SB 163 (BR 1232) - R. Sanders Jr
AN ACT relating to viatical settlements.
Create a new section of Subtitle 15 of KRS Chapter 304 to provide that nothing in this Act preempts the provisions of the Securities Act of Kentucky; amend KRS 292.310 to define "viatical settlement investment"; amend KRS 304.9-150 to require a licensee that is a business entity to notify the commissioner of all changes of members, directors, officers and other individuals within 30 days of the change; amend KRS 304.9-170 to exempt a licensed insurance agent operating as a viatical settlement broker pursuant to this Act from the prelicensing education or examination requirement; amend KRS 304.9-440 to conform and to expand the basis for the commissioner to probate, suspend, impose conditions upon or revoke or refuse to renew any license and require the commissioner to comply with KRS Chapter 13B when taking any action involving a license; amend KRS 304.15-020 to define "business of viatical settlements", chronically ill", "financing entity", "fraudulent viatical settlement act", "viatical settlement contract", "viatical settlement provider", "viator", "viaticated policy", "related provider trust", "special purpose entity", and "terminally ill", and to delete the definition of "independent third party trustee" and "viatical settlement purchaser"; amend KRS 304.115-700 to require licensure of viatical settlement providers and viatical settlement brokers by the Department of Insurance, exempt an insurance agent with a life line of authority pursuant to specified requirements, exempt a licensed attorney, certified public accountant or financial planner accredited by a nationally recognized accreditation agency; amend KRS 304.15-705 to require specified record retention of all transactions of viatical settlement contracts; amend KRS 304.15-710 to require that upon application a viator receive a copy of the department's consumer guide relating to viatical settlements from the provider or broker, that the viator be advised that the proceeds may be taxable under federal or state tax law, may be subject to claims of creditors and may affect other rights or benefits, require that funds be sent to the viator within three (3) business days after the provider receives the insurer's acknowledgment of the policy, require specified disclosures to the viator and delete subsections (6), (7), (8) and (9); amend KRS 304.5-715 to establish rules governing the relationship between the policyowner, the insurer, and the viatical settlement licensees, to require a document releasing the insureds medical records to the provider agent or broker or the insurance company if the policy was issued less than two years before application; require the insurer to respond within thirty days to a request for verification of coverage; require the provider to obtain a witnessed document from the viator giving consent to the contract stating the viator has a full understanding of the contract and has acted freely and voluntarily prior to execution of the contract, and if the viator is terminally or chronically ill that the condition was diagnosed after the policy was issued, and provide that the contract shall contain an unconditional right to rescind within the lesser of 30 days of execution of the contract or within 15 days of receipt of the proceeds, with the repayment of all proceeds, premiums, loans and loan interest to the provider and that if the viator dies during the rescission period the contract shall be deemed rescinded, that a financial advisor should be consulted, that funds will be sent to the viator within three business days of transfer acknowledgment from the insurer, provide that failure to tender consideration to the viator shall render the contract voidable, rather than void, provide limitations on contacts with the insured to determine the health status of the insured, and delete subsection (7) and (8); amend KRS 304.15-716 to provide that it is a violation of subtitle 15 of KRS Chapter 304 for a person to enter into a viatical settlement contract within a 2 year period after issuance of a policy unless specified conditions are met and accompanied by independent evidence and require submission of the evidence to the insurer which shall establish that the viatical settlement contract meets the requirements of this section and require the insurer to respond in a timely manner, delete conflicting provisions; amend KRS 304.15-717 to provide that it is unlawful to intentionally enter into a viatical settlement contract by means of a false, deceptive, or misleading application for the life insurance policy, to knowingly or intentionally interfere with enforcement of the provisions of this subtitle, to knowingly or intentionally permit a person to commit a felony involving dishonesty or breach of trust to participate in the business of viatical settlements, or to commit a fraudulent viatical settlement act as defined in Section 6 of this Act, require a statement in each viatical settlement contract and application that providing false information on the said documents is a crime, require a person engaged in the business of viatical settlements who knows of a fraudulent act involving a viatical settlement act to notify the commissioner and prohibit civil liability for such notification, provide that evidence submitted to the commissioner relating to fraudulent acts are privileged and confidential, provide that this subsection does not apply to statements made with actual malice, provide that this section does not preempt the authority of other law enforcement or regulatory agencies to investigate suspected fraud involving viatical settlement contracts nor does this subsection abrogate or modify common law or statutory privileges or immunities, provide that documents and evidence provided to the commissioner are privileged and confidential, require viatical settlement providers to adopt specified antifraud initiatives; amend KRS 304.15-718 to establish the procedure for executing and funding a viatical settlement contract including the requirement that a viatical settlement provider instruct the viator to send the executed documents involving the ownership, assignment, or change in beneficiary to the escrow agent, provide instruction for the provider if the viator fails to comply, require deposit of the proceeds into an escrow or trust account insured by the FDIC, provide that the escrow agent pay the proceeds to the viator upon proper completion of the process, and delete conflicting provisions; and, amend KRS 304.15-720 to authorize the commissioner to establish standards for viatical settlement contracts if the viator is terminally or chronically ill and to adopt rules governing the relationship between the parties to a viatical settlement contract; amend KRS 304.99-020 to subject viatical settlement providers to the penalty provision.
Feb 8-introduced in Senate
Feb 9-to Banking and Insurance (S)
Feb 16-reported favorably, 1st reading, to Consent Calendar
Feb 17-2nd reading, to Rules; posted for passage in the Consent Orders of the Day for Friday, February 18, 2005
Feb 18-3rd reading, passed 36-0; received in House
Feb 22-to Banking and Insurance (H); posted in committee; posting waived
Feb 23-reported favorably, 1st reading, to Calendar
Feb 24-2nd reading, to Rules
Feb 28-posted for passage in the Regular Orders of the Day for Tuesday, March 1, 2005
Mar 3-3rd reading, passed 92-0
Mar 4-received in Senate; enrolled, signed by President of the Senate
Mar 8-enrolled, signed by Speaker of the House; delivered to Governor
Mar 11-signed by Governor (Acts ch. 58)