LIFA Urges States to Adopt Revised NCOIL Life Settlements Model Act |
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Written by U.S. Insurance News
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Thursday, 27 December 2007 |
The Life Insurance Finance Association (LIFA) has weighed in on the competing Model Acts from both the National Conference of Insurance Legislators (NCOIL) and the National Association of Insurance Commissioners (NAIC), and the association prefers what it sees from NCOIL.
The Life Insurance Finance Association (LIFA) has weighed in on the competing Model Acts from both the National Conference of Insurance Legislators (NCOIL) and the National Association of Insurance Commissioners (NAIC), and the association prefers what it sees from NCOIL.
Recent amendments to NCOIL’s Life Settlements Model Act were adopted unanimously, which, according to LIFA executive director Scott Cipinko, is a reflection of the collaboration of all concerned participants.
“This action was taken only after fully vetting all issues over more than 40 hours of meetings between all interested parties in concert with the NCOIL legislators and staff. The Model was crafted to meet the stated objectives of the legislators,” Cipinko said. “In addition, the adopted changes recognize how the life insurance industry and the secondary markets actually operate.”
Two key changes to the NCOIL Model Act are:
- A change in the language concerning the use of trusts in connection with the creation of Stranger Initiated Life Insurance (SILI). The NAIC Model Act does not address the subject of SILI at all.
- The NCOIL Model retains the two-year provision during which a policy owner is prohibited (with certain limited exceptions) from selling a life insurance policy in the secondary market. The NAIC Model extends this prohibition from two to five years, which, according to consumer advocates, impairs the property rights of consumers.
Due to the unanimous support that the amendments to the NCOIL Model Act received, Cipinko pointed out that this amendment process differed from the recent amendments to the NAIC Viatical Settlements Model Act, which were adopted over the objection or abstention of some NAIC member states.
“The adoption of the NCOIL Model Act shows that even if all parties do not agree with all portions of the final act, the process works, and the property rights of the consumers that the Model Act was aimed at protecting were considered. The NCOIL Model Act as adopted, unlike the NAIC Model Act, adequately considers those essential rights,” he said.
LIFA believes that the adoption of the NCOIL Model Act by the states will protect consumer property rights. To this end, LIFA is calling upon state legislatures to adopt the NCOIL Model Act.
The association says it will oppose the NAIC legislation in any state.
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