A federal judge upheld a $5 million verdict against AXA Equitable Life Insurance Co. yesterday in favor of Peachtree Life Settlements and its assignee Settlement Funding. In his decision, Judge Harold Baer Jr. of the U.S. District Court in Manhattan declined to overrule the jury’s finding.

On Oct. 25, a jury said that AXA must pay a $5 million death benefit on Esther Adler that the insurer claimed lacked insurable interest and was purchased fraudulently.

The judge said that the jury heard that Settlement Funding had relied on AXA’s statements that the policy’s contestability period had expired. He also said that Settlement Funding had relied on documents from AXA saying that the trust owned the policy and it was enforceable and beyond contestability.

“All of this evidence supports the jury’s finding that the Policy – and the incontestability clause – was valid and enforceable and that SF had committed no wrong in connection with the purchase, sale, repurchase or assignment of the Policy,” the decision said.

“I think the judge got it right,” said Jesus Cuza, an attorney with the law firm Greenberg Traurig in Fort Lauderdale, Fla., who represented Peachtree.

“As a matter of law, the policy was beyond the two-year contestability period and the jury found that Settlement Funding and its affiliates acted in accordance with the representations made by AXA,” he said.

Jule Rousseau, an attorney with Arent Fox in New York, said in an email that despite fraud at the inception, the provider wins since AXA provided a verification-of-coverage document.

“If you have a clean settlement, you don’t have to worry about fraud in inception. The unknown fraud is a huge concern for providers and tertiary buyers. Here, they collect since they had no involvement or knowledge,” he said.

He said the decision probably will seem surprising to many others, as well as the carrier, who might have assumed that the fraud would kill the policy.

Source: http://lifesettlements.dealflow.com/wires/article.cfm?title=Judge-Upholds-Jurys-5M-Verdict-Against-AXA-Peachtree-Case&id=hsqcfbrpuhvievh

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)