The NAIC issued a press release (the “Release”) earlier this month announcing its intent to hold a public hearing on the emergence of stranger originated/owned annuity transactions (“STAT”). STATs are similar to stranger owned life insurance transactions (“STOLI”), which have been the subject of regulatory scrutiny for a number of years. STATs generally involve a senior or terminally ill person as the annuity measuring life, and are initiated by investors without an insurable interest in such measuring life. The investor (or “stranger”) pays the premiums on the annuity contract and usually provides some sort of additional payment or incentive to the measuring life for entering into the contract. The investor will then collect the benefits ultimately paid out, which usually include a death benefit.
According to the Release, the NAIC plans to examine the conditions of the evolving STAT marketplace. It will also determine whether new laws and regulations are necessary to protect consumers. The hearing will include industry representatives, state regulators and consumers. The date and location of the hearing have not yet been determined.
We will continue to monitor this topic and provide further updates on InsureReinsure.com.
