Topic: Life Insurance & Annuities

SEC Proposes a New Rule to Regulate Indexed Annuities

On June 26, 2008, the Securities and Exchange Commission (“SEC”) published proposed Rules 151A and 12h-7 (“Proposed Rules”).  The Proposed Rules, if adopted, would clarify the status of indexed annuities (i.e. annuities for which payments to the purchaser are dependent on performance of a securities index) under the federal securities laws, and would provide insurance companies an exemption from reporting requirements under the Securities Exchange Act of 1934 (“Exchange Act”) with respect to such annuities and certain other securities issued by insurance companies that are registered under the Securities Act of 1933 (“Securities Act”) and regulated as insurance under state law. 

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Hawaii Enacts Life Settlement Legislation

Earlier this month, Hawaii Governor Linda Lingle signed into law the Life Settlement Model Act (the “Act”), which prohibits STOLI transactions, which are transactions that benefit people who have no insurable interest in the insured.  The Act, which is based on the NCOIL Model Act, imposes a two-year ban on settlement transactions and provides the Hawaii Department of Commerce and Consumer Affairs with additional oversight authority over life settlement brokers and providers. 

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Oklahoma Legislature Passes Life Settlement Legislation

Oklahoma has become the latest state to enact legislation regulating the life settlements industry.  We previously reported on similar legislative activity in Florida and Iowa.  SB 1980, also known as the Viatical Settlements Act of 2008 (the “Act”), was signed into law on May 15, 2008 and takes aim at stranger-originated life insurance (“STOLI”) transactions. 

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Florida Insurable Interest Bill Passes the House and Senate

Before closing its legislative session on May 2nd, the Florida House and Senate unanimously approved Senate Bill 648 (“SB 648” or the “Bill”) addressing insurable interest requirements with respect to life insurance policies.  The Bill is different from the NAIC and NCOIL Viatical Settlement Models, but addresses many of the same issues surrounding stranger owned life insurance arrangements (“STOLI”). 

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Florida Approves Annuity Suitability Bill

Before closing its legislative session on May 2nd, both of Florida’s legislative chambers unanimously approved Senate Bill 2082 (“SB 2082” or the “Bill”) addressing suitability in annuity sales.  The Bill is based on the NAIC Suitability in Annuity Transactions Model Regulation, as amended in 2006, which requires that life insurance companies ensure that their annuity products are marketed and sold to suitable parties. 

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