SB3246

SECTION 1. Chapter 431, article 10D, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"Part . LIFE SETTLEMENTS

§431:10D-A Definitions. As used in this part:

"Advertisement" means any written, electronic or printed communication or any communication by means of recorded telephone messages or transmitted on radio, television, the Internet or similar communications media, including film strips, motion pictures and videos, published, disseminated, circulated, or placed directly before the public in this State for the purpose of creating an interest in or inducing a person to sell, assign, devise, bequest, or transfer the death benefit or ownership of a life insurance policy or an interest in a life insurance policy pursuant to a life settlement contract.

"Broker" means a person, including a life insurance producer under section 431:10D-B, who, on behalf of an owner and for a fee, commission, or other valuable consideration, offers or attempts to negotiate life settlement contracts, between an owner and providers. A broker represents only the owner and owes a fiduciary duty to the owner to act according to the owner's instructions, and in the best interest of the owner, notwithstanding the manner in which the broker is compensated. A broker does not include an attorney, certified public accountant, or financial planner retained in the type of practice customarily performed in their professional capacity to represent the owner whose compensation is not paid directly or indirectly by the provider or the purchaser.

"Business of life settlements" means an activity involved in, but not limited to, the offering, soliciting, negotiating, procuring, effectuating, purchasing, investing, financing, monitoring, tracking, underwriting, selling, transferring, assigning, hypothecating, or pledging of life settlement contracts or purchase agreements.

"Chronically ill" means:

(1) Being unable to perform at least two activities of daily living (i.e., eating, toileting, transferring, bathing, dressing, or continence);

(2) Requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment; or

(3) Having a level of disability similar to that described in paragraph (1) as determined by the United States Secretary of Health and Human Services.

"Commissioner" means the insurance commissioner.

"Financing entity" means an underwriter, placement agent, lender, purchaser of securities, purchaser of a policy or certificate from a provider, credit enhancer, or any entity that acquires a direct ownership in a policy or certificate that is the subject of a life settlement contract:

(1) Whose principal activity related to the transaction is providing funds to effect the life settlement contract or purchase of one or more policies; and

(2) Who has an agreement in writing with one or more providers to finance the acquisition of life settlement contracts,

but does not include a non-accredited investor or purchaser.

"Financing transaction" means a transaction in which a licensed provider obtains financing from a financing entity including, without limitation, any secured or unsecured financing, any securitization transaction, or any securities offering that either is registered or exempt from registration under federal and state securities law.

"Fraudulent life settlement act" means:

(1) Acts or omissions committed by any person who, knowingly and with intent to defraud, for the purpose of depriving another of property or for pecuniary gain, commits, or permits its employees or its agents to engage in acts including, but not limited to:

(A) Presenting, causing to be presented, or preparing with knowledge and belief that it will be presented to or by a life settlement provider, premium finance lender, life settlement broker, life settlement purchaser, life settlement investment agent, financing entity, insurer, insurance producer, or any other person, false material information, or concealing material information, as part of, in support of or concerning a fact material to one or more of the following:

(i) An application for the issuance of a life settlement contract or insurance policy;

(ii) The underwriting of a life settlement contract or insurance policy;

(iii) A claim for payment or benefit pursuant to a life settlement contract or insurance policy;

(iv) Premiums paid on an insurance policy;

(v) Payments and changes in ownership or beneficiary made in accordance with the terms of a life settlement contract or insurance policy;

(vi) The reinstatement or conversion of an insurance policy;

(vii) The solicitation, offer, effectuation or sale of a life settlement contract or insurance policy;

(viii) The issuance of written evidence of life settlement contracts or insurance;

(ix) A financing transaction; or

(x) Any application for or the existence of or any payments related to a loan secured directly or indirectly by any interest in a life insurance policy;

(B) Employing any device, scheme, or artifice to defraud related to settled policies; and

(C) Entering into, at any time prior to, or at the time of the application for, or issuance of, a policy, or during a two-year period commencing with the date of issuance of the policy, any transaction, or series of transactions, that includes one or more contracts, agreements, commitments, understandings, or arrangements that facilitate, or are ancillary to a life settlement contract that establish the terms under which compensation will be paid in return for the assignment, transfer, sale, devise, bequest or surrender of the death benefit or ownership of any portion of the policy regardless of the date the compensation is to be provided and regardless of the date the assignment, transfer, sale, devise, bequest or surrender is to occur; and

(2) In the furtherance of a fraud or to prevent the detection of a fraud any person commits or permits its employees or its agents to:

(A) Remove, conceal, alter, destroy, or sequester from the commissioner the assets or records of a licensee or other person engaged in the business of life settlements;

(B) Misrepresent or conceal the financial condition of a licensee, financing entity, insurer, or other person;

(C) Transact the business of life settlements in violation of laws requiring a license, certificate of authority, or other legal authority for the transaction of the business of life settlements; or

(D) File with the commissioner or the chief insurance regulatory official of another jurisdiction a document containing false information or otherwise concealing information about a material fact from the commissioner, including but not limited to:

(i) Embezzlement, theft, misappropriation, or conversion of monies, funds, premiums, credits or other property of a life settlement provider, insurer, insured, owner, insurance, policy owner or any other person engaged in the business of life settlements or insurance;

(ii) Knowingly and with intent to defraud, entering into, brokering, or otherwise dealing in a life settlement contract, the subject of which is a life insurance policy that was obtained by presenting false information concerning any fact material to the policy or by concealing, for the purpose of misleading another, information concerning any fact material to the policy, where the owner or the owner's agent intended to defraud the policy's issuer; or

(iii) Attempting to commit, assisting, aiding or abetting in the commission of, or conspiracy to commit the acts or omissions specified in this subsection.

"Insured" means the person covered under the policy being considered for sale in a life settlement contract.

"Life expectancy" means the arithmetic mean of the number of months the individual insured under the life insurance policy to be settled can be expected to live as determined by the life settlement provider considering medical records and appropriate experiential data.

"Life insurance producer" means any person licensed in the State as a resident or nonresident insurance producer who has received qualification or authority for life insurance coverage or a life line of coverage.

"Life settlement contract" means a written agreement entered into between a provider and an owner, establishing the terms under which compensation or anything of value will be paid, which compensation or thing of value is less than the expected death benefit of the insurance policy or certificate, in return for the owner's assignment, transfer, sale, devise, or bequest of the death benefit or any portion of an insurance policy or certificate of insurance for compensation, provided, however, that the minimum value for a life settlement contract shall be greater than a cash surrender value or accelerated death benefit available at the time of an application for a life settlement contract.

A life settlement contract includes a premium finance loan made for a policy on or before the date of issuance of the policy where:

(1) The loan proceeds are not used solely to pay the premiums for the policy and the costs of the loan;

(2) The owner receives on the date of the premium finance loan a guarantee of the future life settlement value of the policy; or

(3) The owner agrees on the date of the premium finance loan to sell the policy or any portion of its death benefit on any date following the issuance of the policy.

A life settlement contract does not include any of the following:

(1) A policy loan by a life insurance company pursuant to the terms of the life insurance policy or a loan secured by the cash value of the policy, or accelerated death provisions contained in the life insurance policy, whether issued with the original policy or as a rider;

(2) A premium finance loan, as defined herein, or any loan made by a bank or other licensed financial institution;

(3) A collateral assignment of a life insurance policy by an owner;

(4) A loan made by a lender that does not violate the State's insurance premium finance law; provided that the loan is not described in paragraph (1), and is not otherwise within the definition of life settlement contract;

(5) An agreement where all the parties are closely related to the insured by blood or law, or have a lawful substantial economic interest in the continued life, health, and bodily safety of the person insured, or are trusts established primarily for the benefit of such parties; or

(6) Any other contract, transaction, or arrangement from the definition of life settlement contract that the commissioner determines is not of the type intended to be regulated by this part.

"Life settlement investment agent" means a person who is an appointed or contracted agent of a licensed life settlement provider who solicits or arranges the funding for the purchase of a life settlement contract by a life settlement purchaser and who is acting on behalf of a life settlement provider; provided that:

(1) A life settlement investment agent shall not have any contact directly or indirectly with the owner or insured; and

(2) A life settlement investment agent is deemed to represent the life settlement provider of whom the life settlement investment agent is an appointed or contracted agent.

"Net benefit" means the amount of life insurance policy or certificate to be settled less any outstanding debts or liens.

"Owner" means the owner of a life insurance policy or a certificate holder under a group policy, with or without a terminal illness, who is a resident of the State and who enters or seeks to enter into a life settlement contract. For the purposes of this article, an owner shall not be limited to an owner of a life insurance policy or a certificate holder under a group policy that insures the life of an individual with a terminal or chronic illness or condition except where specifically addressed. "Owner" does not include:

(1) Any provider or other licensee under this Act;

(2) A qualified institutional buyer as defined in Rule 144A of the federal Securities Act of 1933, as amended;

(3) A financing entity;

(4) A special purpose entity; or

(5) A related provider trust.

"Patient identifying information" means an insured's address, telephone number, facsimile number, electronic mail address, photograph or likeness, employer, employment status, social security number, or any other information that is likely to lead to the identification of the insured.

"Person" means any natural person or legal entity, including but not limited to, an individual, partnership, limited liability company, association, trust, or corporation.

"Premium finance loan" means a loan made primarily for the purposes of making premium payments on a life insurance policy, which loan is secured by an interest in the life insurance policy and where the borrower and owner have an insurable interest in the life of the insured; provided that the lender's interest in the policy does not exceed the amount due under the loan, including principal, interest, costs of collection and other permitted loan costs and fees. A premium finance loan shall not include any agreement by which the borrower, owner, or insured receive a guarantee of settlement value or a monetary inducement to purchase the life insurance policy, or any agreement for future sale or settlement of the life insurance policy. A premium finance loan shall not include an agreement for direct or indirect transfer of ownership or control of the life insurance policy except to the extent of enforcement of the lender’s legitimate security interest in the life insurance policy.

"Provider" means a person, other than an owner, who enters into a life settlement contract with an owner, but does not include:

(1) Any bank, savings bank, savings and loan association, or credit union;

(2) A licensed lending institution or creditor or secured party pursuant to a premium finance loan agreement which takes an assignment of a life insurance policy or certificate issued pursuant to a group life insurance policy as collateral for a loan;

(3) The insurer of a life insurance policy or rider to the extent of providing accelerated death benefits or riders, or cash surrender value;

(4) Any natural person who enters into or effectuates no more than one agreement in a calendar year for the transfer of a life insurance policy or certificate issued pursuant to a group life insurance policy, for compensation or anything of value less than the expected death benefit payable under the policy;

(5) A purchaser;

(6) Any authorized or eligible insurer that provides stop loss coverage to a provider, purchaser, financing entity, special purpose entity, or related provider trust;

(7) A financing entity;

(8) A special purpose entity;

(9) A related provider trust;

(10) A broker; or

(11) An accredited investor or qualified institutional buyer as defined in respectively in regulation D, rule 501 or rule 144A of the federal Securities Act of 1933, as amended, who purchases a life settlement policy from a life settlement provider.

"Purchase agreement" means a contract or agreement entered into by a provider with a purchaser, to which the owner is not a party, to purchase a policy or an interest in a life insurance policy, or acquire a beneficial interest, or a certificate issued pursuant to a group life insurance policy.

"Purchase policy" or "settled policy" means a policy or group certificate that has been acquired by a provider pursuant to a life settlement contract.

"Purchaser" means a person who pays compensation or anything of value as consideration for a beneficial interest in a trust which is vested with, or for the assignment, transfer, or sale of, an ownership or other interest in a life insurance policy or a certificate issued pursuant to a group life insurance policy which is, has been, or will be the subject of a life settlement contract. A purchaser does not include a licensee under this part, any person who is a qualified institutional buyer or accredited investor (as defined, respectively, in Rule 144A or Regulation D, Rule 501, promulgated under the Securities Act of 1933, as amended), a financing entity, or a special purpose entity, or a related provider trust.

"Related provider trust" means a titling trust or other trust established by a licensed provider or a financing entity for the sole purpose of holding the ownership or beneficial interest in purchased policies in connection with a financing transaction. In order to qualify as a provider trust, the trust must have a written agreement with the licensed provider under which the licensed provider is responsible for ensuring compliance with all statutory and regulatory requirements and under which the trust agrees to make all records and files relating to life settlement transactions available to the insurance division as if those records and files were maintained directly by the licensed provider.

"Settled policy" means a life insurance policy or certificate that has been acquired by a life settlement provider pursuant to a life settlement contract.

"Special purpose entity" means a corporation, partnership, trust, limited liability company, or other similar entity formed solely to provide either directly or indirectly access to institutional capital markets for a financing entity or provider.

"Terminally ill" means having an illness or sickness that can reasonably be expected to result in death in twenty-four months or less.

§431:10D-B Licensing requirements. (a) No person, wherever located, shall act as a provider or broker with an owner or multiple owners or purchaser who is a resident of the State, without first having obtained a license from the commissioner. If there is more than one owner on a single policy and the owners are residents of different states, the life settlement contract shall be governed by the law of the state in which the owner having the largest percentage ownership resides or, if the owners hold equal ownership, the state of residence of one owner agreed upon in writing by all owners.

(b) Application for a provider, broker, or life settlement investment agent license shall be made to the commissioner by the applicant on a form prescribed by the commissioner, and the application shall be accompanied by a fee in an amount established by the commissioner; provided that the license and renewal fees for a provider license shall be reasonable and the license and renewal fees for a broker license shall not exceed those established for an insurance producer, as these fees are otherwise provided for in this chapter.

(c) A life insurance producer who has been duly licensed as a resident insurance producer with a life line of authority in the State or the producer's home state for at least one year and is licensed as a nonresident producer in this State shall be deemed to meet the licensing requirements of this section and shall be permitted to operate as a broker.

(d) No later than thirty days from the first day of operating as a broker, the life insurance producer shall notify the commissioner that the producer is acting as a broker on a form prescribed by the commissioner, and shall pay any applicable fee to be determined by the commissioner. Notification shall include an acknowledgement by the life insurance producer that the producer will operate as a broker in accordance with this part.

(e) The insurer that issued the policy that is the subject of a life settlement contract shall not be responsible for any act or omission of a broker, provider, or purchaser arising out of or in connection with the life settlement transaction, unless the insurer receives compensation for the placement of a life settlement contract from the provider, purchaser, or broker in connection with the life settlement contract.

(f) A person licensed as an attorney, certified public accountant, or financial planner accredited by a nationally recognized accreditation agency, who is retained to represent the owner, whose compensation is not paid directly or indirectly by the provider or purchaser, may negotiate life settlement contracts on behalf of the owner without having to obtain a license as a broker.

(g) Licenses may be renewed every two years on the anniversary date upon payment of the periodic renewal fee. As specified by subsection (b) of this section, the renewal fee for a provider shall not exceed a reasonable fee. Failure to pay the fee within the terms prescribed shall result in the automatic revocation of the license requiring periodic renewal.

(h) The term of a provider license shall be equal to that of a domestic stock life insurance company and the term of a broker license shall be equal to that of an insurance producer license. Licenses requiring periodic renewal may be renewed on their anniversary date upon payment of the periodic renewal fee as specified in subsection (b) of this section. Failure to pay the fees on or before the renewal date shall result in expiration of the license.

(i) The applicant shall provide information as the commissioner may require on forms prepared by the commissioner. The commissioner shall have authority, at any time, to require the applicant to fully disclose the identity of its stockholders, (except stockholders owning fewer than ten per cent of the shares of an applicant whose shares are publicly traded), partners, officers and employees, and the commissioner may, in the exercise of the commissioner's sole discretion, refuse to issue a license in the name of any person if not satisfied that any officer, employee, stockholder, or partner thereof who may materially influence the applicant's conduct meets the standards of this part.

(j) A license issued to a partnership, corporation or other entity authorizes all members, officers, and designated employees to act as a licensee under the license, if those persons are named in the application and any supplements to the application.

(k) Upon the filing of an application and the payment of the license fee, the commissioner shall make an investigation of each applicant and may issue a license if the commissioner finds that the applicant:

(1) If a provider has provided a detailed plan of operation;

(2) Is competent and trustworthy and intends to transact its business in good faith;

(3) Has a good business reputation and has had experience, training, or education so as to be qualified in the business for which the license is applied;

(4) If the applicant is a corporation, is incorporated pursuant to the laws of this State, or is a foreign corporation authorized to transact business in this State, or provides a certificate of good corporate standing from the state of its domicile; and

(5) Has provided to the commissioner an anti-fraud plan that meets the requirements of this part and includes:

(A) A description of the procedures for detecting and investigating possible fraudulent acts and procedures for resolving material inconsistencies between medical records and insurance applications;

(B) A description of the procedures for reporting fraudulent insurance acts to the commissioner;

(D) A written description or chart outlining the arrangement of the anti-fraud personnel who are responsible for the investigation and reporting of possible fraudulent insurance acts and investigating unresolved material inconsistencies between medical records and insurance applications.

(l) The commissioner shall not issue any license to any nonresident applicant, unless a written designation of an agent for service of process is filed and maintained with the commissioner or unless the applicant has filed with the commissioner the applicant's written irrevocable consent that any action against the applicant may be commenced against the applicant by service of process on the commissioner.

(m) Each licensee shall file with the commissioner on or before the first day of March of each year an annual statement containing information as the commissioner by rule may prescribe.

(n) A provider may not use any person to perform the functions of a life settlement investment agent or broker as defined in this part unless the person holds a current, valid license as a life settlement investment agent or broker, and as provided in this section.

(o) A life settlement investment agent or broker may not use any person to perform the functions of a provider as defined in this part unless the person holds a current, valid license as a provider, and as provided in this section.

(p) A provider, broker, under the broker license, or life settlement investment agent shall provide to the commissioner new or revised information about officers, ten per cent or more stockholders, partners, directors, members, or designated employees within thirty days of the change.

(q) An individual licensed as a broker shall complete on a biennial basis fifteen hours of training related to life settlements and life settlement transactions, as required by the commissioner; provided that a life insurance producer who is operating as a broker pursuant to this section shall not be subject to the requirements of this subsection. Any person failing to meet the requirements of this subsection shall be subject to the penalties imposed by the commissioner.

§431:10D-C License suspension, revocation, or refusal to renew. (a) The commissioner may suspend, revoke or refuse to renew the license of any licensee if the commissioner finds that:

(1) There was any material misrepresentation in the application for the license;

(2) The licensee or any officer, partner, member, or director has been guilty of fraudulent or dishonest practices, is subject to a final administrative action or is otherwise shown to be untrustworthy or incompetent to act as a licensee;

(3) The provider demonstrates a pattern of unreasonably withholding payments to policy owners;

(4) The licensee no longer meets the requirements for initial licensure;

(5) The licensee or any officer, partner, member, or director has been convicted of a felony, or of any misdemeanor of which criminal fraud is an element; or the licensee has pleaded guilty or nolo contendere with respect to any felony or any misdemeanor of which criminal fraud or moral turpitude is an element, regardless of whether a judgment of conviction has been entered by the court;

(6) The provider has entered into any life settlement contract that has not been approved pursuant to this part;

(7) The provider has failed to honor contractual obligations set out in a life settlement contract;

(8) The provider has assigned, transferred, or pledged a settled policy to a person other than a life settlement provider licensed in this State, life settlement purchaser, an accredited investor, or qualified institutional buyer as defined respectively in Regulation D, Rule 501 or Rule 144A of the federal Securities Act of 1933, as amended, financing entity, special purpose entity, or related provider trust; or

(9) The licensee or any officer, partner, member, or key management personnel has violated any of the provisions of this part.

(b) Before the commissioner denies a license application or suspends, revokes, or refuses to renew the license of any licensee under this part, the commissioner shall conduct a hearing in accordance with the State's laws governing administrative hearings.

§431:10D-D Contract requirements. (a) No person may use any form of life settlement contract or purchase agreement in the State unless it has been filed with and approved, if required, by the commissioner in a manner that conforms with the filing procedures and any time restrictions or deeming provisions, if any, for life insurance forms, policies, and contracts.

(b) No insurer may, as a condition of responding to a request for verification of coverage or in connection with the transfer of a policy pursuant to a life settlement contract, require that the owner, insured, provider, or broker sign any form, disclosure, consent, waiver, or acknowledgment that has not been expressly approved by the commissioner for use in connection with life settlement contracts in the State.

§431:10D-E Reporting requirements and privacy. (a) Each licensee shall file with the commissioner on or before March 1 of each year an annual statement containing such information as the commissioner may prescribe by rule. The information shall be limited to only those transactions where the owner is a resident of this State and shall not include individual transaction data regarding the business of life settlements or data that could compromise the privacy of personal, financial, and health information of the owner or insured.

(b) Except as otherwise allowed or required by law, a life settlement provider, life settlement broker, life settlement investment agent, insurance company, insurance producer, information bureau, rating agency or company, or any other person with actual knowledge of an insured's identity, shall not disclose that identity as an insured, or the insured's financial or medical information to any other person unless the disclosure:

(1) Is necessary to effect a life settlement contract between the owner and a life settlement provider and the owner and insured have provided prior written consent to the disclosure;

(2) Is provided in response to an investigation or examination by the commissioner or any other governmental officer or agency or pursuant to the requirements of this part;

(3) Is a term or condition to the transfer of a policy by one life settlement provider to another life settlement provider;

(4) Is necessary to permit a financing entity, related provider trust or special purpose entity to finance the purchase of policies by a life settlement provider and the owner and insured have provided prior written consent to the disclosure;

(5) Is necessary to allow the life settlement provider or their authorized representatives to make contacts for the purpose of determining health status; or

(6) Is required to purchase stop loss coverage.

§431:10D-F Examination. (a) The commissioner may, when the commissioner deems it reasonably necessary to protect the interests of the public, examine the business and affairs of any licensee or applicant for a license. The commissioner may order any licensee or applicant to produce any records, books, files, or other information reasonably necessary to ascertain whether such licensee or applicant is acting or has acted in violation of the law or otherwise contrary to the interests of the public. The expenses incurred in conducting any examination shall be paid by the licensee or applicant.

(b) In lieu of an examination under this part of any foreign or alien licensee licensed in this State, the commissioner may, at the commissioner’s discretion, accept an examination report on the licensee as prepared by the commissioner for the licensee's state of domicile or port-of-entry state.

(c) Names of and individual identification data, or for all owners and insureds shall be considered private and confidential information and shall not be disclosed by the commissioner unless required by law.

(d) Records of all transactions, life settlement contracts and purchase agreements, shall be maintained by the provider for three years after the death of the insured and shall be available to the commissioner for inspection during reasonable business hours.

(e) Conduct of the examinations shall include the following:

(1) Upon determining that an examination should be conducted, the commissioner shall issue an examination warrant appointing one or more examiners to perform the examination and instructing them as to the scope of the examination. In conducting the examination, the examiner shall use methods common to the examination of any life settlement licensee and should use those guidelines and procedures set forth in an examiners' handbook adopted by a national organization.

(2) Every licensee or person from whom information is sought, its officers, directors, and agents shall provide to the examiners timely, convenient, and free access at all reasonable hours at its offices to all books, records, accounts, papers, documents, assets, and computer or other recordings relating to the property, assets, business, and affairs of the licensee being examined. The officers, directors, employees, and agents of the licensee or person shall facilitate the examination and aid in the examination so far as it is in their power to do so. The refusal of a licensee, by its officers, directors, employees, or agents, to submit to examination or to comply with any reasonable written request of the commissioner shall be grounds for suspension or refusal of, or nonrenewal of any license or authority held by the licensee to engage in the life settlement business or other business subject to the commissioner's jurisdiction.

(3) The commissioner shall have the power to issue subpoenas, to administer oaths, and to examine under oath any person as to any matter pertinent to the examination. Upon the failure or refusal of a person to obey a subpoena, the commissioner may petition a court of competent jurisdiction, and upon proper showing, the court may enter an order compelling the witness to appear and testify or produce documentary evidence.

(4) When making an examination under this part, the commissioner may retain attorneys, appraisers, independent actuaries, independent certified public accountants, or other professionals and specialists as examiners, the reasonable cost of which shall be borne by the licensee that is the subject of the examination.

(5) Nothing contained in this part shall be construed to limit the commissioner's authority to terminate or suspend an examination in order to pursue other legal or regulatory action pursuant to the insurance laws of this State. Findings of fact and conclusions made pursuant to any examination shall be prima facie evidence in any legal or regulatory action.

(6) Nothing contained in this part shall be construed to limit the commissioner's authority to use and, if appropriate, to make public any final or preliminary examination report, any examiner or licensee work papers or other documents, or any other information discovered or developed during the course of any examination in the furtherance of any legal or regulatory action which the commissioner, in the commissioner's sole discretion, may deem appropriate.

(f) Examination reports shall include the following:

(1) Examination reports shall be comprised of only facts appearing upon the books, from the testimony of its officers or agents or other persons examined concerning its affairs, and any conclusions and recommendations as the examiners find reasonably warranted from the facts.

(2) No later than sixty days following completion of the examination, the examiner in charge shall file with the commissioner a verified written report of examination under oath. Upon receipt of the verified report, the commissioner shall transmit the report to the licensee examined, together with a notice that shall afford the licensee examined a reasonable opportunity of not more than thirty days to make a written submission or rebuttal with respect to any matters contained in the examination report and which shall become part of the report or to request a hearing on any matter in dispute.

(3) If the commissioner determines that regulatory action is appropriate as a result of an examination, the commissioner may initiate any proceedings or actions provided by law.

(g) Confidentiality of examination information shall include the following:

(1) Names and individual identification data for all owners and insureds shall be considered private and confidential information and shall not be disclosed by the commissioner, unless required by law; and

(2) Except as otherwise provided in this part, all examination reports, working papers, recorded information, documents, and copies thereof produced by, obtained by, or disclosed to the commissioner or any other person in the course of an examination made under this part, or in the course of analysis or investigation by the commissioner of the financial condition or market conduct of a licensee shall be confidential by law and privileged, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. The commissioner may use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as part of the commissioner's official duties. The licensee being examined may have access to all documents used to make the report.

(h) With respect to conflict of interest:

(1) An examiner may not be appointed by the commissioner if the examiner, either directly or indirectly, has a conflict of interest or is affiliated with the management of or owns a pecuniary interest in any person subject to examination under this part. This section shall not be construed to automatically preclude an examiner from being:

(A) An owner;

(B) An insured in a life settlement contract or insurance policy; or

(2) Notwithstanding the requirements of this subsection, the commissioner may retain from time to time, on an individual basis, qualified actuaries, certified public accountants, or other similar individuals who are independently practicing their professions, even though these persons may from time to time be similarly employed or retained by persons subject to examination under this part.

(i) With respect to immunity to liability:

(1) No cause of action shall arise nor shall any liability be imposed against the commissioner, the commissioner's authorized representatives or any examiner appointed by the commissioner for any statements made or conduct performed in good faith while carrying out the provisions of this part.

(2) No cause of action shall arise, nor shall any liability be imposed against any person for the act of communicating or delivering information or data to the commissioner or the commissioner's authorized representative or examiner pursuant to an examination made under this part, if the act of communication or delivery was performed in good faith and without fraudulent intent or the intent to deceive. This paragraph does not abrogate or modify in any way any common law or statutory privilege or immunity heretofore enjoyed by any person identified in paragraph (1).

(3) A person identified in paragraph (1) or (2) shall be entitled to an award of attorney's fees and costs if the person is the prevailing party in a civil cause of action for libel, slander, or any other relevant tort arising out of activities in carrying out the provisions of this part and the party bringing the action was not substantially justified in doing so. For purposes of this section a proceeding is "substantially justified" if it had a reasonable basis in law or fact at the time that it was initiated.

(j) The commissioner may investigate suspected fraudulent list settlement acts and person engaged in the business of life settlements.

(k) The commissioner shall establish examination fees by rule pursuant to chapter 91.

§431:10D-G Advertising. (a) A broker or provider licensed pursuant to this part may conduct or participate in advertisements within the State. Advertisements shall comply with all advertising and marketing laws of the State or rules adopted by the commissioner that are applicable to life insurers or to brokers and providers licensed pursuant to this part.

(b) Advertising shall be accurate, truthful, and not misleading in fact or by implication.

(1) Directly or indirectly, market, advertise, solicit, or otherwise promote the purchase of a policy for the sole purpose of or with an emphasis on settling the policy; or

(2) Use the words "free", "no cost", or words of similar import in the marketing, advertising, soliciting, or otherwise promoting of the purchase of a policy.

431:10D-H Disclosures to owners. (a) The provider shall provide in writing, in a separate document that is signed by the owner and provider, the following information to the owner no later than the date the life settlement contract is signed by all parties:

(1) The fact that possible alternatives to life settlement contracts exist, including, but not limited to, accelerated benefits offered by the issuer of the life insurance policy;

(2) The fact that some or all of the proceeds of a life settlement contract may be taxable and that assistance should be sought from a professional tax advisor;

(3) The fact that the proceeds from a life settlement contract could be subject to the claims of creditors;

(4) The fact that receipt of proceeds from a life settlement contract may adversely affect the recipients' eligibility for public assistance or other government benefits or entitlements and that advice should be obtained from the appropriate agencies;

(5) The fact that the owner has a right to rescind a life settlement contract within fifteen days of the date it is executed by all parties and the owner has received the disclosures contained herein. Rescission, if exercised by the owner, is effective only if both notice of the rescission is given, and the owner repays all proceeds and any premiums, loans, and loan interest paid on account of the life settlement provider within the rescission period. If the insured dies during the rescission period, the contract shall be deemed to have been rescinded subject to repayment by the owner or the owner’s estate of all proceeds and any premiums, loans, and loan interest to the provider;

(6) The fact that proceeds will be sent to the owner within three business days after the provider has received the insurer or group administrator’s written acknowledgement that ownership of the policy or interest in the certificate has been transferred and the beneficiary has been designated in accordance with the terms of the life settlement contract;

(7) The fact that entering into a life settlement contract may cause other rights or benefits, including conversion rights and waiver of premium benefits that may exist under the policy or certificate of a group policy to be forfeited by the owner and that assistance should be sought from a professional financial advisor;

(8) In the case of a life settlement contract in which the insured is terminally or chronically ill the amount and method of calculating the broker's compensation, wherein the term compensation includes anything of value paid or given to a broker for the placement of a policy;

(9) The date by which the funds will be available to the owner and the transmitter of the funds;

(10) The fact that the commissioner shall require delivery of a buyer's guide or a similar consumer advisory package in the form prescribed by the commissioner to owners during the solicitation process;

(11) The disclosure document shall contain the following language:

"All medical, financial, or personal information solicited or obtained by a life settlement provider or life settlement broker about an insured, including the insured's identity or the identity of family members, a spouse, or a significant other may be disclosed as necessary to effect the life settlement contract between the owner and provider. If you are asked to provide this information, you will be asked to consent to the disclosure. The information may be provided to someone who buys the policy or provides funds for the purchase. You may be asked to renew your permission to share information every two years";

(12) The fact that the commissioner shall require providers and brokers to print separate signed fraud warnings on their applications and on their life settlement contracts is as follows:

"Any person who knowingly presents false information in an application for insurance or life settlement contract is guilty of a crime and may be subject to fines and confinement in prison."

(13) The fact that the insured may be contacted by either the life settlement provider or its authorized representative for the purpose of determining the insured's health status. This contact is limited to once every three months if the insured has a life expectancy of more than one year, and no more than once per month if the insured has a life expectancy of one year or less;

(14) State the affiliation, if any, between the life settlement provider and the issuer of the insurance policy to be settled;

(15) That a broker represents exclusively the owner, and not the insurer or the provider or the purchaser, and owes a fiduciary duty to the owner, including a duty to act according to the owner's instructions and in the best interest of the owner;

(16) The document shall include the name, address, and telephone number of the life settlement provider;

(17) State the name, business address, and telephone number of the independent third party escrow agent, and the fact that the owner may inspect or receive copies of the relevant escrow or trust agreements or documents; and

(18) The fact that a change of ownership could in the future limit the insured's ability to purchase future insurance on the insured's life because there is a limit to how much coverage insurers will issue on one life.

(b) The written disclosures shall be conspicuously displayed in any life settlement contract furnished to the owner by a provider including any affiliations or contractual arrangements between the provider and the broker.

(c) A life settlement broker shall provide the owner with at least the following disclosures no later than the date the life settlement contract is signed by all parties. The disclosures shall be conspicuously displayed in the life settlement contract or in a separate document signed by the owner and provide the following information:

(1) The name, business address, and telephone number of the life settlement broker;

(2) A full, complete, and accurate description of all offers, counter-offers, acceptances, and rejections relating to the proposed life settlement contract; and

(3) A written disclosure of any affiliations or contractual arrangements between the life settlement broker and any person making an offer in connection with the proposed life settlement contracts.

§431:10D-I Disclosure to insurer. Insurance carriers may determine in the application for insurance if the proposed owner intends to pay premiums with the assistance of a loan by a lending institution which uses the policy as collateral for the loan as follows:

(1) If the loan provides funds, which can be used for a purpose other than paying for the premiums, costs, and expenses associated with obtaining and maintaining the life insurance policy and loan, the application shall be rejected as a violation of the prohibited practices in this part.

(2) If the loan does not violate a prohibited practice in this manner, the insurance carrier:

(A) May make disclosures to the applicant and the insured, either on the application or an amendment to the application to be completed no later than the delivery of the policy; or

(B) May require certifications from the applicant or the insured.

§431:10D-J General rules. (a) A provider entering into a life settlement contract with any owner of a policy, wherein the insured is terminally or chronically ill, shall first obtain:

(1) If the seller is the insured, a written statement from a licensed attending physician that the seller is of sound mind and under no constraint or undue influence to enter into a settlement contract; and

(2) A document in which the insured consents to the release of the insured's medical records to a settlement provider, settlement broker, or insurance producer and, if the policy was issued less than two years from the date of application for a settlement contract, to the insurance company that issued the policy.

(b) The insurer shall respond to a request for verification of coverage submitted by a settlement provider, settlement broker, or life insurance producer not later than thirty calendar days of the date the request is received. The request for verification of coverage shall be made on a form approved by the commissioner. The insurer shall complete and issue the verification of coverage or indicate in which respects it is unable to respond. In its response, the insurer shall indicate whether, based on the medical evidence and documents provided, the insurer intends to pursue an investigation at this time regarding the validity of the insurance contract.

(c) Before or at the time of execution of the settlement contract, the settlement provider shall obtain a witnessed document in which the seller consents to the settlement contract, represents that the seller has a full and complete understanding of the settlement contract, that the seller has a full and complete understanding of the benefits of the policy, acknowledges that the seller is entering into the settlement contract freely and voluntarily, and, for persons with a terminal or chronic illness or condition, acknowledges that the insured has a terminal or chronic illness and that the terminal or chronic illness or condition was diagnosed after the policy was issued.

(d) The insurer shall not unreasonably delay effecting change of ownership or beneficiary with any life settlement contract lawfully entered into in the State or with a resident of the State.

(e) If a settlement broker or life insurance producer performs any of these activities required of the settlement provider, the settlement provider is deemed to have fulfilled the requirements of this section.

(f) If a life settlement broker performs those verification of coverage activities required of the life settlement provider, the provider is deemed to have fulfilled the requirements of section 431:10D-H(a).

(g) Within twenty days after an owner executes the life settlement contract, the life settlement provider shall give written notice to the insurer that issued that insurance policy that the policy has become subject to a life settlements contract. The notice shall be accompanied by the documents required by section 431:10C-I.

(h) All medical information solicited or obtained by any licensee shall be subject to the applicable provision of state law relating to confidentiality of medical information, if not otherwise provided in this part.

(i) All life settlement contracts and purchase agreements entered into in the State shall provide that the owner may rescind the contract on or before fifteen days after the date it is executed by all parties thereto. Rescission, if exercised by the owner, is effective only if both notice of the rescission is given, and the owner repays all proceeds and any premiums, loans, and loan interest paid on account of the life settlement provider within the rescission period. If the insured dies during the rescission period, the contract shall be deemed to have been rescinded subject to repayment by the owner or the owner's estate of all proceeds and any premiums, loans, and loan interest to the provider.

(j) Within three business days after receipt from the owner of documents to effect the transfer of the insurance policy, the provider shall pay the proceeds of the settlement to an escrow or trust account managed by a trustee or escrow agent in a state or federally chartered financial institution pending acknowledgement of the transfer by the issuer of the policy. The trustee or escrow agent shall be required to transfer the proceeds due to the owner within three business days of acknowledgement of the transfer from the insurer.

(k) Failure to tender the life settlement contract proceeds to the owner by the date disclosed to the owner renders the contract voidable by the owner for lack of consideration until the time the proceeds are tendered to and accepted by the owner. A failure to give written notice of the right of rescission hereunder shall toll the right of rescission until thirty days after the written notice of the right of rescission has been given.

(l) Any fee paid by a provider, party, individual, or an owner to a broker in exchange for services provided to the owner pertaining to a life settlement contract shall be computed as a percentage of the offer obtained, not the face value of the policy. Nothing in this section shall be construed as prohibiting a broker from reducing the broker's fee below this percentage if the broker so chooses.

(m) The broker shall disclose to the owner anything of value paid or given to the broker, which relate to a life settlement contract with an owner who has a terminal or life threatening illness.

(n) No person at any time prior to, or at the time of, the application for, or issuance of, a policy, or during a two-year period commencing with the date of issuance of the policy, shall enter into any transaction, or series of transactions that establish the terms under which compensation will be paid in return for the assignment, transfer, sale, devise, bequest, or surrender of the death benefit or ownership of any portion of the policy regardless of the date the compensation is to be provided and regardless of the date the assignment, transfer, sale, devise, bequest or surrender is to occur. This prohibition shall not apply if the owner certifies to the settlement provider that one or more of the following conditions have been met within the two-year period:

(1) The policy was issued upon the seller's exercise of conversion rights arising out of a group or individual policy, provided the total of the time covered under the conversion policy plus the time covered under the prior policy is at least twenty‑four months. The time covered under a group policy must be calculated without regard to a change in insurance carriers, provided the coverage has been continuous and under the same group sponsorship; or

(2) The seller submits independent evidence to the settlement provider that one or more of the following conditions have been met within the two‑year period:

(A) The seller or insured is terminally or chronically ill; or

(B) The seller or insured disposes of the seller's or insured's ownership interests in a closely held corporation, pursuant to the terms of a buyout or other similar agreement in effect at the time the insurance policy was initially issued;

(C) Copies of the independent evidence described in paragraph (2) and documents required by this section shall be submitted to the insurer when the settlement provider submits a request to the insurer for verification of coverage. The copies shall be accompanied by a letter of attestation from the settlement provider that the copies are true and correct copies of the documents received by the settlement provider; or

(D) If the settlement provider submits to the insurer a copy of independent evidence provided for in subparagraph (A) when the settlement provider submits a request to the insurer to effect the transfer of the policy to the settlement provider, the copy is deemed to establish that the settlement contract satisfies the requirements of this section.

(o) Copies of the independent evidence under this section shall be submitted to the insurer when the provider submits a request for verification of coverage. These copies shall be accompanied by a letter of attestation from the provider that the copies are true and correct copies of the documents received by the provider. Nothing in this section shall prohibit an insurer from exercising its right to contest the validity of any policy.

§431:10D-K Authority to adopt rules; conflict of laws. (a) The commissioner may adopt rules implementing this part and regulating the activities and relationships of providers, brokers, and life settlement investment agents, insurers and their agents, subject to statutory limitations on administrative rulemaking.

(b) If there is more than one owner on a single policy, and the owners are residents of different states, the life settlement contract shall be governed by the law of the state in which the owner having the largest percentage ownership resides or, if the owners hold equal ownership, the state of residence of one owner agreed upon in writing by all of the owners.

(c) A provider from the State who enters into a life settlement contract with an owner who is a resident of another state that has enacted statutes or adopted rules or regulations governing life settlement contracts, shall be governed in the effectuation of that life settlement contract by the statutes, rules, and regulations of the owner’s state of residence. If the state in which the owner is a resident has not enacted statutes, rules, or regulations governing life settlement contracts, the provider shall give the owner notice that neither state regulates the transaction upon which the owner is entering. For transactions in those states, however, the provider is to maintain all records required if the transactions were executed in the state of residence. The forms used in those states need not be approved by the commissioner.

(d) If there is a conflict in the laws that apply to an owner and a purchaser in any individual transaction, the laws of the state that apply to the owner shall take precedence and the provider shall comply with those laws.

§431:10D-L Prohibited practices. It is unlawful for any person to:

(1) Enter into a life settlement contract if the person knows or reasonably should have known that the life insurance policy was obtained by means of a false, deceptive, or misleading application for the policy;

(2) Engage in any transaction, practice, or course of business if the person knows or reasonably should have known that the intent was to avoid the notice requirements of this section;

(3) Engage in any fraudulent act or practice in connection with any transaction relating to any settlement involving an owner or purchaser who is a resident of the State.

(4) With respect to any settlement contract or insurance policy and a broker, knowingly solicit an offer from, effectuate a settlement with, or make a sale to any provider, purchaser, life settlement investment agent, financing entity or related provider that is controlling, controlled by, or under common control with the broker.

(5) With respect to any life settlement contract or insurance policy and a provider, knowingly enter into a life settlement contract with an owner, if, in connection with such life settlement contract, anything of value will be paid to a broker that is controlling, controlled by, or under common control with such provider or the purchaser, life settlement investment agent, financing entity, or related provider trust that is involved in such settlement contract.

(6) With respect to a provider, enter into a life settlement contract unless the life settlement promotional, advertising and marketing materials, as may be prescribed by rule, have been filed with the commissioner. In no event shall any marketing materials expressly reference that the insurance is "free" for any period of time. The inclusion of any reference in the marketing materials that would cause an owner to reasonably believe that the insurance is free for any period of time shall be considered a violation of this part.

(7) With respect to any life insurance producer, insurance company, broker, provider or life settlement investment agent, make any statement or representation to the applicant or policyholder in connection with the sale or financing of a life insurance policy to the effect that the insurance is free or without cost to the policyholder for any period of time unless provided in the policy.

(8) A violation of this section shall be deemed a fraudulent life settlement act.

§431:10D-M False representation; deceptive words. (a) It is unlawful for a person in the advertisement, offer, or sale of a purchase agreement to misrepresent that such an agreement has been guaranteed, sponsored, recommended, or approved by the State, or any agency or officer of the State, or by the United States or any agency or officer of the United States. An advertisement shall not use the name or title of a life insurance company or insurance policy unless prior written approval has been obtained from the life insurance company.

(b) It is unlawful for a person in conjunction with the sale of a purchase agreement to directly or indirectly misrepresent that the person has been sponsored, recommended, or approved, or that the person’s abilities or qualifications have in any respect been passed upon, by this State or any other state, or any agency or officer thereof, or by the United States or any agency or officer thereof.

(1) A misrepresentation that the purchase agreement purchased, offered, or sold is guaranteed, sponsored, recommended, or approved by the State or any other state, or any agency or officer thereof, or by the United States or any agency or officer thereof;

(2) A misrepresentation that the person is sponsored, recommended, or approved, or that the person's abilities or qualifications have in any respect been passed upon, by the State or any other state, or any agency or officer thereof, or by the United States or any agency or officer thereof;

(3) A misrepresentation that a purchase agreement is guaranteed by any insurance guaranty fund; or

(4) A misrepresentation that a purchase agreement is "guaranteed", that the principal is "safe", or that the purchase agreement is free of risk.

(d) This section may not be construed to prohibit a statement that the person is licensed or appointed under this part if such a statement is required by this part or rules adopted under this part, if the statement is true in fact, and if the effect of the statement is not misrepresented.

(e) The commissioner may allow exceptions to this section, by rule.

§431:10D-N Fraud prevention and control. (a) With respect to fraudulent life settlement acts, interference and participation of convicted felons are prohibited as follows:

(1) A person shall not commit a fraudulent life settlement act;

(2) A person shall not knowingly and intentionally interfere with the enforcement of the provisions of this part or investigations of suspected or actual violations of this part; and

(3) A person in the business of life settlements shall not knowingly or intentionally permit any person convicted of a felony involving dishonesty or breach of trust to participate in the business of life settlements.

(b) With respect to the requirement for fraud warning:

(1) Life settlement contracts and purchase agreement forms, and applications for life settlement contracts, regardless of the form of transmission, shall contain the following statement or a substantially similar statement:

"Any person who knowingly presents false information in an application for insurance or life settlement contract or a life settlement purchase agreement is guilty of a crime and may be subject to fines and confinement in prison."

(2) The lack of a statement as required in this section does not constitute a defense in any prosecution for a fraudulent life settlement act.

(1) Any person engaged in the business of life settlements having knowledge or a reasonable belief that a fraudulent life settlement act is being, will be, or has been committed shall provide to the commissioner the information required by, and in a manner prescribed by, the commissioner.

(2) Any other person having knowledge or a reasonable belief that a fraudulent life settlement act is being, will be, or has been committed may provide to the commissioner the information required by, and in a manner prescribed by, the commissioner.

(d) With respect to immunity from liability:

(1) No civil liability shall be imposed on and no cause of action shall arise from a person’s furnishing information concerning suspected, anticipated, or completed fraudulent life settlement acts, or suspected or completed fraudulent insurance acts, if the information is provided to or received from:

(A) The commissioner or the commissioner’s employees, agents, or representatives;

(B) Federal, state, or local law enforcement or regulatory officials or their employees, agents, or representatives;

(C) A person involved in the prevention and detection of fraudulent life settlement acts or that person’s agents, employees, or representatives;

(D) Any regulatory body or its employees, agents, or representatives, overseeing life insurance, life settlements, or securities or investment fraud;

(E) The life insurer that issued the life insurance policy covering the life of the insured; or

(F) The licensee and any agents, employees, or representatives.

(2) Paragraph (1) shall not apply to statements made with actual malice. In an action brought against a person for filing a report or furnishing other information concerning a fraudulent life settlement act or a fraudulent insurance act, the party bringing the action shall plead specifically any allegation that paragraph (1) does not apply because the person filing the report or furnishing the information did so with actual malice.

(3) A person identified in paragraph (1) shall be entitled to an award of attorney’s fees and costs if the person is the prevailing party in a civil cause of action for libel, slander, or any other relevant tort arising out of activities in carrying out the provisions of this chapter where the party bringing the action was not substantially justified in doing so. For purposes of this section, a proceeding is "substantially justified" if it had a reasonable basis in law or fact at the time that it was initiated.

(4) This subsection does not abrogate or modify common law or statutory privileges or immunities enjoyed by a person described in paragraph (1).

(e) With respect to confidentiality:

(1) The documents and evidence submitted pursuant to this part or obtained by the commissioner in an investigation of suspected or actual fraudulent life settlement acts shall be privileged and confidential, shall not be a public record, and shall not be subject to discovery or subpoena in a civil or criminal action.

(2) Paragraph (1) of this subsection does not prohibit release by the commissioner of documents and evidence obtained in an investigation of suspected or actual fraudulent life settlement acts:

(A) In administrative or judicial proceedings to enforce laws administered by the commissioner;

(B) To federal, state, or local law enforcement or regulatory agencies, to an organization established for the purpose of detecting and preventing fraudulent life settlement acts or to the National Association of Insurance Commissioners; or

(C) At the discretion of the commissioner, to a person in the business of life settlements that is aggrieved by a fraudulent life settlement act.

(3) Release of documents and evidence under paragraph (2) of this section does not abrogate or modify the privilege granted in paragraph (1).

(f) With respect to other law enforcement or regulatory authority, this part shall not:

(1) Preempt the authority or relieve the duty of other law enforcement or regulatory agencies to investigate, examine, and prosecute suspected violations of law;

(2) Prevent or prohibit a person from disclosing voluntarily information concerning life settlement fraud to a law enforcement or regulatory agency other than the insurance division; or

(3) Limit the powers granted elsewhere by the laws of the State to the commissioner or an insurance fraud unit to investigate and examine possible violations of law and to take appropriate action against wrongdoers.

(g) Life settlement providers and life settlement brokers shall have in place antifraud initiatives reasonably calculated to detect, prosecute and prevent fraudulent life settlement acts. At the discretion of the commissioner, the commissioner may order, or a licensee may request and the commissioner may grant, such modifications of the following required initiatives as necessary to ensure an effective antifraud program. The modifications may be more or less restrictive than the required initiatives so long as the modifications may reasonably be expected to accomplish the purpose of this section. Antifraud initiatives shall include:

(1) Fraud investigators, who may be life settlement providers, life settlement broker employees, or independent contractors; and

(2) An antifraud plan, which shall be submitted to the commissioner. The antifraud plan shall include, but not be limited to:

(A) A description of the procedures for detecting and investigating possible fraudulent life settlement acts and procedures for resolving material inconsistencies between medical records and insurance applications;

(B) A description of the procedures for reporting possible fraudulent life settlement acts to the commissioner;

(D) A description or chart outlining the organizational arrangement of the antifraud personnel who are responsible for the investigation and reporting of possible fraudulent life settlement acts and investigating unresolved material inconsistencies between medical records and insurance applications.

(3) Antifraud plans submitted to the commissioner shall be privileged and confidential and shall not be a public record and shall not be subject to discovery or subpoena in a civil or criminal action.

§431:10D-O Injunctions; civil remedies; cease and desist. (a) In addition to the penalties and other enforcement provisions of this part, if any person violates this part or any rule implementing this part, the commissioner may seek an injunction in a court of competent jurisdiction in the county where the person resides or has a principal place of business and may apply for temporary and permanent orders that the commissioner determines necessary to restrain the person from further committing the violation.

(b) Any person damaged by the acts of another person in violation of this part or any rule implementing this part, may bring a civil action for damages against the person committing the violation in a court of competent jurisdiction.

(c) The commissioner may issue a cease and desist order upon a person who violates any provision of this part, any rule or order adopted by the commissioner, or any written agreement entered into with the commissioner, in accordance with the State's laws governing administrative procedures.

(d) When the commissioner finds that such an action presents an immediate danger to the public and requires an immediate final order, the commissioner may issue an emergency cease and desist order reciting with particularity the facts underlying such findings. The emergency cease and desist order is effective immediately upon service of a copy of the order on the respondent and remains effective for ninety days. If the department begins non-emergency cease and desist proceedings, the emergency cease and desist order remains effective, absent an order by an appellate court of competent jurisdiction. In the event of a wilful violation of this part, the trial court may award statutory damages in addition to actual damages in an additional amount up to three times the actual damage award. The provisions of this part may not be waived by agreement. No choice of law provision may be utilized to prevent the application of this part to any settlement in which a party to the settlement is a resident of this State.

§431:10D-P Penalties. (a) It is a violation of this part for any person, provider, broker, purchaser, or any other party related to the business of life settlements, to commit a fraudulent life settlement act.

(b) For criminal liability purposes, a person that commits a fraudulent life settlement act is guilty of committing insurance fraud.

(c) The commissioner shall be empowered to levy a civil penalty and the amount of the claim for each violation upon any person, including those persons and their employees licensed pursuant to this part, who is found to have committed a fraudulent life settlement act.

(d) The license of a person licensed under this part that commits a fraudulent life settlement act shall be revoked for a period to be determined by the commissioner.

§431:10D-Q Unfair trade practices. A violation of this part shall be considered an unfair trade practice pursuant to state law and subject to the penalties provided by state law."

SECTION 2. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	3246
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII