REPORT TITLE:
Insurance


DESCRIPTION:
Regulates viatical settlements and prohibits their use in the
case of life insurance policies held on persons with catastrophic
or life threatening illnesses.  (SD1)

 
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THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO INSURANCE.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The Hawaii Revised Statutes is amended by adding
 
 2 a new chapter to be appropriately designated and to read as
 
 3 follows:
 
 4                             "CHAPTER
 
 5                  HAWAII VIATICAL SETTLEMENTS ACT
 
 6      §431:  -101  Short title.  This article may be cited as the
 
 7 "Hawaii Viatical Settlements Act."
 
 8      §431:  -102  Definitions.  For the purposes of this article:
 
 9      "Commissioner" means the insurance commissioner of the
 
10 State.
 
11      "Financing entity" means an underwriter, placement agent,
 
12 lender, purchaser of securities, purchaser of a policy or
 
13 certificate from a viatical settlement provider, credit enhancer,
 
14 or any person that may be a party to a viatical settlement
 
15 contract and that has a direct ownership in a policy or
 
16 certificate that is the subject of a viatical settlement
 
17 contract, but whose sole activity related to the transaction is
 
18 providing funds to effect the viatical settlement and who has an
 

 
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 1 agreement in writing with a licensed viatical settlement provider
 
 2 to act as a participant in a financing transaction.
 
 3      "Financing transaction" means a transaction in which a
 
 4 licensed viatical settlement provider or a financing entity
 
 5 obtains financing for viatical settlement contracts, viaticated
 
 6 policies or interests therein including, without limitation, any
 
 7 secured or unsecured financing, any securitization transaction or
 
 8 any securities offering either registered or exempt from
 
 9 registration under federal and state securities law, or any
 
10 direct purchase of interests in a policy or certificate, if the
 
11 financing transaction complies with federal and state securities
 
12 law.
 
13      "Person" means a legal entity, including but not limited to,
 
14 an individual, partnership, limited liability company,
 
15 association, trust, corporation, or other legal entity.
 
16      "Viatical settlement broker" means a person that on behalf
 
17 of a viator and for a fee, commission, or other valuable
 
18 consideration offers or attempts to negotiate viatical
 
19 settlements between a viator and one or more viatical settlement
 
20 providers.  Irrespective of the manner in which the viatical
 
21 settlement broker is compensated, a viatical settlement broker is
 
22 deemed to represent only the viator and owes a fiduciary duty to
 
23 the viator to act according to the viator's instructions and in
 

 
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 1 the best interest of the viator.  The term does not include an
 
 2 attorney, accountant, or financial planner retained to represent
 
 3 the viator whose compensation is paid directly by or at the
 
 4 direction of the viator.
 
 5      "Viatical settlement contract" means a written agreement
 
 6 entered into between a viatical settlement provider and a viator.
 
 7 The agreement shall establish the terms under which the viatical
 
 8 settlement provider will pay compensation or anything of value,
 
 9 which compensation or value is less than the expected death
 
10 benefit of the insurance policy or certificate, in return for the
 
11 viator's assignment, transfer, sale, devise, or bequest of the
 
12 death benefit or ownership of all or a portion of the insurance
 
13 policy or certificate of insurance to the viatical settlement
 
14 provider.  A viatical settlement contract also includes a
 
15 contract for a loan or other financial transaction secured
 
16 primarily by an individual or group life insurance policy, other
 
17 than a loan by a life insurance company pursuant to the terms of
 
18 the life insurance contract, or a loan secured by the cash value
 
19 of a policy.
 
20      "Viatical settlement provider" means a person, other than a
 
21 viator, that enters into a viatical settlement contract.
 
22 Viatical settlement provider also means a person that obtains
 
23 financing from a financing entity for the purchase, acquisition,
 

 
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 1 transfer, or other assignment of one or more viatical settlement
 
 2 contracts, viaticated policies or interests therein, or otherwise
 
 3 sells, assigns, transfers, pledges, hypothecates, or otherwise
 
 4 disposes of one or more viatical settlement contracts, viaticated
 
 5 policies, or interests therein.  "Viatical settlement provider"
 
 6 does not include:
 
 7      (1)  A bank, savings bank, savings and loan association,
 
 8           credit union, or other licensed lending institution
 
 9           that takes an assignment of a life insurance policy as
 
10           collateral for a loan;
 
11      (2)  The issuer of a life insurance policy providing
 
12           accelerated benefits; or
 
13      (3)  A natural person who enters into no more than one
 
14           agreement in a calendar year for the transfer of life
 
15           insurance policies for any value less than the expected
 
16           death benefit.
 
17      "Viatical settlement representative" means a person who is
 
18 an authorized agent of a licensed viatical settlement provider or
 
19 viatical settlement broker, as applicable, who acts or aids in
 
20 any manner in the solicitation of a viatical settlement.
 
21 Viatical settlement representative shall not include:  an
 
22 attorney, an accountant, a financial planner, or any person
 
23 exercising a power of attorney granted by a viator, or any person
 

 
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 1 who is retained to represent a viator and whose compensation is
 
 2 paid by or at the direction of the viator regardless of whether
 
 3 the viatical settlement is consummated.  A viatical settlement
 
 4 representative is deemed to represent only the viatical
 
 5 settlement provider or viatical settlement broker.
 
 6      "Viator" means the owner of a life insurance policy or a
 
 7 certificate holder under a group policy insuring the life of an
 
 8 individual who does not have a catastrophic or life-threatening
 
 9 illness or condition, or a chronic illness or condition diagnosed
 
10 to be terminal and which causes the individual to have a life
 
11 expectancy of less than twenty-four months, and who enters or
 
12 seeks to enter into a viatical settlement contract.
 
13      "Viaticated policy" means a life insurance policy or
 
14 certificate that has been acquired by a viatical settlement
 
15 provider pursuant to a viatical settlement contract.
 
16      §431:  -103  License requirements.(a)  A person shall not
 
17 operate as a viatical settlement provider, viatical settlement
 
18 representative, or viatical settlement broker without first
 
19 having obtained a license from the commissioner.
 
20      (b)  Application for a viatical settlement provider,
 
21 viatical settlement representative, or viatical settlement broker
 
22 license shall be made to the commissioner by the applicant on a
 
23 form prescribed by the commissioner.  The application form shall
 

 
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 1 be accompanied by a fee of $5,000.
 
 2      (c)  Licenses may be renewed from year to year on the
 
 3 anniversary date upon payment of the annual renewal fee of
 
 4 $5,000.  Failure to pay the fees by the renewal date shall result
 
 5 in expiration of the license.
 
 6      (d)  The applicant shall provide information on forms
 
 7 required by the commissioner.  The commissioner, at any time, may
 
 8 require the applicant to fully disclose the identity of all
 
 9 stockholders, partners, officers, members, and employees.  The
 
10 commissioner, in the exercise of the commissioner's discretion,
 
11 may refuse to issue a license in the name of a legal entity if
 
12 not satisfied that any officer, employee, stockholder, partner,
 
13 or member thereof who may materially influence the applicant's
 
14 conduct meets the standards of this article.  
 
15      (e)  A license issued to a legal entity authorizes all
 
16 members, officers, and designated employees to act as viatical
 
17 settlement providers, viatical settlement brokers, or viatical
 
18 settlement representatives, as applicable, under the license.
 
19 All those persons shall be named in the application and any
 
20 supplements to the application.
 
21      (f)  Upon the filing of an application and the payment of
 
22 the license fee, the commissioner shall make an investigation of
 
23 each applicant and issue a license if the commissioner finds that
 

 
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 1 the applicant:
 
 2      (1)  Has provided a detailed plan of operation;
 
 3      (2)  Is competent and trustworthy and intends to act in good
 
 4           faith in the capacity involved by the license applied
 
 5           for;
 
 6      (3)  Has a good business reputation and has had experience,
 
 7           training, or education so as to be qualified in the
 
 8           business for which the license is applied for; and
 
 9      (4)  If a legal entity, has provided a certificate of good
 
10           standing from the state of its domicile.  
 
11      (g)  The commissioner shall not issue a license to a
 
12 nonresident applicant, unless a written designation of an agent
 
13 for service of process is filed and maintained with the
 
14 commissioner or the applicant has filed with the commissioner,
 
15 the applicant's written irrevocable consent that any action
 
16 against the applicant may be commenced against the applicant by
 
17 service of process on the commissioner.
 
18      (h)  In addition to the requirements enumerated by this
 
19 section, a viatical settlement provider shall not enter into or
 
20 solicit a viatical settlement contract without first obtaining a
 
21 license from the commissioner; provided that:
 
22      (1)  Only those individuals named in the application may act
 
23           as viatical settlement providers; and
 

 
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 1      (2)  Viatical settlement providers shall acquire and
 
 2           maintain a surety bond in the amount determined to be
 
 3           reasonable by the commissioner.  A copy of the executed
 
 4           bond shall be filed with the commissioner at the time
 
 5           of application for a license.
 
 6      (i)  In addition to the requirements enumerated by this
 
 7 section, a viatical settlement broker shall not solicit a
 
 8 viatical settlement contract without first obtaining a license
 
 9 from the commissioner.
 
10      (1)  The license shall be a limited license, which allows
 
11           solicitation only of viatical settlements; 
 
12      (2)  The prelicensing education and continuing education
 
13           requirements required of other agents and brokers under
 
14           chapter 431 shall not apply to viatical settlement
 
15           brokers; and
 
16      (3)  A viatical settlement broker shall acquire and maintain
 
17           an errors and omissions policy in an amount
 
18           commensurate with the broker's exposure, and which is
 
19           satisfactory to the commissioner.
 
20      (j)  The commissioner may ask for any additional information
 
21 that is necessary to determine whether the applicant complies
 
22 with the requirements of this section.
 
23      §431:  -104  License revocation and denial.(a)  The
 

 
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 1 commissioner may suspend, revoke, or refuse to renew the license
 
 2 of a viatical settlement provider, viatical settlement
 
 3 representative, or viatical settlement broker if the commissioner
 
 4 finds that:
 
 5      (1)  There was any material misrepresentation in the
 
 6           application for the license; 
 
 7      (2)  The licensee or any officer, partner, member, or key
 
 8           management personnel has been convicted of fraudulent
 
 9           or dishonest practices, is subject to a final
 
10           administrative action, or is otherwise shown to be
 
11           untrustworthy or incompetent;
 
12      (3)  The licensee has been found guilty of, or has pleaded
 
13           guilty or nolo contendere to, any felony, or to a
 
14           misdemeanor involving fraud or moral turpitude,
 
15           regardless of whether a judgment of conviction has been
 
16           entered by the court;
 
17      (4)  The licensee no longer meets the requirements for
 
18           initial licensure.
 
19      (b)  In addition to those reasons enumerated in subsection
 
20 (a), the commissioner may suspend, revoke, or refuse to renew the
 
21 license of a viatical settlement provider if the commissioner
 
22 finds that:
 
23      (1)  The viatical settlement provider demonstrates a pattern
 

 
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 1           of unreasonable payments to viators;
 
 2      (2)  The viatical settlement provider has entered into any
 
 3           viatical settlement contract that has not been approved
 
 4           pursuant to this article;
 
 5      (3)  The viatical settlement provider has failed to honor
 
 6           contractual obligations set out in a viatical
 
 7           settlement contract;
 
 8      (4)  The viatical settlement provider has assigned,
 
 9           transferred, or pledged a viaticated policy to a person
 
10           other than a viatical settlement provider licensed in
 
11           this State or a financing entity; or
 
12      (5)  The licensee has violated any provision of this
 
13           article.
 
14      (c)  In addition to those reasons enumerated in subsection
 
15 (a), the commissioner may suspend, revoke, or refuse to renew the
 
16 license of any viatical settlement broker if the commissioner
 
17 finds that:
 
18      (1)  The broker has been found guilty of fraudulent or
 
19           dishonest practices, has been found guilty of a felony
 
20           or any misdemeanor of which criminal fraud is an
 
21           element, or is otherwise shown to be untrustworthy or
 
22           incompetent;
 
23      (2)  The broker has placed or attempted to place a viatical
 

 
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 1           settlement with a viatical settlement provider not
 
 2           licensed in this State; or
 
 3      (3)  The broker has violated any of the provisions of this
 
 4           article.
 
 5      (d)  Before the commissioner denies a license application or
 
 6 suspends, revokes, or refuses to renew the license of a viatical
 
 7 settlement provider, viatical settlement broker, or viatical
 
 8 settlement representative, the commissioner shall conduct a
 
 9 hearing in accordance with section 431:2-308.  
 
10      §431:  -105  Approval of viatical settlements contracts and
 
11 disclosure statements.  (a)  A person shall not use a viatical
 
12 settlement contract or provide to a viator a disclosure statement
 
13 form in this State that has not been filed with and approved by
 
14 the commissioner.
 
15      (b)  The commissioner shall disapprove a viatical settlement
 
16 contract or disclosure statement form if, in the commissioner's
 
17 opinion, the contract or provisions contained therein are
 
18 unreasonable, contrary to the interests of the public, or
 
19 otherwise misleading or unfair to the viator.
 
20      §431:  -106  Reporting requirements and confidentiality.
 
21 (a)  Each licensee shall file with the commissioner on or before
 
22 March 1 of each year an annual statement containing the following
 
23 information for the previous calendar year:
 

 
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 1      (1)  For each policy viaticated:
 
 2           (A)  Date viatical settlement entered into;
 
 3           (B)  Life expectancy of insured at time of contract;
 
 4           (C)  Face amount of policy;
 
 5           (D)  Amount paid by the viatical settlement provider to
 
 6                viaticate the policy; and
 
 7           (E)  If the insured has died, the date of death, and
 
 8                the total insurance premiums paid by viatical
 
 9                settlement provider to maintain the policy in
 
10                force;
 
11      (2)  Breakdown of applications received, accepted, and
 
12           rejected;
 
13      (3)  Breakdown of policies viaticated by issuer and policy
 
14           type;
 
15      (4)  Number of secondary market transactions compared to
 
16           number of primary market transactions;
 
17      (5)  Portfolio size; and
 
18      (6)  Amount of outside borrowings.
 
19      (b)  Except as otherwise allowed or required by law, a
 
20 viatical settlement provider, viatical settlement representative,
 
21 viatical settlement broker, insurance company, insurance agent,
 
22 insurance broker, information bureau, rating agency or company,
 
23 or any other person with actual knowledge of a viator's identity,
 

 
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 1 shall not disclose that identity as a viator to any other person
 
 2 unless the disclosure:
 
 3      (1)  Is necessary to effect a viatical settlement between
 
 4           the viator and a viatical settlement provider, and the
 
 5           viator has provided prior written consent to the
 
 6           disclosure;
 
 7      (2)  Is provided in response to an investigation by the
 
 8           commissioner or any other governmental officer or
 
 9           agency; or
 
10      (3)  Is a condition for the transfer of a viaticated policy
 
11           by one viatical settlement provider to another viatical
 
12           settlement provider.
 
13      (c)  All medical information solicited or obtained by any
 
14 licensee shall be subject to applicable state laws relating to
 
15 confidentiality of medical information.
 
16      §431:  -107  Examination.  (a)  When the commissioner deems
 
17 it reasonably necessary to protect the interests of the public,
 
18 the commissioner may examine the business affairs of any licensee
 
19 or applicant for a license.
 
20      (b)  The commissioner may order any licensee or applicant to
 
21 produce any records, books, files, or other information
 
22 reasonably necessary to ascertain whether or not the licensee or
 
23 applicant is acting or has acted in violation of the law or
 

 
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 1 otherwise contrary to the interests of the public.  The expenses
 
 2 incurred in conducting any examination shall be paid by the
 
 3 licensee or applicant.
 
 4      (c)  Names and individual identification data for all
 
 5 viators shall be considered private and confidential information
 
 6 and shall not be disclosed by the commissioner, unless required
 
 7 by law.
 
 8      (d)  Records of all transactions of viatical settlement
 
 9 contracts shall be maintained by the viatical settlement provider
 
10 and shall be available to the commissioner for inspection during
 
11 reasonable business hours.  A viatical settlement provider shall
 
12 maintain records of each viatical settlement until five years
 
13 after the death of the insured.
 
14      §431:  -108  Disclosure.  (a)  A viatical settlement
 
15 provider, viatical settlement representative, or viatical
 
16 settlement broker shall disclose the following information to the
 
17 viator no later than the time of application:
 
18      (1)  Possible alternatives to viatical settlement contracts
 
19           for individuals including any accelerated death
 
20           benefits offered under the viator's life insurance
 
21           policy;
 
22      (2)  That some or all of the proceeds of the viatical
 
23           settlement may be free from federal income tax and from
 

 
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 1           state franchise and income taxes, and that assistance
 
 2           should be sought from a professional tax advisor;
 
 3      (3)  That proceeds of the viatical settlement could be
 
 4           subject to the claims of creditors;
 
 5      (4)  That receipt of the proceeds of a viatical settlement
 
 6           may adversely effect the viator's eligibility for
 
 7           Medicaid or other government benefits or entitlements,
 
 8           and that advice should be obtained from the appropriate
 
 9           government agencies;
 
10      (5)  That the viator has the right to rescind a viatical
 
11           settlement contract fifteen calendar days after the
 
12           receipt of the viatical settlement proceeds by the
 
13           viator, pursuant to section 431:  -111;
 
14      (6)  That funds shall be sent to the viator within two
 
15           business days after the viatical settlement provider
 
16           has received the insurer or group administrator's
 
17           acknowledgment that ownership of the policy or interest
 
18           in the certificate has been transferred and the
 
19           beneficiary has been designated pursuant to the
 
20           viatical settlement contract; and
 
21      (7)  That entering into a viatical settlement contract may
 
22           cause other rights or benefits, including conversion
 
23           rights and waiver of premium benefits that may exist
 

 
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 1           under the policy or certificate, to be forfeited by the
 
 2           viator and that assistance should be sought from a
 
 3           financial adviser.
 
 4      (b)  A viatical settlement provider shall disclose the
 
 5 following information to the viator prior to the date the
 
 6 viatical settlement contract is signed by all parties:
 
 7      (1)  The affiliation, if any, between the viatical
 
 8           settlement provider and the issuer of an insurance
 
 9           policy to be viaticated;
 
10      (2)  If an insurance policy to be viaticated has been issued
 
11           as a joint policy or involves family riders or any
 
12           coverage of a life other than the insured under the
 
13           policy to be viaticated, the viator shall be informed
 
14           of the possible loss of coverage on the other lives and
 
15           be advised to consult with the viator's insurance
 
16           producer or the company issuing the policy for advice
 
17           on the proposed viatication;
 
18      (3)  The dollar amount of the current death benefit payable
 
19           to the viatical settlement provider under the policy or
 
20           certificate; and
 
21      (4)  The availability of any additional guaranteed insurance
 
22           benefits, the dollar amount of any accidental death and
 
23           dismemberment benefits under the policy or certificate
 

 
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 1           and the viatical settlement provider's interest in
 
 2           those benefits.
 
 3      (c)  A viatical settlement provider and viatical settlement
 
 4 broker shall disclose to the viator prior to the date the
 
 5 viatical settlement contract is signed by all parties, that
 
 6 pursuant to section 431:  -113(a) the viatical settlement
 
 7 provider, viatical settlement representative, or the viatical
 
 8 settlement broker has a limited right to contact the insured for
 
 9 the purpose of determining the health status of the insured.
 
10      §431:  -109  Viator's expressed consent required.  (a)  A
 
11 viatical settlement provider entering into a viatical settlement
 
12 contact shall first obtain:
 
13      (1)  If the viator is the insured, a written statement from
 
14           a licensed attending physician that the viator is of
 
15           sound mind and under no constraint or undue influence
 
16           to enter into a viatical settlement contract;
 
17      (2)  A witnessed document in which the viator:
 
18           (A)  Consents to the viatical settlement contract;
 
19           (B)  Acknowledges that the insured does not have a
 
20                catastrophic or life threatening illness or
 
21                condition, or a chronic illness or condition
 
22                diagnosed as terminal and which causes the insured
 
23                to have a life expectancy of less than twenty-four
 

 
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 1                months;
 
 2           (C)  Represents that the viator has a full and complete
 
 3                understanding of the viatical settlement contract,
 
 4                and of the benefits of the life insurance policy;
 
 5                and
 
 6           (D)  Acknowledges that the viator has entered into the
 
 7                viatical settlement contract freely and
 
 8                voluntarily; and
 
 9      (3)  A document in which the viator consents to the release
 
10           of the insured's medical records to a viatical
 
11           settlement provider or viatical settlement broker.
 
12      §431:  -110  Viatical settlement brokers as agent of
 
13 provider.  Viatical settlement brokers shall be presumed to be
 
14 agents of viatical settlement providers, in the absence of a
 
15 written agreement making the broker the viator's agent.  Viatical
 
16 settlement brokers shall not, without the written agreement of
 
17 the viator obtained prior to performing any services in
 
18 connection with a viatical settlement, seek or obtain any
 
19 compensation from the viator.
 
20      §431:  -111  Viator's right to rescind.(a)  All viatical
 
21 settlement contracts entered into in this State shall provide the
 
22 viator with an unconditional right to rescind the contract for at
 
23 least fifteen calendar days from the receipt of the viatical
 

 
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 1 settlement proceeds.
 
 2      (b)  If the insured dies during the rescission period, the
 
 3 viatical settlement contract shall be deemed to have been
 
 4 rescinded.
 
 5      §431:  -112  Viatical settlement payments.(a)  Immediately
 
 6 upon the viatical settlement provider's receipt of documents to
 
 7 effect the transfer of the insurance policy, the viatical
 
 8 settlement provider shall pay the proceeds of the viatical
 
 9 settlement to an escrow or trust account in a state or federally
 
10 chartered financial institution whose deposits are insured by the
 
11 Federal Deposit Insurance Corporation.
 
12      (b)  The account shall be managed by a trustee or escrow
 
13 agent independent of the parties to the contract.  The trustee or
 
14 escrow agent shall transfer the proceeds to the viator
 
15 immediately upon the viatical settlement provider's receipt of
 
16 acknowledgment of the transfer of the insurance policy.
 
17      (c)  Failure to tender consideration to the viator for the
 
18 viatical settlement contract within the time disclosed pursuant
 
19 to section 431:   -108(a)(6) renders the viatical settlement
 
20 contract voidable by the viator for lack of consideration until
 
21 the time consideration is tendered to and accepted by the viator.
 
22      (d)  Payment of the proceeds of a viatical settlement
 
23 pursuant to this section shall be by means of wire transfer to
 

 
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 1 the account of the viator or by certified check.
 
 2      (e)  Payment of the proceeds pursuant to a viatical
 
 3 settlement shall be made in a lump sum.  Retention of a portion
 
 4 of the proceeds by the viatical settlement provider or escrow
 
 5 agent is not permissible.  Installment payments shall not be made
 
 6 unless the viatical settlement company has purchased an annuity
 
 7 or similar financial instrument issued by a licensed insurance
 
 8 company or bank.
 
 9      (f)  With respect to policies containing a provision for
 
10 double or additional indemnity for accidental death, the
 
11 additional payment shall remain payable to the beneficiary last
 
12 named by the viator prior to entering into the viatical
 
13 settlement agreement, or to such other beneficiary, other than
 
14 the viatical settlement provider, as the viator may thereafter
 
15 designate, or in the absence of a designation, to the estate of
 
16 the viator.
 
17      §431:  -113  Prohibited acts.(a)  Contacts with the
 
18 insured for the purpose of determining the health status of the
 
19 insured by the viatical settlement provider, viatical settlement
 
20 broker, or viatical settlement representative after the viatical
 
21 settlement has occurred shall be made by a viatical settlement
 
22 provider or broker licensed in this State and shall not be made
 
23 more than once every three months.  The limitations set forth in
 

 
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 1 this subsection shall not apply to any contacts with an insured
 
 2 under a viaticated policy for reasons other than determining the
 
 3 insured's health status.
 
 4      (b)  A viatical settlement provider or broker shall not
 
 5 discriminate in the making of viatical settlements on the basis
 
 6 of race, age, sex, national origin, creed, religion, occupation,
 
 7 marital or family status, or sexual orientation, or discriminate
 
 8 between viators with dependents and those without dependents.
 
 9      (c)  A viatical settlement provider or broker shall not pay
 
10 or offer to pay any finder's fee, commission, or other
 
11 compensation to any viator's physician, attorney, accountant, or
 
12 other person providing medical, legal or financial planning
 
13 services to the viator, or to any other person acting as an agent
 
14 of the viator with respect to the viatical settlement.
 
15      (d)  Viatical settlement providers and brokers shall not
 
16 solicit investors who could influence the treatment of the
 
17 illness of the viators whose coverage would be the subject of the
 
18 investment.
 
19      §431:  -114  Advertising standards.(a)  Advertising shall
 
20 be truthful and not misleading by fact or implication.
 
21      (b)  If the advertiser emphasizes the speed with which the
 
22 viatication will occur, the advertising must disclose the average
 
23 time frame from completed application to the date of offer and
 

 
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 1 from acceptance of the offer to receipt of the funds by the
 
 2 viator.
 
 3      (c)  If the advertising emphasizes the dollar amounts
 
 4 available to viators, the advertising shall disclose the average
 
 5 purchase price as a percentage of face value obtained by viators
 
 6 contracting with the advertiser during the past six months.
 
 7      §431:  -115  Authority to adopt rules.  The commissioner
 
 8 may:
 
 9      (1)  Adopt rules under chapter 91 implementing this article;
 
10      (2)  Establish standards for evaluating the reasonableness
 
11           of payments under viatical settlement contracts.  The
 
12           commissioner may regulate, but is not limited to
 
13           regulating, discount rates used to determine the amount
 
14           paid in exchange for assignment, transfer, sale,
 
15           devise, or bequest of a benefit under a life insurance
 
16           policy;
 
17      (3)  Establish appropriate licensing requirements, fees, and
 
18           standards for continued licensure for viatical
 
19           settlement providers, representatives, and brokers;
 
20      (4)  Require a bond or other mechanism for financial
 
21           accountability for viatical settlement providers; and
 
22      (5)  Adopt rules governing the relationship and
 
23           responsibilities during the viatication of a life
 

 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           insurance policy or certificate.
 
 2      §431:  -116  Unfair trade practices.  A violation of this
 
 3 chapter shall be considered an unfair trade practice under
 
 4 article 13 or chapter 480 subject to the penalties contained
 
 5 therein."
 
 6      SECTION 2.  This Act shall take effect upon its approval.
 

 
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