Two industry groups are praising Wisconsin Gov. Jim Doyle for signing into law tough new rules on stranger-originated life insurance (STOLI) transactions, while another organization indicates the measure will deny consumer rights.
Jim Doyle
Doyle signed SB 513 into law May 13. The legislation, in part, requires life insurance policies to be in force for a minimum of five years before consumers can sell them through a life settlement company to collect the death benefits. The new law also defines STOLI as a fraudulent act and gives the Wisconsin Office of the Commissioner of Insurance additional tools, including adopting rules to investigate fraudulent transactions.
Frank Keating, president and chief executive officer for the American Council of Life Insurers (ACLI), noting that the measure was passed unanimously by the state legislature, said in a statement, “Revulsion to this type of fraud cuts across party lines and political philosophies.
“Democrats and Republicans; liberals, conservatives and moderates all agree that we must prevent financial speculators from taking advantage of our senior citizens,” said Keating.
Tom Currey, president of the National Association of Insurance and Financial Advisors, added that in order to acquire life insurance policies, “speculators sometimes encourage seniors to lie” on policy applications.
“And they often fail to mention that seniors participating in these transactions could face legal liability, unexpected taxes and loss of insurance capacity,” Currey said in a statement. “SB 513 is a necessary senior protection measure.”
Both groups noted that Wisconsin is the 29th state to enact anti-STOLI legislation and encouraged those states without such a law to provide “its senior citizens with the same degree of protection as Wisconsin.”
The Life Insurance Settlement Association (LISA) has a different take on the law, however. Its executive director, Doug Head, said in an editorial letter to state newspapers that senators were “badly misled by insurance company lobbyists” and the legislation “prohibits the unfortunate consumers of badly issued policies from finding a way out of their dilemma.”
Head said life settlements are a “common sense” solution for thousands of insurance consumers and there was no complaints registered with insurance regulators on life settlements at all.
“The actual language of SB 513 makes no requirements of insurers to clean up their own practices, while thwarting the existing rights of consumers,” Head said.
Industry reaction mixed to new Wisconsin anti-STOLI law via IFAwebnews.com .
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