To amend sections 1321.72, 1321.78, 3916.01 to 3916.03, 3916.05 to 3916.07, 3916.09 to 3916.20, and 3916.99 and to enact sections 3911.021, 3916.031, 3916.171, 3916.172, and 3916.173 of the Revised Code to make changes to the law governing viatical settlements.
SECTION 1. That sections 1321.72, 1321.78, 3916.01, 3916.02, 3916.03, 3916.05, 3916.06, 3916.07, 3916.09, 3916.10, 3916.11, 3916.12, 3916.13, 3916.14, 3916.15, 3916.16, 3916.17, 3916.18, 3916.19, 3916.20, and 3916.99 be amended and sections 3911.021, 3916.031, 3916.171, 3916.172, and 3916.173 of the Revised Code be enacted to read as follows:
Sec. 1321.72. Sections Except as provided in division (D)
of section 1321.78, sections 1321.71 to 1321.83 of
the Revised
Code do not apply with respect to any of the following:
(A) Life, property, or casualty insurance companies authorized to do business in this state as to policies issued by those companies;
(B) The inclusion of a charge for insurance in connection with any installment transaction pursuant to Chapter 1317. of the Revised Code;
(C) The financing of insurance premiums at a rate of interest not exceeding the maximum rate permitted by section 1343.01 of the Revised Code;
(D) Persons lawfully doing business under the authority of any law of this state, another state, or the United States relating to banks, savings banks, trust companies, savings and loan associations, lenders authorized to make loans pursuant to sections 1321.01 to 1321.19 of the Revised Code, lenders authorized to make loans pursuant to sections 1321.51 to 1321.60 of the Revised Code, or any credit union;
(E) Any person who purchases or otherwise acquires a premium finance agreement from a licensee if the licensee remains responsible for collecting payments due under the agreement, and for otherwise servicing the agreement, in compliance with sections 1321.71 to 1321.83 of the Revised Code.
Sec. 1321.78. (A) A premium finance agreement shall:
(1) Be dated, signed by the insured, and the printed portion thereof shall be in at least eight-point type;
(2) Contain the name and place of business of the insurance agent or broker negotiating the related insurance contract, the name and residence or the place of business of the insured as specified by him, the name and address of the premium finance company, and a description of the insurance contracts involved and the amount of the premium therefor;
(3) Set forth any charges the premium finance company elects to charge under sections 1321.79, 1321.791, and 1321.80 of the Revised Code.
(B) The premium finance company, agent, or agency shall deliver to the insured or send by regular mail to the insured at the address provided in the agreement, a complete copy of the premium finance agreement.
(C) A premium finance company shall give notice of its financing to the insurer not later than the thirtieth day after the date on which the premium financing agreement is accepted by the premium finance company. A notice given under this section shall be effective whether or not the insurer's policy number is set forth in the notice.
(D) Notwithstanding divisions (C) and (D) of section 1321.72 of the Revised Code, in the case of a life insurance policy, any premium finance company shall give notice of its financing to the insurer either prior to the issuance of the life insurance policy if the financing agreement is accepted prior to the issuance of the policy or prior to the completion of the premium financing transaction if the financing agreement is accepted after the issuance of the policy.
(E) If premium financing is used in connection with a life insurance policy, and the premium finance company fails to provide notice of its financing to the insurer pursuant to division (D) of this section, the premium financing agreement is unenforceable as a matter of public policy.
Sec. 3911.021. Any insurance company that issues life insurance policies in this state shall file electronically, in a format prescribed by the superintendent of insurance, on or before June first of each year, a description of the measures taken by the insurance company to detect and prevent stranger-originated life insurance. The description shall be attested to by an officer of the company. The reports shall be maintained by the superintendent as confidential and not a matter of public record.
As used in this section, "stranger-originated life insurance" has the same meaning as in section 3916.01 of the Revised Code.
Sec. 3916.01. As used in this chapter:
(A)
"Advertising" 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, but not limited to, film
strips,
motion pictures, and videos, that is directly or
indirectly
published, disseminated, circulated, or placed directly
or indirectly
before
the public in this state
for the purpose of
creating an
interest in or
inducing
a person to purchase or
sell, assign,
devise, bequest, or transfer
the death benefit or
ownership of a
life insurance policy pursuant
to a viatical
settlement
contract.
(B)
"Business of viatical settlements" means an activity
involved, but not limited to,
in the offering, solicitation,
negotiation, procurement,
effectuation, purchasing, investing,
financing, monitoring,
tracking,
underwriting, selling,
transferring, assigning,
pledging, or
hypothecating or in any
other manner acquiring an
interest in a policy by
means of
viatical
settlement contracts or
purchase
agreements or
any
similar
activity related to viatical
settlement
contracts or
purchase
agreements.
(C)
"Chronically ill" means any of the following
having been
certified within the preceding twelve-month period by
a licensed
health professional as:
(1) Being unable to perform, without substantial assistance from another individual, at least two activities of daily living, including, but not limited to, eating, toileting, transferring, bathing, dressing, or continence for at least ninety days due to a loss of functional capacity; or
(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
division (C)(1) of this section, as determined under regulations
prescribed by the United
States secretary of the treasury in
consultation with the United States secretary of health and human
services;.
(D) "Escrow agent" means an independent third-party person who, pursuant to a written agreement signed by the viatical settlement provider and viator, provides escrow services related to the acquisition of a policy pursuant to a viatical settlement contract. "Escrow agent" does not include any person associated with, affiliated with, or under the control of a person licensed under this chapter or described in division (C) of section 3916.02 of the Revised Code.
(E)(1)
"Financing entity" means an underwriter, placement
agent,
lender, purchaser of securities, purchaser of a policy or
certificate from a
viatical settlement provider, credit enhancer,
or any other person that
has a direct ownership interest in a
policy or certificate
that is the subject of a viatical settlement
contract and to which both of the
following apply:
(a) Its principal activity related to the transaction is
providing funds to effect the business of viatical
settlement
settlements or the purchase
of one
or more viaticated policies.
(b) It has an agreement in writing with one or more licensed viatical settlement providers to finance the acquisition of viatical settlement contracts.
(2) "Financing entity" does not include a non-accredited investor or viatical settlement purchaser.
(E)
"Fraudulent viatical settlement act" means an act or
omission
committed by any person who, knowingly or with intent to
defraud
and for the purpose of depriving another of property or
for
pecuniary gain, commits, or permits any of its employees or
agents
to commit, any of the following acts:
(1) Presenting, causing to be presented, or preparing with
knowledge or belief that it will be presented to or by a viatical
settlement provider, viatical settlement broker, viatical
settlement
purchaser, financing entity,
insurer, insurance
broker,
insurance
agent, or any other person,
any false material
information, or
concealing any material
information, as part of,
in support of, or
concerning a fact
material to, one or more of
the following:
(a) An application for the issuance of a viatical
settlement
contract or insurance policy or certificate;
(b) The underwriting of a viatical settlement contract or
insurnace
policy or certificate;
(c) A claim for payment or benefit pursuant to a viatical
settlement contract or
insurnace
policy or certificate;
(d) Any premiums paid on an insurance policy or certificate;
(e) Any payments
changes in ownership or beneficiary
made
in
accordance with the terms
in
viatical settlement
contract
or
insurance
policy or certificate;
(f) The reinstatement or conversion of an insurance policy
or
certificate;
(g) The solicitation, offer, effectuation, or sale of a
viatical
settlement contract or insurance policy or certificate;
(h) The issuance of written evidence of a viatical
settlement
contract or insurance policy or certificate;
(i) A financing transaction.
(2) In the furtherance of a fraud or to prevent the
detection
of
a fraud, doing any of the following:
(a) Removing, concealing, altering, destroying, or
sequestering
from the superintendent the assets or
records of a
licensee or another person engaged in the business of
viatical
settlements;
(b) Misrepresenting or concealing the financial condition
of
a
licensee, financing entity, insurer, or any other person;
(c) Transacting the business of viatical settlements in
violation
of any law of this state requiring a license,
certificate of
authority, or other legal authority for the
transaction of the
business of viatical settlements;
(d) Filing with the superintendent of insurance or the
chief
insurance regulatory official of another jurisdiction a document
containing false information or otherwise
concealing from the
superintendent any information about a material
fact.
(3) Presenting, causing to be presented, or preparing with
knowledge or reason to believe that it will be presented, to or by
a
viatical settlement provider, viatical settlement broker,
insurer,
insurance agent, financing entity, viatical settlement
purchaser,
or any other person, in connection with a viatical
settlement
transaction or insurance transaction, an insurance
policy or
certificate that the actor knows was fraudulently
obtained by the
insured, the owner, or any agent of the insured or
owner;
(4) Committing any embezzlement, theft, misappropriation, or
conversion of moneys, funds, premiums, credits or other property
of a
viatical settlement provider, insurer, insured, viator,
insurance
policyowner, or any other person engaged in the business
of
viatical settlements or insurance;
(5) Attempting to commit, assisting, aiding or abetting in
the
commission of, or conspiracy to commit any act or omission
specified in
divisions (E)(1) to (4) of this section.
(F) "Recklessly" has the same meaning as in section 2901.22 of the Revised Code.
(G) "Defraud" has the same meaning as in section 2913.01 of the Revised Code.
(H) "Life expectancy" means an opinion or evaluation as to how long a particular person is going to live.
(I) Notwithstanding section 1.59 of the Revised Code, "person" means a natural person or a legal entity, including, but not limited to, an individual, partnership, limited liability company, limited liability partnership, association, trust, business trust, or corporation.
(G)(J)
"Policy" means an individual or group policy, group
certificate, or other contract, or arrangement of life insurance
affecting the
rights of a resident of this state or bearing a
reasonable
relation to this state, regardless of whether delivered
or issued
for delivery in this state.
(H)(K)
"Related provider trust" means a titling trust or any
other
trust established by a licensed viatical settlement provider
or a financing entity for the sole purpose of holding ownership or
beneficial interest in purchased policies in connection with a
financing transaction, provided that the trust has a written
agreement with the licensed viatical settlement provider under
which the licensed viatical settlement provider is responsible for
ensuring compliance with all statutory and regulatory requirements
and under which the trust agrees to make all records and files
related to viatical settlement transactions available to the
superintendent of insurance as if those records and files were
maintained
directly by the licensed viatical settlement provider.
(I)(L)
"Special purpose entity" means a corporation,
partnership,
trust, limited liability company or other similar
entity formed solely to for one of the following purposes:
(i) To provide access, either directly or indirectly, to institutional capital markets for a financing entity or licensed viatical settlement provider;
(ii) In connection with a transaction in which the securities in the special purpose entity are acquired by qualified institutional buyers.
(J)(M)
"Terminally ill" means certified by a physician as
having an illness or sickness physical condition
that
can
reasonably be expected to
result in death in twenty-four
months
or
less.
(K)(N)
"Viatical settlement broker" means a
person that, on
behalf
of a viator and for a fee, commission, or
other valuable
consideration, offers
or attempts to negotiate
viatical
settlements between a viator and one or more
viatical
settlement
providers or viatical settlement brokers.
"Viatical settlement
broker" does
not include
an
attorney, a certified public
accountant, or a
financial planner
accredited
by a nationally
recognized
accreditation agency, who is
retained to
represent the
viator and,
whose compensation is not
paid directly or indirectly
by the
viatical settlement provider or
purchaser.
(L)(O)(1)
"Viatical settlement contract" means any of the
following:
(1)(a) A written agreement establishing between a viator and
a viatical settlement provider that establishes the terms under
which
compensation or any thing anything of value, that is less
than the expected
death
benefit of the insurance policy is or
certificate will be
paid
in return
for the viator's present or
future assignment,
transfer,
sale, release, devise, or
bequest
of
the death benefit
or ownership of any
portion of the
insurance policy or
certificate of insurance any beneficial
interest in the policy
or
its ownership;
(2) A contract for a loan or any other financing
transaction
secured primarily by an individual or group life insurance policy
or certificate,
other than a loan by a life insurance company
pursuant to the terms of the
life insurance contract or a loan
secured by the cash value of a policy or
certificate;
(3) An agreement to transfer ownership or change the
beneficiary
designation of the policy or certificate at a later
date, regardless of
the date that compensation is paid to the
viator (b) The transfer or acquisition for compensation or
anything of value for ownership or beneficial interest in a trust
or an interest in another person that owns such a policy if the
trust or other person was formed or availed of for the
principal
purpose of
acquiring one or more life insurance
policies;
(c) A premium finance loan made for a policy by a lender to a viator on, before, or after the date of issuance of the policy in either of the following situations:
(i) The viator or the insured receives a guarantee of the viatical settlement value of the policy.
(ii) The viator or the insured agrees on, before, or after the issuance of the policy to sell the policy or any portion of the policy's death benefit.
(2) "Viatical settlement contracts" include but are not limited to contracts that are commonly termed "life settlement contracts" and "senior settlement contracts."
(3) "Viatical settlement contract" does not include any of the following unless part of a plan, scheme, device, or artifice to avoid the application of this chapter:
(a) A policy loan or accelerated death benefit made by the insurer pursuant to the policy's terms whether issued with the original policy or a rider;
(b) Loan proceeds that are used solely to pay premiums for the policy and the costs of the loan including interest, arrangement fees, utilization fees and similar fees, closing costs, legal fees and expenses, trustee fees and expenses, and third-party collateral provider fees and expenses, including fees payable to letter of credit issuers;
(c) A loan made by a regulated financial institution in which the lender takes an interest in a policy solely to secure repayment of a loan or, if there is a default on the loan and the policy is transferred, the transfer of such a policy by the lender, provided that neither the default itself nor the transfer is pursuant to an agreement or understanding with any other person for the purpose of evading regulation under this chapter;
(d) A premium finance loan made by a lender that does not violate sections 1321.71 to 1321.83 of the Revised Code, if the premium finance loan is not described in division (O)(1)(c) of this section;
(e) An agreement where all 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 persons or trusts established primarily for the benefit of such parties;
(f) Any designation, consent, or agreement by an insured who is an employee of an employer in connection with the purchase by the employer, or trust established by the employer, of life insurance on the life of the employee as described in section 3911.091 of the Revised Code;
(g) Any business succession planning arrangement including, but not limited to all of the following if the arrangements are bona fide arrangements:
(i) An arrangement between one or more shareholders in a corporation or between a corporation and one or more of its shareholders or one or more persons or trusts established by its shareholders;
(ii) An arrangement between one or more partners in a partnership or between a partnership and one or more of its partners or one or more trusts established by its partners;
(iii) An arrangement between one or more members in a limited liability company or between a limited liability company and one or more of its members or one or more trusts established by its members.
(h) An agreement entered into by a service recipient, a trust established by the service recipient and a service provider, or a trust established by the service provider who performs significant services for the service recipient's trade or business;
(i) An arrangement or agreement with a special purpose entity;
(j) Any other contract, transaction, or arrangement exempted from the definition of viatical settlement contract by rule adopted by the superintendent based on the superintendent's determination that the contract, transaction, or arrangement is not of the type regulated by this chapter.
(M)(P)(1)
"Viatical settlement provider" means
a person,
other
than a viator, that enters into or effectuates a
viatical
settlement contract.
(2) "Viatical settlement provider" does not include any of the following:
(a) A bank, savings bank, savings and loan association, credit union, or other regulated financial institution that takes an assignment of a policy solely as a collateral for a loan;
(b) A premium finance company exempted under section 1321.72
of the Revised Code from the licensure requirements of section
3921.73 of the Revised Code that takes an
assignment of a life
insurance policy or certificate solely as collateral
for a premium
finance loan;
(b)(c) The issuer of a life insurance policy or certificate
providing accelerated
benefits as defined in section 3915.21 of
the Revised Code and pursuant to the contract;
(c)(d) An individual who enters into or effectuates not more
than
one agreement viatical settlement contract in
any calendar
year for the transfer of life
insurance policies or certificates
for any value
less than the
expected death benefit;
(d)(e) An authorized or eligible insurer that provides stop
loss
coverage or financial guarantee insurance to a viatical
settlement provider, purchaser,
financing entity,
special purpose
entity, or related
provider
trust;
(e)(f) A financing entity;
(f)(g) A special purpose entity;
(g)(h) A related provider trust;
(h)(i) A viatical settlement purchaser;
(j) Any other person the superintendent determines is not consistent with the definition of viatical settlement provider.
(N)(Q)
"Viaticated policy" means a life insurance policy or
certificate that has been acquired by a viatical settlement
provider pursuant
to a viatical settlement contract.
(O)(R)
"Viator" means the owner of a life insurance policy or
a
certificate holder under a group policy
that has not previously
been viaticated who, in return for
compensation or any thing
anything of
value that is less than the expected
death
benefit of
the policy
or certificate, assigns, transfers,
sells, releases,
devises, or bequests
the death benefit or ownership of any
portion of
the insurance
policy or certificate of insurance. For
the
purposes of this
chapter, a
"viator" is not limited to an
owner of
a life insurance
policy or a certificate holder under a
group
policy insuring the
life of an individual with a terminal
or
chronic illness or
condition who is terminally or chronically
ill except where specifically addressed.
"Viator" does not
include any of the following:
(1) A licensee under this chapter;
(2) An accredited investor or A qualified institutional buyer
as
defined respectively in
Regulation
D,
Rule 501 or
Rule 144A of
the
Securities Act of 1933, as
amended;
(3) A financing entity;
(4) A special purpose entity;
(5) A related provider trust.
(P)(S)
"Viatical settlement purchaser" means a person who
gives
provides a
sum of money as consideration for a life
insurance policy or an
interest in the death benefits of a life
insurance policy from a viatical settlement provider that is the
subject of a
viatical settlement contract, or a
person who owns,
acquires, or
is entitled to a beneficial interest
in a trust or
person that owns a
viatical settlement contract or is the
beneficiary of a life
insurance policy that has been or will be
is
the subject of a
viatical settlement contract, for the purpose
of
deriving an
economic benefit.
"Viatical settlement purchaser"
does
not include
any of the following:
(1) A licensee under this chapter;
(2) An accredited investor or A qualified institutional buyer
as
defined respectively in
Regulation
D,
Rule 501 or
Rule 144A of
the
Securities Act of 1933, as
amended;
(3) A financing entity;
(4) A special purpose entity;
(5) A related provider trust.
(Q)(T) "Qualified institutional buyer" has the same meaning
as in 17 C.F.R. 230.144A as that regulation exists on the
effective date of this amendment.
(U) "Licensee" means a person licensed as a viatical settlement provider or viatical settlement broker under this chapter.
(R)(V)
"NAIC" means the national association of insurance
commissioners.
(S)
"Securities Act of 1933" has the same
meaning as in
section
1707.01 of the Revised Code (X) "Regulated financial
institution" means a bank, a savings association, or credit union
operating under authority granted by the superintendent of
financial institutions, the regulatory authority of any other
state of the United States, the office of thrift supervision, the
national credit union administration, or the office of the
comptroller of the currency.
(W)(1) "Stranger-originated life insurance," or "STOLI," means a practice, arrangement, or agreement initiated at or prior to the issuance of a policy that includes both of the following:
(a) The purchase or acquisition of a policy primarily benefiting one or more persons who, at the time of issuance of the policy, lack insurable interest in the person insured under the policy;
(b) The transfer at any time of the legal or beneficial ownership of the policy or benefits of the policy or both, in whole or in part, including through an assumption or forgiveness of a loan to fund premiums.
(2) "Stranger-originated life insurance" also includes trusts or other persons that are created to give the appearance of insurable interest and are used to initiate one or more policies for investors but violate insurable interest laws and the prohibition against wagering on life.
(3) "Stranger-originated life insurance" does not include viatical settlement transactions specifically described in division (O)(3) of this section.
Sec. 3916.02. No (A) Notwithstanding division (C) of this
section, no person shall operate in this state as a
viatical
settlement provider or viatical settlement broker without
first
having obtained a license from
the superintendent of
insurance
and, if different from
the owner
of the policy to be viaticated
is not a resident of this
state,
from the comparable
official of
the state of residence
of
the
viator owner if that state issues
licenses for viatical settlement providers or viatical settlement
brokers. If
(B)(1) If there is
more than one viator owner on a single
policy
or
certificate and the
viators owners are residents of
different
states, the
viatical settlement contract
shall be
governed by
the law of
the state in
which the viator
owner
having the largest
percentage
ownership of the
policy or
certificate resides or, if
the viators
owners hold equal
ownership, the
state of residence
of one viator
owner agreed
upon in
writing by all
viators owners.
(2) If the viator is a resident of this state, all agreements to be signed by the viator shall provide exclusive jurisdiction to courts of this state and the laws of this state shall govern the agreements. Nothing in the agreements shall abrogate the viator's right to a trial by jury.
(C)(1) A person who represents the viator and is not compensated directly or indirectly by the viatical settlement provider or viatical settlement purchaser, who is licensed as an attorney, certified public accountant, or financial planner accredited by a nationally recognized accreditation agency may negotiate viatical settlement contracts on behalf of a viator without obtaining a license pursuant to division (A) of this section.
(2) An individual insurance agent, in good standing, who has been licensed as a resident or nonresident insurance agent with a life line of authority in this state for at least five years may operate as a viatical settlement broker without obtaining a license pursuant to division (A) of this section if the viatical settlement broker activities of the insurance agent are incidental to the insurance agent's insurance business activities.
Sec. 3916.03. (A) An applicant for a license as a viatical
settlement provider or viatical
settlement
broker shall submit an
application for the license in
a manner prescribed by
the
superintendent of insurance. The
application shall be accompanied
by a
fee
established by the
superintendent by rule adopted in
accordance with
chapter
Chapter
119. of the Revised Code.
(B) A license issued under this chapter to a person other than an individual authorizes all partners, officers, members, or designated employees of the person to act as viatical settlement providers or viatical settlement brokers, as applicable, and all those partners, officers, members, or designated employees shall be named in the application and any supplements to the application.
(C) Upon the filing of an application under this section and the payment of the license fee, the superintendent shall make an investigation of the applicant and issue to the applicant a license that states in substance that the person is authorized to act as a viatical settlement provider or viatical settlement broker, as applicable, if all of the following apply:
(1) Regarding an application for a license as a viatical
settlement
provider, the applicant provides a all of the
following:
(a) A detailed plan of operation;
(b) Proof of financial responsibility pursuant to division (D) of this section;
(c) A general description of the method the applicant will use to determine life expectancies, including a description of the applicant's intended receipt of life expectancies, the applicant's intended use of life expectancies, the applicant's intended use of life expectancy providers, and a written plan of policies and procedures used to determine life expectancies.
(2) The superintendent finds all of the following:
(a) The applicant is competent and trustworthy and intends to act in good faith in the capacity of a viatical settlement provider or viatical settlement broker, as applicable.
(b) The applicant has a good business reputation and has had experience, training, or education so as to be qualified to act in the capacity of a viatical settlement provider or viatical settlement broker, as applicable.
(3) If the applicant is a person other than an individual,
the
applicant provides a certificate of good standing from the
state of its
domicile organization.
(4) The applicant provides an antifraud plan that meets the requirements of division (G) of section 3916.18 of the Revised Code.
(D)(1) An applicant for licensure as a viatical settlement provider may provide proof of financial responsibility through one of the following means:
(a) Submitting audited financial statements that show a minimum equity of not less than two hundred fifty thousand dollars in cash or cash equivalents;
(b) Submitting both audited annual financial statements that show positive equity and either of the following:
(i) A surety bond in the amount of two hundred fifty thousand dollars in favor of this state issued by an insurer authorized to issue surety bonds in this state;
(ii) An unconditional and irrevocable letter of credit, deposit of cash, or securities, in any combination, in the aggregate amount of two hundred fifty thousand dollars.
(2) If an applicant is licensed as a viatical settlement provider in another state, the superintendent may accept as valid any similar proof of financial responsibility the applicant filed in that state.
(3) The superintendent may request proof of financial responsibility at any time the superintendent considers necessary.
(E) An applicant shall provide all information requested by
the
superintendent. The superintendent may, at any time, require
an applicant to
fully disclose the identity of all stockholders
shareholders,
partners, officers, members,
and employees, and may,
in the
exercise of the superintendent's discretion,
refuse to
issue a
license to an applicant that is not an individual if the
superintendent is not
satisfied that each officer, employee,
stockholder shareholder, partner, or member who may
materially
influence the
applicant's conduct meets the standards set forth in
this chapter.
(E)(F) Except as otherwise provided in this division, a
license
as a
viatical settlement provider or viatical settlement
broker
expires on the last
day of
March next after its issuance
or
continuance. A license as a
viatical settlement provider
or
viatical settlement broker may, in the
discretion of the
superintendent and the payment of an annual renewal fee
established
by the superintendent by rule adopted in accordance
with
chapter
Chapter 119.
of the Revised Code, be continued past
the last
day of March next after its issue
and after the last day
of March
in each succeeding year. Failure
to pay the renewal fee
by the
required date results in the expiration of the
license.
(F)(G) Any individual licensed as a viatical settlement
broker shall complete not less than fifteen hours of continuing
education biennially. The superintendent shall approve continuing
education courses that shall be related to viatical settlements
and viatical settlement transactions. The superintendent shall
adopt rules for the
enforcement of this division.
(H) The superintendent shall not issue a license to a nonresident applicant, unless either of the following applies:
(1) The applicant files and maintains a written designation of an agent for service of process with the superintendent.
(2) The applicant has filed with the superintendent the applicant's written irrevocable consent that any action against the applicant may be commenced against the applicant by service of process on the superintendent.
(G)(I) A viatical settlement
provider
or viatical settlement
broker shall provide to the
superintendent new or
revised
information regarding any change
in
its officers, any shareholder
owning ten per cent or
more of its
stockholders voting
securities, or its partners,
directors,
members, or
designated
employees within thirty days of the change.
(H)(J) Any fee collected under this section shall be paid
into
the
state treasury to the credit of the department of
insurance
operating fund
created by section 3901.021 of the
Revised Code.
Sec. 3916.031. Any corporation, partnership, or other business that is licensed as a viatical settlement broker shall maintain at least one designated individual who is individually licensed as a viatical settlement broker to be responsible for the licensee's compliance with this chapter.
Sec. 3916.05. (A) A person shall not use a viatical settlement contract form or provide a disclosure statement form to a viator in this state unless the viatical settlement contract form or the disclosure statement form is filed with and approved by the superintendent of insurance. The superintendent shall disapprove a viatical settlement contract form or a disclosure statement form if, in the superintendent's opinion, the viatical settlement contract form, the disclosure statement form, or any provision contained therein fails to meet the requirements of section 3916.06 of the Revised Code, is unreasonable, is contrary to the interests of the public, or is otherwise misleading or unfair to the viator. At the superintendent's discretion, the superintendent may require the submission of advertising material to which section 3916.17 of the Revised Code applies. If not disapproved by the superintendent, a filing made pursuant to this section shall be considered approved forty-five days after the contract form, disclosure form, or advertising material is filed.
(B) Any insurance company that issues life insurance policies in this state shall include questions in its life insurance applications that are reasonably structured to identify and prevent stranger-originated life insurance. The superintendent shall adopt rules under Chapter 119. of the Revised Code for the implementation of this section. Each insurer shall file with the superintendent copies of its amended applications for life insurance within twelve months following the effective date of the superintendent's adoption of rules pursuant to this division.
(C) The superintendent may adopt rules in accordance with Chapter 119. of the Revised Code to establish reasonable fees for any service or transaction performed by the department of insurance pursuant to division (A) of this section. Any fee collected pursuant to those rules shall be paid into the state treasury to the credit of the department of insurance operating fund created by section 3901.021 of the Revised Code.
Sec. 3916.06. (A)(1) With each application for a viatical settlement, a viatical settlement provider or viatical settlement broker shall disclose at least the following to a viator no later than the time all parties sign the application for the viatical settlement contract:
(a) That there are possible alternatives to viatical
settlement
contracts, including any
accelerated death benefits
offered under the viator's life insurance policy or
certificate;
(b) That some or all of the proceeds of the viatical settlement may be subject to federal income taxation and state franchise and income taxation, and that assistance should be sought from a professional tax advisor;
(c) That the proceeds of the viatical settlement could be subject to the claims of creditors;
(d) That receipt of the proceeds of the viatical settlement may adversely affect the viator's eligibility for medical assistance under Chapter 5111. of the Revised Code or other government benefits or entitlements, and that advice should be obtained from the appropriate government agencies;
(e) That the viator has a right to rescind the viatical
settlement
contract for at least fifteen calendar days after the
viator receives the
viatical
settlement proceeds, as provided in
section 3916.08 of
the
Revised Code,. If the insured dies during
the
rescission period, the viatical settlement contract shall be
deemed to
have been
rescinded, subject to repayment of all
viatical
settlement proceeds to the
viatical settlement
company.
(f) That funds will be sent to the viator within three business days after the viatical settlement provider has received written acknowledgment from the insurer or group administrator that ownership of the policy or interest in the certificate has been transferred and that the beneficiary has been designated pursuant to the viatical settlement contract;
(g) That entering into a viatical settlement contract may
cause
other
rights or benefits, including conversion rights and
waiver of premium benefits
that may exist under the policy or
certificate, to be forfeited by the viator
and that assistance
should be sought from a financial advisor.
(h) That following execution of the viatical settlement contract, the viatical settlement provider or the authorized representative of the viatical settlement provider may contact the insured for the purpose of determining the insured's health status and to confirm the insured's residential or business address and telephone number or for other purposes permitted by law. Any such contact shall be limited to once in any three-month period if the insured has a life expectancy of more than one year or to once per month if the insured has a life expectancy of one year or less.
(2) The viatical settlement provider or viatical settlement broker shall provide the disclosures under division (A)(1) of this section in a separate document that is signed by the viator and the viatical settlement provider or viatical settlement broker.
(3) Disclosure to a viator under division (A)(1) of this
section shall include distribution of a brochure describing the
process of
viatical settlements. The viatical settlement
provider
or viatical
settlement broker shall use the
NAIC's form for the
brochure
unless one another form is developed or
approved by the
superintendent.
(4) The disclosure document under division (A)(1) of this section shall contain the following language:
"All medical, financial, or personal information solicited or obtained by a viatical settlement provider or viatical 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 viatical settlement between the viator and the viatical settlement 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."
(B)(1) A viatical settlement provider shall disclose at least the following to a viator prior to the date the viatical settlement contract is signed by all the necessary parties:
(a) The affiliation, if any, between the viatical
settlement
provider and
the issuer of the insurance policy or
certificate to
be viaticated;
(b) The name, business address, and telephone number of the viatical settlement provider;
(c) Regarding a viatical settlement broker, the amount and method of calculating the broker's compensation. As used in this division, "compensation" includes anything of value paid or given to a viatical settlement broker for the placement of a policy or certificate.
(d) Any affiliations or contractual arrangements between the viatical settlement provider and the viatical settlement broker;
(d)(e) If an insurance a policy or certificate to be
viaticated
has
been issued
as a joint
policy or certificate or
involves
family riders or any coverage of a life
other than the
insured
under the policy or certificate to be viaticated, the
possible
loss of
coverage on the other lives under the policy or
certificate and that advice
should be sought from the viator's
insurance producer agent or the company issuing
the policy or
certificate;
(e)(f) The dollar amount of the current death benefit payable
to
the viatical
settlement provider under the policy or
certificate,
and, if known, the
availability of any additional
guaranteed
insurance benefits, the dollar
amount of any
accidental
death and
dismemberment benefits under the policy or
certificate,
and the
viatical settlement provider's extent to
which the
viator's
interest in those
benefits will be
transferred as a
result of the
viatical settlement contract.
(f) The name, business
address, and telephone number of the
independent third-party
escrow agent, and the fact that the
viator
or owner
may inspect or
receive
copies of the relevant
escrow or
trust agreements or
documents (g) That an escrow agent
shall provide escrow services to the parties pursuant to a written
agreement, signed by the viatical settlement provider, the
viatical settlement broker, and the viator. At the close of
escrow, the escrow agent will distribute the proceeds of the sale
to the viator, minus any compensation to be paid to any other
persons who provided services and to whom the viator has agreed to
compensate out of the gross amount offered by the viatical
settlement purchaser. All persons receiving any form of
compensation under the escrow agreement shall be clearly
identified, including name, business address, telephone number,
and tax identification number.
(2) The viatical settlement broker shall disclose at least the following to a viator prior to the execution of the viatical settlement contract:
(a) The name, business address, and telephone number of the viatical settlement broker;
(b) A full, complete, and accurate description of all offers, counteroffers, acceptances, and rejections relating to the proposed viatical settlement contract;
(c) Any affiliations or contractual agreements between the viatical settlement broker and any person making an offer in connection with the proposed viatical settlement contract;
(d) The amount and method of calculating the viatical settlement broker's compensation and, if any portion of the viatical settlement broker's compensation is taken from the viatical settlement offer, the total amount of the viatical settlement offer and the viatical settlement broker's compensation as a percentage of that total. As used in this division, "compensation" includes anything of value paid or given to a viatical settlement broker related to the settlement of a policy.
(3) The viatical settlement provider or
viatical
settlement
broker
shall conspicuously display the
disclosures
required under division
divisions (B)(1)
and (2) of
this section
in the viatical settlement contract or in a separate
document
signed by the viator
and the viatical
settlement
provider or
viatical settlement
broker, as appropriate.
(C) If the viatical settlement provider transfers
ownership
or changes
the
beneficiary of the insurance policy or
certificate, the
viatical settlement provider
shall
communicate
in writing the change in
ownership or beneficiary to
the
insured
within twenty days after
the change.
Sec. 3916.07. (A) A viatical settlement provider entering into a viatical settlement contract shall first obtain all of the following:
(1) If the viator is the insured, a written statement from an attending physician that the viator is of sound mind and under no constraint or undue influence to enter into a viatical settlement contract. As used in this division, "physician" means a person authorized under Chapter 4731. of the Revised Code to practice medicine and surgery or osteopathic medicine and surgery.
(2) A document in which the insured consents in writing, as
required by
division (E) of section 3916.13 of the Revised Code,
to the
release of the insured's medical records to a viatical
settlement provider or viatical settlement
broker and to the
insurance company that issued the life
insurance
policy or
certificate covering the life of the insured.
(B) Within twenty days after a viator executes
documents
necessary to transfer any rights under an insurance a
policy or
certificate or within twenty days of entering any
expressed or
implied
agreement, option,
promise, or other form of
understanding
to viaticate the policy,
the viatical settlement
provider
shall
give written notice to the
insurer that issued that
insurance
policy or certificate that the
policy or certificate has
or will
become a viaticated policy or
certificate. The notice
shall be
accompanied by the documents
required by division (C) of
this
section.
(C) The viatical settlement provider shall deliver a
copy of
the
medical
release required under division (A)(2) of
this
section, a
copy of
the viator's application for the viatical
settlement
contract, the
notice required under division (B) of
this section,
and a request
for verification of coverage to the
insurer that
issued the life
insurance policy or certificate that
is the
subject of the
viatical transaction. The viatical
settlement
provider shall
use the NAIC's
form for verification of
coverage
unless standards for
verification are another form is
developed or
approved by
the superintendent of insurance.
(D) The insurer shall respond to a request for verification
of
coverage submitted on an approved form by a viatical
settlement provider or viatical settlement broker
within
thirty
calendar days
after the date the request
is
received and
shall
indicate whether,
based on the medical
evidence
and
documents
provided, the insurer
intends to pursue an
investigation at that
time regarding possible
fraud or the
validity of the life
insurance contract or
certificate policy that is
the subject of
the
request.
The insurer shall
accept an original
or facsimile
or
electronic copy of such request
and any
accompanying
authorization signed by the viator.
(E) Prior to or at the time of execution of the viatical
settlement contract, the viatical settlement provider
shall
obtain
a witnessed
document in which the viator consents to
the
viatical
settlement contract, represents that the viator has a
full and
complete understanding of the viatical settlement
contract and a
full and complete understanding of the benefits of
the life
insurance policy or certificate, and acknowledges that
the viator
is entering into the viatical settlement contract
freely and
voluntarily and, for persons with a terminal or chronic
illness or
condition who are terminally or chronically ill,
acknowledges that the insured has a terminal
or chronic
illness is
terminally or chronically ill and that the terminal or chronic
illness or
condition was
diagnosed after the life insurance policy
or
certificate was
issued.
(F) If a viatical settlement broker performs any of the activities specified in this section on behalf of the viatical settlement provider, the viatical settlement provider is deemed to have fulfilled the requirements of this section.
(G) All medical information solicited or obtained by any licensee shall be subject to the applicable provisions of state law relating to confidentiality of medical information.
Sec. 3916.09. (A) The viatical settlement provider
shall
instruct
the viator to send the executed documents required
to
effect the change in
ownership, assignment, or
change in
beneficiary directly to the independent escrow agent. Within
three
business days after the
date the escrow agent receives the
documents, or from the date the viatical settlement
provider
receives the documents if the viator
erroneously provides
the
documents directly to the viatical settlement
provider, the
viatical settlement
provider shall pay or
transfer
the proceeds of
gross amount to be paid by the viatical
settlement provider to an
the
escrow or agent for deposit in a
trust or escrow
account set
up for that
purpose by the escrow agent in a state or federally
chartered
regulated
financial
institution whose deposits
are
insured by
the federal
deposit
insurance corporation.
Upon
payment of the
settlement
proceeds
into the escrow or trust
account, the escrow
agent
or
trustee
shall deliver the original
change in ownership,
assignment,
or
change in beneficiary forms
to
the viatical
settlement provider, a representative of the
viatical settlement
provider, or
related provider trust. Upon the
licensed
provider's escrow agent's receipt of
the acknowledgment
of the
properly completed transfer of
ownership,
assignment, or
designation of beneficiary from the
insurance
company, the
licensed provider escrow agent shall instruct the escrow
agent to
pay the settlement proceeds to the viator and any other person
pursuant to the viatical settlement contract and the escrow
agreement. The escrow
agent shall
make payment within three
business days of the date
the provider escrow agent
received the
acknowledged
forms from the insurance
company. Funds
are
considered sent to
a viator as of the
date that the
escrow
agent either releases the
funds for wire
transfer to the
viator
or places a check for
delivery to the
viator via United
States
postal service or other
nationally
recognized delivery
service.
(B) Failure to transfer the proceeds to the viator within
the
period of time disclosed pursuant to division (A)(1)(f)
of
section
3916.06 of the Revised Code renders the viatical
settlement
contract voidable by the viator for lack of
consideration until
the time
consideration is tendered to and
accepted by the viator.
If a viatical settlement
contract is
voided by the viator pursuant
to this division, ownership of
the
insurance policy or certificate
reverts to the viator or to
the
viator's estate if the viator is
deceased, irrespective of any
transfer of ownership of the policy
or certificate by the viator, viatical settlement
provider, or
any other person.
Sec. 3916.10. After a viatical settlement has occurred,
contact with the insured for the purpose of
determining the health
status of the insured by the viatical settlement
provider
or
viatical settlement broker shall be made only by the
viatical
settlement provider or broker licensed
in
this state, or the
authorized
representative of the viatical
settlement
provider.
The viatical
settlement
provider or viatical
settlement broker,
or
authorized
representative shall
not contact the insured for
the
purpose of
determining
the
insured's health status more than
once
every three
months if the
insured
has a life expectancy of
more
than one year,
or more than
once per month if
the insured
has a
life expectancy
of one year or
less. The viatical
settlement
provider or viatical settlement
broker shall
explain
the
procedure
for making these contacts at
the time the
viatical
settlement
contract is
entered into.
The limitations set forth in this section do not apply to contacts made with an insured under a viaticated policy for purposes other than to determine the insured's health status.
Viatical settlement providers and viatical
settlement
brokers
are
responsible for the actions of
their authorized
representatives, for the
purposes of this
section except viatical
settlement providers are not responsible for the actions of
subsequent purchasers of a policy.
Sec. 3916.11. (A)(1) A licensee under this chapter shall, for five years, retain copies of all of the following:
(a) All proposed, offered, or executed contracts, purchase agreements, underwriting documents, policy forms, and applications from the date of the proposal, offer, or execution of the contract or purchase agreement, whichever is later;
(b) All checks, drafts, or other evidence and documentation related to the payment, transfer, deposit, or release of funds from the date of the transaction;
(c) All other records and documents related to the requirements of this chapter.
(2) This section does not relieve a person of the obligation to produce the documents described in division (A)(1) of this section to the superintendent of insurance after the retention period specified in that division has expired if the person has retained the documents.
(3) Records required to be retained by this section must be legible and complete and may be retained in paper, photograph, microprocess, magnetic, mechanical, or electronic media, or by any process that accurately reproduces or forms a durable medium for the reproduction of a record.
(4) If a licensee fails to comply with division (A) of this section, the superintendent may initiate proceedings in accordance with Chapter 119. of the Revised Code to revoke, suspend, or refuse to renew the license of the licensee.
(B)(1) Upon determining that an examination should be conducted, subject to division (E) of this section, the superintendent shall appoint one or more examiners to perform the examination and instruct them as to the scope of the examination. The superintendent may employ any guidelines or procedures for purposes of this division that the superintendent considers appropriate.
(2) Every licensee, or person from whom information is sought, and all officers, directors, employees, and agents of any licensee, or person from whom information is sought, shall provide to the examiners timely, convenient, and free access at all reasonable hours at the licensee's or person's 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 superintendent
shall be
grounds for suspension,
revocation, denial of issuance,
or
nonrenewal of any license or
authority held by the licensee to
engage in the business of
viatical
settlement business
settlements or other business
subject to the
superintendent's
jurisdiction. Any proceedings for
suspension,
revocation, denial,
or nonrenewal of refusal to renew any license or
authority
is are
subject
to chapter Chapter 119. of the Revised Code.
(3) The superintendent has 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 superintendent 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. Failure to obey the court order shall be punishable as contempt of court.
(4) When making an examination under this chapter, the superintendent may retain attorneys, appraisers, independent actuaries, independent certified public accountants, or other professionals and specialists as examiners, and the licensee that is the subject of the examination shall bear the cost of those examiners pursuant to division (F) of this section. Examiners who are appointed by the superintendent, but who are not employees of the department of insurance, shall be compensated for their work, travel, and living expenses at reasonable and customary rates.
(5) Nothing contained in this chapter limits the superintendent'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 chapter limits the superintendent's authority to use and, if appropriate, to make public any final or preliminary examination report, any examiner or licensee working 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 that the superintendent, in the superintendent's sole discretion, considers appropriate.
(C)(1) Examination reports shall be comprised of only facts appearing upon the books, records, or other documents of the licensee, its agents, or other persons examined, or as ascertained from the testimony of its officers, agents, or other persons examined concerning its affairs, and the conclusions and recommendations that the examiners find reasonably warranted from the facts.
(2) Upon completion of the examination, the examiner in charge shall file with the superintendent a verified written report of examination. Upon receipt of the verified report, the superintendent 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 from receipt of the report to make a written submission or rebuttal with respect to any matters contained in the examination report.
(3) If the superintendent determines that regulatory action is appropriate as a result of an examination, the superintendent may initiate any proceedings or actions provided by law.
(D)(1) Names and individual identification data for all viators shall be considered private and confidential information and shall not be disclosed by the superintendent, unless required by law.
(2) Except as otherwise provided in this chapter or in the law of another state or jurisdiction that is substantially similar to this chapter, all examination reports, working papers, recorded information, documents, and copies of those reports, papers, information, documents, and copies produced by, obtained by, or disclosed to the superintendent or to any other person in the course of an examination made under this chapter or under the law of another state or jurisdiction that is substantially similar to this chapter, or in the course of the superintendent's analysis or investigation of the financial condition or market conduct of a licensee are confidential by law and privileged, are not a public record open for inspection under section 149.43 of the Revised Code, are not subject to subpoena, and are not subject to discovery or admissible in evidence in any private civil action. The superintendent may use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as part of the superintendent's official duties.
(3) Documents, materials, or other information, including, but not limited to, all working papers, and copies of working papers, in the possession or control of the NAIC and its affiliates and subsidiaries are confidential by law and privileged, are not subject to subpoena, and are not subject to discovery or admissible in evidence in any private civil action, if either of the following applies:
(a) They are created, produced, or obtained by or disclosed to the NAIC and its affiliates and subsidiaries in the course of assisting an examination made under this chapter or assisting the superintendent or the comparable official in another state in the analysis or investigation of the financial condition or market conduct of a licensee.
(b) The superintendent or the comparable official in another state discloses them to the NAIC and its affiliates and subsidiaries under division (D)(5) of this section or under a comparable provision in the law of the other state.
(4) Neither the superintendent nor any person that received the documents, material, or other information while acting under the authority of the superintendent, including the NAIC and its affiliates and subsidiaries, shall be permitted to testify in any private civil action concerning any confidential documents, materials, or information subject to division (D)(1) of this section.
(5)(a) In order to assist in the performance of the superintendent's duties, the superintendent may do any of the following:
(i) Share documents, materials, or other information, including the confidential and privileged documents, materials, or information subject to division (D)(1) of this section, with other state, federal, and international regulatory agencies, with the NAIC and its affiliates and subsidiaries, and with state, federal, and international law enforcement authorities, if the recipient agrees to maintain the confidentiality and privileged status of the document, material, communication, or other information;
(ii) Receive documents, materials, communications, or information, including otherwise confidential and privileged documents, materials, or information, from the NAIC and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions;
(iii) Enter into agreements governing sharing and use of information consistent with this section.
(b) The superintendent shall maintain as confidential or privileged any document, material, or information received under division (D)(5)(a)(ii) of this section with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information.
(6) No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information shall occur as a result of disclosure to the superintendent under this section or as a result of sharing as authorized in division (D)(5) of this section.
(7) A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under division (D) of this section shall be available and enforced in any proceeding in, and in any court of, this state.
(8) Nothing contained in this chapter prevents or prohibits the superintendent from disclosing the content of an examination report, preliminary examination report or results, or any matter relating to those reports or results, to the official of any other state or country that is comparable to the superintendent, or to law enforcement officials of this or any other state or agency of the federal government at any time, or to the NAIC, if the agency or office receiving the report or matters relating to it agrees in writing to hold it confidential and in a manner consistent with this chapter.
(E)(1) The superintendent may not appoint an examiner 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 chapter. This division does not automatically preclude any of the following from being an examiner:
(a) A viator;
(b) An insured in a viaticated insurance policy or
cetificate;
(c) A beneficiary in an insurance a policy or certificate
that
is
proposed to be viaticated.
(2) Notwithstanding the requirements of division (E) of this section, the superintendent 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 chapter.
(F)(1) As used in division (F) of this section, "expenses" include all of the following:
(a) Compensation of examiners for each day or portion of a day worked;
(b) Travel and living expenses of examiners;
(c) All other incidental expenses incurred by or on behalf of examiners;
(d) An allocated share of all expenses not described in division (F)(1), (2), or (3) of this section that are necessarily incurred in the performance of a market conduct examination, including the expenses of direct overhead and support staff for examiners.
(2) When a market conduct examination is made of an insurer a
licensee under this chapter,
the
insurer licensee shall pay the
expenses of the
examination. The
expenses of an
examination
include those incurred
on or after the
date on which the
superintendent notifies the
insurer licensee of the
examination
through the
issuance of the final examination report.
(3) Upon an insurer's failure to comply with
division (A) of
this
section, the
superintendent may initiate
proceedings in
accordance with
Chapter
119. of the Revised Code
to revoke,
suspend, or
refuse to renew
the certificate of
authority or
license of the insurer. Additionally, the The superintendent
may
request the attorney
general to initiate a civil
action in
the
court of common pleas of
Franklin county to obtain
and
enforce a
judgment for expenses
incurred in the performance of a
market
conduct examination.
(G)(1) No cause of action shall arise nor shall any liability be imposed against the superintendent, any authorized representative of the superintendent, or any examiner appointed by the superintendent for any statements made or conduct performed in good faith while carrying out the provisions of this chapter.
(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 superintendent, any
authorized representative
of the superintendent, or any examiner
appointed by the
superintendent pursuant to an examination made
under this chapter,
if the act of communication or delivery was
performed in good
faith and without fraudulent intent or the
intent to deceive.
Division (G)(2) of this section This division
does not
abrogate or modify in any
way any common law or statutory
privilege or immunity previously enjoyed
by any person identified
in division (G)(1) of this
section.
(3) A person identified in division (G)(1) or (2) of this
section
shall be entitled to an award of attorney's fees and costs
if the
person is the prevailing party in a civil action for libel,
slander, or
any other relevant tort arising out of activities in
carrying out the
provisions of this chapter and the party bringing
the action was
not substantially justified in bringing the action.
For purposes
of this division (G)(3) of this section, a proceeding
an action
is
"substantially
justified" if it had a reasonable
basis in law
or
fact at the time that
it was initiated.
(H) The superintendent may investigate suspected fraudulent viatical settlement acts and persons engaged in the business of viatical settlements.
Sec. 3916.12. (A) Each viatical settlement provider
and
viatical
settlement broker licensed licensee under this chapter
shall file with the
superintendent of insurance, on
or before the
first day of
March
of each year, an annual statement
containing
the information
required by the
superintendent by rule
adopted in
accordance with
chapter
119. of the Revised Code
verified under
oath by two officers in the form prescribed by the
superintendent. The annual statement for a viatical settlement
provider shall include the following information about the
viatical settlement provider's transactions:
(1) Aggregate total of the value of unsettled viatical settlement contracts that have been signed by the viator but have not been settled as of the date of the report categorized by the number of days since the viator signed the contract;
(2) Number of policies purchased, total amount of settlement paid for policies purchased, total face value of policies purchased beginning with the reporting year and most recent five years;
(3) Number of settlements paid in the preceding calendar year, allocated by state or territory;
(4) Any other information required by the superintendent.
(B) On or before the first day of May of each year, a viatical settlement provider licensed in this state shall file with the superintendent its financial statement, audited by an independent certified public accountant along with a letter stating whether any significant deficiencies or material weaknesses were detected during the audit pursuant to statement on auditing standards number 112 or as amended or superseded.
(C)(1) Each viatical settlement provider shall file with the superintendent interim unaudited financial statements, including comparative results and footnotes to the financial statements, on a quarterly basis within forty-five days after the end of each quarter. The interim financial statements shall meet all of the following requirements:
(a) Be certified by the chief executive officer and chief financial officer as to the accuracy and fair presentation;
(b) Include disclosures either on the face of the financial statements or in accompanying footnotes sufficient so as to make the interim information not misleading.
(2) Viatical settlement providers may assume that the users of the interim financial statements have access to the prior fiscal year-end audited financial statements and that the adequacy of additional disclosure needed for a fair presentation, except in regard to material contingencies, may be determined in that context. A footnote disclosure that would substantially duplicate the disclosure contained in the audited financial statements for the preceding fiscal year may be omitted. A footnote disclosure shall be provided if events subsequent to the fiscal year end have a material impact on the viatical settlement provider.
(D) A viatical settlement provider that willfully fails to file the annual statements required by this section, or willfully fails to reply within thirty calendar days to a written inquiry from the superintendent or the superintendent's designee, shall, in addition to other penalties provided by this chapter, be subject to a penalty of up to two hundred fifty dollars per day, not to exceed twenty-five thousand dollars in the aggregate for each such failure.
(E) The superintendent shall keep confidential and not a matter of public record all proprietary information of the licensee, all individual transaction data regarding the business of viatical settlements, and data that could compromise the privacy of personal, financial, and health information of the viator or insured.
Sec. 3916.13. Except as otherwise permitted or required by
law, a viatical
settlement provider, viatical
settlement
broker,
insurance company, insurance agent, insurance
broker, information
bureau, rating agency or company, or any other
person with actual
knowledge of a viator or
an insured's identity, shall not
disclose that
identity as an insured,
including
the viator or
insured's name
and
individual identification data, or the viator
or insured's
financial or
medical information, unless
any of the
following apply:
(A) The disclosure is necessary to effect a viatical
settlement
between the viator and a viatical settlement
provider,
and the viator
and insured have provided prior written
consent to
the disclosure.
(B) The disclosure is provided in response to an investigation or examination by the superintendent of insurance or by any other governmental officer or agency or pursuant to the requirements of division (C) of section 3916.18 of the Revised Code.
(C) The disclosure is a term of, or condition to, the transfer of a viaticated policy by one viatical settlement provider to another viatical settlement provider.
(D) The disclosure is necessary to permit a financing
entity,
related provider trust, or special purpose entity to
finance the
purchase
of policies or certificates by a viatical
settlement
provider, and the viator and insured have provided
prior
written
consent to
the
disclosure.
(E) The disclosure is necessary to allow the viatical
settlement provider or viatical settlement
broker or their its
authorized representatives to
make contacts for
the purpose of
determining
health status.
(F) The disclosure is required to purchase stop-loss coverage or financial guaranty insurance.
Sec. 3916.14. (A)(1) The superintendent of insurance may conduct an examination under this chapter of a licensee as often as the superintendent in the superintendent's sole discretion considers appropriate. The superintendent shall consider all of the following to determine the nature, scope, and frequency of examinations:
(a) Consumer complaints;
(b) The results of financial statement analyses and ratios;
(c) Any changes in ownership, officers, or directors;
(d) Any report of independent certified public accountants;
(e) Any other criteria the superintendent determines to be appropriate.
(2) For the purposes of completing an examination of a licensee under this chapter, the superintendent may examine or investigate any person, or the business of any person, insofar as the examination or investigation, in the sole discretion of the superintendent, is necessary or material to the examination of the licensee.
(3) In lieu of an examination under this chapter of any foreign or alien licensee licensed under this chapter, the superintendent, at the superintendent's discretion, may accept an examination report on the licensee as prepared by the official of the licensee's state of domicile or port-of-entry state who is comparable to the superintendent. As far as is practical, the superintendent shall cooperate with that official for any examination of a foreign or alien licensee.
(B) The licensee or applicant shall pay to the superintendent all costs, assessments, forfeitures, or fines incurred in conducting an examination under this section. The superintendent shall deposit the money into the state treasury to the credit of the department of insurance operating fund created by section 3901.021 of the Revised Code.
Sec. 3916.15. (A) The superintendent of insurance may refuse to issue or may suspend, revoke, or refuse to renew the license of a viatical settlement provider or viatical settlement broker, if the superintendent finds that any of the following apply:
(1) There was a material misrepresentation in the application for the license.
(2) The applicant or licensee or any officer, partner, member, key management personnel, or designee of the applicant or licensee has been convicted of fraudulent or dishonest practices, is subject to a final administrative action in another state, has been the subject of an administrative or civil action brought by the department of commerce, division of securities, or is otherwise shown to be untrustworthy or incompetent.
(3) The licensee is a viatical settlement provider that demonstrates a pattern of unreasonable payments to viators.
(4) The licensee or any officer, partner, member, key management personnel, or designee of the licensee has been convicted of or has pleaded guilty or no contest to a felony or to a misdemeanor involving fraud, moral turpitude, dishonesty, or breach of trust, regardless of whether a judgment of conviction has been entered by the court.
(5) The licensee is a viatical settlement provider that has used a viatical settlement contract form that has not been approved under this chapter.
(6) The licensee is a viatical settlement provider that has failed to honor contractual obligations set out in a viatical settlement contract.
(7) The licensee no longer meets the requirements for initial licensure.
(8) The licensee is a viatical settlement provider that has
assigned,
transferred, or pledged
a viaticated policy to a person
that is the licensee knew or should have known was not a one of
the following:
(a) A viatical settlement provider
licensed in this state,
a;
(b) A viatical settlement purchaser;
(c) A qualified institutional buyer;
(d) A financing entity, a;
(e) A special purpose entity, or a;
(f) A related provider trust.
(9) The licensee or any officer, partner, member, key management personnel, or designee of the licensee has violated any provision of this chapter or any rule adopted under this chapter.
(10) The licensee or any officer, partner, member, key management personnel, or designee of the licensee has committed any coercive, fraudulent, or dishonest act, or made any untrue, deceptive, or misleading statement, in connection with a viatical settlement transaction or a proposed viatical settlement transaction.
(B) Before the superintendent refuses to issue a license
under
this chapter, or suspends, revokes, or refuses to renew
the
license of a
viatical settlement provider or viatical
settlement
broker, the superintendent
shall
provide the licensee or
applicant
with notice and an
opportunity
for hearing as provided
in
chapter
Chapter
119. of the
Revised
Code, except as follows:
(1)(a) Any notice of opportunity for hearing, the hearing officer's findings and recommendations, or the superintendent's order shall be served by certified mail at the last known address of the licensee or applicant. Service shall be evidenced by return receipt signed by any person.
For purposes of this section, the "last known address" is the address that appears in the licensing records of the department of insurance.
(b) If the certified mail envelope is returned with an endorsement showing that service was refused, or that the envelope was unclaimed, the notice and all subsequent notices required by Chapter 119. of the Revised Code may be served by ordinary mail to the last known address of the licensee or applicant. The mailing shall be evidenced by a certificate of mailing. Service is deemed complete as of the date of such certificate provided that the ordinary mail envelope is not returned by the postal authorities with an endorsement showing failure of delivery. The time period in which to request a hearing, as provided in Chapter 119. of the Revised Code, begins to run on the date of mailing.
(c) If service by ordinary mail fails, the superintendent
may
shall
cause a summary of the substantive provisions of the notice
to
be
published
once a week for three consecutive weeks in a
newspaper
of general circulation
in the county where the last
known place of
residence or business of the
licensee or applicant
is located. The
notice is considered served on the date of the
third
publication.
(d) Any notice required to be served under Chapter 119. of the Revised Code shall also be served upon the attorney of the licensee or applicant by ordinary mail if the attorney has entered an appearance in the matter.
(e) The superintendent may, at any time, perfect service on a licensee or applicant by personal delivery of the notice by an employee of the department.
(f) Notices regarding the scheduling of hearings and all other matters not described in division (B)(1)(a) of this section shall be sent by ordinary mail to the licensee or applicant and to the attorney of the licensee or applicant.
(2) Any subpoena for the appearance of a witness or the production of documents or other evidence at a hearing, or for the purpose of taking testimony for use at a hearing, shall be served by certified mail, return receipt requested, by an attorney or by an employee of the department designated by the superintendent. Such subpoenas shall be enforced in the manner provided in section 119.09 of the Revised Code. Nothing in this section shall be construed as limiting the superintendent's other statutory powers to issue subpoenas.
Sec. 3916.16. (A)(1) It is a violation of this chapter for any person to enter into a viatical settlement contract prior to the application for or issuance of a policy that is the subject of the viatical settlement contract.
(2) It is a violation of this chapter for any person to issue, solicit, market, or otherwise promote the purchase of a policy for the purpose of or with an emphasis on selling the policy.
(B) It is a violation of this chapter for any person to enter
into a viatical settlement contract within a
two-year five-year
period
commencing with the date of issuance of the
insurance
policy or
certificate unless the viator certifies to the viatical
settlement provider that one or more of the following
conditions
have been met within that two-year period five years
after the
issuance of the policy:
(1) The policy or certificate was issued upon the viator's
exercise of conversion rights arising out of a group
policy or
certificate,
provided the total of the time covered
under the
conversion policy or
certificate plus the time covered
under the
group prior policy or
certificate is at least
twenty-four sixty
months. The
time covered
under the a group
policy or certificate
shall be
calculated without
regard to any
change in insurance
carriers,
provided the coverage
has been
continuous and under the
same group
sponsorship.
(2) The viator is a charitable organization with an insurable
interest pursuant to division (B) of section 3911.09 the Revised
Code that has received from the Internal Revenue Service a
determination letter that is currently in effect, stating that the
charitable organization is exempt from federal income
taxation
under 26 U.S.C. subsection 501(a) and described in section
501(c)(3) of the "Internal Revenue Code."
(3) The viator is not an individual.
(4) The viator certifies and submits independent evidence to
the viatical
settlement provider that one or more of the
following
conditions
have been met within that two-year
period
arisen after the issuance of the policy:
(a) The viator or insured is terminally or chronically ill.
(b) The viator's spouse dies.
(c) The viator divorces the viator's spouse.
(d) The viator retires from
fulll-time
full-time employment.
(e) The viator becomes physically or mentally disabled, and a physician determines that the disability prevents the viator from maintaining full-time employment.
(f) The viator was the insured's employer at the time the
policy
or certificate was issued and the employment relationship
terminated.
(g) A court of competent jurisdiction enters a final order,
judgement
judgment, or decree on the application of a creditor of
the viator
and adjudicates the viator bankrupt or insolvent
or
approves a
petition seeking reorganization of the viator or
appointing a
receiver, trustee, or liquidator to all or a
substantial part of
the viator's assets.
(h) The viator experiences a significant decrease in income
that
is unexpected and that impairs the viator's reasonable
ability to
pay the policy premium.
(i) The viator or insured disposes of the viator's or
insured's
ownership interests in a closely held corporation
(g) The sole beneficiary of the policy is a family member of the viator and the beneficiary dies.
(4) The viator enters into a viatical settlement contract more than two years after the date of issuance of a policy and certifies that all of the following are true:
(a) The viator has funded the policy using personal assets, which may include an interest in the life insurance policy being viaticated up to the cash surrender value of the policy or any financing agreement to fund the policy premiums entered into prior to policy issuance or within two years of policy issuance was provided to the insurer within thirty days of the date the agreement was executed and the financing agreement was secured with personal assets.
(b) The viator had no agreement or understanding with any other person to viaticate the policy or transfer the benefits of the policy, including through an assumption or forgiveness of a premium finance loan at any time prior to issuance of the policy or during the two years after the date of issuance of the policy.
(c) If requested by the insurer, the viator both disclosed to the insurer whether a person other than the insurer obtained a life expectancy evaluation for settlement purposes in connection with the application, underwriting, and issuance of the policy and provided a copy of any such life expectancy evaluation to the insurer at the time of application.
(d) The viator disclosed any financial arrangement, trust, or other arrangement, transaction, or device that conceals the ownership or beneficial interest of the policy to the insurer prior to the issuance of the policy.
(B)(C) Copies of the independent evidence described in
division
(A)(4)(B)(3) of this section and documents
required by
section
3916.07
of the Revised Code shall be
submitted to the
insurer when
the viatical settlement provider or any other party
entering into
a viatical settlement contract with a viator
submits
a request to
the insurer for
verification of coverage.
The copies
shall be
accompanied by a
letter of attestation from
the viatical
settlement provider that
the copies are true and
correct
copies
of the documents received
by the viatical
settlement
provider.
(C)(D) If the viatical settlement provider submits to
the
insurer a
copy of the owner or insured's certification and
independent
evidence described
in division
(A)(4)(B)(3) of this
section when the
viatical settlement provider submits a
request
to the
insurer to effect the
transfer of the policy or
certificate to the viatical settlement
provider,
the
copy
conclusively establishes that the
viatical settlement
contract
satisfies the requirements of this
section, and the
insurer shall
timely respond to the request.
(E) No insurer, as a condition of responding to a request for verification of coverage or effecting the transfer of a policy pursuant to a viatical settlement contract, may require the viator, insured, viatical settlement provider, or viatical settlement broker to sign any form, disclosure, consent, or waiver form that has not been approved by the superintendent of insurance for use in connection with viatical settlement contracts.
(F) Upon receipt of a properly completed request for change of ownership or beneficiary of a policy, the insurer shall respond in writing within thirty calendar days to confirm that the insurer has made the change or specify reasons that the change cannot be processed. No insurer shall unreasonably delay effecting change in ownership or beneficiary or seek to interfere with any viatical settlement contract lawfully entered into in this state.
(G) A viatical settlement provider or viatical settlement broker that is party to a plan, transaction, or series of transactions to originate, renew, continue, or finance a policy with the insurer for the purpose of engaging in the business of viatical settlements at any time prior to or during the first five years after the insurer issues the policy shall fully disclose the plan, transaction, or series of transactions to the superintendent of insurance.
Sec. 3916.17. (A) The general assembly hereby declares
that
the
purpose of this section is to provide prospective viators
with
clear and unambiguous statements in the advertisement of
viatical
settlements and to assure the clear, truthful, and
adequate
disclosure of the benefits, risks, limitations, and
exclusions of
any viatical settlement contract. This purpose is
intended to be
accomplished by the establishment of guidelines and
standards of
permissible and impermissible conduct in the
advertising of
viatical settlements to assure that product
descriptions are
presented in a manner that prevents unfair,
deceptive, or
misleading advertising and is conducive to accurate
presentation
and description of viatical settlements through the
advertising
media and material used by viatical settlement
licensees.
Divisions (B) to (P) of this section apply to any advertising of viatical settlement contracts, or any related products or services intended for dissemination in this state, including, but not limited to, internet advertising viewed by persons located in this state. In cases in which disclosure requirements are established pursuant to federal regulation, this section shall be interpreted so as to minimize or eliminate conflict with federal regulation wherever possible.
(B) Every viatical settlement licensee shall establish and
at
all
times shall maintain a
system of control over the content,
form,
and method of
dissemination of all advertisements of its
contracts, products,
and services. All advertisements, regardless
of by whom they are
written, created, designed, or presented,
shall be the
responsibility of the viatical settlement
licensee
and of
the individual who person that created or
presented the
advertisement.
A
system of control shall include
regular routine
notification, at
least once a year, to agents and
others
authorized by the
viatical
settlement licensee who disseminate
advertisements of the
requirements and procedures for approval
compliance under this section
prior to the use of any
advertisements not furnished by the
viatical settlement
licensee.
(C) All advertisements that are subject to this section
shall
be
truthful and not misleading in fact or by implication.
The form
and content of an advertisement of a viatical settlement
contract
shall be sufficiently complete and clear so as to avoid
deception
and shall not have the capacity or tendency to mislead
or deceive.
The determination of whether an advertisement has the
capacity or
tendency to mislead or deceive shall be made by the
superintendent
of insurance, from the overall impression that the
advertisement
may be reasonably expected to create upon a person
of average
education or intelligence within the segment of the
public to
which it is directed.
(D) Viatical settlement advertisements containing any representation set forth in this division are deemed false and misleading on their face and are prohibited. False and misleading viatical settlement advertisements include, but are not limited to, those including any of the following representations:
(1) "Guaranteed," "fully secured," "100 percent secured," "fully insured," "secure," "safe," "backed by rated insurance companies," "backed by federal law," "backed by state law," or "state guaranty funds," or similar representations;
(2) "No risk," "minimal risk," "low risk," "no speculation," "no fluctuation," or similar representations;
(3) "Qualified or approved for individual retirement accounts (IRAs), Roth IRAs, 401(k) plans, simplified employee pensions (SEPs), 403(b), Keogh plans, TSA, or other retirement account rollovers," "tax deferred," or similar representations;
(4) Utilization of the word "guaranteed" to describe the fixed return, annual return, principal, earnings, profits, investment, or similar representations;
(5) "No sales charges or fees" or similar representations;
(6) "High yield," "superior return," "excellent return," "high return," "quick profit," or similar representations;
(7) Purported favorable representations or testimonials about the benefits of viatical settlement contracts or viatical settlement purchase agreements as an investment, taken out of context from any newspaper, trade paper, journal, radio or television program, or any other form of print and electronic media.
(E)(1) The information required to be disclosed under this section shall not be minimized, rendered obscure, or presented in an ambiguous fashion or intermingled with the text of the advertisement so as to be confusing or misleading.
An advertisement shall not omit material information or use any words, phrases, statements, references, or illustrations if the omission or use has the capacity, tendency, or effect of misleading or deceiving viators, as to the nature or extent of any benefit, loss covered, premium payable, or state or federal tax consequence. The fact that the viatical settlement contract offered is made available for inspection prior to consummation of the sale, that an offer is made to refund the payment if the viator is not satisfied, or that the viatical settlement contract includes a "free look" period that satisfies or exceeds legal requirements, does not remedy any misleading statements.
(2) An advertisement shall not use the name or title of a
life
insurance company or a life insurance policy unless the
advertisement
has been approved by the insurer that company.
(3) An advertisement shall not represent that any premium
payments will not be required to be paid on the life insurance
policy
that is the subject of a viatical settlement contract or
viatical
settlement purchase agreement in order to maintain that
policy,
unless that is the fact.
(4) An advertisement shall not state or imply that interest charged on an accelerated death benefit or a policy loan is unfair, inequitable, or in any manner an incorrect or improper practice.
(5) The words "free," "no cost," "without cost," "no additional cost," "at no extra cost," or words of similar import shall not be used with respect to any policy or to any benefit or service unless true. An advertisement may specify the charge for a benefit or a service or may state that a charge is included in the payment or use other appropriate language.
(6)(a)
Terstimonials
Testimonials, appraisals, analyses,
or
endorsements
used
in advertisements must satisfy all of the
following:
(i) They must be genuine.
(ii) They must represent the current opinion of the author.
(iii) They must be applicable to the viatical settlement
contrct
contract
product or service advertised, if any.
(iv) They must be accurately reproduced with sufficient completeness to avoid misleading or deceiving prospective viators as to the nature or scope of the testimonials, appraisals, analyses, or endorsements.
(b) In using testimonials, appraisals, analyses, or
endorsements,
the viatical settlement licensee makes as its own
all the
statements contained
in the testimonials, appraisals,
analyses,
or endorsements, and
the statements are subject to all
the
provisions of this section.
(c) If the individual making a testimonial, appaisal
appraisal,
analysis,
or endorsement has a
funancial
financial
interest in the
viatical
settlement
provider or related entity
subject of that testimonial, appraisal, analysis, or endorsement
directly or indirectly as a stockholder shareholder,
director,
officer,
employee, or otherwise, or receives any benefit
directly
or
indirectly other than required union scale wages, that
fact
shall
be prominently disclosed in the advertisement.
(d) An advertisement shall not state or
im-ply
imply that a
viatical
settlement contract benefit or service has been approved
or endorsed by a group of individuals, society,
association, or
other organization unless that is the fact and
unless any
relationship between the individual group of individuals, society,
association, or
organization and the viatical settlement
provider
is disclosed.
If
the entity making the endorsement or
testimonial
is owned,
controlled, or managed by the viatical
settlement
provider, or
receives any payment or other
consideration from the
viatical
settlement provider for
making an endorsement or
testimonial, that
fact shall be disclosed
in the advertisement.
(e) When an endorsement refers to benefits received under a viatical settlement contract, all pertinent information shall be retained for a period of at least five years after its use.
(F) An advertisement shall not contain statistical information unless the information accurately reflects recent and relevant facts. The source of all statistics used in an advertisement shall be identified.
(G) An advertisement shall not disparage any insurer,
viatical
settlement provider, viatical settlement broker, viatical
settlement investment agent, insurance producer, policy, service,
or
method of marketing.
(H) All advertisements about a viatical settlement provider or its viatical settlement contract, products, or services shall clearly identify the viatical settlement provider's name. If any specific viatical settlement contract is advertised, the viatical settlement contract shall be identified either by form number or some other appropriate description. If an application is part of the advertisement, the name of the viatical settlement provider shall be shown on the application.
(I) An advertisement shall not use a trade name, group
designation, name of the parent company of a viatical
settlement
licensee, name of a
particular division of the viatical
settlement
licensee, service mark, slogan, symbol, or
other
device
or
reference without disclosing the name of the viatical
settlement
licensee,
if either of the following applies regarding
the
advertisement:
(1) It would have the capacity or tendency to mislead or
deceive
as to the true identity of the viatical
settlement
licensee.
(2) It would have the capacity or tendency to create the
impression that a company other than the viatical
settlement
licensee
would have any
responsibility for the financial
obligation
under a
viatical
settlement contract.
(J) An advertisement shall not use any combination of words, symbols, or physical materials that, by their content, phraseology, shape, color, or other characteristics, are so similar to a combination of words, symbols, or physical materials used by a government program or agency or otherwise appear to be of such a nature that they tend to mislead prospective viators into believing that the solicitation is in some manner connected with a government program or agency.
(K) An advertisement may state that a viatical
settlement
provider licensee is licensed in the state in which the
advertisement
appears, provided it does not exaggerate that fact
or suggest or
imply that competing viatical settlement providers
competitors
may not be so
licensed. The advertisement may ask the
audience to
consult the
licensee's web site or contact the
department of insurance to find
out if the state in which the
advertisement appears requires
licensing
and, if it does, whether
the viatical settlement
provider or viatical
settlement broker
person is
licensed.
(L) An advertisement shall not create the impression that the viatical settlement provider, its financial condition or status, the payment of its claims, or the merits, desirability, or advisability of its viatical settlement contracts are recommended or endorsed by any government entity.
(M) All advertisements of an actual licensee shall state the name of the actual licensee. An advertisement shall not use a trade name, any group designation, name of any affiliate or controlling entity of the licensee, service mark, slogan, symbol, or other device in a manner that would have the capacity or tendency to mislead or deceive as to the true identity of the actual licensee or create the false impression that an affiliate or controlling entity would have any responsibility for the financial obligation of the licensee.
(N) An advertisement shall not directly or indirectly create the impression that any division or agency of this state, any other state, or the United States government endorses, approves, or favors any of the following:
(1) Any viatical settlement licensee or its business
practices or
methods of operation;
(2) The merits, desirability, or advisability of any
viatical
settlement contract, or viatical settlement program;
(3) Any viatical settlement contract, or viatical settlement
program;
(4) Any life insurance policy or certificate or life
insurance
company.
(O) If the advertiser emphasizes the speed with which the viatication will occur, the advertising must disclose the average time frame, from completed application to the date of offer and from acceptance of the offer to receipt of the funds by the viator.
(P) If the advertising emphasizes the dollar amounts available to viators, the advertising shall disclose the average purchase price as a per cent of face value obtained by viators contracting with the licensee during the past six months.
Sec. 3916.171. (A) No person shall commit a fraudulent viatical settlement act.
(B) All of the following acts are fraudulent viatical settlement acts when committed by any person who, knowingly and with intent to defraud and for the purpose of depriving another of property or for pecuniary gain, commits, or permits any of its employees or its agents to commit them:
(1) Presenting, causing to be presented, or preparing with knowledge or belief that it will be presented to or by a viatical settlement provider, viatical settlement broker, life expectancy provider, viatical settlement purchaser, financing entity, insurer, insurance broker, insurance agent, or any other person, any false material information, or concealing any material information, as part of, in support of, or concerning a fact material to, one or more of the following:
(a) An application for the issuance of a viatical settlement contract or a policy;
(b) The underwriting of a viatical settlement contract or a policy;
(c) A claim for payment or benefit pursuant to a viatical settlement contract or a policy;
(d) Any premiums paid on a policy;
(e) Any payments and changes in ownership or beneficiary made in accordance with the terms of a viatical settlement contract or a policy;
(f) The reinstatement or conversion of a policy;
(g) The solicitation, offer, effectuation, or sale of a viatical settlement contract or a policy;
(h) The issuance of written evidence of a viatical settlement contract or a policy;
(i) A financing transaction;
(j) Any application for or the existence of or any payments related to a loan secured directly or indirectly by any interest in a policy.
(2) Failing to disclose to the insurer, where the insurer has requested such disclosure, that the prospective insured has undergone a life expectancy evaluation by any person or entity other than the insurer or its authorized representatives in connection with the application, underwriting, and issuance of the policy.
(3) In the furtherance of a fraud or to prevent the detection of a fraud, doing any of the following:
(a) Removing, concealing, altering, destroying, or sequestering from the superintendent of insurance the assets or records of a licensee or another person engaged in the business of viatical settlements;
(b) Misrepresenting or concealing the financial condition of a licensee, financing entity, insurer, or any other person;
(c) Transacting the business of viatical settlements in violation of any law of this state requiring a license, certificate of authority, or other legal authority for the transaction of the business of viatical settlements;
(d) Filing with the superintendent of insurance or the chief insurance regulatory official of another jurisdiction a document containing false information or otherwise concealing from the superintendent any information about a material fact.
(4) Recklessly entering into, negotiating, brokering, or otherwise dealing in a viatical settlement contract involving a policy that was obtained by presenting false, deceptive, or misleading information of any fact material to the policy, or by concealing information concerning any fact material to the policy, for the purpose of misleading and with the intent to defraud the issuer of the policy, the viatical settlement provider, or the viator;
(5) Committing any embezzlement, theft, misappropriation, or conversion of moneys, funds, premiums, credits, or other property of a viatical settlement provider, insurer, insured, viator, policyowner, or any other person engaged in the business of viatical settlements or insurance;
(6) Employing any plan, financial structure, device, scheme, or artifice to defraud in the business of viatical settlements;
(7) Misrepresenting the state of residence or facilitating the change of the state in which a person owns a policy or the state of residency of a viator to a state or jurisdiction that does not have laws similar to this chapter for the express purposes of evading or avoiding the provisions of this chapter;
(8) In the solicitation, application, or issuance of a policy, employing any device, scheme, or artifice in violation of sections 3911.09 or 3911.091 of the Revised Code;
(9) Engaging in any conduct related to a viatical settlement contract if the person knows or should have known that the intent of the transaction was to avoid the disclosure and notice requirements of section 3916.06 of the Revised Code;
(10) Entering into a premium finance agreement with any person pursuant to which the person will receive, directly or indirectly, any proceeds, fees, or other considerations from the policy, the owner of the policy, the issuer of the policy, or from any other person with respect to the premium finance agreement or any viatical settlement contract, or from any transaction related to the policy, that are in addition to the amount required to pay the principal, interest, costs, and expenses related to the policy premiums pursuant to the premium finance agreement or subsequent sale of the agreement. Any payments, charges, fees, or other amounts in addition to the amounts required to pay the principal, interest, costs, and expenses related to policy premiums paid under the premium finance agreement shall be remitted to the original owner of the policy or, if the owner is not living at the time of the determination of the overpayment, to the estate of the owner.
(11) With respect to any viatical settlement contract or a policy, for a viatical settlement broker or an agent registered under this chapter as operating as a viatical settlement broker to knowingly solicit an offer from, effectuate a viatical settlement with, or make a sale to any viatical settlement provider, viatical settlement purchaser, financing entity, or related provider trust that is controlling, controlled by, or under common control with such viatical settlement broker or registered agent unless both of the following are true:
(a) The viatical settlement broker or agent disclosed that affiliation to the viator.
(b) The viatical settlement broker or agent is controlled by or under common control with a person that is regulated under the "Securities Act of 1933" or the "Securities Act of 1934," 15 U.S.C. 77a et seq., as amended.
(12) With respect to any viatical settlement contract or a policy, for a viatical settlement provider to knowingly enter into a viatical settlement contract with a viator if, in connection with such viatical settlement contract, anything of value will be paid to a viatical settlement broker or an agent registered under this chapter as operating as a viatical settlement broker that is controlling, controlled by, or under common control with such viatical settlement provider or the viatical settlement purchaser, financing entity, or related provider trust that is involved in such viatical settlement contract unless both of the following are true:
(a) The viatical settlement broker or agent disclosed that affiliation to the viator.
(b) The viatical settlement broker or agent is controlled by or under common control with a person that is regulated under the "Securities Act of 1933" or the "Securities Act of 1934," 15 U.S.C. 77a et seq., as amended.
(13) Issuing, soliciting, marketing, or otherwise promoting the purchase of a policy for the purpose of or with emphasis on settling the policy;
(14) Issuing or using a pattern of false, misleading, or deceptive life expectancies;
(15) Issuing, soliciting, marketing, or otherwise promoting stranger-originated life insurance;
(16) Attempting to commit, assisting, aiding or abetting in the commission of, or conspiracy to commit any act or omission specified in divisions (B)(1) to (15) of this section.
Sec. 3916.172. Any contract, agreement, arrangement, or transaction including, but not limited to, any financing agreement or arrangement identified in section 1321.72 of the Revised Code entered into for the furtherance or aid of a stranger-originated life insurance act, practice, arrangement, or agreement is void and unenforceable.
Sec. 3916.173. Trusts or other persons that are created to give the appearance of insurable interest and are used to initiate one or more policies for investors violate insurable interest laws and the prohibition against wagering on life.
Sec. 3916.18. (A)(1) No person shall commit a fraudulent
viatical settlement act.
(2) No person shall knowingly or intentionally interfere
with
the
enforcement of the provisions of this chapter or
investigations of suspected
or actual violations of this chapter.
(3)(2) No person in the business of viatical settlements
shall
knowingly or intentionally permit any person convicted of a
felony
involving dishonesty or breach of trust to participate in
the
business
of viatical settlements.
(B)(1) Each viatical settlement contract and each application for a viatical settlement, 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 viatical settlement contract is guilty of a crime and may be subject to fines and imprisonment."
(2) The lack of a statement as required in division (B)(1) of this section does not constitute a defense in any prosecution for a fraudulent viatical settlement act.
(C)(1) Every person engaged in the business of viatical settlements having knowledge or a reasonable belief that a fraudulent viatical settlement act is being, will be, or has been committed shall provide to the superintendent of insurance the information required by the superintendent. The person shall provide the information in a manner prescribed by the superintendent.
(2) Every person having knowledge or a reasonable belief
reason to believe
that a
fraudulent viatical settlement act is
being, will
be, or
has been
committed may provide to the
superintendent the
information required by
the superintendent. The
person shall
provide the information under this
division in a
manner prescribed
by the superintendent.
(3) Any life insurer that has a good faith belief that a person is participating or has participated in a stranger-originated life insurance transaction shall report the person to the superintendent in a form and manner prescribed by the superintendent. Upon receipt of the insurer's report, the superintendant shall conduct an investigation to determine whether there is probable cause, based on the totality of the facts and circumstances that the person has or had engaged in a stranger-originated life insurance transaction. If the superintendent finds probable cause, the superintendent shall do one of the following:
(a) If the person is licensed or regulated by the department of insurance, the superintendent shall provide the person an opportunity for notice and hearing pursuant to Chapter 119. of the Revised Code. If the person waives or does not request a hearing pursuant to Chapter 119. of the Revised Code, or a hearing is held and the person is found to have participated in one or more stranger-originated life insurance transactions, the superintendent shall publish the order on the department's web site, and shall notify each insurance company licensed in this state that the person has been adjudicated as having participated in one or more stranger-originated life insurance transactions.
(b) If the person is not licensed or regulated by the department the superintendent shall provide the superintendent's findings to the appropriate licensing or regulatory authority.
(D)(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 viatical settlement acts or suspected or completed fraudulent insurance acts, if the information is provided to or received from any of the following:
(a) The superintendent, or the superintendent's employees, agents, or representatives;
(b) Law enforcement or regulatory officials of this state,
another state, the
united states
United States, or a political
subdivision of
this state or another state, or any employee,
agent, or
representative of
any of those officials:;
(c) A person involved in the prevention and detection of fraudulent viatical settlement acts or any agent, employee, or representative of any person so involved;
(d) The NAIC, national association of securities dealers
(NASD) financial industry regulatory authority (FINRA),
the north
american American securities
amdiministrators
administrators
association
(NASAA),
any employee, agent, or
representative of
any of those
associations., or other regulatory
body overseeing
life insurance,
viatical settlements, securities,
or
investment
fraud;
(e) The life insurer that issued the life insurance policy
or
certificate covering the life of the insured.
(2) The immunity provided in division (D)(1) of this section
shall not apply to any statement made with actual malice. In an
action brought against a person for filing a report or
furnishing
other information concerning a fraudulent viatical
settlement act
or a fraudulent insurance act, the party bringing
the action shall
plead specifically any allegation that the
immunity provided in
division (D)(1) of this section does not
apply because the person
filing the report or furnishing the information
did so with actual
malice.
(3) If a person is the prevailing party in a civil action for libel, slander, or any other relevant tort arising out of activities in carrying out the provisions of this chapter, if the prevailing party is a person identified in division (D)(1) of this section and the immunity described in that division applies to the person, and if the party who brought the action was not substantially justified in doing so, the person who is the prevailing party is entitled to an award of attorney's fees and costs arising out of the action. However, the person is not entitled to an award of attorney's fees if the person provided information about the person's own fraudulent viatical settlement acts. For purposes of this division, an action is "substantially justified" if it had a reasonable basis in law or fact at the time that it was initiated.
(4) This section does not abrogate or modify any common law or statutory privilege or immunity enjoyed by a person described in division (D)(1) of this section.
(E)(1) The documents and evidence provided pursuant to division (D) of this section or obtained by the superintendent in an investigation of any suspected or actual fraudulent viatical settlement act is privileged and confidential, is not a public record open for inspection under section 149.43 of the Revised Code, and is not subject to discovery or subpoena in a civil or criminal action.
(2) Division (E)(1) of this section does not prohibit release by the superintendent of any document or evidence obtained in an investigation of suspected or actual fraudulent viatical settlement acts, in any of the following manners or circumstances:
(a) In any administrative or judicial proceeding to enforce
any
laws
administer
administered by the superintendent;
(b) To any law enforcement or regulatory agency of this
state,
another state, the
united states
United States, or a
politcal
political
subdivision of
this state or another state, to
an organization
established for the purpose of detecting and
preventing fraudulent
viatical
settlement
act
acts, or to the
NACI
NAIC;
(c) At the discretion of the superintendent, to a person in the business of viatical settlements that is aggrieved by a fraudulent viatical settlement act.
(3) Release of documents and evidence under division (E)(2) of this section does not abrogate or modify the privilege granted in division (E)(1) of this section.
(F) The provisions of this chapter do not do any of the following:
(1) Preempt the authority or relieve the duty of any other law enforcement or regulatory agencies to investigate, examine, or prosecute suspected violations of law;
(2) Prevent or prohibit a person from disclosing voluntarily
any
information concerning fraudulent viatical settlement fraud
acts to a law
enforcement or
regulatory agency other than the
department of
insurance;
(3) Limit any power granted elsewhere by the law of this state to the superintendent or an insurance fraud unit to investigate and examine possible violations of law and to take appropriate action against wrongdoers.
(G)(1) Viatical settlement providers and
viatical settlement
brokers shall adopt and have in place
antifraud initiatives
reasonably calculated to detect, prosecute,
and prevent
fraudulent
viatical settlement acts. At the discretion
of the
superintendent, the superintendent may order, or a licensee
viatical settlement provider or viatical
settlement broker may
request and the
superintendent may grant,
any modifications of
the
following
required initiatives described
in divisions
(G)(1)(a)
and (b) of
this section that are 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
under this
division shall
include all of the
following:
(a) Fraud investigators, who may be licensed viatical settlement provider or licensed viatical settlement broker employees or independent contractors;
(b) An antifraud plan that includes, but
not is not limited
to,
all of the following:
(i) A description of the procedures for detecting and investigating possible fraudulent viatical settlement acts and procedures for resolving material inconsistencies between medical records and insurance applications;
(ii) A description of the procedures for reporting possible fraudulent viatical settlement acts to the superintendent;
(iii) A description of the plan for
atifraud
antifraud
education and
training of underwriters and other personnel;
(iv) A description or
charp
chart outlining the
organizational
arrangement of the antifraud personnel who are
responsible for the
investigation and reporting of possible
fraudulent viatical
settlement acts and investigating unresolved
material
inconsistencies between medical records and insurance
applications;
(v) A description of the procedures used to perform initial and continuing review of the accuracy of life expectancies used in connection with a viatical settlement contract.
(2) The superintendent, by rule adopted in accordance with
Chapter 119. of the Revised Code, may require that antifraud plans
required
under division (G)(1) of this section be submitted to the
superintendent. If the superintendent requires that antifraud
plans be submitted to the superintendent, the plans so submitted
are privileged and confidential, are not a public record
open for
inspection under section 149.43 of the
revised code
Revised Code,
and
are not
subject to discovery or subpoena in a civil or
criminal
action.
(H) No insurer that issued a policy being viaticated shall be responsible, under this chapter, for any act or omission of a viatical settlement broker or viatical settlement provider arising out of or in connection with the viatical settlement transaction unless the insurer receives compensation for the placement of a viatical settlement contract from the viatical settlement provider or viatical settlement broker in connection with the viatical settlement contract.
Sec. 3916.19. (A) In addition to the penalties and other enforcement provisions contained in this chapter, if any person violates any provision of this chapter or any rule or regulation implementing any provision of this chapter, the superintendent of insurance may seek an injunction in a court of competent jurisdiction and may apply for any temporary or permanent order that the superintendent determines is necessary to restrain the person from committing the violation.
(B) Any person damaged by any act of a person in violation of any provision of this chapter may bring a civil action against the person committing the violation in a court of competent jurisdiction. A civil action brought under this division does not preclude the superintendent from exercising any regulatory, enforcement, or other authority available to the superintendent under this chapter.
(C) In addition to the penalties and other enforcement provisions contained in this chapter, any person who violates any provision of this chapter is subject to a civil penalty of up to ten thousand dollars per violation. Imposition of civil penalties described in this division shall be pursuant to an order of the superintendent issued under Chapter 119. of the Revised Code. The superintendent's order may require a person found to be in violation of this chapter to make restitution to persons aggrieved by violations of this chapter.
(D) Any transaction related to the sale or financing of an interest or investment in a viatical settlement is subject to Chapter 1707. of the Revised Code and the rules adopted thereunder. Nothing in this chapter shall preempt, supersede, or limit the application of Chapter 1707. of the Revised Code and the rules adopted thereunder.
Sec. 3916.20. The superintendent of insurance may adopt rules in accordance with Chapter 119. of the Revised Code for purposes of implementing this chapter, including, but not limited to, rules that do the following:
(A) Govern the
relationship and responsibilities of both
insurers and, viatical settlement
providers, and viatical
settlement
brokers
during the viatication of a life
insurance
policy or
certificate.
(B) Establish standards for evaluating the reasonableness of
payments
under
viatical settlement contracts for persons with a
terminal or chronic illness
or condition who are terminally or
chronically ill. This authority
includes,
but is not limited
to,
the regulation of discount rates
used to
determine the amount
paid in exchange
for the assignment, release,
transfer, sale,
devise, or bequest of a benefit under a
life
insurance policy or
certificate insuring persons who are terminally or chronically
ill.
(C) Establish appropriate licensing requirements, fees, and
standards for
continued licensure for viatical settlement
providers and viatical settlement
brokers;
(D) Require a bond or other mechanism for ensuring the
financial
accountability of viatical settlement providers
and
viatical settlement brokers.
Sec. 3916.99. (A) Whoever violates section 3916.02 of the Revised Code is guilty of a felony of the third degree.
(B) Whoever violates division (A)(1) of section 3916.18
3916.171
of
the Revised Code is guilty of a
violation of section
2913.02 of
the Revised Code.
SECTION 2. That existing sections 1321.72, 1321.78, 3916.01, 3916.02, 3916.03, 3916.05, 3916.06, 3916.07, 3916.09, 3916.10, 3916.11, 3916.12, 3916.13, 3916.14, 3916.15, 3916.16, 3916.17, 3916.18, 3916.19, 3916.20, and 3916.99 of the Revised Code are hereby repealed.
SECTION 3. Division (A) of section 3916.02 as amended by this act shall take effect 90 days after the effective date of this act.
Section 4. Nothing in Chapter 3916. of the Revised Code as amended by this act shall be construed as affecting the incontestability period provided in division (C) of section 3915.05 of the Revised Code.