With the recent release of the United States Government Accountability Office (”GAO”) and SEC reports/studies, the life settlement industry got its first reliable source of industry data. It is about time! After many years of guessing what the size of the industry is or how much value is created for consumers, the industry now has some hard figures from the GAO to hang its hat on. And, I believe, these are really amazing figures. From 2006-2009, $35.5 billion face value of life insurance was sold in the secondary market to investors. In these transactions, the policy owners received approximately $6.2 billion in cash proceeds, compared to the cash surrender value of these policies of $558 million. Thus, the life settlement industry put $5.6 billion of money into consumers’ pockets in excess of their only alternative, surrendering the policy back to the life insurance company. In today’s challenging economic environment, there cannot be many industries out there that are putting more cash into consumers’ wallets. Now is the time to take this hard data and introduce millions more to the consumer-friendly life settlement industry.
New York State Issues List of Grandfathered Providers
New York State’s Insurance Department issued a list of 33 life settlement providers that met the requirements to be grandfathered during the application review process. The list of companies, including the largest providers in the industry, was much bigger than many industry observers had expected. Q Capital is one of the providers that is allowed to continue operating under the current guidelines. The procedure calls for these companies to have the authority to close transactions in the state while the insurance department reviews their applications. The providers will have to use the forms filed with the state for transaction closings. The full list of providers is available here.
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Q Capital’s John McCarroll Re-elected to LISA Board of Directors
In a highly contested election, John McCarroll, Vice President-General Counsel of Q Capital Strategies, was re-elected to the Board of Directors of the Life Insurance Settlement Association (LISA). John has served on LISA’s Board since 2005 and, since 2008, has been a Vice President of the Board. John’s hard work and significant contributions on the Board prompted his re-election. Congratulations to John and the five other newly elected members.
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California outlines new life settlement broker requirements
Anyone transacting a life settlement in California will be required to notify the California Department of Insurance of the transaction within 10 days, according to new rules covering life settlement transactions.
Additionally, any agent who has been transacting life settlements for less than one year will need to complete a 15-hour life settlement training course prior to qualifying for a Life Settlement Broker license, according to the new rules. Agents who have been transacting life settlements for more than a year do not need to complete the coursework to obtain a two-year license, costing $136.
The rules, which take effect July 1, are a response to a new law, signed by Gov. Arnold Schwarzenegger on Oct. 11, 2009, repealing the state’s viatical settlement laws and instituting new life settlement laws.
In the last few years, state regulators in a number of states have been seeking tighter regulation on life settlement transactions, hoping their efforts will curtail transactions that take advantage of the elderly.
California regulators are creating a life settlement notification form for agents to use, according to a notice issued by the agency earlier this month. All notifications will be conducted using the state regulator’s website, according to the notice.
The Life Settlement Broker course is being developed by a curriculum board, appointed by California Insurance Commissioner Steve Poizner.
As part of the passage of SB 98, the commissioner was required to evaluate whether the life insurance agent’s examination met the requirements of the new law. The curriculum board evaluated and deemed it necessary to include several life settlement questions in the life insurance licensee examination. The inclusion of life settlement topics on the exam also is scheduled to begin July 1.
Source: Insurance and Financial Advisor, 4/28/2010 (IFAWebNews.com)
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