On Jan. 30, 2008, the Ohio House unanimously passed a piece of legislation known as Substitute House Bill 404 -- a bill that, if voted into law, is intended to take steps to protect consumers from life settlement-related abuses. Within the bill's framework is a proposed five-year waiting period (extended from the state's original two-year ban) before a life policy can be sold on the secondary market.
It's certainly not odd to see life settlement regulations, both proposed and enacted, floating around legislatures across the U.S. We're a nation of checks and balances, and the insurance industry is no exception. Brokerages and carriers regulate their agents' actions. Both state and federal bodies regulate the brokerages and carriers. And, surely, somebody somewhere regulates the regulators themselves.
That, however, does not mean that these regulations are always greeted with open arms. In response to H.B. 404, Doug Head, president of the nonprofit Life Insurance Settlement Association, sees the move as yet another unnecessary roadblock in the life settlement landscape.
"Things like this keep people from helping their clients," Head said. "I'm amazed that Ohio agents aren't rioting -- when they find out, they might, but it may be too late."
Industry professionals, whether they're agents, MGAs or BGAs, carriers, or market proponents such as Head, would never dare say they oppose all regulations on any aspect of the insurance market.
Their job, above all, is to make sure their clients are protected -- and with unscrupulous agents running unchecked, it would be a detriment to any market to leave it unregulated.
As regulatory efforts continue to move forth, professionals nationwide are noticing the increasing number of steps a life settlement agent must take to transact a settlement.
"There are so many more forms," said Robin Weinberger, national director of accounts for the brokerage firm of Advanced Planning Services Inc. "Every provider has volumes of paperwork that has to be signed at the closing ... and it's become an overwhelming task to be able to do the closing."
Rick Johnson, president of the brokerage firm Policy Options, stands firmly behind what he calls "reasonable" regulation -- rules and guidelines that protect consumers without banning options that may help improve their overall financial situation.
"That's to say, I don't want to see regulators taking a haphazard approach to regulation," Johnson said. "I think (life settlements) are a valuable resource to consumers, and when regulators have knee-jerk reactions... it's an over-reaction to what some unscrupulous promoters are doing."
Johnson acknowledges that in the past four years, he's observed a growing number of disclosure and compliance issues surrounding the settlement industry -- a natural side effect, some say, of the exploding market. But while he's cautious about what laws are proposed and passed, Johnson says he does eventually want to see all 50 states regulate such transactions.
"It's great from a consumer protection standpoint, especially for seniors," he said.
In our third annual 2008 Guide to Life Settlements, we explore how producers function in today's life settlement environment -- including their takes on compensation disclosure and standardization, two pet proposals backed by many regulators. We also offer professionals' advice on how to properly enter the market, what to look for in coming years, and, above all, how to stay compliant while continuing to serve your clients' needs.
Christina Pellett
Managing Editor
ASJEditor@AgentMediaCorp.com
