HB 1461

1
A bill to be entitled
2An act relating to viatical settlements; amending s.
3626.9911, F.S.; limiting the definition of "life
4expectancy provider" to those determining life
5expectancies for the purpose of a viatical settlement
6contract governed by state law; defining the terms
7"premium finance loan" and "stranger-originated life
8insurance"; modifying the definition of "viatical
9settlement contract" to include additional transactions
10and specify transactions not constituting such a contract;
11conforming other definitions to changes made by the act;
12amending s. 626.9913, F.S.; requiring that a viatical
13settlement provider annually file a statement containing
14information required by state law on or before a specified
15date; providing requirements for such statements;
16authorizing the Office of Insurance Regulation to adopt
17rules; amending s. 626.9914, F.S.; clarifying grounds for
18which the office may suspend, revoke, deny, or refuse to
19renew the license of a viatical settlement provider;
20amending s. 626.99175, F.S.; prohibiting a person from
21performing the functions of a life expectancy provider
22regarding viatical settlement contracts without first
23having registered as a life expectancy provider; amending
24s. 626.992, F.S.; clarifying restrictions on the use of
25viatical settlement brokers, viatical settlement
26providers, and registered life expectancy providers;
27clarifying a requirement that a person operating as a life
28expectancy provider register as such; amending s.
29626.9922, F.S.; limiting the scope of an examination of
30the business affairs of certain licensees by the office or
31Department of Financial Services; clarifying provisions
32relating to parties to whom such examination requirements
33apply; creating s. 626.99234, F.S.; authorizing insurers
34to make certain inquiries to an applicant for a life
35insurance policy; authorizing an insurer to reject certain
36applications; prohibiting an insurer from rejecting an
37application solely because the premiums will be financed
38under certain circumstances; authorizing an insurer to
39make certain disclosures to an applicant; authorizing an
40insurer to require certain certifications from an
41applicant or insured; amending s. 626.9924, F.S.;
42requiring that a viatical settlement provider obtain a
43witnessed document containing certain provisions before
44the execution of a viatical settlement contract; providing
45for the use of a third-party trustee or escrow agent
46during a viatical settlement transaction; amending s.
47626.99245, F.S.; deleting provisions requiring the
48maintenance of certain records from viatical settlement
49transactions completed in other states; amending s.
50626.9925, F.S.; deleting a provision authorizing the
51Financial Services Commission to adopt rules defining
52terms for use in the Viatical Settlement Act; amending s.
53626.99275, F.S.; prohibiting any person from engaging in
54stranger-originated life insurance; providing penalties;
55amending s. 626.99287, F.S.; providing that a viatical
56settlement contract is void under certain circumstances;
57providing an effective date.
58
59Be It Enacted by the Legislature of the State of Florida:
60
61     Section 1.  Section 626.9911, Florida Statutes, is amended
62to read:
63     626.9911  Definitions.--As used in this act, the term:
64     (1)  "Financing entity" means an underwriter, placement
65agent, lender, purchaser of securities, or purchaser of a policy
66or certificate from a viatical settlement provider, credit
67enhancer, or any entity that has direct ownership in a policy or
68certificate that is the subject of a viatical settlement
69contract, but whose principal activity related to the
70transaction is providing funds or credit enhancement to effect
71the viatical settlement or the purchase of one or more
72viaticated policies and who has an agreement in writing with one
73or more licensed viatical settlement providers to finance the
74acquisition of viatical settlement contracts. The term does not
75include a nonaccredited investor or other natural person. A
76financing entity may not enter into a viatical settlement
77contract.
78     (2)  "Independent third-party trustee or escrow agent"
79means an attorney, certified public accountant, financial
80institution, or other person providing escrow services under the
81authority of a regulatory body. The term does not include any
82person associated, affiliated, or under common control with a
83viatical settlement provider or viatical settlement broker.
84     (3)  "Life expectancy" means an opinion or evaluation as to
85how long a particular person is to live, or relating to such
86person's expected demise regarding a viatical settlement
87contract.
88     (4)  "Life expectancy provider" means a person who
89determines, or holds himself or herself out as determining, life
90expectancies or mortality ratings used to determine life
91expectancies for the purposes of a viatical settlement contract
92governed by state law:
93     (a)  On behalf of a viatical settlement provider, viatical
94settlement broker, life agent, or person engaged in the business
95of viatical settlements;
96     (b)  In connection with a viatical settlement investment,
97pursuant to s. 517.021(23); or
98     (c)  On residents of this state in connection with a
99viatical settlement contract or viatical settlement investment.
100     (5)  "Person" has the meaning specified in s. 1.01.
101     (6)  "Premium finance loan" means a loan made primarily for
102the purpose of making premium payments on a life insurance
103policy issued or to be issued to a resident of this state, which
104loan is secured by an interest in such life insurance policy.
105     (7)(6)  "Related form" means any form, created by or on
106behalf of a licensee, which a viator is required to sign or
107initial. The forms include, but are not limited to, a power of
108attorney, a release of medical information form, a suitability
109questionnaire, a disclosure document, or any addendum, schedule,
110or amendment to a viatical settlement contract considered
111necessary by a provider to effectuate a viatical settlement
112transaction.
113     (8)(7)  "Related provider trust" means a titling trust or
114other trust established by a licensed viatical settlement
115provider or financing entity for the sole purpose of holding the
116ownership or beneficial interest in purchased policies in
117connection with a financing transaction. The trust must have a
118written agreement with a licensed viatical settlement provider
119or financing entity under which the licensed viatical settlement
120provider or financing entity is responsible for insuring
121compliance with all statutory and regulatory requirements and
122under which the trust agrees to make all records and files
123relating to viatical settlement transactions available to the
124office as if those records and files were maintained directly by
125the licensed viatical settlement provider. This term does not
126include an independent third-party trustee or escrow agent or a
127trust that does not enter into agreements with a viator. A
128related provider trust shall be subject to all provisions of
129this act that apply to the viatical settlement provider who
130established the related provider trust, except s. 626.9912,
131which shall not be applicable. A viatical settlement provider
132may establish no more than one related provider trust, and the
133sole trustee of such related provider trust shall be the
134viatical settlement provider licensed under s. 626.9912. The
135name of the licensed viatical settlement provider shall be
136included within the name of the related provider trust.
137     (9)(8)  "Special purpose entity" means an entity
138established by a licensed viatical settlement provider or by a
139financing entity, which may be a corporation, partnership,
140trust, limited liability company, or other similar entity formed
141solely to provide, either directly or indirectly, access to
142institutional capital markets to a viatical settlement provider
143or financing entity. A special purpose entity may not obtain
144capital from any natural person or entity with less than $50
145million in assets and may not enter into a viatical settlement
146contract.
147     (10)  "Stranger-originated life insurance" or "STOLI" means
148an act, practice, or arrangement to initiate the issuance of a
149life insurance policy in this state for the benefit of a third-
150party investor who, at the time of policy origination, has no
151insurable interest under the laws of this state in the life of
152the insured. STOLI practices include, but are not limited to,
153cases in which life insurance is purchased with resources or
154guarantees from or through a person or entity, that, at the time
155of inception of the policy, could not lawfully initiate the
156policy himself, herself, or itself, and where, at the time of
157inception, there is an arrangement or agreement to directly or
158indirectly transfer the ownership of the policy or the policy's
159benefits to a third party. Trusts created to give the appearance
160of insurable interest and used to initiate policies for
161investors violate insurable interest laws and the prohibition
162against wagering on life. STOLI arrangements do not include
163otherwise lawful viatical settlement contracts as permitted by
164state law or those acts, practices, or arrangements set forth in
165paragraph (12)(c).
166     (11)(9)  "Viatical settlement broker" means a person who,
167on behalf of a viator and for a fee, commission, or other
168valuable consideration, offers or attempts to negotiate viatical
169settlement contracts between a viator resident in this state and
170one or more viatical settlement providers. Notwithstanding the
171manner in which the viatical settlement broker is compensated, a
172viatical settlement broker is deemed to represent only the
173viator and owes a fiduciary duty to the viator to act according
174to the viator's instructions and in the best interest of the
175viator. The term does not include an attorney, licensed
176Certified Public Accountant, or investment adviser lawfully
177registered under chapter 517, who is retained to represent the
178viator and whose compensation is paid directly by or at the
179direction and on behalf of the viator.
180     (12)(10)  "Viatical settlement contract" means:
181     (a)  A written agreement entered into between a viatical
182settlement provider, or its related provider trust, and a viator
183who is a resident of this state. The viatical settlement
184contract includes an agreement to transfer ownership or change
185the beneficiary designation of a life insurance policy at a
186later date, regardless of the date that compensation is paid to
187the viator. The agreement must establish the terms under which
188the viatical settlement provider will pay compensation or
189anything of value, which compensation or value is less than the
190expected death benefit of the insurance policy or certificate,
191in return for the viator's assignment, transfer, sale, devise,
192or bequest of the death benefit or ownership of all or a portion
193of the insurance policy or certificate of insurance to the
194viatical settlement provider.
195     (b)  A viatical settlement contract also includes:
196     1.  The transfer for compensation or value of ownership or
197beneficial interest in a trust or other entity owning such
198policy if the trust or other entity was formed or availed of for
199the principal purpose of acquiring one or more life insurance
200contracts owned by a resident of this state.
201     2.  A premium finance loan made for a policy on or before
202the date of issuance of the policy if one or more of the
203following conditions apply:
204     a.  The loan proceeds are not used solely to pay premiums
205for the policy and any costs or expenses incurred by the lender
206or the borrower in connection with the financing.
207     b.  The owner receives on the date of the origination of
208the premium-finance loan a guarantee of the future viatical
209settlement value of the policy.
210     c.  The owner agrees on the date of origination of the
211premium finance loan to sell the policy or any portion of the
212policy's death benefit on any date following the issuance of the
213policy, not including an agreement to sell the policy in the
214event of a default, if the default is not pursuant to an
215agreement or understanding with any other person for the purpose
216of evading regulation under this act.
217     (c)  A viatical settlement contract does not include:
218     1.  A policy loan by a life insurance company pursuant to
219the terms of the life insurance policy or accelerated death
220provisions contained in the life insurance policy issued with
221the original policy or as a rider.
222     2.  A premium finance loan or any loan made by a bank or
223other licensed financial institution, if neither party defaults
224on such loan or the transfer of the policy in connection with
225such default is pursuant to an agreement or understanding with
226any other person for the purpose of evading regulation under
227this act.
228     3.  A collateral assignment of a life insurance policy by
229an owner of a policy.
230     4.  A loan made by a lender which is not described in
231subparagraph (b)2. and is not otherwise within the scope of the
232definition of viatical settlement contract.
233     5.  An agreement for which all of the parties satisfy at
234least one of the following conditions:
235     a.  The parties are closely related to the insured by blood
236or law.
237     b.  The parties have a lawful substantial economic interest
238in the continued life, health, and bodily safety of the person
239insured.
240     c.  The parties are trusts established primarily for the
241benefit of those parties.
242     6.  Any designation, consent, or agreement by an insured
243who is an employee of an employer in connection with the
244purchase by the employer or by a trust established by the
245employer of life insurance on the life of the employee.
246     7.  A bona fide business succession planning arrangement
247between:
248     a.  One or more shareholders in a corporation;
249     b.  A corporation and one or more of its shareholders or
250one or more trusts established by its shareholders;
251     c.  One or more partners in a partnership;
252     d.  A partnership and one or more of its partners or one or
253more trusts established by its partners;
254     e.  One or more members in a limited liability company; or
255     f.  A limited liability company and one or more of its
256members or one or more trusts established by its members.
257     8.  An agreement entered into by a service recipient or a
258trust established by the service recipient, or a service
259provider or a trust established by the service provider
260performing significant services for the service recipient's
261trade or business.
262     9.  Any other contract, transaction, or arrangement that
263the commissioner determines is not of the type intended to be
264regulated by this act a contract for a loan or other financial
265transaction secured primarily by an individual or group life
266insurance policy, other than a loan by a life insurance company
267pursuant to the terms of the life insurance contract, or a loan
268secured by the cash value of a policy.
269     (13)(11)  "Viatical settlement investment" has the same
270meaning as specified in s. 517.021.
271     (14)(12)  "Viatical settlement provider" means a person
272who, in this state, from this state, or with a resident of this
273state, effectuates a viatical settlement contract. The term does
274not include:
275     (a)  Any bank, savings bank, savings and loan association,
276credit union, or other licensed lending institution that takes
277an assignment of a life insurance policy as collateral for a
278loan.
279     (b)  A life and health insurer that has lawfully issued a
280life insurance policy that provides accelerated benefits to
281terminally ill policyholders or certificateholders.
282     (c)  Any natural person who enters into no more than one
283viatical settlement contract with a viator in 1 calendar year,
284unless such natural person has previously been licensed under
285this act or is currently licensed under this act.
286     (d)  A trust that meets the definition of a "related
287provider trust."
288     (e)  A viator in this state.
289     (f)  A financing entity.
290     (15)(13)  "Viaticated policy" means a life insurance
291policy, or a certificate under a group policy, which is the
292subject of a viatical settlement contract.
293     (16)(14)  "Viator" means a resident of this state who is
294the owner of a life insurance policy or a certificateholder
295under a group policy, which policy is not a previously
296viaticated policy, who enters or seeks to enter into a viatical
297settlement contract. This term does not include a viatical
298settlement provider or any person acquiring a policy or interest
299in a policy from a viatical settlement provider, nor does it
300include an independent third-party trustee or escrow agent.
301     Section 2.  Subsection (2) of section 626.9913, Florida
302Statutes, is amended to read:
303     626.9913  Viatical settlement provider license continuance;
304annual report; fees; deposit.--
305     (2)  Annually, on or before March 1, the viatical
306settlement provider licensee shall file a statement containing
307information required by statute the commission requires and
308shall pay to the office a license fee in the amount of $500.
309After December 31, 2007, the annual statement shall include an
310annual audited financial statement of the viatical settlement
311provider prepared in accordance with generally accepted
312accounting principles by an independent certified public
313accountant covering a 12-month period ending on a day falling
314during the last 6 months of the preceding calendar year. If the
315audited financial statement has not been completed, however, the
316licensee shall include in its annual statement an unaudited
317financial statement for the preceding calendar year and an
318affidavit from an officer of the licensee stating that the audit
319has not been completed. In this event, the licensee shall submit
320the audited statement on or before June 1. The audited and
321unaudited financial statements are subject to the provisions of
322chapter 688 and ss. 812.081 and 815.045 and may be protected as
323trade secrets. The annual statement, due on or before March 1
324each year, shall also provide the office with a report of all
325life expectancy providers who have provided life expectancies
326directly or indirectly to the viatical settlement provider for
327use in connection with a viatical settlement contract or a
328viatical settlement investment. A viatical settlement provider
329shall include in all statements filed with the office all
330information requested by the office regarding a related provider
331trust established by the viatical settlement provider. The
332office may adopt rules requiring that the annual statement
333contain information, in the aggregate, regarding viatical
334settlement contracts entered into with a resident of this state.
335The office may require more frequent reporting. Failure to
336timely file the annual statement or the audited financial
337statement or to timely pay the license fee is grounds for
338immediate suspension of the license. The commission may by rule
339require all or part of the statements or filings required under
340this section to be submitted by electronic means in a computer-
341readable form compatible with the electronic data format
342specified by the commission.
343     Section 3.  Subsection (1) of section 626.9914, Florida
344Statutes, is amended to read:
345     626.9914  Suspension, revocation, denial, or nonrenewal of
346viatical settlement provider license; grounds; administrative
347fine.--
348     (1)  The office shall suspend, revoke, deny, or refuse to
349renew the license of any viatical settlement provider if the
350office finds that the licensee:
351     (a)  Has made a misrepresentation in the application for
352the license;
353     (b)  Has engaged in fraudulent or dishonest practices, or
354otherwise has been shown to be untrustworthy or incompetent to
355act as a viatical settlement provider;
356     (c)  Demonstrates a pattern of unreasonable payments to
357viators;
358     (d)  Has been found guilty of, or has pleaded guilty or
359nolo contendere to, any felony, or a misdemeanor involving fraud
360or moral turpitude, regardless of whether a judgment of
361conviction has been entered by the court;
362     (e)  Has issued viatical settlement contracts using a
363viatical settlement contract form that has have not been
364approved pursuant to this act;
365     (f)  Has failed to honor contractual obligations related to
366the business of viatical settlement contracts;
367     (g)  Deals in bad faith with viators;
368     (h)  Has violated any provision of the insurance code or of
369this act;
370     (i)  Employs any person who materially influences the
371licensee's conduct and who fails to meet the requirements of
372this act;
373     (j)  No longer meets the requirements for initial
374licensure; or
375     (k)  Obtains or utilizes life expectancies regarding
376viatical settlement contracts from life expectancy providers who
377are not registered with the office pursuant to this act.
378     Section 4.  Subsection (1) of section 626.99175, Florida
379Statutes, is amended to read:
380     626.99175  Life expectancy providers; registration
381required; denial, suspension, revocation.--
382     (1)  After July 1, 2006, A person may not perform the
383functions of a life expectancy provider regarding viatical
384settlement contracts without first having registered as a life
385expectancy provider, except as provided in subsection (6).
386     Section 5.  Section 626.992, Florida Statutes, is amended
387to read:
388     626.992  Use of licensed viatical settlement providers,
389viatical settlement brokers, and registered life expectancy
390providers required.--
391     (1)  A licensed viatical settlement provider may not use
392any person to perform the functions of a viatical settlement
393broker as defined in this act regarding a viatical settlement
394contract unless such person holds a current, valid life agent
395license and has appointed himself or herself in conformance with
396this chapter.
397     (2)  A viatical settlement broker may not use any person to
398perform the functions of a viatical settlement provider as
399defined in this act regarding a viatical settlement contract
400unless such person holds a current, valid license as a viatical
401settlement provider.
402     (3)  After July 1, 2006, A person may not operate as a life
403expectancy provider regarding a viatical settlement contract
404unless such person is registered as a life expectancy provider
405pursuant to this act.
406     (4)  After July 1, 2006, A viatical settlement provider,
407viatical settlement broker, or any other person in the business
408of viatical settlements may not obtain life expectancies
409regarding a viatical settlement contract from a person who is
410not registered as a life expectancy provider pursuant to this
411act.
412     Section 6.  Subsections (1), (2), (4), and (7) of section
413626.9922, Florida Statutes, are amended to read:
414     626.9922  Examination.--
415     (1)  The office or department may examine the business and
416affairs of any of its respective licensees or applicants for a
417license. The office or department may order any such licensee or
418applicant to produce any records, books, files, advertising and
419solicitation materials, or other information and may take
420statements under oath to determine whether the licensee or
421applicant is in violation of the law or is acting contrary to
422the public interest. With respect to licensees, the examination
423is limited to information regarding viatical settlement
424contracts executed in this state, from this state, or with a
425resident of this state. The expenses incurred in conducting any
426examination or investigation must be paid by the licensee or
427applicant. Examinations and investigations must be conducted as
428provided in chapter 624, and licensees are subject to all
429applicable provisions of the insurance code.
430     (2)  All accounts, books and records, documents, files,
431contracts, and other information relating to all transactions of
432viatical settlement contracts, or life expectancies regarding
433viatical settlement contracts, or viatical settlement purchase
434agreements made before July 1, 2005, must be maintained by the
435licensee for a period of at least 3 years after the death of the
436insured and must be available to the office or department for
437inspection during reasonable business hours.
438     (4)  Such information The originals of records required to
439be maintained under this section must be made available to the
440office or department for examination at the office's or
441department's request.
442     (7)  Subsections (1), (2), (3), and (4) apply to life
443expectancy providers providing life expectancies regarding
444viatical settlement contracts in the state and providing life
445expectancies regarding viatical settlement contracts to viatical
446settlement providers in the state, as if life expectancy
447providers were licensees.
448     Section 7.  Section 626.99234, Florida Statutes, is created
449to read:
450     626.99234  Disclosures by insurers.--In addition to other
451questions that an insurance carrier may lawfully pose to an
452applicant for a life insurance policy, insurance carriers may
453inquire in the application as to whether the proposed owner
454intends to pay premiums with the assistance of financing from a
455lender that will use the policy as collateral to support the
456financing.
457     (1)  If the premium finance loan provides funds that can be
458used for a purpose other than paying for the premiums, costs,
459and expenses associated with obtaining and maintaining the life
460insurance policy and loan, the application shall be rejected as
461a prohibited practice under this act.
462     (2)  If the financing does not violate subsection (1) or
463the insurer's lawful underwriting guidelines, the insurer may
464not reject the life insurance application solely because the
465premiums will be financed.
466     (3)  The insurance carrier may make a disclosure to the
467applicant, either on the application or an amendment to the
468application to be completed no later than the date of delivery
469of the policy, including, but not limited to, the following:
470IF YOU HAVE ENTERED INTO A LOAN ARRANGEMENT IN WHICH
471THE POLICY IS USED AS COLLATERAL AND THE POLICY
472CHANGES OWNERSHIP AT SOME POINT IN THE FUTURE IN
473SATISFACTION OF THE LOAN, YOU SHOULD BE AWARE THAT A
474CHANGE OF OWNERSHIP COULD LEAD TO A STRANGER OWNING AN
475INTEREST IN THE INSURED'S LIFE AND COULD IN THE FUTURE
476LIMIT YOUR ABILITY TO PURCHASE INSURANCE ON THE
477INSURED'S LIFE BECAUSE THERE IS A LIMIT AS TO HOW MUCH
478COVERAGE INSURERS WILL ISSUE ON A LIFE. YOU SHOULD
479CONSULT A PROFESSIONAL ADVISOR SINCE A CHANGE IN
480OWNERSHIP IN SATISFACTION OF THE LOAN MAY RESULT IN
481TAX CONSEQUENCES TO THE OWNER, DEPENDING ON THE
482STRUCTURE OF THE LOAN.
483     (4)  In addition to the disclosures in subsection (3), the
484insurance carrier may require any of the following
485certifications from the applicant or the insured:
486     (a)  I HAVE NOT ENTERED INTO ANY AGREEMENT OR ARRANGEMENT
487UNDER WHICH I HAVE AGREED TO MAKE A FUTURE SALE OF THIS LIFE
488INSURANCE POLICY.
489     (b)  MY LOAN ARRANGEMENT FOR THIS POLICY PROVIDES FUNDS
490SUFFICIENT TO PAY FOR SOME OR ALL OF THE PREMIUMS, COSTS, AND
491EXPENSES ASSOCIATED WITH OBTAINING AND MAINTAINING MY LIFE
492INSURANCE POLICY, BUT I HAVE NOT ENTERED INTO ANY AGREEMENT
493PURSUANT TO WHICH I AM TO RECEIVE CONSIDERATION IN EXCHANGE FOR
494PROCURING THIS POLICY.
495     (c)  THE BORROWER HAS AN INSURABLE INTEREST IN THE INSURED.
496     Section 8.  Subsections (1) and (3) of section 626.9924,
497Florida Statutes, are amended to read:
498     626.9924  Viatical settlement contracts; procedures;
499rescission.--
500     (1)  Before the execution of a viatical settlement contract
501by all parties, the A viatical settlement provider entering into
502a viatical settlement contract with any viator must first obtain
503a witnessed document in which the viator consents to the
504viatical settlement contract, represents that he or she has a
505full and complete understanding of the viatical settlement
506contract and the benefits of the life insurance policy, releases
507his or her medical records, and acknowledges that he or she is
508entering has entered into the viatical settlement contract
509freely and voluntarily.
510     (3)  A viatical settlement transaction may be completed
511only through the use of an independent third-party trustee or
512escrow agent. Immediately upon receipt by the independent third-
513party trustee or escrow agent of documents from the viatical
514settlement provider viator to effect the transfer of the
515insurance policy, the viatical settlement provider must pay the
516proceeds of the settlement to an escrow or trust account managed
517by the independent third-party trustee or escrow agent in a
518financial institution licensed under Florida law or a federally
519chartered financial institution that is a member of the Federal
520Reserve System, pending acknowledgment of the transfer by the
521issuer of the policy. An advance or partial payment of the
522proceeds due under a viatical settlement contract may not be
523used to effect transfer of the subject policy; any such advance
524or partial payment is made at the sole discretion and risk of
525the viatical settlement provider.
526     Section 9.  Section 626.99245, Florida Statutes, is amended
527to read:
528     626.99245  Conflict of regulation of viaticals.--
529     (1)  A viatical settlement provider who from this state
530enters into a viatical settlement contract with a viator who is
531a resident of another state that has enacted statutes or adopted
532regulations governing viatical settlement contracts shall be
533governed in the effectuation of that viatical settlement
534contract by the statutes and regulations of the viator's state
535of residence. If the state in which the viator is a resident has
536not enacted statutes or regulations governing viatical
537settlement agreements, the provider shall give the viator notice
538that neither Florida nor his or her state regulates the
539transaction upon which he or she is entering. For transactions
540in those states, however, the viatical settlement provider is to
541maintain all records required as if the transactions were
542executed in Florida. The forms used in those states need not be
543approved by the office.
544     (2)  This section does not affect the requirement of s. ss.
545626.9911(12) and 626.9912(1) that a viatical settlement provider
546doing business from this state must obtain a viatical settlement
547license from the office. As used in this subsection, the term
548"doing business from this state" includes effectuating viatical
549settlement contracts from offices in this state, regardless of
550the state of residence of the viator.
551     Section 10.  Section 626.9925, Florida Statutes, is amended
552to read:
553     626.9925  Rules.--The commission may adopt rules to
554administer this act, including rules establishing standards for
555evaluating advertising by licensees; rules providing for the
556collection of data, for disclosures to viators, for the
557reporting of life expectancies, and for the registration of life
558expectancy providers; and rules defining terms used in this act
559and prescribing recordkeeping requirements relating to executed
560viatical settlement contracts.
561     Section 11.  Paragraph (e) is added to subsection (1) of
562section 626.99275, Florida Statutes, to read:
563     626.99275  Prohibited practices; penalties.--
564     (1)  It is unlawful for any person:
565     (e)  To engage in stranger-originated life insurance.
566     Section 12.  Section 626.99287, Florida Statutes, is
567amended to read:
568     626.99287  Contestability of viaticated policies.--Except
569as hereinafter provided, if a viatical settlement contract is
570entered into at any time before the date of issuance of a policy
571or within the 2-year period commencing with the date of issuance
572of the insurance policy or certificate to be acquired, the
573viatical settlement contract is void and unenforceable by either
574party. Notwithstanding this limitation, such a viatical
575settlement contract is not void and unenforceable if:
576     (1)  The policy was issued upon the owner's exercise of
577conversion rights arising out of a group or term policy;
578     (2)  The owner of the policy is a charitable organization
579exempt from taxation under 26 U.S.C. s. 501(c)(3);
580     (3)  The owner of the policy is not a natural person;
581     (4)  The viatical settlement contract was entered into
582before July 1, 2000;
583     (5)  The viator certifies by producing independent evidence
584to the viatical settlement provider that one or more of the
585following conditions have been met within the 2-year period:
586     (a)1.  The viator or insured is diagnosed with an illness
587or condition that is either:
588     a.  Catastrophic or life threatening; or
589     b.  Requires a course of treatment for a period of at least
5903 years of long-term care or home health care; and
591     2.  The condition was not known to the insured at the time
592the life insurance contract was entered into.
593     (b)  The viator's spouse dies;
594     (c)  The viator divorces his or her spouse;
595     (d)  The viator retires from full-time employment;
596     (e)  The viator becomes physically or mentally disabled and
597a physician determines that the disability prevents the viator
598from maintaining full-time employment;
599     (f)  The owner of the policy was the insured's employer at
600the time the policy or certificate was issued and the employment
601relationship terminated;
602     (g)  A final order, judgment, or decree is entered by a
603court of competent jurisdiction, on the application of a
604creditor of the viator, adjudicating the viator bankrupt or
605insolvent, or approving a petition seeking reorganization of the
606viator or appointing a receiver, trustee, or liquidator to all
607or a substantial part of the viator's assets; or
608     (h)  The viator experiences a significant decrease in
609income which is unexpected by the viator and which impairs his
610or her reasonable ability to pay the policy premium.
611
612If the viatical settlement provider submits to the insurer a
613copy of the viator's or owner's certification described above,
614then the provider submits a request to the insurer to effect the
615transfer of the policy or certificate to the viatical settlement
616provider, the viatical settlement agreement shall not be void or
617unenforceable by operation of this section. The insurer shall
618timely respond to such request. Nothing in this section shall
619prohibit an insurer from exercising its right during the
620contestability period to contest the validity of any policy on
621grounds of fraud.
622     Section 13.  This act shall take effect July 1, 2009.


CODING: Words stricken are deletions; words underlined are additions.