A bill currently pending before Congress, the Viatical Settlements Licensing Act of 2007 (the “Bill”), would regulate life settlements in Washington D.C. and require licensing of viatical settlement providers or brokers operating in the Washington D.C. region by the District’s Insurance Commissioner. To see a copy of the Bill, click here.
Under the proposed legislation, the Insurance Commissioner would consider the following criteria in determining whether to issue a license: (1) Applicant has provided a detailed plan of operation; (2) Applicant is competent and trustworthy and intends to act in good faith in the capacity of a viatical settlement broker; (3) Applicant has a good business reputation, experience, training, or education that qualify him or her in the business for which the license is applied for; (4) Applicant has demonstrated financial accountability as evidenced by surety bond, deposit of cash, certificates of deposit, securities, a policy of errors and omissions insurance, or any combination thereof in the amount of $250,000; (5) If a legal entity, Applicant has provided a certificate of good standing; and (6) Applicant has provided a sufficient anti-fraud plan.
Notably, there are exemptions from licensing in the proposed bill. For instance, attorneys, certified public accountants and financial planners accredited by a nationally recognized accreditation organization are not required to obtain a viatical settlement broker’s license when retained to represent the viator and not compensated by the viatical settlement provider or purchaser.
If the Bill passes, Washington D.C. would join approximately 40 states that have regulations regarding the transfer of life insurance policies.