Florida Senate - 2016                              CS for SB 650
       
       
        
       By the Committee on Banking and Insurance; and Senator Legg
       
       597-02609-16                                           2016650c1
    1                        A bill to be entitled                      
    2         An act relating to viatical settlements; amending s.
    3         626.9911, F.S.; revising definitions; defining the
    4         terms “business of viatical settlements,” “fraudulent
    5         viatical settlement act,” and “stranger-originated
    6         life insurance practice”; amending s. 626.9913, F.S.;
    7         requiring additional information in an annual
    8         statement filed by viatical settlement provider
    9         licensees; revising deposit requirements for viatical
   10         settlement provider licensees; deleting an obsolete
   11         provision regarding a deposit requirement; authorizing
   12         the Financial Services Commission to adopt rules;
   13         amending s. 626.9914, F.S.; adding an act that
   14         warrants the imposition of administrative penalties
   15         against viatical settlement provider licensees;
   16         increasing the amount of administrative fines that may
   17         be imposed by the Office of Insurance Regulation
   18         against licensees for certain violations; amending s.
   19         626.99175, F.S.; deleting an obsolete provision;
   20         deleting an exception from registration requirements
   21         for life expectancy providers; creating s. 626.99185,
   22         F.S.; requiring viatical settlement providers to
   23         provide viators with a disclosure statement before or
   24         concurrently with a viator’s execution of a viatical
   25         settlement contract; providing requirements and
   26         procedures for such disclosure statements; amending s.
   27         626.9924, F.S.; correcting cross-references relating
   28         to a requirement to provide specified documents with a
   29         notice that a policy has or will become a viaticated
   30         policy; amending s. 626.99245, F.S.; conforming a
   31         cross-reference; creating s. 626.99273, F.S.;
   32         prohibiting certain practices and conflicts of
   33         interest relating to viatical settlement contracts or
   34         insurance policies; requiring a viatical settlement
   35         provider to file certain promotional, advertising, and
   36         marketing materials with the office before entering
   37         into viatical settlement contracts; prohibiting
   38         certain references relating to the cost of life
   39         insurance policies in such materials and other
   40         specified statements and representations; authorizing
   41         the commission to adopt rules; amending s. 626.99275,
   42         F.S.; prohibiting a person from entering into a
   43         viatical settlement contract before a specified date
   44         except under specified circumstances, from issuing,
   45         soliciting, marketing, or otherwise promoting the
   46         purchase of a policy under certain circumstances, and
   47         from engaging in a fraudulent viatical settlement act;
   48         providing criminal penalties for a violation of such
   49         prohibitions; creating s. 626.99276, F.S.; requiring
   50         specified affidavits and other documentation to be
   51         provided to an insurer for requests to verify coverage
   52         and to transfer a policy or certificate to a viatical
   53         settlement provider; prohibiting insurers from
   54         requiring certain forms that have not been approved by
   55         the office to be signed as a condition of responding
   56         to such requests; requiring insurers to respond in
   57         writing during a specified period to properly
   58         completed requests to change the ownership or
   59         beneficiary of a policy; amending s. 626.99278, F.S.;
   60         providing requirements for licensed viatical
   61         settlement providers to maintain specified
   62         documentation relating to anti-fraud plans and
   63         procedures, material inconsistencies between medical
   64         records and insurance applications, and reporting of
   65         specified fraudulent acts and prohibited practices;
   66         amending s. 626.99287, F.S.; revising the period
   67         during which certain viatical settlement contracts are
   68         void and unenforeceable; revising exceptions to such
   69         contracts being void and unenforceable; creating s.
   70         626.99289, F.S.; providing that certain contracts,
   71         agreements, arrangements, and transactions relating to
   72         stranger-originated life insurance practices are void
   73         and unenforceable; providing an effective date.
   74          
   75  Be It Enacted by the Legislature of the State of Florida:
   76  
   77         Section 1. Section 626.9911, Florida Statutes, is amended
   78  to read:
   79         626.9911 Definitions.—As used in this act, the term:
   80         (1) “Business of viatical settlements” means an activity
   81  involved in the offering, soliciting, negotiating, procuring,
   82  effectuating, purchasing, investing, monitoring, tracking,
   83  underwriting, selling, transferring, assigning, pledging, or
   84  hypothecating of, or acquiring in other manner, an interest in a
   85  life insurance policy by means of a viatical settlement
   86  contract.
   87         (2) “Financing entity” means an underwriter, placement
   88  agent, lender, purchaser of securities, or purchaser of a policy
   89  or certificate from a viatical settlement provider, credit
   90  enhancer, or any entity that has direct ownership in a policy or
   91  certificate that is the subject of a viatical settlement
   92  contract, but whose principal activity related to the
   93  transaction is providing funds or credit enhancement to effect
   94  the viatical settlement or the purchase of one or more
   95  viaticated policies and who has an agreement in writing with one
   96  or more licensed viatical settlement providers to finance the
   97  acquisition of viatical settlement contracts. The term does not
   98  include a nonaccredited investor or other natural person. A
   99  financing entity may not enter into a viatical settlement
  100  contract.
  101         (3) “Fraudulent viatical settlement act” means an act or
  102  omission committed by a person who, knowingly or with the intent
  103  to defraud for the purpose of depriving another of property or
  104  for pecuniary gain, commits or allows an employee or agent to
  105  commit an act specified in this subsection.
  106         (a) Presenting, causing to be presented, or preparing with
  107  the knowledge or belief that it will be presented to or by
  108  another person false or concealed material information as part
  109  of, in support of, or concerning a fact material to:
  110         1. An application for the issuance of a viatical settlement
  111  contract or an insurance policy;
  112         2. The underwriting of a viatical settlement contract or an
  113  insurance policy;
  114         3. A claim for payment or benefit pursuant to a viatical
  115  settlement contract or an insurance policy;
  116         4. Premiums paid on an insurance policy;
  117         5. Payments and changes in ownership or beneficiary made in
  118  accordance with the terms of a viatical settlement contract or
  119  an insurance policy;
  120         6. The reinstatement or conversion of an insurance policy;
  121         7. The solicitation, offer, effectuation, or sale of a
  122  viatical settlement contract or an insurance policy;
  123         8. The issuance of written evidence of a viatical
  124  settlement contract or an insurance policy; or
  125         9. A financing transaction.
  126         (b) Employing a plan, financial structure, device, scheme,
  127  or artifice to defraud related to viaticated policies.
  128         (c) Engaging in a stranger-originated life insurance
  129  practice.
  130         (d) Failing to disclose upon request by an insurer that the
  131  prospective insured has undergone a life expectancy evaluation
  132  by a person other than the insurer or its authorized
  133  representatives in connection with the issuance of the policy.
  134         (e) Perpetuating a fraud or preventing the detection of a
  135  fraud by:
  136         1. Removing, concealing, altering, destroying, or
  137  sequestering from the office the assets or records of a licensee
  138  or other person engaged in the business of viatical settlements;
  139         2. Misrepresenting or concealing the financial condition of
  140  a licensee, financing entity, insurer, or other person;
  141         3. Transacting in the business of viatical settlements in
  142  violation of laws requiring a license, certificate of authority,
  143  or other legal authority to transact such business; or
  144         4. Filing with the office or the equivalent chief insurance
  145  regulatory official of another jurisdiction a document that
  146  contains false information or conceals information about a
  147  material fact from the office or other regulatory official.
  148         (f) Embezzlement, theft, misappropriation, or conversion of
  149  moneys, funds, premiums, credits, or other property of a
  150  viatical settlement provider, insurer, insured, viator,
  151  insurance policyowner, or other person engaged in the business
  152  of viatical settlements or insurance.
  153         (g) Recklessly entering into, negotiating, brokering, or
  154  otherwise dealing in a viatical settlement contract, the subject
  155  of which is a life insurance policy that was obtained based on
  156  information that was falsified or concealed for the purpose of
  157  defrauding the policy’s issuer, viatical settlement provider, or
  158  viator. As used in this paragraph, the term “recklessly” means
  159  acting or failing to act in conscious disregard for the relevant
  160  facts or risks, and which disregard involves a gross deviation
  161  from acceptable standards of conduct.
  162         (h) Facilitating the viator’s change of residency state to
  163  avoid the provisions of this act.
  164         (i) Facilitating or causing the creation of a trust with a
  165  non-Florida situs or other nonresident entity for the purpose of
  166  owning a life insurance policy covering a Florida resident to
  167  avoid the provisions of this act.
  168         (j) Facilitating or causing the transfer of the ownership
  169  of an insurance policy covering a Florida resident to a trust
  170  with a non-Florida situs or other nonresident entity to avoid
  171  the provisions of this act.
  172         (k) Applying for or obtaining a loan that is secured
  173  directly or indirectly by an interest in a life insurance
  174  policy.
  175         (l) Violating s. 626.99273(1) or (2).
  176         (m) Attempting to commit, assisting, aiding, or abetting in
  177  the commission of or conspiring to commit an act or omission
  178  specified in this subsection.
  179         (4)(2) “Independent third-party trustee or escrow agent”
  180  means an attorney, certified public accountant, financial
  181  institution, or other person providing escrow services under the
  182  authority of a regulatory body. The term does not include any
  183  person associated, affiliated, or under common control with a
  184  viatical settlement provider or viatical settlement broker.
  185         (5)(3) “Life expectancy” means an opinion or evaluation as
  186  to how long a particular person is to live, or relating to such
  187  person’s expected demise.
  188         (6)(4) “Life expectancy provider” means a person who
  189  determines, or holds himself or herself out as determining, life
  190  expectancies or mortality ratings used to determine life
  191  expectancies under any of the following circumstances:
  192         (a) On behalf of a viatical settlement provider, viatical
  193  settlement broker, life agent, or person engaged in the business
  194  of viatical settlements.;
  195         (b) In connection with a viatical settlement investment,
  196  pursuant to s. 517.021(24).; or
  197         (c) On residents of this state in connection with a
  198  viatical settlement contract or viatical settlement investment.
  199         (7)(5) “Person” has the meaning specified in s. 1.01.
  200         (8)(6) “Related form” means any form, created by or on
  201  behalf of a licensee, which a viator or insured is required to
  202  sign or initial. The forms include, but are not limited to, a
  203  power of attorney, a release of medical information form, a
  204  suitability questionnaire, a disclosure document, or any
  205  addendum, schedule, or amendment to a viatical settlement
  206  contract considered necessary by a provider to effectuate a
  207  viatical settlement transaction.
  208         (9)(7) “Related provider trust” means a titling trust or
  209  other trust established by a licensed viatical settlement
  210  provider or financing entity for the sole purpose of holding the
  211  ownership or beneficial interest in purchased policies in
  212  connection with a financing transaction. The trust must have a
  213  written agreement with a licensed viatical settlement provider
  214  or financing entity under which the licensed viatical settlement
  215  provider or financing entity is responsible for insuring
  216  compliance with all statutory and regulatory requirements and
  217  under which the trust agrees to make all records and files
  218  relating to viatical settlement transactions available to the
  219  office as if those records and files were maintained directly by
  220  the licensed viatical settlement provider. This term does not
  221  include an independent third-party trustee or escrow agent or a
  222  trust that does not enter into agreements with a viator. A
  223  related provider trust is shall be subject to all provisions of
  224  this act that apply to the viatical settlement provider who
  225  established the related provider trust, except s. 626.9912,
  226  which does shall not apply be applicable. A viatical settlement
  227  provider may establish up to no more than one related provider
  228  trust, and the sole trustee of such related provider trust shall
  229  be the viatical settlement provider licensed under s. 626.9912.
  230  The name of the licensed viatical settlement provider shall be
  231  included within the name of the related provider trust.
  232         (10)(8) “Special purpose entity” means an entity
  233  established by a licensed viatical settlement provider or by a
  234  financing entity, which may be a corporation, partnership,
  235  trust, limited liability company, or other similar entity formed
  236  solely to provide, either directly or indirectly, access to
  237  institutional capital markets to a viatical settlement provider
  238  or financing entity. A special purpose entity may not obtain
  239  capital from any natural person or entity with less than $50
  240  million in assets and may not enter into a viatical settlement
  241  contract.
  242         (11) “Stranger-originated life insurance practice” means an
  243  act, practice, arrangement, or agreement to initiate a life
  244  insurance policy for the benefit of a third-party investor who,
  245  at the time of policy origination, has no insurable interest in
  246  the insured. Stranger-originated life insurance practices
  247  include, but are not limited to:
  248         (a) The purchase of a life insurance policy with resources
  249  or guarantees from or through a person who, at the time of such
  250  policy’s inception, could not lawfully initiate the policy and
  251  the execution of a verbal or written arrangement or agreement to
  252  directly or indirectly transfer the ownership of such policy or
  253  policy benefits to a third party.
  254         (b) The creation of a trust or other entity that has the
  255  appearance of an insurable interest to initiate policies for
  256  investors, which violates insurable interest laws and the
  257  prohibition against wagering on life.
  258         (12)(9) “Viatical settlement broker” means a person who, on
  259  behalf of a viator and for a fee, commission, or other valuable
  260  consideration, offers or attempts to negotiate viatical
  261  settlement contracts between a viator resident in this state and
  262  one or more viatical settlement providers. Notwithstanding the
  263  manner in which the viatical settlement broker is compensated, a
  264  viatical settlement broker is deemed to represent only the
  265  viator and owes a fiduciary duty to the viator to act according
  266  to the viator’s instructions and in the best interest of the
  267  viator. The term does not include an attorney, licensed
  268  Certified Public Accountant, or investment adviser lawfully
  269  registered under chapter 517, who is retained to represent the
  270  viator and whose compensation is paid directly by or at the
  271  direction and on behalf of the viator.
  272         (13)(10) “Viatical settlement contract” means a written
  273  agreement entered into between a viatical settlement provider,
  274  or its related provider trust, and a viator. The viatical
  275  settlement contract includes an agreement to transfer ownership
  276  or change the beneficiary designation of a life insurance policy
  277  at a later date, regardless of the date that compensation is
  278  paid to the viator. The agreement must establish the terms under
  279  which the viatical settlement provider will pay compensation or
  280  anything of value, which compensation or value is less than the
  281  expected death benefit of the insurance policy or certificate,
  282  in return for the viator’s assignment, transfer, sale, devise,
  283  or bequest of the death benefit or ownership of all or a portion
  284  of the insurance policy or certificate of insurance to the
  285  viatical settlement provider. The term also includes the
  286  transfer for compensation or value of an ownership or a
  287  beneficial interest in a trust or other entity that owns such
  288  policy if the trust or other entity was formed or used for the
  289  principal purpose of acquiring one or more life insurance
  290  contracts that insure the life of a person residing in this
  291  state, and A viatical settlement contract also includes a
  292  contract for a loan or other financial transaction secured
  293  primarily by an individual or group life insurance policy. The
  294  term does not include, other than a policy loan by a life
  295  insurance company pursuant to the terms of the life insurance
  296  contract or accelerated death provisions contained in a life
  297  insurance policy, whether issued with the original policy or as
  298  a rider, or a loan secured by the cash surrender value of a
  299  policy as determined by the policy issuer and the life insurance
  300  policy terms, or a loan or advance from the issuer of the policy
  301  to the policyowner.
  302         (14)(11) “Viatical settlement investment” has the same
  303  meaning as specified in s. 517.021.
  304         (15)(12) “Viatical settlement provider” means a person who,
  305  in this state, from this state, or with a resident of this
  306  state, effectuates a viatical settlement contract. The term does
  307  not include:
  308         (a) A Any bank, savings bank, savings and loan association,
  309  or credit union, or other licensed lending institution that
  310  takes an assignment of a life insurance policy as collateral for
  311  a loan.
  312         (b) A life and health insurer that has lawfully issued a
  313  life insurance policy that provides accelerated benefits to
  314  terminally ill policyholders or certificateholders.
  315         (c) A Any natural person who enters into no more than one
  316  viatical settlement contract with a viator in 1 calendar year,
  317  unless such natural person has previously been licensed under
  318  this act or is currently licensed under this act.
  319         (d) A trust that meets the definition of a “related
  320  provider trust.”
  321         (e) A viator in this state.
  322         (f) A financing entity.
  323         (16)(13) “Viaticated policy” means a life insurance policy,
  324  or a certificate under a group policy, which is the subject of a
  325  viatical settlement contract.
  326         (17)(14) “Viator” means the owner of a life insurance
  327  policy or a certificateholder under a group policy, which policy
  328  is not a previously viaticated policy, who enters or seeks to
  329  enter into a viatical settlement contract. This term does not
  330  include a viatical settlement provider, a or any person
  331  acquiring a policy or interest in a policy from a viatical
  332  settlement provider, or nor does it include an independent
  333  third-party trustee or escrow agent.
  334         Section 2. Subsections (2) and (3) of section 626.9913,
  335  Florida Statutes, are amended, and subsection (6) is added to
  336  that section, to read:
  337         626.9913 Viatical settlement provider license continuance;
  338  annual report; fees; deposit.—
  339         (2)(a) Annually, on or before March 1, the viatical
  340  settlement provider licensee shall file a statement containing
  341  information the commission requires and shall pay to the office
  342  a license fee in the amount of $500.
  343         (b) In addition to any other requirements, the annual
  344  statement must specify:
  345         1. The total number of unsettled viatical settlement
  346  contracts and corresponding total amount due to viators under
  347  viatical settlement contracts that have been signed by the
  348  viator but have not been settled as of December 31 of the
  349  preceding calendar year, categorized by the number of days since
  350  the viator signed the contract for transactions regulated by
  351  this state.
  352         2. For each of the most recent 5 years, the total number of
  353  policies purchased, total gross amount paid for policies
  354  purchased, total commissions or compensation paid for policies
  355  purchased, and total face value of policies purchased, allocated
  356  by state, territory, and jurisdiction.
  357         3. For the most recent calendar year, the total amount of
  358  proceeds or compensation paid to policyowners, allocated by
  359  state, territory, and jurisdiction.
  360         (c)After December 31, 2007, The annual statement shall
  361  include an annual audited financial statement of the viatical
  362  settlement provider prepared in accordance with generally
  363  accepted accounting principles by an independent certified
  364  public accountant covering a 12-month period ending on a day
  365  occurring within falling during the last 6 months of the
  366  preceding calendar year. If the audited financial statement has
  367  not been completed, however, the licensee shall include in its
  368  annual statement an unaudited financial statement for the
  369  preceding calendar year and an affidavit from an officer of the
  370  licensee stating that the audit has not been completed. In this
  371  event, the licensee shall submit the audited statement on or
  372  before June 1. The annual statement, due on or before March 1
  373  each year, shall also provide the office with a report of all
  374  life expectancy providers who have provided life expectancies
  375  directly or indirectly to the viatical settlement provider for
  376  use in connection with a viatical settlement contract or a
  377  viatical settlement investment. A viatical settlement provider
  378  shall include in all statements filed with the office all
  379  information requested by the office regarding a related provider
  380  trust established by the viatical settlement provider. The
  381  office may require more frequent reporting. Failure to timely
  382  file the annual statement or the audited financial statement or
  383  to timely pay the license fee is grounds for immediate
  384  suspension of the license. The commission may by rule require
  385  all or part of the statements or filings required under this
  386  section to be submitted by electronic means in a computer
  387  readable form compatible with the electronic data format
  388  specified by the commission.
  389         (3) To ensure the faithful performance of its obligations
  390  to its viators in the event of insolvency or the loss of its
  391  license, a viatical settlement provider licensee must deposit
  392  and maintain deposited in trust with the department securities
  393  eligible for deposit under s. 625.52, having at all times a
  394  value of not less than $250,000 $100,000; however, a viatical
  395  settlement provider licensed in this state prior to June 1,
  396  2004, which has deposited and maintains continuously deposited
  397  in trust with the department securities in the amount of $25,000
  398  and which posted and maintains continuously posted a security
  399  bond acceptable to the department in the amount of $75,000, has
  400  until June 1, 2005, to comply with the requirements of this
  401  subsection.
  402         (6) The commission may adopt rules to implement this
  403  section.
  404         Section 3. Subsections (1) and (2) of section 626.9914,
  405  Florida Statutes, are amended to read:
  406         626.9914 Suspension, revocation, denial, or nonrenewal of
  407  viatical settlement provider license; grounds; administrative
  408  fine.—
  409         (1) The office shall suspend, revoke, deny, or refuse to
  410  renew the license of any viatical settlement provider if the
  411  office finds that the licensee has committed any of the
  412  following acts:
  413         (a) Has made a misrepresentation in the application for the
  414  license.;
  415         (b) Has engaged in fraudulent or dishonest practices, or
  416  otherwise has been shown to be untrustworthy or incompetent to
  417  act as a viatical settlement provider.;
  418         (c) Demonstrates a pattern of unreasonable payments to
  419  viators.;
  420         (d) Has been found guilty of, or has pleaded guilty or nolo
  421  contendere to, any felony, or a misdemeanor involving fraud or
  422  moral turpitude, regardless of whether a judgment of conviction
  423  has been entered by the court.;
  424         (e) Has issued viatical settlement contracts that have not
  425  been approved pursuant to this act.;
  426         (f) Has failed to honor contractual obligations related to
  427  the business of viatical settlement contracts.;
  428         (g) Deals in bad faith with viators.;
  429         (h) Has violated any provision of the insurance code or of
  430  this act.;
  431         (i) Employs or contracts with a any person who materially
  432  influences the licensee’s conduct and who fails to meet the
  433  requirements of this act.;
  434         (j) No longer meets the requirements for initial
  435  licensure.; or
  436         (k) Obtains or utilizes life expectancies from life
  437  expectancy providers who are not registered with the office
  438  pursuant to this act.
  439         (l) Has engaged in a fraudulent viatical settlement act.
  440         (2) The office may, in lieu of or in addition to any
  441  suspension or revocation, assess an administrative fine not to
  442  exceed $10,000 $2,500 for each nonwillful violation or $25,000
  443  $10,000 for each willful violation by a viatical settlement
  444  provider licensee. The office may also place a viatical
  445  settlement provider licensee on probation for a period not to
  446  exceed 2 years.
  447         Section 4. Subsection (1) of section 626.99175, Florida
  448  Statutes, is amended to read:
  449         626.99175 Life expectancy providers; registration required;
  450  denial, suspension, revocation.—
  451         (1) After July 1, 2006, A person may not perform the
  452  functions of a life expectancy provider without first having
  453  registered as a life expectancy provider, except as provided in
  454  subsection (6).
  455         Section 5. Section 626.99185, Florida Statutes, is created
  456  to read:
  457         626.99185 Disclosures to viator of disbursement.—
  458         (1) Before or concurrently with a viator’s execution of a
  459  viatical settlement contract, the viatical settlement provider
  460  shall provide to the viator, in duplicate, a disclosure
  461  statement in legible written form disclosing:
  462         (a) The name of each viatical settlement broker who
  463  receives or will receive compensation and the amount of each
  464  broker’s compensation related to that transaction. For the
  465  purpose of this section, compensation includes anything of value
  466  paid or given by or at the direction of a viatical settlement
  467  provider or person acquiring an interest in one or more life
  468  insurance policies to a viatical settlement broker in connection
  469  with the viatical settlement contract.
  470         (b) A complete reconciliation of the gross offer or bid by
  471  the viatical settlement provider to the net amount of proceeds
  472  or value to be received by the viator related to that
  473  transaction. As used in this section, the term “gross offer” or
  474  “bid” means the total amount or value offered by the viatical
  475  settlement provider for the purchase of an interest in one or
  476  more life insurance policies, including commissions,
  477  compensation, or other proceeds or value being deducted from the
  478  gross offer or bid.
  479         (2) The viator shall sign and date the disclosure statement
  480  before or concurrently with the viator’s execution of a viatical
  481  settlement contract, with the viator retaining the duplicate
  482  copy of the disclosure statement.
  483         (3) If a viatical settlement contract is entered into and
  484  the contract is subsequently amended or if there is a change in
  485  the viatical settlement provider’s gross offer or bid amount, a
  486  change in the net amount of proceeds or value to be received by
  487  the viator, or a change in the information provided in the
  488  disclosure statement to the viator, the viatical settlement
  489  provider shall provide, in duplicate, an amended disclosure
  490  statement to the viator containing the information in subsection
  491  (1). The viator shall sign and date the amended disclosure
  492  statement, with the viator retaining the duplicate copy of the
  493  amended disclosure statement.
  494         (4) Before a viatical settlement provider’s execution of a
  495  viatical settlement contract or an amendment to such contract,
  496  the viatical settlement provider must obtain the signed and
  497  dated disclosure statement and any amended disclosure statement
  498  required by this section. In transactions for which a broker is
  499  not used, the viatical settlement provider must obtain the
  500  signed and dated disclosure statement from the viator.
  501         (5) The viatical settlement provider shall maintain the
  502  documentation required by this section pursuant to s.
  503  626.9922(2) and shall make such documentation available to the
  504  office at any time for copying and inspection upon reasonable
  505  notice by the office to the viatical settlement provider.
  506         Section 6. Subsection (7) of section 626.9924, Florida
  507  Statutes, is amended to read:
  508         626.9924 Viatical settlement contracts; procedures;
  509  rescission.—
  510         (7) At any time during the contestable period, within 20
  511  days after a viator executes documents necessary to transfer
  512  rights under an insurance policy or within 20 days of any
  513  agreement, option, promise, or any other form of understanding,
  514  express or implied, to viaticate the policy, the provider must
  515  give notice to the insurer of the policy that the policy has or
  516  will become a viaticated policy. The notice must be accompanied
  517  by the documents required by ss. 626.99276 and 626.99287 s.
  518  626.99287(5)(a) in their entirety.
  519         Section 7. Subsection (2) of section 626.99245, Florida
  520  Statutes, is amended to read:
  521         626.99245 Conflict of regulation of viaticals.—
  522         (2) This section does not affect the requirement of ss.
  523  626.9911(15) 626.9911(12) and 626.9912(1) that a viatical
  524  settlement provider doing business from this state must obtain a
  525  viatical settlement license from the office. As used in this
  526  subsection, the term “doing business from this state” includes
  527  effectuating viatical settlement contracts from offices in this
  528  state, regardless of the state of residence of the viator.
  529         Section 8. Section 626.99273, Florida Statutes, is created
  530  to read:
  531         626.99273 Prohibited practices and conflicts of interest.—
  532         (1) With respect to a viatical settlement contract or an
  533  insurance policy, a viatical settlement broker may not knowingly
  534  solicit an offer from, effectuate a viatical settlement with, or
  535  make a sale to any viatical settlement provider, financing
  536  entity, or related provider trust that is controlling,
  537  controlled by, or under common control with such viatical
  538  settlement broker.
  539         (2) With respect to a viatical settlement contract or an
  540  insurance policy, a viatical settlement provider may not
  541  knowingly enter into a viatical settlement contract with a
  542  viator if, in connection with such viatical settlement contract,
  543  anything of value will be paid to a viatical settlement broker
  544  that is controlling, controlled by, or under common control with
  545  such viatical settlement provider, financing entity, or related
  546  provider trust that is involved in such viatical settlement
  547  contract.
  548         (3) A viatical settlement provider may not enter into a
  549  viatical settlement contract unless the viatical settlement
  550  promotional, advertising, and marketing materials, as may be
  551  prescribed by rule, have been filed with the office. Such
  552  materials may not expressly indicate, or include any reference
  553  that would cause a viator to reasonably believe, that the life
  554  insurance is free for any period of time.
  555         (4) A life insurance agent, insurer, viatical settlement
  556  broker, or viatical settlement provider may not make a statement
  557  or representation to an applicant or policyholder in connection
  558  with the sale of a life insurance policy to the effect that the
  559  insurance is free or without cost to the policyholder for any
  560  period of time.
  561         (5) The commission may adopt rules to implement this
  562  section.
  563         Section 9. Section 626.99275, Florida Statutes, is amended
  564  to read:
  565         626.99275 Prohibited practices; penalties.—
  566         (1) It is unlawful for a any person to:
  567         (a) To Knowingly enter into, broker, or otherwise deal in a
  568  viatical settlement contract the subject of which is a life
  569  insurance policy, knowing that the policy was obtained by
  570  presenting materially false information concerning any fact
  571  material to the policy or by concealing, for the purpose of
  572  misleading another, information concerning any fact material to
  573  the policy, where the viator or the viator’s agent intended to
  574  defraud the policy’s issuer.
  575         (b) To Knowingly or with the intent to defraud, for the
  576  purpose of depriving another of property or for pecuniary gain,
  577  issue or use a pattern of false, misleading, or deceptive life
  578  expectancies.
  579         (c) To Knowingly engage in any transaction, practice, or
  580  course of business intending thereby to avoid the notice
  581  requirements of s. 626.9924(7).
  582         (d) To Knowingly or intentionally facilitate the change of
  583  state of residency of a viator to avoid the provisions of this
  584  chapter.
  585         (e) Knowingly enter into a viatical settlement contract
  586  before the application for or issuance of a life insurance
  587  policy that is the subject of a viatical settlement contract or
  588  during the 5-year period commencing on the date of issuance of
  589  the policy or certificate, unless the viator provides a sworn
  590  affidavit and accompanying documentation in accordance with s.
  591  626.9987.
  592         (f) Knowingly issue, solicit, market, or otherwise promote
  593  the purchase of a life insurance policy for the purpose of or
  594  with an emphasis on selling the policy.
  595         (g) Engage in a fraudulent viatical settlement act.
  596         (2) A person who violates any provision of this section
  597  commits:
  598         (a) A felony of the third degree, punishable as provided in
  599  s. 775.082, s. 775.083, or s. 775.084, if the insurance policy
  600  involved is valued at any amount less than $20,000.
  601         (b) A felony of the second degree, punishable as provided
  602  in s. 775.082, s. 775.083, or s. 775.084, if the insurance
  603  policy involved is valued at $20,000 or more, but less than
  604  $100,000.
  605         (c) A felony of the first degree, punishable as provided in
  606  s. 775.082, s. 775.083, or s. 775.084, if the insurance policy
  607  involved is valued at $100,000 or more.
  608         Section 10. Section 626.99276, Florida Statutes, is created
  609  to read:
  610         626.99276Notification to insurer required.—
  611         (1) A copy of the sworn affidavit and the documentation
  612  required in s. 626.99287 must be submitted to the insurer if the
  613  viatical settlement provider or other party entering into a
  614  viatical settlement contract with a viator submits a request to
  615  the insurer for verification of coverage or if the viatical
  616  settlement provider submits a request to transfer the policy or
  617  certificate to the provider. If the request is made by a
  618  viatical settlement provider, the copy shall be accompanied by a
  619  sworn affidavit from the viatical settlement provider affirming
  620  that the copy is a true and correct copy of the documentation
  621  received by the provider.
  622         (2) An insurer may not require, as a condition of
  623  responding to a request for verification of coverage or
  624  effecting the transfer of a policy pursuant to a viatical
  625  settlement contract, that the viator, insured, viatical
  626  settlement provider, or viatical settlement broker sign any
  627  disclosures, consent form, waiver form, or other form that has
  628  not been approved by the office for use in connection with
  629  viatical settlement contracts in this state.
  630         (3) Upon receipt of a properly completed request for change
  631  of ownership or beneficiary of a policy, the insurer shall
  632  respond in writing within 30 calendar days confirming that the
  633  change has been effectuated or specifying the reasons why the
  634  requested change cannot be processed. The insurer may not
  635  unreasonably delay effectuating a change of ownership or
  636  beneficiary and may not otherwise seek to interfere with any
  637  viatical settlement contract lawfully entered into in this
  638  state.
  639         Section 11. Section 626.99278, Florida Statutes, is amended
  640  to read:
  641         626.99278 Viatical provider anti-fraud plan.—
  642         (1) Each Every licensed viatical settlement provider and
  643  registered life expectancy provider must adopt an anti-fraud
  644  plan and file it with the Division of Insurance Fraud of the
  645  department. Each anti-fraud plan shall include:
  646         (a)(1) A description of the procedures for detecting and
  647  investigating possible fraudulent acts and procedures for
  648  resolving material inconsistencies between medical records and
  649  insurance applications.
  650         (b)(2) A description of the procedures for the mandatory
  651  reporting of possible fraudulent insurance acts and prohibited
  652  practices specified set forth in s. 626.99275 to the Division of
  653  Insurance Fraud of the department.
  654         (c)(3) A description of the plan for anti-fraud education
  655  and training of its underwriters or other personnel.
  656         (d)(4) A written description or chart outlining the
  657  organizational arrangement of the anti-fraud personnel who are
  658  responsible for the investigation and reporting of possible
  659  fraudulent insurance acts and for the investigation of
  660  unresolved material inconsistencies between medical records and
  661  insurance applications.
  662         (e)(5) For viatical settlement providers, a description of
  663  the procedures used to perform initial and continuing review of
  664  the accuracy of life expectancies used in connection with a
  665  viatical settlement contract or viatical settlement investment.
  666         (2) Each licensed viatical settlement provider shall
  667  maintain in accordance with s. 626.9922:
  668         (a) Documentation of compliance with its anti-fraud plan
  669  and procedures filed in accordance with this section.
  670         (b) Documentation pertaining to resolved and unresolved
  671  material inconsistencies between medical records and insurance
  672  applications.
  673         (c) Documentation of its mandatory reporting of the
  674  possible fraudulent acts and prohibited practices specified in
  675  s. 626.99275 to the Division of Insurance Fraud.
  676         Section 12. Section 626.99287, Florida Statutes, is
  677  amended, to read:
  678         626.99287 Contestability of viaticated policies.—Except as
  679  hereinafter provided, if a viatical settlement contract is
  680  entered into during within the 5-year 2-year period commencing
  681  on with the date of issuance of the insurance policy or
  682  certificate to be acquired, the viatical settlement contract is
  683  void and unenforceable by either party. Notwithstanding this
  684  limitation, such a viatical settlement contract is not void and
  685  unenforceable if the viator provides a sworn affidavit and
  686  accompanying documentation that certifies to the viatical
  687  settlement provider that one or more of the following conditions
  688  were met during the 5-year period:
  689         (1) The policy was issued upon the owner’s exercise of
  690  conversion rights arising out of a group or term policy, if the
  691  total time covered under the prior policy is at least 60 months.
  692  The time covered under a group policy shall be calculated
  693  without regard to any change in insurance carriers, provided the
  694  coverage has been continuous and under the same group
  695  sponsorship;
  696         (2) The owner of the policy is a charitable organization
  697  exempt from taxation under 26 U.S.C. s. 501(c)(3);
  698         (3) The owner of the policy is not a natural person;
  699         (4) The viatical settlement contract was entered into
  700  before July 1, 2000;
  701         (5) The viator certifies by producing independent evidence
  702  to the viatical settlement provider that one or more of the
  703  following conditions were have been met during within the 5-year
  704  2-year period:
  705         (a)1. The viator or insured is terminally or chronically
  706  ill diagnosed with an illness or condition that is either:
  707         a. Catastrophic or life threatening; or
  708         b. Requires a course of treatment for a period of at least
  709  3 years of long-term care or home health care; and
  710         2. the condition was not known to the insured at the time
  711  the life insurance contract was entered into;.
  712         (b) The viator’s spouse dies;
  713         (c) The viator divorces his or her spouse;
  714         (d) The viator retires from full-time employment;
  715         (e) The viator becomes physically or mentally disabled and
  716  a physician determines that the disability prevents the viator
  717  from maintaining full-time employment;
  718         (f) The owner of the policy was the insured’s employer at
  719  the time the policy or certificate was issued and the employment
  720  relationship terminated;
  721         (g) A final order, judgment, or decree is entered by a
  722  court of competent jurisdiction, on the application of a
  723  creditor of the viator, adjudicating the viator bankrupt or
  724  insolvent, or approving a petition seeking reorganization of the
  725  viator or appointing a receiver, trustee, or liquidator to all
  726  or a substantial part of the viator’s assets; or
  727         (h) The viator experiences a significant decrease in income
  728  which is unexpected by the viator and which impairs his or her
  729  reasonable ability to pay the policy premium.
  730         (6) The viator entered into a viatical settlement contract
  731  more than 2 years after the policy’s issuance date and, with
  732  respect to the policy, at all times before such date each of the
  733  following conditions were met:
  734         (a) Policy premiums were funded exclusively with
  735  unencumbered assets, including an interest in the life insurance
  736  policy being financed but only to the extent of its net cash
  737  surrender value provided by or full recourse liability incurred
  738  by the insured;
  739         (b) An agreement or understanding with another person was
  740  not entered into to guarantee any such liability or to purchase,
  741  or agree to purchase, the policy, including through an
  742  assumption or forgiveness of the loan; and
  743         (c) The insured and the policy were not evaluated for
  744  settlement.
  745  
  746  If the viatical settlement provider submits to the insurer a
  747  copy of the viator’s or owner’s certification described above,
  748  then the provider submits a request to the insurer to effect the
  749  transfer of the policy or certificate to the viatical settlement
  750  provider, the viatical settlement agreement shall not be void or
  751  unenforceable by operation of this section. The insurer shall
  752  timely respond to such request. Nothing in this section shall
  753  prohibit an insurer from exercising its right during the
  754  contestability period to contest the validity of any policy on
  755  grounds of fraud.
  756         Section 13. Section 626.99289, Florida Statutes, is created
  757  to read:
  758         626.99289 Void and unenforceable contracts, agreements,
  759  arrangements, and transactions.—A contract, agreement,
  760  arrangement, or transaction, including, but not limited to, a
  761  financing agreement or any other arrangement or understanding
  762  entered into, whether written or verbal, for the furtherance or
  763  aid of a stranger-originated life insurance practice is void and
  764  unenforceable.
  765         Section 14. This act shall take effect July 1, 2016.