Brief⁽¹⁾

S.B. 151, as amended, enacts new law for the regulation of viatical settlements and repeals existing statutes on the subject. [Viatical settlement companies (providers) purchase life insurance policies from persons diagnosed with catastrophic, terminal, or chronic conditions (viators) at a discount of face value. The insured receives a lump sum payment. The company becomes the owner and beneficiary of the policy and must pay all future premiums. The company will collect the proceeds of the policy when the insured dies.]

The bill defines several terms important to the Act, including:

• Viator is the owner of a life insurance policy or the certificate holder of a group life insurance policy who has a catastrophic, life threatening, or chronic illness or condition and enters or seeks to enter into a viatical settlement contract.



• Viatical settlement representative is a person acting or aiding in the solicitation of viatical settlements (does not include an attorney, accountant, financial planner or any person exercising a power of attorney granted by a viator, or any person retained and paid to represent the viator).



• Viatical settlement broker is a person who, for a fee, negotiates a viatical settlement between a viator and a viatical settlement provider.

• Viatical settlement contract is the agreement entered into between a viatical settlement provider and a viator.



• Viatical settlement provider is a person, other than the viator who enters into a contract or obtains financing for the purchase, acquisition, transfer, or other assignment of a viatical settlement contract (does not include a bank, savings and loan association, credit union, or other financial institution that takes an assignment of a life insurance policy as collateral for a loan, or the issuer of a life insurance policy providing accelerated benefits, or any natural person who enters into no more than one agreement in a calendar year for the transfer of like policies for any value less than the expected death benefit).

Under the Act, no person may operate as a viatical settlement provider, viatical settlement representative, or a viatical settlement broker without obtaining a license from the Insurance Commissioner. The applicant for licensure must provide the information required by the Act. Any misrepresentation by the applicant or any failure of a licensee to comply with the terms of the Act could result in the refusal to issue a license or suspension or revocation of a license. Records, books, and files of viatical settlement contracts must be available to the Commissioner for examination.

S.B. 151 also sets out the information any viatical settlement representative or broker must disclose to the viator at the time an application is made, including disclosure of alternative to such a settlement, tax implications of a settlement, and the viators right to rescind a contract within 15 days after receipt of the settlement proceeds.

Immediately upon the transfer of the insurance policy from the viator to the viatical settlement provider, the provider must pay the proceeds of the settlement into a third party escrow account for payment to the viator.

Finally, the Insurance Commissioner is authorized to adopt rules and regulations to establish: requirements for reasonable payments under viatical settlements; appropriate licensing requirements and fees; requirements for bonds or other mechanism for financial accountability for providers; and other rules and regulations necessary for the enforcement of the Act.

The House Committee amendment was technical changing the word "like" to "life."

Background

S.B. 151, as amended, was recommended by the Insurance Commissioner whose representative explained that the bill was intended to strengthen and expand the regulation of viatical settlements in Kansas because of the growth and changes to the structure of the viatical settlement industry since enactment of current laws in 1992.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/bill_search.html.