The current regulatory landscape consists of:
- Frequent changes to laws that vary state-by-state
- Increased regulatory oversight
- Multi-faceted licensing, compensation/transparency and disclosure requirements
- Congressional and SEC involvement
- NCOIL & NAIC Model Act Revisions
All life settlement market participants should be familiar with the licensing and operational requirements of the states they plan to operate in and thereafter, constantly monitor applicable developments.
Since 2010, the following states significantly changed their laws, either by expanding existing settlement legislation or regulating settlements for the first time (effective dates are referenced):
- Oregon - 1/1/10
- Vermont - 1/1/10
- New York - 5/18/10 (disclosures, privacy & anti-STOLI provisions were in effect since 11/18/09)
- Hawaii - 6/16/10 [see NOTE below]
- California - 7/1/10
- Illinois - 7/1/10
- Rhode Island - 7/1/10
- New Hampshire - 6/14/10
- Wisconsin - 11/1/10
- Texas - 9/1/11
- Hawaii - 7/12/12
- Massachusetts - 6/1/13
- Arizona - 9/30/13
NOTE: In a bizarre example of how laws must constantly be monitored, Hawaii, which regulated settlements for the first time as of 6/16/08, became "unregulated" (with no specific life settlement laws) again as of 6/16/10. Then, as of 7/1/12, the substantially same law that "sunset" (or disappeared) in 2010, becomes effective again.
In addition, life settlement terminology is not consistent throughout the country. With the exception of three states (Delaware, Michigan and New Mexico), the term "viatical settlement," when used, refers to all settlement transactions, regardless if it involves a terminally or chronically ill insured or an aging senior.
Source: Life Insurance Settlement Association (http://www.lisa.org)
NOTE #1 - Every state, other than the green & white states, regulates ALL settlement transactions regardless of health of insured
NOTE #2 - There are exceptions to the "Waiting Periods" referenced above; please consult applicable state law
NOTE #3 - "Unregulated" states do not have specific life settlement laws, but remain governed by other applicable state law