Bill Text: FL S1600 | 2017 | Regular Session | Comm Sub
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Viatical Settlement Contracts
Spectrum: Bipartisan Bill
Status: (Failed) 2017-05-05 - Died in Rules, companion bill(s) passed, see CS/CS/CS/HB 1007 (Ch. 2017-178) [S1600 Detail]
Download: Florida-2017-S1600-Comm_Sub.html
Bill Title: Viatical Settlement Contracts
Spectrum: Bipartisan Bill
Status: (Failed) 2017-05-05 - Died in Rules, companion bill(s) passed, see CS/CS/CS/HB 1007 (Ch. 2017-178) [S1600 Detail]
Download: Florida-2017-S1600-Comm_Sub.html
Florida Senate - 2017 CS for SB 1600 By the Committee on Banking and Insurance; and Senators Young and Broxson 597-02946-17 20171600c1 1 A bill to be entitled 2 An act relating to viatical settlement contracts; 3 amending s. 626.9911, F.S.; defining the terms 4 “fraudulent viatical settlement act” and “stranger 5 originated life insurance practice” for purposes of 6 provisions relating to the Viatical Settlement Act; 7 amending ss. 626.9924 and 626.99245, F.S.; conforming 8 cross-references; amending s. 626.99275, F.S.; 9 providing additional prohibited acts related to 10 viatical settlement contracts; amending s. 626.99287, 11 F.S.; extending the period in which viatical 12 settlement contracts are void and unenforceable; 13 revising conditions and requirements in which viatical 14 settlement contracts entered into within a specified 15 time period are valid and enforceable; deleting 16 provisions related to the transfer of insurance 17 policies or certificates to viatical settlement 18 providers; creating s. 626.99289, F.S.; providing that 19 certain contracts, agreements, arrangements, or 20 transactions relating to stranger-originated life 21 insurance practices are void and unenforceable; 22 creating s. 626.99290, F.S.; authorizing a life 23 insurer to contest policies obtained through such 24 practices; providing an effective date. 25 26 Be It Enacted by the Legislature of the State of Florida: 27 28 Section 1. Subsections (2) through (7) of section 626.9911, 29 Florida Statutes, are renumbered as subsections (3) through (8), 30 respectively, present subsections (8) through (14) of that 31 section are renumbered as subsections (10) through (16), 32 respectively, and new subsections (2) and (9) are added to that 33 section, to read: 34 626.9911 Definitions.—As used in this act, the term: 35 (2) “Fraudulent viatical settlement act” means an act or 36 omission committed by a person who knowingly, or with intent to 37 defraud for the purpose of depriving another of property or for 38 pecuniary gain, commits or allows an employee or agent to commit 39 any of the following acts: 40 (a) Presenting, causing to be presented, or preparing with 41 the knowledge or belief that it will be presented to or by 42 another person, false or concealed material information as part 43 of, in support of, or concerning a fact material to: 44 1. An application for the issuance of a viatical settlement 45 contract or a life insurance policy; 46 2. The underwriting of a viatical settlement contract or a 47 life insurance policy; 48 3. A claim for payment or benefit pursuant to a viatical 49 settlement contract or a life insurance policy; 50 4. Premiums paid on a life insurance policy; 51 5. Payments and changes in ownership or beneficiary made in 52 accordance with the terms of a viatical settlement contract or a 53 life insurance policy; 54 6. The reinstatement or conversion of a life insurance 55 policy; 56 7. The solicitation, offer, effectuation, or sale of a 57 viatical settlement contract or a life insurance policy; 58 8. The issuance of written evidence of a viatical 59 settlement contract or a life insurance policy; or 60 9. A financing transaction for a viatical settlement 61 contract or life insurance policy. 62 (b) Employing a plan, financial structure, device, scheme, 63 or artifice relating to viaticated policies for the purpose of 64 perpetrating fraud. 65 (c) Engaging in a stranger-originated life insurance 66 practice. 67 (d) Failing to disclose, upon request by an insurer, that 68 the prospective insured has undergone a life expectancy 69 evaluation by a person other than the insurer or its authorized 70 representatives in connection with the issuance of the life 71 insurance policy. 72 (e) Perpetuating a fraud or preventing the detection of a 73 fraud by: 74 1. Removing, concealing, altering, destroying, or 75 sequestering from the office the assets or records of a licensee 76 or other person engaged in the business of viatical settlements; 77 2. Misrepresenting or concealing the financial condition of 78 a licensee, financing entity, insurer, or other person; 79 3. Transacting in the business of viatical settlements in 80 violation of laws requiring a license, certificate of authority, 81 or other legal authority to transact such business; or 82 4. Filing with the office or the equivalent chief insurance 83 regulatory official of another jurisdiction a document that 84 contains false information or conceals information about a 85 material fact from the office or other regulatory official. 86 (f) Embezzlement, theft, misappropriation, or conversion of 87 moneys, funds, premiums, credits, or other property of a 88 viatical settlement provider, insurer, insured, viator, 89 insurance policyowner, or other person engaged in the business 90 of viatical settlements or life insurance. 91 (g) Entering into, negotiating, brokering, or otherwise 92 dealing in a viatical settlement contract, the subject of which 93 is a life insurance policy that was obtained based on 94 information that was falsified or concealed for the purpose of 95 defrauding the policy’s issuer, viatical settlement provider, or 96 viator. 97 (h) Facilitating the viator’s change of residency state to 98 avoid the provisions of this act. 99 (i) Facilitating or causing the creation of a trust with a 100 non-Florida or other nonresident entity for the purpose of 101 owning a life insurance policy covering a Florida resident to 102 avoid the provisions of this act. 103 (j) Facilitating or causing the transfer of the ownership 104 of an insurance policy covering a Florida resident to a trust 105 with a situs outside this state or to another nonresident entity 106 to avoid the provisions of this act. 107 (k) Applying for or obtaining a loan that is secured 108 directly or indirectly by an interest in a life insurance 109 policy. 110 (l) Attempting to commit, assisting, aiding, or abetting in 111 the commission of, or conspiring to commit, an act or omission 112 specified in this subsection. 113 (9) “Stranger-originated life insurance practice” means an 114 act, practice, arrangement, or agreement to initiate a life 115 insurance policy for the benefit of a third-party investor who, 116 at the time of policy origination, has no insurable interest in 117 the insured. Stranger-originated life insurance practices 118 include, but are not limited to: 119 (a) The purchase of a life insurance policy with resources 120 or guarantees from or through a person who, at the time of such 121 policy’s inception, could not lawfully initiate the policy and 122 the execution of a verbal or written arrangement or agreement to 123 directly or indirectly transfer the ownership of such policy or 124 policy benefits to a third party. 125 (b) The creation of a trust or other entity that has the 126 appearance of an insurable interest in order to initiate 127 policies for investors, in violation of insurable interest laws 128 and the prohibition against wagering on life. 129 Section 2. Subsection (7) of section 626.9924, Florida 130 Statutes, is amended to read: 131 626.9924 Viatical settlement contracts; procedures; 132 rescission.— 133 (7) At any time during the contestable period, within 20 134 days after a viator executes documents necessary to transfer 135 rights under an insurance policy or within 20 days of any 136 agreement, option, promise, or any other form of understanding, 137 express or implied, to viaticate the policy, the provider must 138 give notice to the insurer of the policy that the policy has or 139 will become a viaticated policy. The notice must be accompanied 140 by the documents required by s. 626.99287626.99287(5)(a) in141their entirety. 142 Section 3. Subsection (2) of section 626.99245, Florida 143 Statutes, is amended to read: 144 626.99245 Conflict of regulation of viaticals.— 145 (2) This section does not affect the requirement of ss. 146 626.9911(14)626.9911(12)and 626.9912(1) that a viatical 147 settlement provider doing business from this state must obtain a 148 viatical settlement license from the office. As used in this 149 subsection, the term “doing business from this state” includes 150 effectuating viatical settlement contracts from offices in this 151 state, regardless of the state of residence of the viator. 152 Section 4. Subsection (1) of section 626.99275, Florida 153 Statutes, is amended to read: 154 626.99275 Prohibited practices; penalties.— 155 (1) It is unlawful for aanyperson to: 156 (a)ToKnowingly enter into, broker, or otherwise deal in a 157 viatical settlement contract the subject of which is a life 158 insurance policy, knowing that the policy was obtained by 159 presenting materially false information concerning any fact 160 material to the policy or by concealing, for the purpose of 161 misleading another, information concerning any fact material to 162 the policy, where the viator or the viator’s agent intended to 163 defraud the policy’s issuer. 164 (b)ToKnowingly or with the intent to defraud, for the 165 purpose of depriving another of property or for pecuniary gain, 166 issue or use a pattern of false, misleading, or deceptive life 167 expectancies. 168 (c)ToKnowingly engage in any transaction, practice, or 169 course of business intending thereby to avoid the notice 170 requirements of s. 626.9924(7). 171 (d)ToKnowingly or intentionally facilitate the change of 172 state of residency of a viator to avoid the provisions of this 173 chapter. 174 (e) Knowingly enter into a viatical settlement contract 175 before the application for or issuance of a life insurance 176 policy that is the subject of a viatical settlement contract or 177 during the 5-year period commencing on the date of issuance of 178 the policy or certificate, unless the viator provides a sworn 179 affidavit and accompanying documentation in accordance with s. 180 626.99287. 181 (f) Engage in a fraudulent viatical settlement act, as 182 defined in s. 626.9911. 183 (g) Knowingly issue, solicit, market, or otherwise promote 184 the purchase of a life insurance policy for the purpose of or 185 with an emphasis on selling the policy to a third party. 186 (h) Engage in a stranger-originated life insurance 187 practice, as defined in s. 626.9911. 188 Section 5. Section 626.99287, Florida Statutes, is amended 189 to read: 190 626.99287 Contestability of viaticated policies.—Except as 191 hereinafter provided, if a viatical settlement contract is 192 entered into duringwithinthe 5-year2-yearperiod commencing 193 onwiththe date of issuance of the insurance policy or 194 certificate to be acquired, the viatical settlement contract is 195 void and unenforceable by either party. Notwithstanding this 196 limitation, such a viatical settlement contract is not void and 197 unenforceable if the viator provides a sworn affidavit and 198 accompanying independent evidentiary documentation certifying to 199 the viatical settlement provider that one or more of the 200 following conditions were met during the 5-year period: 201 (1) The policy was issued upon the owner’s exercise of 202 conversion rights arising out of a group or term policy, if the 203 total time covered under the prior policy is at least 60 months. 204 The time covered under a group policy shall be calculated 205 without regard to any change in insurance carriers, provided the 206 coverage has been continuous and under the same group 207 sponsorship.;208 (2) The owner of the policy is a charitable organization 209 exempt from taxation under 26 U.S.C. s. 501(c)(3).;210 (3) The owner of the policy is not a natural person.;211(4)The viatical settlement contract was entered into212before July 1, 2000;213 (4)(5)The viator certifies by producing independent214evidence to the viatical settlement provider that one or more of215the following conditionshave been met within the 2-year period:216(a)1.The viator or insured is terminally or chronically 217 illdiagnosed with an illness or condition that is either:218a.Catastrophic or life threatening; or219b.Requires a course of treatment for a period of at least2203 years of long-term care or home health care;and 2212.the condition was not known to the insured at the time 222 the life insurance contract was entered into. 223 (5)(b)The viator’s spouse dies.;224 (6)(c)The viator divorces his or her spouse.;225 (7)(d)The viator retires from full-time employment.;226 (8)(e)The viator becomes physically or mentally disabled 227 and a physician determines that the disability prevents the 228 viator from maintaining full-time employment.;229 (9)(f)The owner of the policy was the insured’s employer 230 at the time the policy or certificate was issued and the 231 employment relationship terminated.;232 (10)(g)A final order, judgment, or decree is entered by a 233 court of competent jurisdiction, on the application of a 234 creditor of the viator, adjudicating the viator bankrupt or 235 insolvent, or approving a petition seeking reorganization of the 236 viator or appointing a receiver, trustee, or liquidator to all 237 or a substantial part of the viator’s assets.; or238 (11)(h)The viator experiences a significant decrease in 239 income which is unexpected by the viator and which impairs his 240 or her reasonable ability to pay the policy premium. 241 (12) The viator entered into a viatical settlement contract 242 more than 2 years after the policy’s issuance date and, with 243 respect to the policy, at all times before the date that is 2 244 years after policy issuance, each of the following conditions 245 are met: 246 (a) Policy premiums have been funded exclusively with 247 unencumbered assets, including an interest in the life insurance 248 policy being financed only to the extent of its net cash 249 surrender value, provided by, or fully recourse liability 250 incurred by, the insured; 251 (b) There is no agreement or understanding with any other 252 person to guarantee any such liability or to purchase, or stand 253 ready to purchase, the policy, including through an assumption 254 or forgiveness of the loan; and 255 (c) Neither the insured nor the policy has been evaluated 256 for settlement. 257 258If the viatical settlement provider submits to the insurer a259copy of the viator’s or owner’s certification described above,260then the provider submits a request to the insurer to effect the261transfer of the policy or certificate to the viatical settlement262provider, the viatical settlement agreement shall not be void or263unenforceable by operation of this section. The insurer shall264timely respond to such request. Nothing in this section shall265prohibit an insurer from exercising its right during the266contestability period to contest the validity of any policy on267grounds of fraud.268 Section 6. Section 626.99289, Florida Statutes, is created 269 to read: 270 626.99289 Void and unenforceable contracts, agreements, 271 arrangements, and transactions.—Notwithstanding s. 627.455, a 272 contract, agreement, arrangement, or transaction, including, but 273 not limited to, a financing agreement or any other arrangement 274 or understanding entered into, whether written or verbal, for 275 the furtherance or aid of a stranger-originated life insurance 276 practice is void and unenforceable. 277 Section 7. Section 626.99290, Florida Statutes, is created 278 to read: 279 626.99290 Contestability of life insurance policies. 280 Notwithstanding s. 627.455, a life insurer may contest a life 281 insurance policy if the policy was obtained by a stranger 282 originated life insurance practice, as defined in s. 626.9911. 283 Section 8. This act shall take effect upon becoming a law.