER, PARTNER, MEMBER, OR KEY MANAGEMENT PERSONNEL
HAS:
(1) VIOLATED ANY INSURANCE LAWS, OR VIOLATED ANY REGULATION, SUBPOENA
OR ORDER OF THE SUPERINTENDENT OR OF ANOTHER STATE'S INSURANCE COMMIS-
SIONER, OR HAS VIOLATED ANY LAW IN THE COURSE OF HIS OR HER DEALINGS IN
SUCH CAPACITY;
(2) PROVIDED MATERIALLY INCORRECT, MATERIALLY MISLEADING, MATERIALLY
INCOMPLETE OR MATERIALLY UNTRUE INFORMATION IN THE LICENSE APPLICATION;
(3) OBTAINED OR ATTEMPTED TO OBTAIN A LICENSE THROUGH MISREPRESEN-
TATION OR FRAUD;
(4)(A) USED FRAUDULENT, COERCIVE OR DISHONEST PRACTICES;
(B) DEMONSTRATED INCOMPETENCE;
(C) DEMONSTRATED UNTRUSTWORTHINESS; OR
(D) DEMONSTRATED FINANCIAL IRRESPONSIBILITY IN THE CONDUCT OF BUSINESS
IN THIS STATE OR ELSEWHERE;
(5) IMPROPERLY WITHHELD, MISAPPROPRIATED OR CONVERTED ANY MONIES OR
PROPERTIES RECEIVED IN THE COURSE OF BUSINESS IN THIS STATE OR ELSE-
WHERE;
(6) INTENTIONALLY MISREPRESENTED THE TERMS OF ANY INSURANCE CONTRACT
OR VIATICAL SETTLEMENT CONTRACT OR ANY APPLICATION THEREFOR;
(7) 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;
(8) ADMITTED OR BEEN FOUND TO HAVE COMMITTED ANY INSURANCE UNFAIR
TRADE PRACTICE OR FRAUD;
(9) HAD A VIATICAL SETTLEMENT PROVIDER LICENSE OR ITS EQUIVALENT
DENIED, SUSPENDED OR REVOKED IN ANY OTHER STATE, PROVINCE, DISTRICT OR
TERRITORY;
(10) FORGED ANOTHER'S NAME TO AN APPLICATION FOR INSURANCE OR VIATICAL
SETTLEMENT CONTRACT OR TO ANY DOCUMENT RELATED TO AN INSURANCE OR VIATI-
CAL SETTLEMENT TRANSACTION;
(11) KNOWINGLY ACCEPTED VIATICAL SETTLEMENT BUSINESS FROM A PERSON WHO
IS NOT LICENSED UNLESS SUCH PERSON IS NOT REQUIRED TO BE LICENSED;
(12) DEMONSTRATED A PATTERN OF UNREASONABLE PAYMENTS TO VIATORS;
(13) FAILED TO HONOR CONTRACTUAL OBLIGATIONS SET OUT IN A VIATICAL
SETTLEMENT CONTRACT; OR
(14) SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED THE OWNERSHIP OF
A VIATICATED POLICY TO A PERSON OTHER THAN ANOTHER (A) VIATICAL SETTLE-
MENT PROVIDER LICENSED IN THIS STATE; (B) VIATICAL SETTLEMENT PURCHASER;
(C) QUALIFIED INSTITUTIONAL BUYER; (D) ACCREDITED INVESTOR; (E) FINANC-
ING ENTITY; (F) SPECIAL PURPOSE ENTITY; OR (G) RELATED PROVIDER TRUST.
(B)(1) BEFORE THE SUPERINTENDENT SUSPENDS, REVOKES OR REFUSES TO RENEW
THE LICENSE OF A VIATICAL SETTLEMENT PROVIDER, THE SUPERINTENDENT SHALL
GIVE NOTICE TO THE LICENSEE AND SHALL HOLD, OR CAUSE TO BE HELD, A HEAR-
ING NOT LESS THAN TEN DAYS AFTER THE GIVING OF SUCH NOTICE, EXCEPT THAT,
IN CASES WHERE IN THE JUDGMENT OF THE SUPERINTENDENT THE PUBLIC WELFARE
REQUIRES IT, A LICENSE MAY BE SUSPENDED FOR UP TO TEN DAYS PRIOR TO A
HEARING.
(2) IN LIEU OF REVOKING OR SUSPENDING THE LICENSE FOR ANY OF THE CAUS-
ES ENUMERATED IN THIS SECTION, THE SUPERINTENDENT MAY IMPOSE A CIVIL
PENALTY OF NOT MORE THAN TEN THOUSAND DOLLARS FOR EACH VIOLATION.
A. 1873 17
(3) UPON THE FAILURE OF SUCH LICENSEE TO PAY SUCH PENALTY ORDERED
PURSUANT TO PARAGRAPH TWO OF THIS SUBSECTION WITHIN TWENTY DAYS AFTER
THE MAILING OF SUCH ORDER, POSTAGE PREPAID, REGISTERED, AND ADDRESSED TO
THE LAST KNOWN PLACE OF BUSINESS OF SUCH LICENSEE; UNLESS SUCH ORDER IS
STAYED BY A COURT OF COMPETENT JURISDICTION, THE SUPERINTENDENT MAY
REVOKE THE LICENSE OF SUCH LICENSEE OR MAY SUSPEND THE SAME FOR SUCH
PERIOD AS THE SUPERINTENDENT DETERMINES.
S 7805. VIATICAL SETTLEMENT CONTRACT FORMS AND DISCLOSURE FORMS. (A)
NO LICENSED VIATICAL SETTLEMENT PROVIDER SHALL ENTER INTO A VIATICAL
SETTLEMENT CONTRACT SUBJECT TO THIS CHAPTER UNLESS THE VIATICAL SETTLE-
MENT CONTRACT FORM, APPLICATION FORM, AND ANY OTHER FORM, INCLUDING
DISCLOSURE FORMS, AS MAY BE PRESCRIBED BY REGULATION, HAS BEEN FILED
WITH AND APPROVED BY THE SUPERINTENDENT. THE SUPERINTENDENT MAY DISAP-
PROVE ANY SUCH FORM IF THE SUPERINTENDENT FINDS IT TO BE UNREASONABLE,
CONTRARY TO LAW OR TO THE INTERESTS OF THE PUBLIC, OR OTHERWISE MISLEAD-
ING OR UNFAIR.
(B) NO LICENSED VIATICAL SETTLEMENT PROVIDER SHALL ENTER INTO A VIATI-
CAL SETTLEMENT CONTRACT SUBJECT TO THIS ARTICLE UNLESS THE VIATICAL
SETTLEMENT PROMOTIONAL, ADVERTISING, AND MARKETING MATERIALS, AS MAY BE
PRESCRIBED BY REGULATION, HAVE BEEN FILED WITH AND APPROVED BY THE
SUPERINTENDENT. IN NO EVENT SHALL ANY SUCH MARKETING MATERIALS EXPRESS-
LY REFERENCE THAT SUCH INSURANCE IS "FREE" FOR ANY PERIOD OF TIME. THE
INCLUSION OF ANY REFERENCE IN SUCH MATERIALS THAT WOULD CAUSE A VIATOR
TO REASONABLY BELIEVE THAT SUCH INSURANCE IS FREE FOR ANY PERIOD OF TIME
SHALL BE CONSIDERED A VIOLATION UNDER THIS ARTICLE.
(C) WHENEVER BY THE PROVISIONS OF THIS CHAPTER THE SUPERINTENDENT HAS
APPROVED ANY VIATICAL SETTLEMENT CONTRACT FORM, APPLICATION FORM,
DISCLOSURE FORM AND ANY OTHER FORM, THE SUPERINTENDENT MAY, AFTER NOTICE
AND HEARING GIVEN TO THE VIATICAL SETTLEMENT PROVIDER THAT SUBMITTED THE
FORM FOR APPROVAL, WITHDRAW AN APPROVAL PREVIOUSLY GIVEN, IF THE USE OF
THE FORM IS CONTRARY TO THE REQUIREMENTS APPLICABLE TO THE FORM AT THE
TIME OF SUCH WITHDRAWAL. ANY SUCH WITHDRAWAL SHALL BE EFFECTIVE AT THE
EXPIRATION OF SUCH PERIOD, NOT LESS THAN NINETY DAYS AFTER THE GIVING OF
NOTICE OF WITHDRAWAL, AS THE SUPERINTENDENT SHALL IN SUCH NOTICE
PRESCRIBE.
S 7806. REPORTING REQUIREMENTS. (A) EVERY LICENSED VIATICAL SETTLEMENT
PROVIDER SHALL FILE IN THE OFFICE OF THE SUPERINTENDENT, ANNUALLY ON OR
BEFORE THE FIRST DAY OF MARCH, A STATEMENT, TO BE KNOWN AS ITS ANNUAL
STATEMENT, EXECUTED IN DUPLICATE, VERIFIED BY THE OATH OF AT LEAST TWO
OF ITS PRINCIPAL OFFICERS, SHOWING ITS CONDITION AT LAST YEAR-END. THE
STATEMENT SHALL BE IN SUCH FORM AND SHALL CONTAIN SUCH MATTERS AS THE
SUPERINTENDENT SHALL PRESCRIBE. REPORTS AND ANNUAL STATEMENTS FILED BY
A LICENSED VIATICAL SETTLEMENT PROVIDER MAY BE FILED ON A CONFIDENTIAL
BASIS AND SHALL BE DEEMED TO BE A TRADE SECRET WITHIN THE MEANING OF
THIS STATE'S PUBLIC RECORDS DISCLOSURE LAWS. THE SUPERINTENDENT SHALL
NOT REQUIRE ANY ANNUAL STATEMENT OR REPORT TO INCLUDE INFORMATION
REGARDING VIATICAL SETTLEMENT CONTRACTS BETWEEN THE VIATICAL SETTLEMENT
PROVIDER AND A PERSON OTHER THAN A VIATOR, AND SHALL NOT REQUIRE REPORT-
ING OF INDIVIDUAL TRANSACTION DATA OR DATA WHICH COULD COMPROMISE THE
PRIVACY OF PERSONAL, FINANCIAL OR HEALTH INFORMATION OF THE VIATOR OR
THE INSURED.
(B) EVERY LICENSED VIATICAL SETTLEMENT PROVIDER THAT WILLFULLY FAILS
TO FILE AN ANNUAL STATEMENT AS REQUIRED IN THIS SECTION, OR WILLFULLY
FAILS TO REPLY WITHIN THIRTY DAYS TO A WRITTEN INQUIRY BY THE SUPER-
INTENDENT IN CONNECTION THEREWITH, SHALL, IN ADDITION TO OTHER PENALTIES
PROVIDED BY THIS CHAPTER, BE SUBJECT, UPON DUE NOTICE AND OPPORTUNITY TO
A. 1873 18
BE HEARD, TO A PENALTY OF UP TO TWO HUNDRED FIFTY DOLLARS PER DAY OF
DELAY, NOT TO EXCEED TWENTY-FIVE THOUSAND DOLLARS IN THE AGGREGATE, FOR
EACH SUCH FAILURE.
S 7807. EXAMINATIONS OR INVESTIGATIONS. THE SUPERINTENDENT MAY MAKE AN
EXAMINATION OR INVESTIGATION INTO THE AFFAIRS OF ANY VIATICAL SETTLEMENT
PROVIDER, VIATICAL SETTLEMENT BROKER OR APPLICANT FOR LICENSURE AS A
VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT BROKER AS PRESCRIBED
UNDER ARTICLE THREE OF THIS CHAPTER.
S 7808. PRIVACY. (A) EXCEPT AS OTHERWISE ALLOWED OR REQUIRED BY LAW,
NO VIATICAL SETTLEMENT PROVIDER, VIATICAL SETTLEMENT BROKER, INSURANCE
COMPANY, INSURANCE PRODUCER, INFORMATION BUREAU, RATING AGENCY OR
AUTHORIZED REPRESENTATIVE THEREOF, OR ANY OTHER PERSON WHO LEARNS THE
INSURED'S OR VIATOR'S IDENTITY IN CONNECTION WITH A PROPOSED OR ACTUAL
VIATICAL SETTLEMENT CONTRACT SUBJECT TO THIS CHAPTER SHALL DISCLOSE THE
IDENTITY OF THE INSURED OR VIATOR, OR INFORMATION THAT THERE IS A
REASONABLE BASIS TO BELIEVE COULD BE USED TO IDENTIFY THE INSURED OR
VIATOR, TO ANY OTHER PERSON UNLESS THE DISCLOSURE IS:
(1) TO A LICENSED VIATICAL SETTLEMENT PROVIDER, LICENSED VIATICAL
SETTLEMENT BROKER, FINANCING ENTITY, RELATED PROVIDER TRUST, SPECIAL
PURPOSE ENTITY OR THE AUTHORIZED REPRESENTATIVE OF THE VIATICAL SETTLE-
MENT PROVIDER, VIATICAL SETTLEMENT BROKER, FINANCING ENTITY, RELATED
PROVIDER TRUST OR SPECIAL PURPOSE ENTITY AS REASONABLY NECESSARY FOR THE
PURPOSE OF FINANCING OR EFFECTUATING A VIATICAL SETTLEMENT CONTRACT
BETWEEN A VIATICAL SETTLEMENT PROVIDER AND A VIATOR AND UPON THE WRITTEN
CONSENT OF SUCH INSURED OR VIATOR;
(2) PROVIDED IN RESPONSE TO AN INVESTIGATION OR EXAMINATION BY THE
SUPERINTENDENT OR ANY OTHER GOVERNMENTAL OFFICER OR AGENCY OR PURSUANT
TO THE REQUIREMENTS OF ARTICLE FOUR OF THIS CHAPTER;
(3) TO ANOTHER LICENSED VIATICAL SETTLEMENT PROVIDER, FINANCING ENTI-
TY, RELATED PROVIDER TRUST OR SPECIAL PURPOSE ENTITY WHEN THE OWNERSHIP
OR ADMINISTRATION OF A VIATICATED POLICY IS OR MAY BE TRANSFERRED TO THE
OTHER VIATICAL SETTLEMENT PROVIDER;
(4) NECESSARY TO ALLOW THE LICENSED VIATICAL SETTLEMENT PROVIDER OR
ITS AUTHORIZED REPRESENTATIVE TO CONTACT THE INSURED OR THE INSURED'S
DESIGNEE FOR THE PURPOSE OF DETERMINING THE HEALTH STATUS OF THE
INSURED;
(5) NECESSARY TO OBTAIN A DEATH CERTIFICATE OR PREPARE, SUBMIT OR
COLLECT UPON A CLAIM FOR DEATH BENEFITS UNDER THE POLICY;
(6) REQUIRED TO PURCHASE ANY STOP LOSS OR GAP COVERAGE, REINSURANCE,
OR GUARANTEE IN CONNECTION WITH THE FINANCING OF THE SETTLEMENT OR
TRANSFER OF THE POLICY; OR
(7) OTHERWISE CONSENTED TO BY THE INSURED AND SUCH INFORMATION IS
PROVIDED SOLELY TO A (A) QUALIFIED INSTITUTIONAL BUYER WITH INTERNAL
PROCEDURES TO PROTECT THE IDENTITY OF THE INSURED AND THE INSURED'S
PROTECTED HEALTH INFORMATION; (B) NATIONALLY RECOGNIZED STATISTICAL
RATING ORGANIZATION; (C) NATIONALLY RECOGNIZED AUDITING FIRM; AND (D)
PERSONS IN THE BUSINESS OF PROVIDING LIFE EXPECTANCIES.
NOTWITHSTANDING ANYTHING IN THIS SECTION TO THE CONTRARY, A VIATICAL
SETTLEMENT PROVIDER, VIATICAL SETTLEMENT BROKER, INSURANCE COMPANY,
INSURANCE PRODUCER, INFORMATION BUREAU, RATING AGENCY OR COMPANY, OR ANY
OTHER PERSON WITH ACTUAL KNOWLEDGE OF AN INSURED'S IDENTITY, MAY
DISCLOSE ALL INFORMATION RELATING TO THE INSURED TO ANY OTHER PERSON IN
COMPLIANCE WITH THE GRAMM-LEACH-BLILEY ACT, THE FAIR CREDIT REPORTING
ACT, ANY SUCCESSOR ACTS AND OTHER APPLICABLE FEDERAL PRIVACY LAWS.
(B) FOR THE PURPOSES OF THIS SECTION, THE TERM "AUTHORIZED REPRESEN-
TATIVE" SHALL NOT INCLUDE ANY PERSON WHO HAS OR MAY HAVE ANY FINANCIAL
A. 1873 19
INTEREST IN THE VIATICAL SETTLEMENT CONTRACT OTHER THAN A LICENSED VIAT-
ICAL SETTLEMENT PROVIDER, LICENSED VIATICAL SETTLEMENT BROKER, FINANCING
ENTITY, RELATED PROVIDER TRUST OR SPECIAL PURPOSE ENTITY.
(C) A VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT BROKER SHALL
REQUIRE ITS AUTHORIZED REPRESENTATIVE TO AGREE IN WRITING TO ADHERE TO
THE PRIVACY PROVISIONS OF THIS ARTICLE.
(D) MEDICAL INFORMATION SOLICITED OR OBTAINED IN CONNECTION WITH A
PROPOSED OR ACTUAL VIATICAL SETTLEMENT CONTRACT SHALL BE SUBJECT TO THE
PROVISIONS APPLICABLE TO HEALTH CARE PROVIDERS UNDER THE PUBLIC HEALTH
LAW AND ALL OTHER FEDERAL, STATE AND COMMON LAWS RELATING TO CONFIDEN-
TIALITY OF MEDICAL INFORMATION.
S 7809. DISCLOSURE. (A) A VIATICAL SETTLEMENT PROVIDER SHALL PROVIDE
THE VIATOR WITH AT LEAST THE FOLLOWING DISCLOSURES PRIOR TO THE TIME
THAT THE APPLICATION FOR THE VIATICAL SETTLEMENT CONTRACT IS SIGNED BY
THE VIATOR. THE DISCLOSURES SHALL BE PROVIDED IN A SEPARATE DOCUMENT
THAT IS SIGNED BY THE VIATOR AND SHALL STATE THAT:
(1) THERE MAY BE ALTERNATIVES TO VIATICAL SETTLEMENT CONTRACTS INCLUD-
ING, BUT NOT LIMITED TO, ANY ACCELERATED DEATH BENEFITS, CASH SURRENDER
VALUES OR POLICY LOANS AVAILABLE UNDER THE VIATOR'S POLICY;
(2) ALTHOUGH THE VIATICAL SETTLEMENT BROKER MAY BE COMPENSATED BY A
VIATICAL SETTLEMENT PROVIDER OR ANOTHER VIATICAL SETTLEMENT BROKER, THE
VIATICAL SETTLEMENT BROKER REPRESENTS ONLY THE VIATOR AND OWES A FIDUCI-
ARY DUTY TO THE VIATOR TO ACT ACCORDING TO THE VIATOR'S INSTRUCTIONS AND
IN THE BEST INTEREST OF THE VIATOR;
(3) 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;
(4) PROCEEDS OF THE VIATICAL SETTLEMENT CONTRACT COULD BE SUBJECT TO
THE CLAIMS OF CREDITORS;
(5) RECEIPT OF PROCEEDS OF A VIATICAL SETTLEMENT CONTRACT MAY AFFECT
ELIGIBILITY FOR PUBLIC ASSISTANCE PROGRAMS SUCH AS MEDICAL ASSISTANCE
(MEDICAID), FAMILY ASSISTANCE, SUPPLEMENTARY SOCIAL SECURITY INCOME AND
AIDS OR OTHER DRUG ASSISTANCE PROGRAMS AND THAT PRIOR TO ENTERING INTO A
VIATICAL SETTLEMENT CONTRACT, A POLICYOWNER SHOULD CONSULT WITH THE
APPROPRIATE SOCIAL SERVICES AGENCY CONCERNING HOW RECEIPT WILL AFFECT
THE ELIGIBILITY OF THE RECIPIENT AND THE RECIPIENT'S SPOUSE OR DEPEN-
DENTS;
(6) THE VIATOR HAS THE RIGHT TO RESCIND A VIATICAL SETTLEMENT CONTRACT
FOR FIFTEEN CALENDAR DAYS AFTER THE RECEIPT OF THE VIATICAL SETTLEMENT
PROCEEDS BY THE VIATOR. RESCISSION, IF EXERCISED BY THE VIATOR IS
EFFECTIVE ONLY IF BOTH NOTICE OF THE RESCISSION IS GIVEN, AND ALL
PROCEEDS AND ANY PREMIUMS, LOANS AND LOAN INTEREST PAID BY THE VIATICAL
SETTLEMENT PROVIDER IS REPAID TO THE VIATICAL SETTLEMENT PROVIDER, WITH-
IN THE RESCISSION PERIOD. IF THE INSURED DIES DURING THE RESCISSION
PERIOD, THE SETTLEMENT CONTRACT SHALL BE DEEMED TO HAVE BEEN RESCINDED,
SUBJECT TO REPAYMENT OF ALL VIATICAL SETTLEMENT PROCEEDS AND ANY PREMI-
UMS, LOANS AND LOAN INTEREST PAID BY THE VIATICAL SETTLEMENT PROVIDER;
(7) PROCEEDS WILL BE SENT TO THE VIATOR WITHIN THREE BUSINESS DAYS
AFTER THE VIATICAL SETTLEMENT PROVIDER HAS RECEIVED FROM THE INSURER OR
ITS AUTHORIZED REPRESENTATIVE WRITTEN ACKNOWLEDGMENT THAT OWNERSHIP OF
THE POLICY HAS BEEN TRANSFERRED AND THE BENEFICIARY HAS BEEN DESIGNATED
AND VERIFICATION OF COVERAGE;
(8) 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 ASSISTANCE SHOULD BE SOUGHT FROM AN APPROPRIATE ADVISOR; AND
A. 1873 20
(9) PRIOR TO ENTERING INTO THE VIATICAL SETTLEMENT CONTRACT, THE VIAT-
ICAL SETTLEMENT PROVIDER AND THE VIATICAL SETTLEMENT BROKER SHALL EACH
PROVIDE A WRITTEN NOTIFICATION TO THE VIATOR STATING THE VIATICAL
SETTLEMENT PROVIDER'S FINAL OFFER, THE PROCEEDS PAYABLE TO THE VIATOR
AND THE COMPENSATION PAYABLE TO THE VIATICAL SETTLEMENT BROKER OR ANY
OTHER PERSON.
(B) A VIATICAL SETTLEMENT PROVIDER SHALL ALSO PROVIDE TO THE VIATOR A
BROCHURE DESCRIBING THE PROCESS OF VIATICAL SETTLEMENTS, IN A FORM
PRESCRIBED BY THE SUPERINTENDENT, PRIOR TO THE TIME THAT THE APPLICATION
FOR THE VIATICAL SETTLEMENT CONTRACT IS SIGNED BY THE VIATOR. IN THE
EVENT THAT THE SUPERINTENDENT DOES NOT PUBLISH OR OTHERWISE APPROVE A
PRESCRIBED FORM, THE VIATICAL SETTLEMENT PROVIDER SHALL USE A FORM OF
BROCHURE SUBSTANTIALLY SIMILAR TO THAT APPROVED BY THE NATIONAL ASSOCI-
ATION OF INSURANCE COMMISSIONERS (NAIC).
(C) A VIATICAL SETTLEMENT PROVIDER SHALL PROVIDE THE VIATOR AND THE
INSURED WITH AT LEAST THE FOLLOWING DISCLOSURES PRIOR TO THE TIME THAT
THE APPLICATION FOR THE VIATICAL SETTLEMENT CONTRACT IS SIGNED BY THE
VIATOR. THE DISCLOSURES SHALL BE PROVIDED IN A SEPARATE DOCUMENT THAT IS
SIGNED BY THE VIATOR AND THE INSURED AND SHALL STATE THAT:
(1) "MEDICAL, FINANCIAL OR PERSONAL INFORMATION 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 CONTRACT 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 ALSO BE
PROVIDED TO ANOTHER VIATICAL SETTLEMENT PROVIDER WHEN THE OWNERSHIP OR
ADMINISTRATION OF THE VIATICATED POLICY IS OR MAY BE TRANSFERRED TO SUCH
OTHER VIATICAL SETTLEMENT PROVIDER. YOU MAY BE ASKED TO RENEW YOUR
PERMISSION TO SHARE INFORMATION EVERY TWO YEARS."; AND
(2) THE INSURED MAY BE CONTACTED BY EITHER THE VIATICAL SETTLEMENT
PROVIDER OR ITS AUTHORIZED REPRESENTATIVE FOR THE PURPOSE OF DETERMINING
THE INSURED'S HEALTH STATUS AND TO CONFIRM THE INSURED'S RESIDENTIAL
ADDRESS AND TELEPHONE NUMBER, OR AS OTHERWISE PROVIDED IN THIS ARTICLE.
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.
(D) A VIATICAL SETTLEMENT PROVIDER SHALL PROVIDE THE VIATOR WITH AT
LEAST THE FOLLOWING DISCLOSURES PRIOR TO THE SIGNING OF THE VIATICAL
SETTLEMENT CONTRACT BY THE VIATOR. THE DISCLOSURES SHALL BE CONSPICU-
OUSLY DISPLAYED IN THE VIATICAL SETTLEMENT CONTRACT OR IN A SEPARATE
DOCUMENT SIGNED BY THE VIATOR AND THE VIATICAL SETTLEMENT PROVIDER AND
SHALL PROVIDE THE FOLLOWING INFORMATION:
(1) THE AFFILIATION, IF ANY, BETWEEN THE VIATICAL SETTLEMENT PROVIDER
AND THE ISSUER OF THE POLICY TO BE VIATICATED;
(2) THE NAME, BUSINESS ADDRESS AND TELEPHONE NUMBER OF THE VIATICAL
SETTLEMENT PROVIDER;
(3) IF OTHER PERSONS ARE INSURED UNDER THE POLICY, THERE MAY BE A
POSSIBLE LOSS OF COVERAGE ON THE OTHER LIVES UNDER THE POLICY AND THE
VIATOR SHALL BE ADVISED TO CONSULT WITH HIS OR HER INSURANCE PRODUCER OR
THE INSURER ISSUING THE POLICY FOR ADVICE ON THE PROPOSED VIATICAL
SETTLEMENT;
(4) THE DOLLAR AMOUNT OF THE CURRENT DEATH BENEFIT PAYABLE TO THE
VIATICAL SETTLEMENT PROVIDER UNDER THE POLICY AND THE AVAILABILITY OF
ANY ADDITIONAL GUARANTEED INSURANCE BENEFITS AND THE DOLLAR AMOUNT OF
ANY ACCIDENTAL DEATH OR ACCIDENTAL DEATH AND DISMEMBERMENT BENEFITS
UNDER THE POLICY; AND
A. 1873 21
(5) THE NAME, BUSINESS ADDRESS, AND TELEPHONE NUMBER OF THE INDEPEND-
ENT THIRD-PARTY ESCROW AGENT, AND THE FACT THAT THE VIATOR MAY INSPECT
OR RECEIVE COPIES OF THE RELEVANT ESCROW AGREEMENTS OR DOCUMENTS.
(E)(1) A VIATICAL SETTLEMENT BROKER SHALL PROVIDE THE VIATOR WITH THE
FOLLOWING DISCLOSURES PRIOR TO THE SIGNING OF THE VIATICAL SETTLEMENT
CONTRACT BY THE VIATOR. THE DISCLOSURES SHALL BE PROVIDED IN A SEPARATE
DOCUMENT THAT IS SIGNED BY THE VIATOR AND THE VIATICAL SETTLEMENT BROKER
AND SHALL PROVIDE THE VIATOR WITH:
(A) THE FINAL OFFER FROM THE VIATICAL SETTLEMENT PROVIDER, THE
PROCEEDS TO BE PAID TO THE VIATOR FROM THE FINAL OFFER AND THE COMPEN-
SATION TO BE PAID TO THE VIATICAL SETTLEMENT BROKER AND ANY OTHER
PERSON; AND
(B) ALL OTHER OFFERS OBTAINED BY THE VIATICAL SETTLEMENT BROKER FROM
ANY OTHER VIATICAL SETTLEMENT PROVIDER.
(2) IF, AFTER NOTICE AND HEARING, THE SUPERINTENDENT DETERMINES THAT
SUCH DISCLOSURE WAS OMITTED OR DELAYED TO THE MATERIAL DETRIMENT OF THE
VIATOR, THE SUPERINTENDENT MAY REQUIRE THE VIATICAL SETTLEMENT BROKER TO
PAY THE VIATOR AN AMOUNT NOT EXCEEDING THE COMPENSATION THAT WOULD
OTHERWISE HAVE BEEN DUE TO THE VIATICAL SETTLEMENT BROKER. IF THE VIATI-
CAL SETTLEMENT BROKER HAS ALREADY RECEIVED SUCH COMPENSATION, THE VIATI-
CAL SETTLEMENT BROKER SHALL REMIT SUCH AMOUNT TO THE VIATOR.
(F) IF THE VIATICAL SETTLEMENT PROVIDER TRANSFERS OWNERSHIP OF THE
POLICY, THE VIATICAL SETTLEMENT PROVIDER SHALL COMMUNICATE THE CHANGE IN
OWNERSHIP TO THE INSURED WITHIN TWENTY DAYS AFTER THE CHANGE.
(G) A VIATICAL SETTLEMENT BROKER MAY PROVIDE ANY OF THE DISCLOSURES
REQUIRED BY SUBSECTION (A), (B) OR (C) OF THIS SECTION. IF A VIATICAL
SETTLEMENT BROKER PROVIDES ANY OF THESE DISCLOSURES, THE REQUIREMENTS OF
SUBSECTIONS (A), (B) AND (C) SHALL BE DEEMED TO BE SATISFIED AS TO THE
DISCLOSURES SO PROVIDED.
S 7810. GENERAL RULES. (A)(1) A VIATICAL SETTLEMENT PROVIDER ENTERING
INTO A VIATICAL SETTLEMENT CONTRACT SHALL FIRST OBTAIN:
(A) IF THE VIATOR IS THE INSURED, A SIGNED STATEMENT FROM A LICENSED
ATTENDING PHYSICIAN THAT THE VIATOR IS OF SOUND MIND TO ENTER INTO A
VIATICAL SETTLEMENT CONTRACT AND UNDER NO CONSTRAINT OR UNDUE INFLUENCE
TO ENTER INTO A VIATICAL SETTLEMENT CONTRACT; AND
(B) A WRITTEN CONSENT FROM THE INSURED TO THE RELEASE OF HIS OR HER
MEDICAL RECORDS:
(I) TO A LICENSED VIATICAL SETTLEMENT PROVIDER;
(II) TO A LICENSED VIATICAL SETTLEMENT BROKER; AND
(III) 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 LIFE INSURANCE POLICY COVERING THE LIFE OF THE INSURED.
(2) WITHIN FIFTEEN CALENDAR DAYS AFTER THE VIATICAL SETTLEMENT
CONTRACT IS EXECUTED, THE VIATICAL SETTLEMENT PROVIDER SHALL GIVE WRIT-
TEN NOTICE TO THE INSURER THAT ISSUED THAT INSURANCE POLICY THAT A VIAT-
ICAL SETTLEMENT CONTRACT HAS BEEN EXECUTED. THE NOTICE SHALL BE ACCOMPA-
NIED BY:
(A) A COPY OF THE MEDICAL RELEASE REQUIRED UNDER SUBPARAGRAPH (B) OF
PARAGRAPH ONE OF THIS SUBSECTION IF THE POLICY WAS ISSUED LESS THAN TWO
YEARS PRIOR TO THE DATE OF APPLICATION FOR A VIATICAL SETTLEMENT
CONTRACT;
(B) A COPY OF THE VIATOR'S APPLICATION FOR THE VIATICAL SETTLEMENT
CONTRACT IF THE POLICY WAS ISSUED LESS THAN TWO YEARS PRIOR TO THE DATE
OF APPLICATION FOR A VIATICAL SETTLEMENT CONTRACT; AND
(C) A REQUEST FOR VERIFICATION OF COVERAGE TO THE INSURER THAT ISSUED
THE POLICY THAT IS THE SUBJECT OF THE VIATICAL SETTLEMENT TRANSACTION.
A. 1873 22
(3) THE INSURER SHALL RESPOND TO A REQUEST FOR VERIFICATION OF COVER-
AGE SUBMITTED BY A VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT
BROKER WITHIN TEN CALENDAR DAYS FROM THE DATE THE REQUEST IS RECEIVED
AND 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.
(4) UNLESS THE INSURER INTENDS TO PURSUE AN INVESTIGATION UNDER PARA-
GRAPH THREE OF THIS SUBSECTION, THE INSURER SHALL, WITHIN TEN CALENDAR
DAYS OF RECEIPT OF A REQUEST FOR A CHANGE OF OWNERSHIP OR ASSIGNMENT
USED TO EFFECTUATE THE TRANSFER OR ASSIGNMENT OF THE VIATOR'S RIGHTS OR
BENEFITS UNDER A POLICY TO A VIATICAL SETTLEMENT PROVIDER, PROCESS THE
CHANGE OF OWNERSHIP OR ASSIGNMENT AND NOTIFY THE VIATICAL SETTLEMENT
PROVIDER AND THE VIATOR THAT THE TRANSFER OR ASSIGNMENT HAS BEEN EFFEC-
TUATED.
(5) 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 UNDERSTAND-
ING OF THE VIATICAL SETTLEMENT CONTRACT, THAT HE OR SHE HAS A FULL AND
COMPLETE UNDERSTANDING OF THE BENEFITS OF THE POLICY, ACKNOWLEDGES THAT
HE OR SHE IS ENTERING INTO THE VIATICAL SETTLEMENT CONTRACT FREELY AND
VOLUNTARILY AND, FOR PERSONS WHO ARE CHRONICALLY ILL OR TERMINALLY ILL,
ACKNOWLEDGES THAT SUCH CHRONICALLY ILL OR TERMINALLY ILL CONDITION WAS
DIAGNOSED AFTER THE POLICY WAS ISSUED.
(B) EVERY VIATICAL SETTLEMENT CONTRACT ENTERED INTO WITH A VIATOR
SHALL PROVIDE THE VIATOR WITH AN UNCONDITIONAL RIGHT TO RESCIND THE
CONTRACT FOR AT LEAST FIFTEEN CALENDAR DAYS FROM THE RECEIPT OF THE
VIATICAL SETTLEMENT PROCEEDS BY THE VIATOR. RESCISSION, IF EXERCISED BY
THE VIATOR, IS EFFECTIVE ONLY IF BOTH NOTICE OF THE RESCISSION IS GIVEN,
AND ALL PROCEEDS AND ANY PREMIUMS, LOANS AND LOAN INTEREST PAID BY THE
VIATICAL SETTLEMENT PROVIDER IS REPAID TO THE VIATICAL SETTLEMENT
PROVIDER, 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 PAID BY THE VIATICAL
SETTLEMENT PROVIDER.
(C) UPON EXECUTION OF THE VIATICAL SETTLEMENT CONTRACT BY ALL PARTIES,
THE VIATICAL SETTLEMENT PROVIDER SHALL INSTRUCT THE VIATOR TO SEND THE
EXECUTED DOCUMENTS REQUIRED TO EFFECT THE CHANGE IN OWNERSHIP, ASSIGN-
MENT OR CHANGE IN BENEFICIARY DIRECTLY TO THE INDEPENDENT ESCROW AGENT.
WITHIN THREE BUSINESS DAYS AFTER THE DATE THE ESCROW AGENT RECEIVES THE
DOCUMENT (OR FROM THE DATE THE VIATICAL SETTLEMENT PROVIDER RECEIVES THE
DOCUMENTS, IF THE VIATOR ERRONEOUSLY PROVIDES THE DOCUMENTS DIRECTLY TO
THE PROVIDER), THE VIATICAL SETTLEMENT PROVIDER SHALL PAY OR TRANSFER
THE PROCEEDS OF THE VIATICAL SETTLEMENT INTO AN ESCROW ACCOUNT MAIN-
TAINED IN AN INSURED BANK LOCATED IN NEW YORK STATE OR A NATIONALLY
CHARTERED BANK LOCATED WITHIN THE UNITED STATES, OR OTHER BANK ACCEPTA-
BLE BY THE SUPERINTENDENT. 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, RELATED PROVIDER TRUST OR OTHER DESIGNATED REPRE-
SENTATIVE OF THE VIATICAL SETTLEMENT PROVIDER. UPON THE ESCROW AGENT'S
RECEIPT OF THE ACKNOWLEDGMENT OF THE PROPERLY COMPLETED TRANSFER OF
OWNERSHIP, ASSIGNMENT OR DESIGNATION OF BENEFICIARY FROM THE INSURER,
THE ESCROW AGENT SHALL PAY THE SETTLEMENT PROCEEDS TO THE VIATOR.
A. 1873 23
(D) FAILURE TO TENDER CONSIDERATION TO THE VIATOR FOR THE VIATICAL
SETTLEMENT CONTRACT WITHIN THE TIME REQUIRED SHALL RENDER THE VIATICAL
SETTLEMENT CONTRACT VOIDABLE BY THE VIATOR FOR LACK OF CONSIDERATION
UNTIL THE TIME CONSIDERATION IS TENDERED TO AND ACCEPTED BY THE VIATOR.
(E) WITH RESPECT TO EACH VIATICATED POLICY, AND NOTWITHSTANDING ANY
SUBSEQUENT TRANSFER OF SUCH VIATICATED POLICY, THE VIATICAL SETTLEMENT
PROVIDER SHALL RETAIN RESPONSIBILITY FOR TRACKING OF THE INSURED,
INCLUDING, WITHOUT LIMITATION, MONITORING THE INSURED'S RESIDENTIAL
ADDRESS, CONTACT INFORMATION AND HEALTH STATUS, PREPARATION AND
SUBMISSION OF A DEATH CLAIM, OR ASSISTING THE BENEFICIARY IN THE
SUBMISSION OF THE DEATH CLAIM. CONTACTS WITH THE INSURED FOR THE
PURPOSE OF DETERMINING THE HEALTH STATUS OF THE INSURED BY THE VIATICAL
SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT BROKER AFTER THE VIATICAL
SETTLEMENT CONTRACT HAS BEEN EXECUTED SHALL BE MADE ONLY BY A LICENSED
VIATICAL SETTLEMENT PROVIDER, VIATICAL SETTLEMENT BROKER OR THEIR
AUTHORIZED REPRESENTATIVE AND SHALL BE LIMITED TO ONCE EVERY THREE
MONTHS FOR AN INSURED WITH A LIFE EXPECTANCY OF MORE THAN ONE YEAR, AND
TO NO MORE THAN ONCE PER MONTH FOR AN INSURED WITH A LIFE EXPECTANCY OF
ONE YEAR OR LESS. A VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT
BROKER SHALL BE RESPONSIBLE FOR THE ACTIONS OF ITS AUTHORIZED REPRESEN-
TATIVE. THE VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT BROKER
SHALL EXPLAIN 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.
(F) ALTHOUGH THE VIATICAL SETTLEMENT BROKER MAY BE COMPENSATED BY A
VIATICAL SETTLEMENT PROVIDER OR ANOTHER VIATICAL SETTLEMENT BROKER, THE
VIATICAL SETTLEMENT BROKER SHALL, EXCEPT AS PROVIDED IN SECTION TWO
THOUSAND ONE HUNDRED TWENTY OF THIS CHAPTER, REPRESENT ONLY THE VIATOR
AND OWES A FIDUCIARY DUTY TO THE VIATOR.
(G)(1) A VIATICAL SETTLEMENT PROVIDER MAY SELL, ASSIGN, PLEDGE OR
OTHERWISE TRANSFER THE OWNERSHIP OF A VIATICATED POLICY ONLY TO ANOTHER
LICENSED VIATICAL SETTLEMENT PROVIDER, FINANCING ENTITY, RELATED PROVID-
ER TRUST, SPECIAL PURPOSE ENTITY OR QUALIFIED INSTITUTIONAL BUYER;
PROVIDED, HOWEVER, THAT THE VIATICAL SETTLEMENT PROVIDER CONTINUES TO
RETAIN RESPONSIBILITY FOR TRACKING OF THE INSURED RELATED TO THE VIATI-
CATED POLICY PURSUANT TO THE PROVISIONS OF SUBSECTION (E) OF THIS
SECTION, AND PROVIDED FURTHER THAT THE VIATICAL SETTLEMENT PROVIDER
SHALL REQUIRE ANY SUCH PARTY TO AGREE IN WRITING, AS A CONDITION OF ANY
SUCH SALE, ASSIGNMENT, PLEDGE OR TRANSFER OF THE POLICY, THAT EACH SUCH
VIATICAL SETTLEMENT PROVIDER, FINANCING ENTITY, RELATED PROVIDER TRUST,
SPECIAL PURPOSE ENTITY OR QUALIFIED INSTITUTIONAL BUYER SHALL MAINTAIN
THE CONFIDENTIALITY OF ALL PERSONAL, PRIVATE, FINANCIAL AND MEDICAL
INFORMATION RELATED TO THE VIATOR OR THE INSURED, WHICH SHALL NOT BE
DISCLOSED EXCEPT AS PURSUANT TO THIS ARTICLE.
(2) A BENEFICIAL INTEREST IN A VIATICATED POLICY HELD BY A PERSON
OTHER THAN A VIATICAL SETTLEMENT PROVIDER AND ANY FUNDS DEPOSITED BY
SUCH BENEFICIARY THAT ARE ESCROWED AND EXPRESSLY IDENTIFIED FOR THE
PAYMENT OF PREMIUMS ON BEHALF OF SUCH PERSON SHALL NOT BE SUBJECT TO
CLAIMS BY CREDITORS OF THE VIATICAL SETTLEMENT PROVIDER THAT OWNS SUCH
POLICY. A PERSON HOLDING SUCH BENEFICIAL INTEREST SHALL BE ENTITLED TO
PROCEEDS OF THE POLICY AS AGAINST THE CREDITORS, PERSONAL REPRESEN-
TATIVES, TRUSTEES IN BANKRUPTCY AND RECEIVERS IN STATE AND FEDERAL
COURTS OF THE VIATICAL SETTLEMENT PROVIDER. AN EXECUTOR OR ADMINISTRA-
TOR OF ANY SUCH PERSON, OR A PERSON ENTITLED TO THE PROCEEDS OF SUCH
POLICY IN TRUST FOR SUCH PERSON SHALL NOT BE DEEMED A THIRD PERSON BENE-
A. 1873 24
FICIARY, ASSIGNEE OR PAYEE. THIS SUBSECTION SHALL BE APPLICABLE WHETHER
OR NOT THE RIGHT IS RESERVED IN ANY SUCH POLICY TO CHANGE THE DESIGNATED
BENEFICIARY AND WHETHER OR NOT SUCH PERSON SHALL PREDECEASE THE INSURED.
S 7811. PROHIBITED PRACTICES. (A) A VIATICAL SETTLEMENT PROVIDER OR
VIATICAL SETTLEMENT BROKER SHALL NOT DIRECTLY OR INDIRECTLY:
(1) DISCRIMINATE IN THE AVAILABILITY OF A VIATICAL SETTLEMENT CONTRACT
ON THE BASIS OF RACE, COLOR, SEX, NATIONAL ORIGIN, CREED, RELIGION,
OCCUPATION, MARITAL OR FAMILY STATUS, OR DISCRIMINATE BETWEEN VIATORS
WITH DEPENDENTS AND THOSE WITHOUT;
(2) DIRECTLY OR INDIRECTLY PAY OR OFFER TO PAY ANY COMPENSATION TO ANY
PERSON FOR OR BECAUSE OF SUCH PERSON ACTING IN THIS STATE AS A VIATICAL
SETTLEMENT BROKER, UNLESS SUCH PERSON IS A LICENSED VIATICAL SETTLEMENT
BROKER PURSUANT TO THE PROVISIONS OF SECTION TWO THOUSAND ONE HUNDRED
FOUR-A OF THIS CHAPTER;
(3) DIRECTLY OR INDIRECTLY PAY OR OFFER TO PAY ANY REFERRAL OR
FINDER'S FEE OR OTHER COMPENSATION TO ANY VIATOR'S PHYSICIAN, ATTORNEY,
ACCOUNTANT OR OTHER PERSON PROVIDING MEDICAL, LEGAL OR FINANCIAL PLAN-
NING SERVICES TO THE VIATOR, OR TO ANY OTHER PERSON, OTHER THAN A
LICENSED VIATICAL SETTLEMENT BROKER, ACTING AS AGENT OF THE VIATOR WITH
RESPECT TO THE VIATICAL SETTLEMENT CONTRACT;
(4) ENTER INTO ANY VIATICAL SETTLEMENT CONTRACT IN WHICH PAYMENTS OF
PROCEEDS ARE MADE IN INSTALLMENTS;
(5) PAY OR OFFER TO PAY COMPENSATION TO A VIATICAL SETTLEMENT BROKER,
EXCEPT WHERE THE COMPENSATION IS CLEARLY DISCLOSED TO THE VIATOR AS
REQUIRED IN THIS ARTICLE; OR
(6) ENGAGE IN ANY OTHER ACT DETERMINED BY THE SUPERINTENDENT TO BE AN
UNFAIR OR DECEPTIVE ACT OR PRACTICE PURSUANT TO THIS CHAPTER.
(B) (1) A VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT BROKER
SHALL NOT DIRECTLY OR INDIRECTLY:
(A) ENTER INTO AN AGREEMENT OR UNDERSTANDING LIMITING OR RESTRICTING A
VIATOR'S OR VIATICAL SETTLEMENT BROKER'S ABILITY TO SEEK COMPETITIVE
BIDS ON POLICIES;
(B) MONOPOLIZE OR ATTEMPT TO MONOPOLIZE, OR COMBINE OR CONSPIRE WITH
ANY OTHER PERSON OR PERSONS TO MONOPOLIZE, IN THIS STATE, THE BUSINESS
OF VIATICAL SETTLEMENTS;
(C) ENTER INTO AN AGREEMENT WITH ANY OTHER VIATICAL SETTLEMENT PROVID-
ER OR VIATICAL SETTLEMENT BROKER TO FIX OR LIMIT THE VALUE PAID TO
VIATORS;
(D) ENTER INTO ANY AGREEMENT OR COMMUNICATION WITH ANY OTHER VIATICAL
SETTLEMENT PROVIDER WITH RESPECT TO THE TERMS TO BE OFFERED TO A VIATOR;
OR
(E) ENTER INTO ANY AGREEMENT WITH ANY OTHER VIATICAL SETTLEMENT
PROVIDER OR VIATICAL SETTLEMENT BROKER OR OTHER PERSON TO RESTRAIN TRADE
OR ENGAGE IN ANY OTHER ANTICOMPETITIVE BEHAVIOR AFFECTING THE BUSINESS
OF VIATICAL SETTLEMENTS IN THIS STATE;
(2) NOTWITHSTANDING PARAGRAPH ONE OF THIS SUBSECTION, SUBSEQUENT TO
THE EXPIRATION OF THE FIFTEEN DAY RESCISSION PERIOD OF THE VIATICAL
SETTLEMENT CONTRACT AS PROVIDED IN SUBSECTION (B) OF SECTION SEVEN THOU-
SAND EIGHT HUNDRED TEN OF THIS ARTICLE, A VIATICAL SETTLEMENT PROVIDER
MAY SELL, ASSIGN, PLEDGE OR OTHERWISE TRANSFER THE OWNERSHIP OF A VIATI-
CATED POLICY TO ANOTHER LICENSED VIATICAL SETTLEMENT PROVIDER PURSUANT
TO THIS ARTICLE.
(C)(1) NO PERSON SHALL ENTER INTO A VIATICAL SETTLEMENT CONTRACT WITH-
IN A TWO-YEAR PERIOD COMMENCING WITH THE DATE OF ISSUANCE OF THE POLICY
UNLESS THE VIATOR CERTIFIES TO THE VIATICAL SETTLEMENT PROVIDER THAT ONE
A. 1873 25
OR MORE OF THE FOLLOWING CONDITIONS HAVE BEEN MET WITHIN THE TWO-YEAR
PERIOD:
(A) THE POLICY WAS ISSUED UPON THE VIATOR'S EXERCISE OF CONVERSION
RIGHTS ARISING OUT OF A POLICY, PROVIDED THE TOTAL OF THE TIME COVERED
UNDER THE CONVERSION POLICY PLUS THE TIME COVERED UNDER THE PRIOR POLICY
IS AT LEAST TWO YEARS. THE TIME COVERED UNDER A GROUP POLICY SHALL BE
CALCULATED WITHOUT REGARD TO ANY CHANGE IN INSURER, PROVIDED THE COVER-
AGE HAS BEEN CONTINUOUS AND UNDER THE SAME GROUP SPONSORSHIP; OR
(B) THE VIATOR SUBMITS INDEPENDENT EVIDENCE TO THE VIATICAL SETTLEMENT
PROVIDER THAT ONE OR MORE OF THE FOLLOWING CONDITIONS HAVE BEEN MET
WITHIN THE TWO-YEAR PERIOD:
(I) THE VIATOR OR INSURED IS TERMINALLY ILL OR CHRONICALLY ILL;
(II) THE VIATOR OR INSURED DISPOSES OF HIS OR HER OWNERSHIP INTERESTS
IN A CLOSELY HELD CORPORATION THAT OWNS THE POLICY PURSUANT TO THE TERMS
OF A BUYOUT OR SIMILAR AGREEMENT IN EFFECT AT THE TIME THE POLICY WAS
INITIALLY ISSUED;
(III) THE VIATOR'S SPOUSE DIES;
(IV) THE VIATOR DIVORCES HIS OR HER SPOUSE;
(V) THE VIATOR RETIRES FROM FULL-TIME EMPLOYMENT;
(VI) THE VIATOR BECOMES PHYSICALLY OR MENTALLY DISABLED AND A PHYSI-
CIAN DETERMINES THAT THE DISABILITY PREVENTS THE VIATOR FROM MAINTAINING
FULL-TIME EMPLOYMENT; OR
(VII) 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.
(2) A COPY OF THE CERTIFICATIONS AND INDEPENDENT EVIDENCE REQUIRED BY
THIS SUBSECTION AND DOCUMENTS REQUIRED PURSUANT TO SUBSECTION (A) OF
SECTION SEVEN THOUSAND EIGHT HUNDRED TEN OF THIS ARTICLE SHALL BE
SUBMITTED TO THE INSURER WHEN THE VIATICAL SETTLEMENT PROVIDER SUBMITS A
REQUEST TO THE INSURER FOR VERIFICATION OF COVERAGE PURSUANT TO THIS
SECTION. 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.
(D) NO PERSON SHALL:
(1) REMOVE, CONCEAL, ALTER, DESTROY OR SEQUESTER FROM THE SUPERINTEN-
DENT THE ASSETS OR RECORDS OF A VIATICAL SETTLEMENT PROVIDER, VIATICAL
SETTLEMENT BROKER OR OTHER PERSON ENGAGED IN THE BUSINESS OF VIATICAL
SETTLEMENTS;
(2) MISREPRESENT OR CONCEAL THE FINANCIAL CONDITION OF A VIATICAL
SETTLEMENT PROVIDER; OR
(3) IN RELATION TO THE BUSINESS OF VIATICAL SETTLEMENTS, FILE WITH THE
SUPERINTENDENT A DOCUMENT CONTAINING MATERIAL FALSE INFORMATION CONCERN-
ING ANY FACT MATERIAL THERETO OR OTHERWISE CONCEAL INFORMATION ABOUT A
FACT MATERIAL THERETO FROM THE SUPERINTENDENT.
(E) NO VIATICAL SETTLEMENT PROVIDER, VIATICAL SETTLEMENT BROKER OR
OTHER PERSON, SHALL, BY ANY ADVERTISEMENT OR PUBLIC ANNOUNCEMENT IN THIS
STATE, CALL ATTENTION TO ANY UNAUTHORIZED INSURER OR UNAUTHORIZED VIATI-
CAL SETTLEMENT PROVIDER.
(F) (1) NO PERSON OR PREMIUM FINANCE AGENCY THAT ENTERS INTO A PREMIUM
FINANCE AGREEMENT, AS SUCH TERMS ARE DEFINED PURSUANT TO ARTICLE
TWELVE-B OF THE BANKING LAW, WITH THE OWNER OF A POLICY WITH REGARD TO
SUCH POLICY, AND NO PERSON AFFILIATED OR ASSOCIATED WITH SUCH PERSON OR
PREMIUM FINANCE AGENCY, SHALL RECEIVE ANY PROCEEDS, FEES OR OTHER
CONSIDERATION, DIRECTLY OR INDIRECTLY, FROM THE OWNER OF THE POLICY OR
A. 1873 26
ANY OTHER PERSON WITH RESPECT TO ANY VIATICAL SETTLEMENT CONTRACT OR
OTHER TRANSACTION RELATED TO SUCH POLICY OTHER THAN PAYMENTS OF PRINCI-
PAL, INTEREST AND SERVICE CHARGES AS ARE AUTHORIZED AND LIMITED BY ARTI-
CLE TWELVE-B OF THE BANKING LAW AND SPECIFIED IN THE PREMIUM FINANCE
AGREEMENT OR SUBSEQUENT SALE OF SUCH AGREEMENT.
(2) IF AT ANY TIME, A POLICY THAT IS THE SUBJECT OF A PREMIUM FINANCE
AGREEMENT IS SOLD, ASSIGNED, TRANSFERRED, DEVISED OR BEQUEATHED TO A
PERSON OR PREMIUM FINANCE AGENCY SPECIFIED IN PARAGRAPH ONE OF THIS
SUBSECTION OR TO A VIATICAL SETTLEMENT PROVIDER PURSUANT TO THE TERMS OF
A PREMIUM FINANCE AGREEMENT, ANY PROCEEDS OR OTHER CONSIDERATION
RECEIVED OTHER THAN THE AMOUNTS SPECIFIED IN PARAGRAPH ONE OF THIS
SUBSECTION SHALL BE REMITTED TO THE ORIGINAL OWNER OF THE POLICY OR TO
HIS OR HER ESTATE IF HE OR SHE IS NOT THEN LIVING.
(G) NO PERSON SHALL, DIRECTLY OR INDIRECTLY, MARKET, ADVERTISE, SOLIC-
IT OR OTHERWISE PROMOTE THE PURCHASE OF A LIFE INSURANCE POLICY FOR THE
PURPOSE OF OR WITH AN EMPHASIS ON VIATICATING SUCH POLICY.
(H) NO PERSON MAY PURCHASE, DIRECTLY OR INDIRECTLY, A POLICY SUBJECT
TO A VIATICAL SETTLEMENT CONTRACT WHERE SUCH PERSON, DIRECTLY OR THROUGH
AN AFFILIATE, ACTED AS THE VIATICAL SETTLEMENT BROKER ON BEHALF OF THE
VIATOR WITH RESPECT TO SUCH VIATICAL SETTLEMENT CONTRACT.
(I) NO PERSON LICENSED UNDER THE INSURANCE LAWS OF THIS STATE MAY
PROHIBIT, RESTRICT, LIMIT OR IMPAIR A LICENSED LIFE PRODUCER FROM OPER-
ATING AS A VIATICAL SETTLEMENT BROKER, LAWFULLY NEGOTIATING A VIATICAL
SETTLEMENT CONTRACT ON BEHALF OF A VIATOR, AIDING AND ASSISTING A VIATOR
WITH A VIATICAL SETTLEMENT CONTRACT OR OTHERWISE PARTICIPATING IN A
VIATICAL SETTLEMENT TRANSACTION UNDER THIS ARTICLE.
(J) NO PERSON LICENSED UNDER THE INSURANCE LAWS OF THIS STATE MAY
ENGAGE IN ANY TRANSACTION, ACT, PRACTICE OR COURSE OF BUSINESS OR DEAL-
ING WHICH RESTRICTS, LIMITS, INTERFERES WITH, OR IMPAIRS IN ANY WAY THE
LAWFUL TRANSFER OF OWNERSHIP, CHANGE OF BUSINESS OR ASSIGNMENT OF A
POLICY TO EFFECTUATE A VIATICAL SETTLEMENT CONTRACT.
S 7812. AUTHORITY TO PROMULGATE REGULATIONS. THE SUPERINTENDENT MAY
PROMULGATE REGULATIONS IMPLEMENTING THIS ARTICLE.
S 7813. NONCONFORMING CONTRACTS. (A) EXCEPT AS OTHERWISE SPECIFICALLY
PROVIDED IN THIS CHAPTER, ANY VIATICAL SETTLEMENT CONTRACT SUBJECT TO
THIS CHAPTER THAT IS IN VIOLATION OF ANY OF THE PROVISIONS OF THIS CHAP-
TER SHALL BE VALID AND BINDING UPON THE VIATICAL SETTLEMENT PROVIDER,
BUT IN ALL RESPECTS IN WHICH THE CONTRACT'S PROVISIONS ARE IN VIOLATION
OF THE REQUIREMENTS OR PROHIBITIONS OF THIS CHAPTER IT SHALL BE ENFORCE-
ABLE AS IF IT CONFORMED WITH SUCH REQUIREMENTS OR PROHIBITIONS.
(B) NO VIATICAL SETTLEMENT CONTRACT SUBJECT TO THIS CHAPTER SHALL
PROVIDE THAT THE RIGHTS OR OBLIGATIONS OF THE VIATOR OR OF ANY PERSON
RIGHTFULLY CLAIMING THEREUNDER SHALL BE GOVERNED BY THE LAWS OF ANY
JURISDICTION OTHER THAN THIS STATE.
(C) IN ANY ACTION TO RECOVER UNDER THE PROVISIONS OF ANY VIATICAL
SETTLEMENT CONTRACT THAT THE SUPERINTENDENT IS AUTHORIZED BY THIS CHAP-
TER TO APPROVE, IF IN THE SUPERINTENDENT'S OPINION ITS PROVISIONS ARE
MORE FAVORABLE TO VIATORS, THE COURT SHALL ENFORCE SUCH CONTRACT AS IF
ITS PROVISIONS WERE THE SAME AS THOSE SPECIFIED IN THIS CHAPTER UNLESS
THE COURT FINDS THAT ITS ACTUAL PROVISIONS WERE MORE FAVORABLE TO
VIATORS AT THE DATE WHEN THE CONTRACT WAS ENTERED INTO.
S 7814. APPLICABILITY. THE PROVISIONS OF THIS ARTICLE SHALL APPLY TO
ANY VIATICAL SETTLEMENT CONTRACT MADE OR PROPOSED TO BE MADE, OR SOLIC-
ITED WITH A VIATOR.
S 7815. CONTRACT PROVISIONS REQUIRED BY LAWS OF OTHER JURISDICTIONS.
A LICENSED VIATICAL SETTLEMENT PROVIDER MAY INCLUDE, IN A VIATICAL
A. 1873 27
SETTLEMENT CONTRACT MADE IN THIS STATE WITH THE OWNER OF A POLICY THAT
IS A RESIDENT OF ANOTHER STATE OR IN A VIATICAL SETTLEMENT CONTRACT MADE
IN ANOTHER STATE WITH A VIATOR, ANY PROVISION REQUIRED BY THE LAWS OF
SUCH OTHER STATE APPLICABLE TO THE CONTRACT IF SUCH PROVISIONS ARE NOT
SUBSTANTIALLY IN CONFLICT WITH THE LAWS OF THIS STATE.
S 7816. SEVERABILITY. IF ANY CLAUSE, SENTENCE, PARAGRAPH, SECTION OR
PART OF THIS ARTICLE SHALL BE ADJUDGED BY ANY COURT OF COMPETENT JURIS-
DICTION TO BE INVALID AND AFTER EXHAUSTION OF ALL FURTHER JUDICIAL
REVIEW, THE JUDGMENT SHALL NOT AFFECT, IMPAIR OR INVALIDATE THE REMAIN-
DER THEREOF, BUT SHALL BE CONFINED IN ITS OPERATION TO THE CLAUSE,
SENTENCE, PARAGRAPH, SECTION OR PART OF THIS ARTICLE DIRECTLY INVOLVED
IN THE CONTROVERSY IN WHICH THE JUDGMENT SHALL HAVE BEEN RENDERED.
S 14. Subsection (b) of section 403 of the insurance law, as amended
by chapter 805 of the laws of 1984, is amended to read as follows:
(b) For the purpose of section one hundred nine of this chapter, it is
a violation of this chapter for any individual, firm, association or
corporation subject to the provisions of this chapter to commit a frau-
dulent insurance act OR A FRAUDULENT VIATICAL SETTLEMENT ACT.
S 15. Section 403 of the insurance law is amended by adding a new
subsection (f) to read as follows:
(F) IN THIS ARTICLE, "FRAUDULENT VIATICAL SETTLEMENT ACT" MEANS A
FRAUD AS DEFINED IN SECTION 176.40 OF THE PENAL LAW.
S 16. Subsection (c) of section 403 of the insurance law, as amended
by chapter 262 of the laws of 1998, is amended to read as follows:
(c) In addition to any criminal liability arising under the provisions
of this section, the superintendent shall be empowered to levy a civil
penalty not exceeding five thousand dollars and the amount of the claim
for each violation upon any person, including those persons and their
employees licensed pursuant to this chapter, who is found to have: (i)
committed a fraudulent insurance act, FRAUDULENT VIATICAL SETTLEMENT ACT
or otherwise violates the provisions of this section; or (ii) knowingly
and with intent to defraud files, makes, or assists, solicits or
conspires with another to file or make an application for a premium
reduction, pursuant to subsection (a) of section two thousand three
hundred thirty-six of this chapter, containing any materially false
information or which, for the purpose of misleading, conceals informa-
tion concerning any fact material thereto.
S 17. Subsection (a) of section 404 of the insurance law is amended to
read as follows:
(a) If the insurance frauds bureau has reason to believe that a person
has engaged in, or is engaging in, an act defined in section 155.05 of
the penal law, with respect to personal or commercial insurance trans-
actions [or], VIATICAL SETTLEMENT TRANSACTIONS, section 176.05 OR
SECTION 176.40 of such law, the superintendent may make such investi-
gation within or without this state as [he] THE SUPERINTENDENT deems
necessary to aid in the enforcement of this chapter or to determine
whether any person has violated or is about to violate any such
provision of the penal law.
S 18. Subsections (a), (c) and (d) of section 405 of the insurance
law, subsection (a) as amended by chapter 635 of the laws of 1996,
subsection (d) as added by chapter 57 of the laws of 1993, the opening
paragraph of subsection (d) as amended by chapter 191 of the laws of
2008, paragraphs 9 and 10 of subsection (d) as amended and paragraph 11
of subsection (d) as added by chapter 678 of the laws of 1997, are
amended to read as follows:
A. 1873 28
(a) Any person licensed pursuant to the provisions of this chapter,
and any person engaged in the business of insurance OR VIATICAL SETTLE-
MENTS in this state who is exempted from compliance with the licensing
requirements of this chapter, including the state insurance fund of this
state, who has reason to believe that an insurance transaction OR VIATI-
CAL SETTLEMENT TRANSACTION may be fraudulent, or has knowledge that a
fraudulent insurance transaction OR FRAUDULENT VIATICAL SETTLEMENT TRAN-
SACTION is about to take place, or has taken place shall, within thirty
days after determination by such person that the transaction appears to
be fraudulent, send to the insurance frauds bureau on a form prescribed
by the superintendent, the information requested by the form and such
additional information relative to the factual circumstances of the
transaction and the parties involved as the superintendent may require.
The insurance frauds bureau shall accept reports of suspected fraudulent
insurance transactions OR FRAUDULENT VIATICAL SETTLEMENT TRANSACTIONS
from any self insurer, including but not limited to self insurers
providing health insurance coverage or those defined in section fifty of
the workers' compensation law, and shall treat such reports as any other
received pursuant to this section.
(c) Whenever the superintendent is satisfied that a material fraud,
deceit, or intentional misrepresentation has been committed in an insur-
ance OR VIATICAL SETTLEMENT transaction or purported insurance OR VIATI-
CAL SETTLEMENT transaction, he OR SHE shall report any such violation of
law to the appropriate licensing agency, the district attorney of the
county in which such acts were committed, when authorized by law, to the
attorney general, and where appropriate, to the person who submitted the
report of fraudulent activity, as provided by the provisions of this
article. Within one hundred twenty days of receipt of the superinten-
dent's report, the attorney general or the district attorney concerned
shall inform the superintendent as to the status of the reported
violations.
(d) No later than March fifteenth of each year, beginning in nineteen
hundred ninety-four, the superintendent shall furnish to the governor,
the speaker of the assembly and the TEMPORARY president [pro tem] of the
senate a report containing:
(1) a comprehensive summary and assessment of the frauds bureau's
efforts in discovering, investigating and halting fraudulent activities
and assisting in the prosecution of persons who are parties to insurance
fraud OR VIATICAL SETTLEMENTS FRAUD;
(2) the number of reports received from any person or persons engaged
in the business of insurance OR VIATICAL SETTLEMENTS, the number of
investigations undertaken by the bureau pursuant to any reports
received, the number of investigations undertaken not as a result of
reports received, the number of investigations that resulted in a refer-
ral to a licensing agency, a local prosecutor or the attorney general,
the number of such referrals pursued by a licensing agency, a local
prosecutor or the attorney general, and the disposition of such cases;
(3) a delineation of the number of reported and investigated cases by
line of insurance AND THOSE THAT RELATE TO VIATICAL SETTLEMENTS;
(4) a comparison of the frauds bureau's experience, with regard to
paragraphs two and three of this subdivision, to the bureau's experience
of years past;
(5) the total number of employees assigned to the frauds bureau delin-
eated by title and location of bureau assigned;
(6) an assessment of THE ACTIVITIES OF insurance [company activities]
COMPANIES AND VIATICAL SETTLEMENT PROVIDERS in regard to detecting,
A. 1873 29
investigating and reporting fraudulent activities, including a list of
companies which maintain special investigative units for the sole
purpose of detecting, investigating and reporting fraudulent activities
and the number of investigators assigned to such units per every thirty
thousand policies OR VIATICAL SETTLEMENT CONTRACTS in force with such
company OR PROVIDER;
(7) the amount of technical and monetary assistance requested and
received by the frauds bureau from any insurance company or companies,
ANY VIATICAL SETTLEMENT PROVIDER OR PROVIDERS, or any organization fund-
ed by insurance companies OR VIATICAL SETTLEMENT PROVIDERS;
(8) the amount of money returned by the frauds bureau to insurance
companies pursuant to any fraudulent claims that were recouped by the
bureau;
(9) the number and amount of civil penalties levied by the frauds
bureau pursuant to chapter four hundred eighty of the laws of nineteen
hundred ninety-two;
(10) recommendations for further statutory or administrative changes
designed to meet the objectives of this article; and
(11) an assessment of law enforcement and insurance company activities
to detect and curtail the incidence of operating a motor vehicle without
proper insurance coverage as required by this chapter.
S 19. Section 406 of the insurance law, as amended by chapter 6 of the
laws of 2007, is amended to read as follows:
S 406. Immunity. (A) In the absence of fraud or bad faith, no person
shall be subject to civil liability, and no civil cause of action of any
nature shall arise against such person [(i)] (1) for any information
relating to suspected fraudulent insurance transactions OR FRAUDULENT
VIATICAL SETTLEMENT ACTS furnished to law enforcement officials, their
agents and employees; and [(ii)] (2) for any information relating to
suspected fraudulent insurance transactions OR FRAUDULENT VIATICAL
SETTLEMENT ACTS furnished to other persons subject to the provisions of
this chapter; and [(iii)] (3) for any such information furnished in
reports to the insurance frauds bureau, its agents or employees or any
state agency investigating fraud or misconduct relating to workers'
compensation insurance, its agents or employees. Nor shall the super-
intendent or any employee of the insurance frauds bureau, in the absence
of fraud or bad faith, be subject to civil liability and no civil cause
of action of any nature shall arise against them by virtue of the publi-
cation of any report or bulletin related to the official activities of
the insurance frauds bureau. Nothing herein is intended to abrogate or
modify in any way any common law privilege of immunity heretofore
enjoyed by any person.
(B) A PERSON IDENTIFIED IN SUBSECTION (A) OF THIS SECTION 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 ARTICLE 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.
(C) (1) THE DOCUMENTS AND EVIDENCE PROVIDED PURSUANT TO SUBSECTION (A)
OF SECTION FOUR HUNDRED FIVE OF THIS ARTICLE OR OBTAINED BY THE SUPER-
INTENDENT IN AN INVESTIGATION OF SUSPECTED OR ACTUAL FRAUDULENT INSUR-
ANCE ACTS OR FRAUDULENT VIATICAL SETTLEMENT ACTS SHALL BE PRIVILEGED AND
CONFIDENTIAL AND SHALL NOT BE A PUBLIC RECORD.
A. 1873 30
(2) PARAGRAPH ONE OF THIS SUBSECTION SHALL NOT PROHIBIT RELEASE BY THE
SUPERINTENDENT OF DOCUMENTS AND EVIDENCE OBTAINED IN AN INVESTIGATION OF
SUSPECTED OR ACTUAL FRAUDULENT INSURANCE ACTS OR VIATICAL SETTLEMENT
ACTS:
(A) IN ADMINISTRATIVE OR JUDICIAL PROCEEDINGS TO ENFORCE LAWS ADMINIS-
TERED BY THE SUPERINTENDENT; OR
(B) TO FEDERAL, STATE OR LOCAL LAW ENFORCEMENT OR REGULATORY AGENCIES,
OR TO AN ORGANIZATION ESTABLISHED FOR THE PURPOSE OF DETECTING AND
PREVENTING FRAUDULENT INSURANCE ACTS OR FRAUDULENT VIATICAL SETTLEMENT
ACTS OR TO THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS (NAIC).
(3) RELEASE OF DOCUMENTS AND EVIDENCE UNDER PARAGRAPH TWO OF THIS
SUBSECTION DOES NOT ABROGATE OR MODIFY THE PRIVILEGE GRANTED IN PARA-
GRAPH ONE OF THIS SUBSECTION.
S 20. The insurance law is amended by adding a new section 411 to read
as follows:
S 411. VIATICAL SETTLEMENTS FRAUD PREVENTION PLANS. (A) EVERY VIATICAL
SETTLEMENT PROVIDER SHALL FILE WITH THE SUPERINTENDENT A PLAN FOR THE
DETECTION, INVESTIGATION AND PREVENTION OF FRAUDULENT VIATICAL SETTLE-
MENT ACTS IN THIS STATE AND THOSE FRAUDULENT VIATICAL SETTLEMENT ACTS
AFFECTING VIATICAL SETTLEMENT CONTRACTS IN THIS STATE.
(1) THE PLAN SHALL PROVIDE THE TIME AND MANNER IN WHICH SUCH PLAN
SHALL BE IMPLEMENTED, INCLUDING PROVISIONS FOR A SPECIAL INVESTIGATIONS
UNIT AND STAFFING LEVELS WITHIN SUCH UNIT. SUCH INVESTIGATORS SHALL BE
RESPONSIBLE FOR INVESTIGATING INFORMATION ON OR CASES OF SUSPECTED FRAU-
DULENT ACTIVITY AND FOR EFFECTIVELY IMPLEMENTING FRAUD PREVENTION AND
REDUCTION ACTIVITIES PURSUANT TO THE PLAN FILED WITH THE SUPERINTENDENT.
A VIATICAL SETTLEMENT PROVIDER SHALL INCLUDE IN SUCH PLAN STAFFING
LEVELS AND ALLOCATIONS OF RESOURCES OF SUCH SPECIAL INVESTIGATIONS UNIT
THAT SHALL BE SUFFICIENT AND APPROPRIATE FOR THE PROPER IMPLEMENTATION
OF THE PLAN AND APPROVAL OF SUCH PLAN PURSUANT TO SUBSECTION (C) OF THIS
SECTION.
(2) IN LIEU OF A SPECIAL INVESTIGATIONS UNIT, A VIATICAL SETTLEMENT
PROVIDER MAY CONTRACT WITH A PROVIDER OF SERVICES RELATED TO THE INVES-
TIGATION OF INFORMATION ON OR CASES OF SUSPECTED FRAUDULENT ACTIVITIES;
PROVIDED, HOWEVER, THAT A VIATICAL SETTLEMENT PROVIDER THAT OPTS FOR
CONTRACTING WITH A SEPARATE PROVIDER OF SERVICES, SHALL PROVIDE TO THE
SUPERINTENDENT A DETAILED PLAN THEREFOR, PURSUANT TO REQUIREMENTS SET
FORTH IN REGULATION BY THE SUPERINTENDENT.
(3) A PERSON EMPLOYED BY A SPECIAL INVESTIGATIONS UNIT OR AN INDEPEND-
ENT PROVIDER OF INVESTIGATIVE SERVICES UNDER CONTRACT WITH A VIATICAL
SETTLEMENT PROVIDER SHALL BE QUALIFIED BY EDUCATION OR EXPERIENCE TO ACT
IN SUCH CAPACITY, SUBJECT TO REQUIREMENTS ESTABLISHED BY THE SUPERINTEN-
DENT IN A REGULATION.
(B) THE PLAN SHALL PROVIDE FOR THE FOLLOWING:
(1) INTERFACE OF SPECIAL INVESTIGATIONS UNIT PERSONNEL WITH LAW
ENFORCEMENT AND PROSECUTORIAL AGENCIES, INCLUDING THE INSURANCE FRAUDS
BUREAU OF THE STATE INSURANCE DEPARTMENT;
(2) REPORTING OF FRAUD DATA TO A CENTRAL ORGANIZATION APPROVED BY THE
SUPERINTENDENT;
(3) IN-SERVICE EDUCATION AND TRAINING FOR UNDERWRITING AND CLAIMS
PERSONNEL IN IDENTIFYING AND EVALUATING INSTANCES OF SUSPECTED FRAUDU-
LENT ACTIVITY IN UNDERWRITING OR CLAIMS ACTIVITIES;
(4) COORDINATION WITH OTHER UNITS OF A VIATICAL SETTLEMENT PROVIDER
FOR THE INVESTIGATION AND INITIATION OF CIVIL ACTIONS BASED UPON INFOR-
MATION RECEIVED BY OR THROUGH THE SPECIAL INVESTIGATION UNIT;
A. 1873 31
(5) PUBLIC AWARENESS OF THE COST AND FREQUENCY OF FRAUDULENT ACTIV-
ITIES, AND THE METHODS OF PREVENTING FRAUD;
(6) DEVELOPMENT AND USE OF A FRAUD DETECTION AND PROCEDURES MANUAL TO
ASSIST IN THE DETECTION AND ELIMINATION OF FRAUDULENT ACTIVITY; AND
(7) THE TIME AND MANNER IN WHICH SUCH PLAN SHALL BE IMPLEMENTED AND A
DEMONSTRATION THAT THE FRAUD PREVENTION AND REDUCTION MEASURES OUTLINED
IN THE PLAN WILL BE FULLY IMPLEMENTED.
(C) (1) A FRAUD DETECTION AND PREVENTION PLAN FILED BY A VIATICAL
SETTLEMENT PROVIDER WITH THE SUPERINTENDENT PURSUANT TO THIS SECTION
SHALL BE DEEMED APPROVED BY THE SUPERINTENDENT IF NOT RETURNED BY THE
SUPERINTENDENT FOR REVISION WITHIN ONE HUNDRED TWENTY DAYS OF THE DATE
OF FILING. IF THE SUPERINTENDENT RETURNS A PLAN FOR REVISION, THE SUPER-
INTENDENT SHALL STATE THE POINTS OF OBJECTION WITH SUCH PLAN, AND ANY
AMENDMENTS AS THE SUPERINTENDENT MAY REQUIRE CONSISTENT WITH THE
PROVISIONS OF THIS SECTION, INCLUDING, BUT NOT LIMITED TO, STAFFING
LEVELS, RESOURCE ALLOCATION, OR OTHER POLICY OR OPERATIONAL CONSIDER-
ATIONS. AN AMENDED PLAN REFLECTING THE CHANGES SHALL BE FILED WITH THE
SUPERINTENDENT WITHIN FORTY-FIVE DAYS FROM THE DATE OF RETURN.
(2) IF THE SUPERINTENDENT HAS RETURNED A PLAN FOR REVISION MORE THAN
ONE TIME, THE VIATICAL SETTLEMENT PROVIDER SHALL BE ENTITLED TO A HEAR-
ING PURSUANT TO THE PROVISIONS OF ARTICLE THREE OF THIS CHAPTER AND
REGULATIONS PROMULGATED THEREUNDER.
(3) IF A VIATICAL SETTLEMENT PROVIDER FAILS TO SUBMIT A FINAL PLAN
WITHIN THIRTY DAYS AFTER A DETERMINATION OF THE SUPERINTENDENT AFTER THE
HEARING HELD PURSUANT TO PARAGRAPH TWO OF THIS SUBSECTION, OR OTHERWISE
FAILS TO SUBMIT A PLAN, OR FAILS TO IMPLEMENT THE PROVISIONS OF A PLAN
IN A TIME AND MANNER PROVIDED FOR IN SUCH PLAN, OR OTHERWISE REFUSES TO
COMPLY WITH THE PROVISIONS OF THIS SECTION, THE SUPERINTENDENT MAY: (A)
IMPOSE A FINE OF NOT MORE THAN TWO THOUSAND DOLLARS PER DAY FOR SUCH
FAILURE BY A VIATICAL SETTLEMENT PROVIDER UNTIL THE SUPERINTENDENT DEEMS
THE VIATICAL SETTLEMENT PROVIDER TO BE IN COMPLIANCE; OR (B) IMPOSE UPON
THE VIATICAL SETTLEMENT PROVIDER A FRAUD DETECTION AND PREVENTION PLAN
DEEMED TO BE APPROPRIATE BY THE SUPERINTENDENT, WHICH SHALL BE IMPLE-
MENTED BY THE VIATICAL SETTLEMENT PROVIDER; OR (C) IMPOSE THE PROVISIONS
OF BOTH SUBPARAGRAPHS (A) AND (B) OF THIS PARAGRAPH.
(D) ANY PLAN, THE INFORMATION CONTAINED THEREIN, OR CORRESPONDENCE
RELATED THERETO, OR ANY OTHER INFORMATION FURNISHED PURSUANT TO THIS
SECTION SHALL BE DEEMED TO BE A CONFIDENTIAL COMMUNICATION AND SHALL NOT
BE OPEN FOR REVIEW OR BE SUBJECT TO A SUBPOENA EXCEPT BY A COURT ORDER
OR BY REQUEST FROM ANY LAW ENFORCEMENT AGENCY OR AUTHORITY.
(E) EVERY VIATICAL SETTLEMENT PROVIDER REQUIRED TO FILE A FRAUD
PREVENTION PLAN SHALL REPORT TO THE SUPERINTENDENT ON AN ANNUAL BASIS,
NO LATER THAN JANUARY FIFTEENTH, DESCRIBING THE PROVIDER'S EXPERIENCE,
PERFORMANCE AND COST EFFECTIVENESS IN IMPLEMENTING THE PLAN, UTILIZING
SUCH FORMS AS THE SUPERINTENDENT MAY PRESCRIBE. UPON CONSIDERATION OF
SUCH REPORTS, THE SUPERINTENDENT MAY REQUIRE AMENDMENTS TO THE PROVID-
ER'S FRAUD PREVENTION PLAN AS DEEMED NECESSARY.
S 21. The penal law is amended by adding seven new sections 176.40,
176.45, 176.50, 176.55, 176.60, 176.65 and 176.70 to read as follows:
S 176.40 FRAUDULENT VIATICAL SETTLEMENT ACT; DEFINED.
A FRAUDULENT VIATICAL SETTLEMENT ACT IS COMMITTED BY ANY PERSON WHO,
KNOWINGLY AND WITH INTENT TO DEFRAUD, PRESENTS, CAUSES TO BE PRESENTED,
OR PREPARES WITH KNOWLEDGE OR BELIEF THAT IT WILL BE PRESENTED TO, OR
BY, A VIATICAL SETTLEMENT PROVIDER OR VIATICAL SETTLEMENT BROKER, OR ANY
AGENT THEREOF, OR TO ANY VIATOR ANY WRITTEN STATEMENT OR OTHER PHYSICAL
EVIDENCE AS PART OF, OR IN SUPPORT OF, AN APPLICATION FOR A VIATICAL
A. 1873 32
SETTLEMENT CONTRACT, OR A CLAIM FOR PAYMENT OR OTHER BENEFIT UNDER A
VIATICAL SETTLEMENT CONTRACT WHICH THE PERSON KNOWS TO (A) CONTAIN MATE-
RIALLY FALSE INFORMATION CONCERNING ANY MATERIAL FACT THERETO; OR (B)
CONCEAL, FOR THE PURPOSE OF MISLEADING, INFORMATION CONCERNING ANY FACT
MATERIAL THERETO.
S 176.45 VIATICAL SETTLEMENT FRAUD IN THE FIFTH DEGREE.
A PERSON IS GUILTY OF VIATICAL SETTLEMENT FRAUD IN THE FIFTH DEGREE
WHEN HE OR SHE COMMITS A FRAUDULENT VIATICAL SETTLEMENT ACT.
VIATICAL SETTLEMENT FRAUD IN THE FIFTH DEGREE IS A CLASS A MISDEMEA-
NOR.
S 176.50 VIATICAL SETTLEMENT FRAUD IN THE FOURTH DEGREE.
A PERSON IS GUILTY OF VIATICAL SETTLEMENT FRAUD IN THE FOURTH DEGREE
WHEN HE OR SHE COMMITS A FRAUDULENT VIATICAL SETTLEMENT ACT AND THEREBY
WRONGFULLY TAKES, OBTAINS OR WITHHOLDS, OR ATTEMPTS TO WRONGFULLY TAKE,
OBTAIN OR WITHHOLD PROPERTY WITH A VALUE IN EXCESS OF TWENTY-FIVE THOU-
SAND DOLLARS.
VIATICAL SETTLEMENT FRAUD IN THE FOURTH DEGREE IS A CLASS E FELONY.
S 176.55 VIATICAL SETTLEMENT FRAUD IN THE THIRD DEGREE.
A PERSON IS GUILTY OF VIATICAL SETTLEMENT FRAUD IN THE THIRD DEGREE
WHEN HE OR SHE COMMITS A FRAUDULENT VIATICAL SETTLEMENT ACT AND THEREBY
WRONGFULLY TAKES, OBTAINS OR WITHHOLDS, OR ATTEMPTS TO WRONGFULLY TAKE,
OBTAIN OR WITHHOLD PROPERTY WITH A VALUE IN EXCESS OF FIFTY THOUSAND
DOLLARS.
VIATICAL SETTLEMENT FRAUD IN THE THIRD DEGREE IS A CLASS D FELONY.
S 176.60 VIATICAL SETTLEMENT FRAUD IN THE SECOND DEGREE.
A PERSON IS GUILTY OF VIATICAL SETTLEMENT FRAUD IN THE SECOND DEGREE
WHEN HE OR SHE COMMITS A FRAUDULENT VIATICAL SETTLEMENT ACT AND THEREBY
WRONGFULLY TAKES, OBTAINS OR WITHHOLDS, OR ATTEMPTS TO WRONGFULLY TAKE,
OBTAIN OR WITHHOLD PROPERTY WITH A VALUE IN EXCESS OF ONE HUNDRED THOU-
SAND DOLLARS.
VIATICAL SETTLEMENT FRAUD IN THE SECOND DEGREE IS A CLASS C FELONY.
S 176.65 VIATICAL SETTLEMENT FRAUD IN THE FIRST DEGREE.
A PERSON IS GUILTY OF VIATICAL SETTLEMENT FRAUD IN THE FIRST DEGREE
WHEN HE OR SHE COMMITS A FRAUDULENT VIATICAL SETTLEMENT ACT AND THEREBY
WRONGFULLY TAKES, OBTAINS OR WITHHOLDS, OR ATTEMPTS TO WRONGFULLY TAKE,
OBTAIN OR WITHHOLD PROPERTY WITH A VALUE IN EXCESS OF ONE MILLION
DOLLARS.
VIATICAL SETTLEMENT FRAUD IN THE FIRST DEGREE IS A CLASS B FELONY.
S 176.70 AGGRAVATED VIATICAL SETTLEMENT FRAUD.
A PERSON IS GUILTY OF AGGRAVATED VIATICAL SETTLEMENT FRAUD WHEN HE OR
SHE COMMITS A FRAUDULENT VIATICAL SETTLEMENT ACT, AND HAS BEEN PREVIOUS-
LY CONVICTED WITHIN THE PRECEDING FIVE YEARS OF ANY OFFENSE, AN ESSEN-
TIAL ELEMENT OF WHICH IS THE COMMISSION OF A FRAUDULENT VIATICAL SETTLE-
MENT ACT.
AGGRAVATED VIATICAL SETTLEMENT FRAUD IS A CLASS D FELONY.
S 22. Section 570 of the banking law, as added by chapter 488 of the
laws of 1960, is amended to read as follows:
S 570. Restrictions on premium finance agreements. [1.] No premium
finance agreement shall contain any provision by which:
[(a)] 1. In the absence [of] OR default of the insured, the premium
finance agency holding the agreement may, arbitrarily and without
reasonable cause, accelerate the maturity of any part or all of the
amount owing thereunder;
[(b)] 2. A power of attorney is given to confess judgment in this
state; [or
A. 1873 33
(c)] 3. The insured relieves the insurance agent or broker or the
premium finance agency holding the agreement from liability for any
legal rights or remedies which the insured may otherwise have against
him[.]OR HER; OR
4. SUCH AGREEMENT, AS IT RELATES TO A LIFE INSURANCE CONTRACT,
ATTEMPTS TO EVADE ANY REQUIREMENT OF ARTICLE SEVENTY-EIGHT OF THE INSUR-
ANCE LAW.
S 23. This act shall take effect immediately; provided, however, that
upon such date, a person lawfully acting or operating as a viatical
settlement provider or viatical settlement broker in this state as of or
within the twelve months preceding the effective date of this act may
continue to do so pending approval or disapproval of the person's appli-
cation for a license as long as the application is filed with the super-
intendent of insurance's office not later than thirty days after publi-
cation of the superintendent of insurance of an application form and
instructions for applications for such licensure. The superintendent of
insurance shall publish application forms and instructions for applica-
tions for viatical settlement provider licenses and viatical settlement
broker licenses not later than sixty days after the effective date of
this act.
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