Life Settlement License

Idaho Gov. C.L. “Butch” Otter signed legislation April 1 that will impose rules to regulate the life settlement market for the first time in the state.

The new law takes effect July 1.

HB 75 contains provisions from two competing model laws drafted by the National Conference of Insurance Legislators (NCOIL) and the National Association of Insurance Commissioners (NAIC), but leans more heavily toward NCOIL’s model, said Shad Priest, deputy director of the Idaho Insurance Department.

Before the bill passed, the state only had an insurable-interest law, he said.

Priest said the bill outlaws stranger-originated life insurance (STOLI).

Idaho’s law differs from other states in that it requires life settlement brokers and providers to be licensed as life insurance producers. Other states have separate licensing categories for each of the intermediaries.

Doug Head, executive director of the Life Insurance Settlement Association (LISA), opposes a provision in the Idaho law that will require an insured’s medical information to be turned over to insurers.

“This is intrusive and unfair to consumers,” Head said in an email. “We hope that it will be amended in the future.”

Priest responded that the information is collected by providers in order to conduct the transaction and the state requires that the insured consent to releasing the information to the provider, broker, and insurer.

“The intrusion with respect to the insurer is no greater than the intrusion created by the release of the information to the broker and the provider,” he said in an email. “The very nature of life settlement transactions requires that the consumer allow strangers to access his or her medical records. When the consumer agrees to enter into a transaction, it is important that they be aware of and agree to the required medical disclosures, which the law is designed to do.”