CSHB 190(JUD): "An Act relating to viatical settlement transactions; and providing for an effective date."
00CS FOR HOUSE BILL NO. 190(JUD) 01 "An Act relating to viatical settlement transactions; and providing for an effective 02 date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 21.36 is amended by adding a new section to read: 05 Sec. 21.36.055. Violation of viatical settlement provisions prohibited. A 06 person may not violate the viatical settlement transaction provisions of AS 21.89.110 07 or regulations adopted under AS 21.89.110. 08 * Sec. 2. AS 21.89 is amended by adding a new section to read: 09 Sec. 21.89.110. Viatical settlement transactions. (a) The director shall 10 regulate the transaction of viatical settlement contracts for the protection of viators, 11 insureds, and insurers. The authority of the director under this subsection extends to 12 the regulation of transactions between a viator and a viatical settlement provider and 13 between a viator and a person acting as an agent in viaticating a life insurance policy, 14 while the authority of the commissioner extends to the regulation of viatical settlement
01 investments as provided under AS 45.55.905(c). 02 (b) A viatical settlement provider, representative, or broker must apply for a 03 license with the director, submit information required by the director, and pay the 04 required fee established under AS 21.06.250 with the application for licensure. A 05 person may not act as or represent to be a viatical settlement provider, representative, 06 or broker relative to a subject resident, located, or to be performed in this state unless 07 licensed under this section. 08 (c) Viatical settlement contract forms, viator and insured disclosure statements, 09 and viatical settlement advertising materials must be filed by the viatical settlement 10 provider, representative, or broker with the director and must be approved by the 11 director. 12 (d) The director may examine a licensed viatical settlement provider, 13 representative, or broker, or an applicant for a viatical settlement provider, 14 representative, or broker license. The cost of the examination shall be paid by the 15 person examined under AS 21.06.160. 16 (e) Except as may be required in the course of conduct of the division's 17 responsibilities, a viatical settlement provider, representative, or broker may not 18 disclose to another person the identity of the viator or insured of an insurance policy 19 that is the subject of a viatical settlement contract. The viator may waive this 20 prohibition against disclosure if the waiver is in writing and is signed by the viator. 21 (f) The director may adopt regulations to implement this section, including 22 standards for 23 (1) viatical settlement provider, representative, and broker reporting 24 requirements and records retention; 25 (2) viator and insured privacy protection; 26 (3) viatical settlement contract provisions, advertising materials, and 27 filing requirements; 28 (4) payments to viators or insureds, including evaluating the 29 reasonableness of payments under a viatical settlement contract; 30 (5) licensing requirements, including license qualification, 31 disqualification, and renewal;
01 (6) financial accountability of viatical settlement providers; 02 (7) the relationship and responsibilities of insurers, viators, insureds, 03 and viatical settlement providers, representatives, and brokers in the transaction of a 04 viatical settlement contract; 05 (8) viator, insured, and insurer protection, including full and fair 06 disclosure setting out the manner and content of required disclosures and filing 07 requirements; and 08 (9) assessment of fees to cover the cost of regulating viatical settlement 09 contracts, providers, representatives, and brokers. 10 (g) A violation of this section or a regulation adopted under this section is an 11 unfair trade practice and subject to penalty under AS 21.36. 12 (h) In this section, 13 (1) "transaction" means, with respect to viatical settlement contracts, 14 (A) solicitation and inducement; 15 (B) preliminary negotiations; 16 (C) effectuation of a viatical settlement contract; 17 (D) transaction of matters subsequent to the effectuation of the 18 viatical settlement contract and arising out of it; 19 (2) "viatical settlement broker" 20 (A) means a person that, on behalf of a viator or insured and 21 for a fee, commission, or other valuable consideration, offers or attempts to 22 negotiate viatical settlement contracts between a viator or insured and one or 23 more viatical settlement providers; 24 (B) does not include a person acting as an attorney or 25 accountant retained to represent a viator or insured and compensated by or at 26 the direction of the viator or insured; 27 (3) "viatical settlement contract" 28 (A) means a written agreement between a viator or insured and 29 a viatical settlement provider for the sale, assignment, transfer, devise, or 30 bequest to the viatical settlement provider by the viator or insured of all or a 31 portion of the death benefit or ownership of a life insurance policy for
01 consideration that is less than the expected death benefit of the life insurance 02 policy; 03 (B) includes a contract for a loan or other financial transaction 04 secured primarily by an individual or group life insurance policy; 05 (C) does not include 06 (i) a loan by a life insurance company under the terms 07 of a life insurance contract; 08 (ii) a loan secured by the cash value of a policy; 09 (iii) the assignment of a life insurance policy as 10 collateral for a loan to a bank, saving bank, savings and loan 11 association, credit union, or other licensed lending institution; 12 (iv) the exercise by the viator or insured of an 13 accelerated benefits provision under the terms of the life insurance 14 contract; or 15 (v) the sale, assignment, transfer, devise, or bequest of 16 a life insurance policy for less than the expected death benefit by a 17 viator or insured to a friend or family member if the friend or family 18 member does not enter into more than one agreement in a calendar 19 year; 20 (4) "viatical settlement provider" means a person, other than a viator 21 or insured, that enters into a viatical settlement contract, including a person that 22 (A) obtains financing for the purchase, acquisition, transfer, or 23 other assignment of one or more viatical settlement contracts, viaticated 24 policies, or interests in viatical settlement contracts or viaticated policies; or 25 (B) sells, assigns, transfers, pledges, hypothecates, or disposes 26 of one or more viatical settlement contracts, viaticated policies, or interests in 27 viatical settlement contracts or viaticated policies; 28 (5) "viatical settlement representative" 29 (A) means a person that is an authorized agent of a viatical 30 settlement provider or broker and that acts or aids in any manner in the 31 transaction of a viatical settlement contract;
01 (B) does not include 02 (i) a person acting as an attorney or an accountant, or 03 a person exercising a power of attorney granted by a viator or insured; 04 or 05 (ii) a person retained to represent a viator or insured and 06 compensated by or at the direction of the viator or insured; 07 (6) "viaticated policy" means a life insurance policy that has been 08 acquired by a viatical settlement provider under a viatical settlement contract; 09 (7) "viator" means the owner of a life insurance policy insuring the life 10 of an individual who enters or seeks to enter into a viatical settlement contract. 11 * Sec. 3. AS 45.55 is amended by adding a new section to read: 12 Sec. 45.55.155. Viatical settlement interests. (a) Before the sale of a viatical 13 settlement interest, an issuer shall provide a prospective buyer with information that 14 is sufficient to make an informed investment decision. The issuer shall also provide 15 the information to the administrator upon request if the issuer is not otherwise required 16 to file the information with the administrator. In this subsection, "information that is 17 sufficient to make an informed investment decision" includes state-mandated disclosure 18 forms and a disclosure of any significant factors that may affect the outcome of the 19 investment. 20 (b) Except as may be required in the course of conduct of the responsibilities 21 of the Department of Community and Economic Development, an issuer of a viatical 22 settlement interest may not disclose to another person the identity of the viator or 23 insured of the insurance policy that is the subject of the viatical settlement interest. 24 The viator may waive this prohibition against disclosure if the waiver is in writing and 25 signed by the viator. 26 * Sec. 4. AS 45.55.905 is amended by adding a new subsection to read: 27 (c) The administrator shall regulate transactions between a viatical settlement 28 provider or person acting as an agent of a viatical settlement provider and a subsequent 29 investor, while the authority of the director of the division of insurance extends to the 30 regulation of viatical settlement contracts under AS 21.89.110. 31 * Sec. 5. AS 45.55.990(32) is amended to read:
01 (32) "security" means a note; stock; treasury stock; bond; debenture; 02 evidence of indebtedness; certificate of interest or participation in any profit-sharing 03 agreement; limited liability company interest under AS 10.50, notwithstanding the 04 limitations of AS 45.08.103(c); collateral-trust certificate; preorganization certificate 05 or subscription; transferable share; investment contract; voting-trust certificate; 06 certificate of deposit for a security; viatical settlement interest; certificate of interest 07 or participation in an oil, gas, or mining title or lease or in payments out of production 08 under the title or lease or in any sale of or indenture or bond or contract for the 09 conveyance of land or any interest in land; an option on a contract for the future 10 delivery of agricultural or mineral commodities or any other commodity offered or sold 11 to the public and not regulated by the Commodity Futures Trading Commission; 12 however, the contract or option is not subject to the provisions of AS 45.55.070 if it 13 is sold or purchased on the floor of a bona fide exchange or board of trade and offered 14 or sold to the public by a broker-dealer or agent registered under this chapter; 15 investment of money or money's worth including goods furnished or services 16 performed in the risk capital of a venture with the expectation of some benefit to the 17 investor where the investor has no direct control over the investment or policy decision 18 of the venture; or, in general, any interest or instrument commonly known as a 19 "security," or any certificate of interest or participation in, temporary or interim 20 certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, 21 any of the foregoing; "security" does not include an insurance or endowment policy 22 or annuity contract under which an insurance company promises to pay a fixed or 23 variable sum of money either in a lump sum or periodically for life or for some other 24 specified period; 25 * Sec. 6. AS 45.55.990 is amended by adding new paragraphs to read: 26 (37) "viatical settlement interest" 27 (A) means the entire interest or any fractional interest in a life 28 insurance policy or in the death benefit under a life insurance policy that is the 29 subject of a viatical settlement contract; 30 (B) does not include the initial purchase from the viator by a 31 viatical settlement provider;
01 (38) "viator" means the owner of a life insurance policy insuring the 02 life of an individual who enters or who seeks to enter a viatical settlement contract. 03 * Sec. 7. This Act takes effect immediately under AS 01.10.070(c).