75th OREGON LEGISLATIVE ASSEMBLY--2009 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 3715
A-Engrossed
Senate Bill 973
Ordered by the Senate May 1
Including Senate Amendments dated May 1
Sponsored by Senator BONAMICI, Representative SCHAUFLER; Senators
MONNES ANDERSON, MORRISETTE, Representative KENNEMER (at the
request of American Council of Life Insurers)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.
Revises regulations for life settlement insurance.
Imposes regulations on life settlement investment agents.
Creates new reporting requirements and disclosure requirements
for persons in business of life settlements. Expands regulations
on advertising of life settlement contracts, purchase agreements
and related products.
Increases length of time life insurance policy owner is allowed
to rescind life settlement contract. Permits life settlement
contracts for policy owner and insured who are not terminally or
chronically ill. Limits frequency of contact of insured for
purpose of determining insured's health status after execution of
life settlement contract.
Expands list of prohibited actions by persons in business of
life settlements. Prohibits stranger-originated life insurance
practices. Subject to exemptions, requires minimum of five-year
time period between issuance of life insurance policy and
agreement to life settlement contract. Requires life settlement
providers and brokers to prepare and implement anti-fraud
initiatives.
Adds private right of civil action against persons violating
Act. Makes violation of Act unlawful trade practice. Makes
certain violations of Act subject to criminal prosecution as
theft or forgery.
A BILL FOR AN ACT
Relating to life insurance; creating new provisions; amending ORS
646.608, 744.321, 744.323, 744.328, 744.338, 744.341, 744.343,
744.346 and 744.358; and repealing ORS 744.319, 744.348,
744.351 and 744.356.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + Sections 2, 5 and 11 to 19 of this 2009 Act are
added to and made a part of ORS 744.319 to 744.358. + }
SECTION 2. { + As used in ORS 744.319 to 744.358:
(1) 'Advertising' means any written, electronic or printed
communication or any communication by means of recorded telephone
messages or transmission on radio, television, the Internet or
similar communications media, including film strips, motion
pictures and videos, published, disseminated, circulated or
placed directly before the public in this state for the purpose
of creating an interest in or inducing a person to purchase or
sell, assign, devise, bequest or transfer the death benefit or
ownership of a life insurance policy or to purchase or sell,
assign, devise, bequest or transfer the death benefit or
ownership of a life insurance policy pursuant to a life
settlement contract.
(2) 'Business of life settlements' means an activity involved
in, but not limited to, the offering, soliciting, negotiating,
procuring, effectuating, purchasing, investing, financing,
monitoring, tracking, underwriting, selling, transferring,
assigning, pledging, hypothecating or in any other manner
acquiring an interest in a life insurance policy by means of a
life settlement contract.
(3) 'Chronically ill' means:
(a) Being unable to perform at least two activities of daily
living, such as eating, toileting, moving around, bathing or
dressing;
(b) Requiring substantial supervision to protect the individual
from threats to health and safety due to severe cognitive
impairment; or
(c) Having a level of disability similar to that described in
paragraph (a) of this subsection as determined by the Director of
the Department of Consumer and Business Services.
(4)(a) 'Financing entity' means an underwriter, placement
agent, lender, purchaser of securities, purchaser of a policy or
certificate from a life settlement provider, credit enhancer or
any other person or entity that has a direct ownership in a
policy or certificate that is the subject of a life settlement
contract, but:
(A) Whose principal activity related to the transaction is
providing funds to effect the life settlement or purchase of one
or more settled policies; and
(B) Who has an agreement in writing with one or more licensed
life settlement providers to finance the acquisition of life
settlement contracts.
(b) 'Financing entity' does not include a nonaccredited
investor or a life settlement purchaser.
(5) 'Licensee' means a life settlement provider, life
settlement broker or life settlement investment agent.
(6) 'Life insurance producer' means any person licensed in this
state as a resident or nonresident insurance producer who has
received qualification or authority under ORS 744.062 or 744.063
to transact life insurance.
(7)(a) 'Life settlement broker' means a person, including a
life insurance producer, working exclusively on behalf of an
owner and for a fee, commission or other valuable consideration,
who offers or attempts to negotiate life settlement contracts
between an owner and one or more life settlement providers or one
or more life settlement brokers. Notwithstanding the manner in
which the life settlement broker is compensated, a life
settlement broker is deemed to represent only the owner, and not
the life insurance producer or the life settlement provider, and
owes a fiduciary duty to the owner to act according to the
owner's instructions and in the best interest of the owner.
(b) 'Life settlement broker' does not include an attorney, a
certified public accountant or a financial planner, accredited by
a nationally recognized accreditation agency, who is retained to
represent the owner and whose compensation is not paid directly
or indirectly by the life settlement provider or purchaser.
(8)(a) 'Life settlement contract' means a written agreement
between an owner and a life settlement provider or any affiliate
of the life settlement provider establishing the terms under
which compensation or anything of value is or will be paid, which
compensation or value is less than the expected death benefits of
the policy, in return for the owner's present or future
assignment, transfer, sale, devise or bequest of the death
benefit or ownership of any portion of the insurance policy or
certificate of insurance.
(b) 'Life settlement contract' includes the transfer for
compensation or value of ownership or beneficial interest in a
trust or other entity that owns a life insurance policy or
certificate of insurance if the trust or other entity was formed
for the principal purpose of acquiring one or more life insurance
contracts insuring the life of a person residing in this state.
(c) 'Life settlement contract' also includes a premium finance
loan made for a life insurance policy by a lender to an owner on,
before or after the date of issuance of the policy if:
(A) The owner or the insured receives on the date of the
premium finance loan a guarantee of a future life settlement
value of the policy; or
(B) The owner or the insured agrees on the date of the premium
finance loan to sell the policy or any portion of its death
benefit on any date following the issuance of the policy.
(d) 'Life settlement contract' does not include:
(A) A policy loan or accelerated death benefit made by the
insurer pursuant to the policy's terms;
(B) Loan proceeds that are used solely to pay:
(i) Premiums for the policy; or
(ii) The costs of the loan, including, without limitation,
interest, arrangement fees, utilization fees and similar fees,
closing costs, legal fees and expenses, trustee fees and expenses
and third party collateral provider fees and expenses, including
fees payable to letter of credit issuers;
(C) A loan made by a bank or other licensed financial
institution in which the lender takes an interest in a life
insurance policy solely to secure repayment of a loan or, if
there is a default on the loan and the policy is transferred, the
transfer of such a policy by the lender. However, neither the
default itself nor the transfer of the policy in connection with
a default may occur pursuant to an agreement or understanding
with any other person for the purpose of evading regulation under
ORS 744.319 to 744.358;
(D) A premium finance loan made by a lender that does not
violate the provisions of ORS 746.405 to 746.530, if the premium
finance loan is not described in paragraph (c) of this
subsection;
(E) An agreement in which all the parties are closely related
to the insured by blood or law or have a lawful substantial
economic interest in the continued life, health and bodily safety
of the person insured, or are trusts established primarily for
the benefit of such parties;
(F) Any designation, consent or agreement by an insured who is
an employee of an employer in connection with the purchase by the
employer, or trust established by the employer, of life insurance
on the life of the employee;
(G) A legitimate business succession planning arrangement:
(i) Between one or more shareholders in a corporation or
between a corporation and one or more of its shareholders or one
or more trusts established by its shareholders;
(ii) Between one or more partners in a partnership or between a
partnership and one or more of its partners or one or more trusts
established by its partners; or
(iii) Between one or more members in a limited liability
company or between a limited liability company and one or more of
its members or one or more trusts established by its members;
(H) An agreement entered into by a service recipient, or a
trust established by the service recipient and a service
provider, or a trust established by the service provider, who
performs significant services for the service recipient's trade
or business; or
(I) Any other contract, transaction or arrangement exempted
from the definition of life settlement contract by the director
based on a determination that the contract, transaction or
arrangement is not of the type intended to be regulated by ORS
744.319 to ORS 744.358.
(9) 'Life settlement investment agent' means a person who is an
appointed or contracted agent of a licensed life settlement
provider who solicits or arranges the funding for the purchase of
a life settlement by a life settlement purchaser and who is
acting on behalf of a life settlement provider.
(10)(a) 'Life settlement provider' means a person, other than
an owner, that enters into or effectuates a life settlement
contract with an owner resident in this state.
(b) 'Life settlement provider' does not include:
(A) A bank, savings bank, savings and loan association, credit
union or other licensed lending institution that takes an
assignment of a life insurance policy solely as collateral for a
loan;
(B) A premium finance company making premium finance loans and
exempted by the director from the licensing requirement under ORS
746.405 to 746.530 that takes an assignment of a life insurance
policy solely as collateral for a loan;
(C) The issuer of the life insurance policy;
(D) An insurer certified under ORS 731.354 or accredited under
ORS 731.511 that provides stop loss coverage or financial
guaranty insurance to a life settlement provider, purchaser,
financing entity, special purpose entity or related provider
trust;
(E) An individual who enters into or effectuates no more than
one agreement in a calendar year for the transfer of life
insurance policies for any value less than the expected death
benefit;
(F) A financing entity;
(G) A special purpose entity;
(H) A related provider trust;
(I) A life settlement purchaser; or
(J) Any other person that the director determines is not the
type of person intended to be covered by the definition of 'life
settlement provider. '
(11) 'Life settlement purchase agreement' means a contract or
agreement, entered into by a life settlement purchaser and to
which the owner is not a party, to purchase a life insurance
policy or an interest in a life insurance policy that is entered
into for the purpose of deriving an economic benefit.
(12)(a) 'Life settlement purchaser' means a person who, to
derive an economic benefit:
(A) Provides a sum of money as consideration for a life
insurance policy or an interest in the death benefits of a life
insurance policy; or
(B) Owns or acquires or is entitled to a beneficial interest in
a trust that owns a life settlement contract or is the
beneficiary of a life insurance policy that has been or will be
the subject of a life settlement contract.
(b) 'Life settlement purchaser' does not include:
(A) A licensee under ORS 744.321 or 744.323 or section 5 of
this 2009 Act;
(B) An accredited investor or qualified institutional buyer as
defined in Rule 501(a) or Rule 144A promulgated under the Federal
Securities Act of 1933, as amended;
(C) A financing entity;
(D) A special purpose entity; or
(E) A related provider trust.
(13)(a) 'Owner' means the owner of a life insurance policy or a
certificate holder under a group policy who resides in this state
and enters or seeks to enter into a life settlement contract. For
the purposes of ORS 744.319 to 744.358, an owner shall not be
limited to an owner of a life insurance policy or a certificate
holder under a group policy insuring the life of an individual
with a terminal or chronic illness or condition except when
specifically addressed. If there is more than one owner on a
single policy and the owners are residents of different states,
the transaction shall be governed by the law of the state in
which the owner having the largest ownership percentage resides
or, if the owners hold equal ownership, the state of residence of
one owner agreed upon in writing by all the owners.
(b) 'Owner' does not include:
(A) A licensee under ORS 744.321, 744.323 or section 5 of this
2009 Act, including a life insurance producer acting as a life
settlement broker under ORS 744.323;
(B) A qualified institutional buyer as defined in Rule 144A
promulgated under the Federal Securities Act of 1933, as amended;
(C) A financing entity;
(D) A special purpose entity; or
(E) A related provider trust.
(14) 'Policy' means an individual or group policy, group
certificate, contract or arrangement of life insurance owned by a
resident of this state, regardless of whether delivered or issued
for delivery in this state.
(15) 'Related provider trust' means a trust established by a
licensed life settlement provider or a financing entity for the
sole purpose of holding the ownership or beneficial interest in
purchased policies in connection with a financing transaction.
(16) 'Settled policy' means a life insurance policy or
certificate that has been acquired by a life settlement provider
pursuant to a life settlement contract.
(17) 'Special purpose entity' means a corporation, partnership,
trust, limited liability company or other similar entity formed
solely to provide either direct or indirect access to
institutional capital markets:
(a) For a financing entity or licensed life settlement
provider;
(b) In connection with a transaction in which the securities in
the special purpose entity are acquired by the owner or by
qualified institutional buyers as defined in Rule 144 promulgated
under the Securities Act of 1933, as amended; or
(c) In connection with a transaction in which the securities
pay a fixed rate of return commensurate with established
asset-backed institutional capital markets.
(18)(a) 'Stranger-originated life insurance' means a practice
or a plan to initiate a life insurance policy for the benefit of
a third party investor who, at the time of policy origination,
has no insurable interest in the insured. Such practices include
but are not limited to cases in which life insurance is purchased
with resources or guarantees from or through a person or entity
who, at the time of policy inception, could not lawfully initiate
the policy, and for which, at the time of policy inception, there
is an arrangement or agreement, whether verbal or written, to
directly or indirectly transfer the ownership of the policy or
the policy benefits to a third party.
(b) Trusts that are created to give the appearance of insurable
interest, and are used to initiate policies for investors, are
considered stranger-originated life insurance arrangements.
(c) Stranger-originated life insurance arrangements do not
include those practices set forth in subsection (8)(d) of this
section.
(19) 'Terminally ill' means having an illness or sickness that
can reasonably be expected to result in death in 24 months or
less. + }
SECTION 3. ORS 744.321 is amended to read:
744.321. (1) A person shall not act as a life settlement
provider unless the person holds a license of life settlement
provider issued by the Director of the Department of Consumer and
Business Services.
{ - (2) The term 'life settlement provider' does not apply to
any of the following: - }
{ - (a) Any bank, savings bank, savings and loan association,
credit union or other licensed lending institution that takes an
assignment of a life insurance policy as collateral for a loan.
The exemption in this paragraph applies only with respect to such
an assignment. - }
{ - (b) An insurer issuing a life insurance policy providing
accelerated benefits pursuant to ORS 743.154 or pursuant to the
laws of the state to which the policy was subject when issued.
The exemption in this paragraph applies only with respect to the
relationship between the insurer and insured under such a
policy. - }
{ - (c) Any individual who enters into not more than one
agreement in a calendar year for the transfer of life insurance
policies for any value less than the expected death benefit. - }
{ - (3) - } { + (2) + } A life settlement provider may use
the term ' viatical settlement provider' to describe the business
transacted under the license and may use the term 'viatical
settlement contract' instead of 'life settlement contract. '
{ + (3) A related provider trust must have a written
agreement with a licensed life settlement provider under which
the licensed life settlement provider is responsible for ensuring
compliance with all statutory and regulatory requirements and
under which the trust agrees to make all records and files
related to life settlement transactions available to the director
as if those records and files were maintained directly by the
licensed life settlement provider. + }
SECTION 4. ORS 744.323 is amended to read:
744.323. (1) A person shall not act as a life settlement broker
unless the person holds a license of life settlement broker
issued by the Director of the Department of Consumer and Business
Services.
{ - (2) The term 'life settlement broker' does not apply to
an attorney, accountant or financial planner retained to
represent the policyholder or certificate holder unless
compensation paid to the attorney, accountant or financial
planner is paid by the life settlement provider. - }
{ + (2) A life insurance producer who has been duly licensed
as a resident insurance producer with a life line of authority in
this state or the producer's home state for at least one year and
is licensed as a nonresident producer in this state meets the
licensing requirements of this section and is permitted to
operate as a life settlement broker in this state. + }
(3) A life settlement broker may use the term 'viatical
settlement broker' to describe the business transacted under the
license and may use the term 'viatical settlement contract '
instead of 'life settlement contract. '
SECTION 5. { + A person shall not operate as a life settlement
investment agent unless the person holds a license of life
settlement investment agent issued by the Director of the
Department of Consumer and Business Services or the person has
obtained the appropriate license from the equivalent chief
insurance regulatory official of the state of residence of the
life settlement purchaser whom the agent is negotiating with on
behalf of a life settlement provider. If there is more than one
purchaser of a single policy and the purchasers are residents of
different states, the life settlement investment agent must be
licensed by the state in which the purchaser having the largest
percentage ownership resides or, if the purchasers hold equal
ownership, the state of residence of one purchaser agreed upon in
writing by all purchasers. + }
SECTION 6. ORS 744.328 is amended to read:
744.328. (1) If the Director of the Department of Consumer and
Business Services determines that an applicant has satisfied all
requirements for the license for which application is made, the
director shall issue the license to the applicant. The director
may issue a license if the director determines that the
applicant, as required to be set forth in the application for the
license:
(a) Has not engaged in conduct that would authorize the
director to refuse to issue a license under ORS 744.338;
{ - and - }
{ - (b) Is financially responsible and has a good business
reputation. - }
{ + (b) Is competent and trustworthy and intends to act in
good faith in the capacity specified by the license applied for;
(c) Has demonstrated evidence of financial responsibility in a
format prescribed by the director through either a surety bond
executed in an amount and in a manner prescribed by the director
or a deposit of cash, certificates of deposit or securities or
any combination thereof in an amount and manner prescribed by the
director. The director shall accept as evidence of financial
responsibility proof that financial instruments consistent with
the requirements under this paragraph have been filed with at
least one state in which the applicant is licensed as a life
settlement provider, life settlement broker or life settlement
investment agent;
(d) Has a good business reputation and has had experience,
training or education so as to be qualified in the business of
the licensee;
(e) If a life settlement provider or broker, has provided an
anti-fraud plan under section 17 (10) of this 2009 Act; and
(f) If a life settlement provider, has provided a detailed plan
of operation in a manner prescribed by the director. + }
(2) The director may refuse to issue a license in the name of
any firm, partnership or corporation if the director is not
satisfied that any officer, employee, stockholder or partner
thereof who may materially influence the conduct of the applicant
meets the standards of this section.
(3) The director may issue a license to a nonresident applicant
only if the nonresident applicant files with the director in
writing an appointment of the director to be the attorney of the
applicant upon whom all legal process in any action or proceeding
against the applicant may be served. In the appointment, the
applicant shall agree that any lawful process against the
applicant that is served upon the director shall be of the same
legal force and validity as if served upon the applicant, and
that the authority shall continue in force so long as any
liability remains outstanding in this state. An appointment under
this subsection becomes effective on the date that the director
issues the license to the applicant.
(4) If the director denies an application, the director shall
so inform the applicant, stating the grounds for the denial.
SECTION 7. ORS 744.338 is amended to read:
744.338. (1) The Director of the Department of Consumer and
Business Services may suspend, revoke, refuse to issue or refuse
to renew a license of a licensee if the director finds one or
more of the following with respect to the licensee or applicant
for a license:
(a) Dishonesty, fraud or gross negligence in the conduct of
business as a licensee, or the licensee or applicant is otherwise
shown to be untrustworthy or incompetent to act as a licensee.
(b) The life settlement provider demonstrates a pattern of
unreasonable payments to policyholders or certificate holders.
(c) Falsification by the applicant or licensee of an
application for the license or renewal thereof, or
misrepresentation or engagement in any other dishonest act in
relation to the application.
(d) Conduct resulting in a conviction of a felony under the
laws of any state or of the United States, to the extent that
such conduct may be considered under ORS 670.280.
(e) Conviction of any crime, an essential element of which is
dishonesty or fraud, under the laws of any state or of the United
States.
(f) Refusal to renew or cancellation, revocation or suspension
of authority to transact insurance or business as a life
settlement provider, life settlement broker or similar entity in
another state.
(g) Failure to pay a civil penalty imposed by final order of
the director or to carry out terms of probation set by the
director.
(h) Refusal by a licensee to be examined or to produce
accounts, records or files for examination, refusal by any
officers to give information with respect to the affairs of the
licensee or refusal to perform any other legal obligation as to
the examination when required by the director.
(i) Affiliation with or under the same general management or
interlocking directorate or ownership as another life settlement
provider or life settlement broker or an insurer, any of which
unlawfully transacts business in this state.
(j) Failure at any time to meet any qualification for which
issuance of the license could have been refused had the failure
then existed and been known to the director.
(k) Violation of any rule or order of the director or any
provision of the Insurance Code { + by a licensee or any
officer, partner, member or key management personnel of the
licensee + }.
(2) The director may suspend or refuse to renew a license
immediately and without hearing if the director determines that
one or both of the following circumstances exist:
(a) The licensee is insolvent.
(b) The financial condition or business practices of the
licensee otherwise pose an imminent threat to the public health,
safety or welfare of the residents of this state.
(3) A life settlement provider or life settlement broker
holding a license that has not been renewed or has been revoked
shall surrender the license to the director at the director's
request.
(4) The director may take any other administrative action
authorized under the Insurance Code in addition to or in lieu of
the actions authorized under this section.
SECTION 8. ORS 744.341 is amended to read:
744.341. (1) A life settlement contract must be in writing. A
life settlement provider shall establish in the contract the
terms under which the life settlement provider will pay
compensation or anything of value in return for the
policyholder's or certificate holder's assignment, transfer,
sale, devise or bequest of the death benefit or ownership of the
insurance policy or certificate to the life settlement provider.
(2) A life settlement provider shall not use a life settlement
contract { + form or provide to an owner a disclosure statement
form + } in this state unless the life settlement provider has
filed the { - contract - } form with the Director of the
Department of Consumer and Business Services and the director has
approved the { - contract - } form. The director shall
disapprove a life settlement contract form if, in the director's
opinion, the contract or any provision of the contract is
unreasonable, contrary to the interests of the public,
{ - or - } otherwise misleading or unfair to the policyholder
or certificate holder { + or in violation of any of the
requirements of ORS 744.319 to 744.358 + }.
(3) Each life settlement contract entered into in this state
must contain a provision enabling the policyholder or certificate
holder to rescind the contract not later than the 30th day after
the date on which the contract is executed by all parties or not
later than the 15th day after the policyholder or certificate
holder receives the life settlement proceeds, whichever is the
lesser period. In order to rescind such a contract, a
policyholder or certificate holder who has received the proceeds
must return them to the life settlement provider.
SECTION 9. ORS 744.343 is amended to read:
744.343. { + (1) + } Each life settlement provider shall file
a report for the preceding calendar year with the Director of the
Department of Consumer and Business Services on or before March 1
of each year, or within such extension of time therefor as the
director may grant. The report shall be in the form and contain
such information as the director prescribes and shall be verified
as follows:
{ - (1) - } { + (a) + } If the life settlement provider is
a corporation, by at least two principal officers of the life
settlement provider.
{ - (2) - } { + (b) + } If the life settlement provider is
a partnership, by two partners.
{ - (3) - } { + (c) + } If the life settlement provider is
neither a corporation nor a partnership, by its president and
secretary.
{ + (2) For a policy settled within five years of policy
issuance, a life settlement provider shall file with the director
on or before March 1 of each year an annual statement containing
such information as the director may prescribe by regulation. In
addition to any other requirements, the annual statement must
specify the total number and aggregate face amount and life
settlement proceeds of policies settled during the immediately
preceding calendar year, together with a breakdown of the
information by policy issue year. The annual statement must also
include the names of the insurance companies whose policies have
been settled and the life settlement brokers that have settled
the policies. The information must be limited to only those
transactions for which the owner is a resident of this state.
(3) Except as otherwise allowed or required by law, a life
settlement provider, life settlement broker, life settlement
investment agent, insurance company, insurance producer,
information bureau, rating agency or company, or any other person
with actual knowledge of an insured's identity, may not disclose
the fact that the person is insured or the insured's financial or
medical information to any other person unless the disclosure:
(a) Is necessary to effect a life settlement between the owner
and a life settlement provider and the owner and insured have
provided prior written consent to the disclosure;
(b) Is necessary to effect a life settlement purchase agreement
between the life settlement purchaser and a life settlement
provider and the owner and insured have provided prior written
consent to the disclosure;
(c) Is provided in response to an investigation or examination
by the director or any other governmental officer or agency or
pursuant to the requirements of ORS 744.346;
(d) Is a term of or condition to the transfer of a policy by
one life settlement provider to another life settlement provider;
(e) Is necessary to permit a financing entity, related provider
trust or special purpose entity to finance the purchase of
policies by a life settlement provider and the owner and insured
have provided prior written consent to the disclosure;
(f) Is necessary to allow the life settlement provider or life
settlement broker or their authorized representatives to make
contacts for the purpose of determining health status; or
(g) Is required to purchase stop loss coverage or financial
guaranty insurance. + }
SECTION 10. ORS 744.346 is amended to read:
744.346. (1) The Director of the Department of Consumer and
Business Services may examine the business and practices of any
licensee or applicant for a license when the director determines
an examination to be necessary. The director may order a licensee
or applicant to produce any records, books, files or other
information reasonably necessary to ascertain whether or not the
licensee or applicant is acting or has acted in violation of the
law or otherwise contrary to the interests of the public. The
expenses incurred in conducting any examination shall be paid by
the licensee or applicant.
{ - (2) A life settlement provider shall maintain records of
all transactions of life settlement contracts of the life
settlement provider and must make the records available to the
director for inspection during reasonable business hours. The
records must be maintained for a period of not later than five
years from the date of their creation. - }
{ + (2)(a) A person required to be licensed under ORS 744.321
and 744.323 shall for five years retain copies of all:
(A) Proposed, offered or executed contracts, purchase
agreements, underwriting documents, policy forms and applications
from the date of the proposal, offer or execution of the contract
or purchase agreement, whichever is later;
(B) Checks, drafts or other evidence and documentation related
to the payment, transfer, deposit or release of funds from the
date of the transaction; and
(C) Other records and documents related to the requirements
under ORS 744.319 to 744.358.
(b) This section does not relieve a person of the obligation to
produce these documents for the director after the retention
period has expired if the person has retained the documents.
(c) Records required to be retained by this section must be
legible and complete and may be retained in paper, photograph,
microprocess, magnetic, mechanical or electronic media, or by any
process that accurately reproduces or forms a durable medium for
the reproduction of a record. + }
(3) The director at any time may require a licensee to fully
disclose the identity of all stockholders, partners, officers and
employees.
(4) Names of, and individual identification data for, all
policyholders and certificate holders who have entered life
settlement contracts with life settlement providers { - shall
be - } { + are + } confidential as provided in ORS 705.137.
SECTION 11. { + (1) With an application for a life settlement,
a life settlement provider or life settlement broker shall
provide the owner with at least the following disclosures no
later than the time the application for the life settlement
contract is signed by all parties. The disclosures must be
provided in a separate document that is signed by the owner and
the life settlement provider or life settlement broker, and must
provide the following information:
(a) There are possible alternatives to life settlement
contracts, including any accelerated death benefits or policy
loans offered under the owner's life insurance policy.
(b) A life settlement broker represents exclusively the owner,
and not the insurer or the life settlement provider, and owes a
fiduciary duty to the owner, including a duty to act according to
the owner's instructions and in the best interest of the owner.
(c) Some or all of the proceeds of the life settlement may be
taxable under federal and state income tax, and assistance should
be sought from a professional tax advisor.
(d) Proceeds of the life settlement may be subject to the
claims of creditors.
(e) Receipt of the proceeds of a life settlement may adversely
affect the owner's eligibility for Medicaid or other government
benefits or entitlements, and advice should be obtained from the
appropriate government agencies.
(f) The owner has the right to rescind a life settlement
contract before the earlier of 60 calendar days after the date
upon which the life settlement contract is executed by all
parties or 30 calendar days after the life settlement proceeds
have been paid to the owner, as provided in section 13 (3) of
this 2009 Act. Rescission, if exercised by the owner, is
effective only if both notice of the rescission is given, and the
owner repays all proceeds and any premiums, loans and loan
interest paid on account of the life settlement within the
rescission period. If the insured dies during the rescission
period, the life settlement contract shall be deemed to have been
rescinded, subject to repayment by the owner or the owner's
estate of all life settlement proceeds and any premiums, loans
and loan interest of the life settlement within 60 days of the
insured's death.
(g) Funds will be sent to the owner within three business days
after the life settlement provider has received the insurer or
group administrator's written acknowledgment that ownership of
the policy or interest in the certificate has been transferred
and the beneficiary has been designated.
(h) Entering into a life settlement contract may prevent the
owner from qualifying for new life insurance coverage in the
future and may cause other rights or benefits, including
conversion rights and waiver of premium benefits that may exist
under the policy or certificate, to be forfeited by the owner.
Assistance should be sought from a financial adviser.
(i) The following language: 'All medical, financial or personal
information solicited or obtained by a life settlement provider
or life settlement broker about an insured, including the
insured's identity or the identity of family members, a spouse or
a significant other may be disclosed as necessary to effect the
life settlement between the owner and the life settlement
provider. If you are asked to provide this information, you will
be asked to consent to the disclosure. The information may be
provided to someone who buys the policy or provides funds for the
purchase. You may be asked to renew your permission to share
information every two years. '
(j) Following execution of a life contract, the insured may be
contacted for the purpose of determining the insured's health
status and to confirm the insured's residential or business
street address and telephone number, or as otherwise provided in
ORS 744.319 to 744.358. This contact is limited to once every
three months if the insured has a life expectancy of more than
one year, and to no more than once per month if the insured has a
life expectancy of one year or less. All such contacts shall be
made only by a life settlement provider licensed in the state in
which the owner resided at the time of the life settlement, or by
the authorized representative of a duly licensed life settlement
provider.
(2) Prior to or concurrently with the disclosures required
under subsection (1) of this section, the owner shall be given a
brochure describing the process of life settlements. The Director
of the Department of Consumer and Business Services shall develop
and approve a form for the brochure.
(3) A life settlement provider shall provide the owner with at
least the following disclosures no later than the date the life
settlement contract is signed by all parties. The disclosures
shall be conspicuously displayed in the life settlement contract
or in a separate document signed by the owner and provide the
following information:
(a) The affiliation, if any, between the life settlement
provider and the issuer of the insurance policy to be settled;
(b) The name, business address and telephone number of the life
settlement provider;
(c) Any affiliations or contractual arrangements between the
life settlement provider and the life settlement purchaser;
(d) If an insurance policy to be settled has been issued as a
joint policy or involves family riders or any coverage of a life
other than the insured under the policy to be settled,
information about the possible loss of coverage on the other
lives under the policy and the need to consult with the owner's
insurance producer or the insurer issuing the policy for advice
on the proposed life settlement;
(e) The dollar amount of the current death benefit payable to
the life settlement provider under the policy or certificate. If
known, disclosure of the availability of any additional
guaranteed insurance benefits, the dollar amount of any
accidental death and dismemberment benefits under the policy or
certificate and the extent to which the owner's interest in those
benefits will be transferred as a result of the life settlement
contract;
(f) If the funds will be escrowed with an independent third
party during the transfer process, the name, business address and
telephone number of the independent third party escrow agent, and
the fact that the owner may inspect or receive copies of the
relevant escrow or trust agreements or documents;
(g) The name, business address and telephone number of the life
settlement broker;
(h) A full, complete and accurate description of all offers,
counter-offers, acceptances and rejections relating to the
proposed life settlement contract;
(i) A written disclosure of any affiliations or contractual
arrangements between the life settlement broker and any person
making an offer in connection with the proposed life settlement
contracts;
(j) The amount and method of calculating the broker's
compensation. Compensation includes anything of value paid or
given to a life settlement broker for the placement of a policy;
and
(k) When any portion of the life settlement broker's
compensation, as described in paragraph (j) of this subsection,
is taken from a proposed life settlement offer, disclosure of the
total amount of the life settlement offer and the percentage of
the life settlement offer comprised by the life settlement
broker's compensation.
(4) If the life settlement provider transfers ownership or
changes the beneficiary of the insurance policy, the provider
shall communicate in writing the change in ownership or
beneficiary to the insured within 20 days after the change.
(5) A life settlement provider or its life settlement
investment agent shall provide the life settlement purchaser with
at least the following disclosures prior to the date the life
settlement purchase agreement is signed by all parties. The
disclosures must be conspicuously displayed in any life purchase
contract or in a separate document signed by the life settlement
purchaser and life settlement provider or life settlement
investment agent, and must make the following disclosures to the
life settlement purchaser:
(a) The purchaser shall receive no returns, such as dividends
and interest, until the insured dies and a death claim payment is
made.
(b) The actual annual rate of return on a life settlement
contract is dependent upon an accurate projection of the
insured's life expectancy and the actual date of the insured's
death. An annual guaranteed rate of return is not determinable.
(c) The settled life insurance contract should not be
considered a liquid purchase since it is impossible to predict
the exact timing of its maturity and the funds probably are not
available until the death of the insured. There is no established
secondary market for resale of these products by the purchaser.
(d) The purchaser may lose all benefits or may receive
substantially reduced benefits if the insurer goes out of
business during the term of the life investment.
(e) The purchaser is responsible for payment of the insurance
premium or other costs related to the policy, if required by the
terms of the life purchase agreement. These payments may reduce
the purchaser's return. If a party other than the purchaser is
responsible for the payment, the name and address of that party
also shall be disclosed.
(f)(A) The purchaser is responsible for payment of the
insurance premiums or other costs related to the policy.
(B) The amount of the premiums, if applicable.
(g) The name, business address and telephone number of the
independent third party providing escrow services and the
relationship to the broker.
(h) The amount of any trust fees or other expenses to be
charged to the life settlement purchaser.
(i) Whether the purchaser is entitled to a refund of all or
part of the purchaser's investment under the settlement contract
if the policy is later determined to be null and void.
(j)(A) Group policies may contain limitations or caps in the
conversion rights, and additional premiums may have to be paid if
the policy is converted.
(B) The name of the party responsible for the payment of the
additional premiums.
(C) If a group policy is terminated and replaced by another
group policy, there may be no right to convert the original
coverage.
(k) The risks associated with policy contestability, including
but not limited to the risk that the purchaser will have no claim
or only a partial claim to death benefits should the insurer
rescind the policy within the contestability period.
(L) Whether the purchaser will be the owner of the policy in
addition to being the beneficiary and if the purchaser is the
beneficiary only and not also the owner, the special risks
associated with that status, including but not limited to the
risk that the beneficiary may be changed or the premium may not
be paid.
(m) The experience and qualifications of the person who
determines the life expectancy of the insured, the information
this projection is based on and the relationship of the
projection maker to the life settlement provider, if any.
(6) Disclosure to a life settlement purchaser shall include
distribution of a brochure describing the process of investment
in life settlements, in a form to be developed and approved by
the director.
(7) A life settlement provider or its life settlement
investment agent shall provide the life settlement purchaser with
at least the following disclosures no later than at the time of
the assignment, transfer or sale of all or a portion of an
insurance policy. The disclosures must be contained in a document
signed by the life settlement purchaser and life settlement
provider or life settlement investment agent, and must make the
following disclosures to the life settlement purchaser:
(a) The life expectancy certifications obtained by the provider
in the process of determining the price paid to the owner.
(b) If premium payments or other costs related to the policy
have been escrowed, the date when the escrowed funds will be
depleted, whether the purchaser is responsible for payment of
premiums thereafter and, if so, the amount of the premiums.
(c) Whether or not premium payments or other costs related to
the policy have been waived. If waived, whether or not the
investor is responsible for payment of the premiums if the
insurer that wrote the policy terminates the waiver after
purchase, and the amount of those premiums.
(d) The type of policy offered or sold, such as whole life,
term life, universal life or a group policy certificate, any
additional benefits contained in the policy and the current
status of the policy.
(e) If the policy is term insurance, the special risks
associated with term insurance, including but not limited to the
purchaser's responsibility for additional premiums if the owner
continues the term policy at the end of the current term.
(f) If the policy is contestable.
(g) If the insurer that wrote the policy has any additional
rights that could negatively affect or extinguish the purchaser's
rights under the life settlement contract, what these rights are
and under what conditions these rights are activated.
(h) The name and address of the person responsible for
monitoring the insured's condition. A description of how often
the monitoring of the insured's condition is done, how the date
of death is determined and how and when this information is
transmitted to the purchaser.
(8) The life settlement purchase agreement is voidable by the
purchaser at any time within three days after the disclosures
mandated by subsection (7) of this section are received by the
purchaser. + }
SECTION 12. { + Prior to the initiation of a plan, transaction
or series of transactions, a life settlement broker or life
settlement provider shall fully disclose to an insurer the plan,
transaction or series of transactions to which the life
settlement broker or life settlement provider is a party, to
originate, renew, continue or finance a life insurance policy
with the insurer for the purpose of engaging in the business of
life settlements at anytime prior to, or during the first five
years after, issuance of the policy. + }
SECTION 13. { + (1)(a) A life settlement provider entering
into a life settlement contract shall first obtain:
(A) If the owner is the insured, a written statement from a
licensed attending physician that the owner is of sound mind and
under no constraint or undue influence to enter into a life
settlement contract; and
(B) A document in which the insured consents to the release of
the insured's medical records to a licensed life settlement
provider, life settlement broker and the insurance company that
issued the life insurance policy covering the life of the
insured.
(b) Within 20 days after a owner executes documents necessary
to transfer any rights under an insurance policy or, if the
insured is terminally ill, within 20 days after an owner entering
any agreement, option, promise or any other form of
understanding, expressed or implied, to transfer the policy for
value, the life settlement provider shall give written notice to
the insurer that issued the insurance policy that the policy has
or will become a settled policy. The notice must be accompanied
by the documents required by paragraph (c) of this subsection.
(c) The life settlement provider shall deliver a copy of the
medical release required under paragraph (a)(B) of this
subsection, a copy of the owner's application for the life
settlement contract, the notice required under paragraph (b) of
this subsection and a request for verification of coverage to the
insurer that issued the life policy that is the subject of the
life transaction. The Director of the Department of Consumer and
Business Services shall develop and approve a form for the
request for verification.
(d) The insurer shall respond to a request for verification of
coverage submitted on an approved form by a life settlement
provider or life settlement broker within 30 calendar days of the
date the request is received and shall indicate whether, based on
the medical evidence and documents provided, the insurer intends
to pursue an investigation at this time regarding the validity of
the insurance contract or possible fraud. The insurer shall
accept a request for verification of coverage made on a form
approved by the director. The insurer shall accept an original or
facsimile or electronic copy of such request and any accompanying
authorization signed by the owner. Failure by the insurer to meet
its obligations under this subsection is a violation of the
Insurance Code.
(e) Prior to or at the time of execution of the life settlement
contract, the life settlement provider shall obtain a witnessed
document in which the owner consents to the life settlement
contract, represents that the owner has a full and complete
understanding of the life settlement contract, that the owner has
a full and complete understanding of the benefits of the life
insurance policy, acknowledges that the owner is entering into
the life settlement contract freely and voluntarily and, for
persons with a terminal illness or chronic illness or condition,
acknowledges that the insured has a terminal illness or chronic
illness and that the terminal illness or chronic illness or
condition was diagnosed after the life insurance policy was
issued.
(f) If a life settlement broker performs any of the activities
required of the life settlement provider, the provider is deemed
to have fulfilled the requirements of this section that were
performed by the broker.
(2) All medical information solicited or obtained by any
licensee is privileged and confidential under ORS 705.137.
(3)(a) All life settlement contracts entered into in this state
must provide the owner with an absolute right to rescind the
contract before the earlier of 60 calendar days after the date
upon which the life settlement contract is executed by all
parties or 30 calendar days after the life settlement proceeds
have been sent to the owner under subsection (5) of this section.
(b) The life settlement provider may condition rescission upon
the owner both giving notice and repaying to the life settlement
provider within the rescission period all proceeds of the
settlement and any premiums, loans and loan interest paid by or
on behalf of the life settlement provider in connection with or
as a consequence of the life settlement.
(c) If the insured dies during the rescission period, the life
settlement contract is deemed to have been rescinded, subject to
repayment within 60 calendar days of the death of the insured to
the life settlement provider or purchaser of all life settlement
proceeds and any premiums, loans and loan interest that have been
paid by the life settlement provider or purchaser.
(d) In the event of any rescission, if the life settlement
provider has paid commissions or other compensation to a life
settlement broker in connection with the rescinded transaction,
the life settlement broker shall refund all such commissions and
compensation to the life settlement provider within five business
days following receipt of written demand from the life settlement
provider. The demand must be accompanied by either the owner's
notice of rescission if rescinded at the election of the owner,
or the notice of the death of the insured if rescinded by reason
of the death of the insured within the applicable rescission
period.
(4) The life settlement purchaser shall have the right to
rescind a life settlement contract within three days after the
disclosures mandated by section 11 (7) of this 2009 Act are
received by the purchaser.
(5)(a) The life settlement provider shall instruct the owner to
send the executed documents required to effect the change in
ownership, assignment or change in beneficiary directly to an
independent escrow agent selected by the provider.
(b) Within three business days after the date the escrow agent
receives the document, or from the date the life settlement
provider receives the documents, if the owner erroneously
provides the documents directly to the provider, the provider
shall pay or transfer the proceeds of the life settlement into an
escrow or trust account maintained in a state or federally
chartered financial institution whose deposits are insured by the
Federal Deposit Insurance Corporation.
(c) Upon payment of the settlement proceeds into the escrow
account, the escrow agent shall deliver the original change in
ownership, assignment or change in beneficiary forms to the life
settlement provider or related provider trust or other designated
representative of the life settlement provider. Upon the escrow
agent's receipt of the acknowledgment of the properly completed
transfer of ownership, assignment or designation of beneficiary
from the insurance company, the escrow agent shall pay the
settlement proceeds to the owner.
(6) Failure to pay the owner the full contract amount for the
life settlement contract within the time set forth under
subsection (5) of this section renders the life settlement
contract voidable by the owner until the time full payment is
tendered to and accepted by the owner. Funds are deemed sent by a
life settlement provider to a owner as of the date that the
escrow agent either releases funds for wire transfer to the owner
or places a check for delivery to the owner via the United States
Postal Service or another nationally recognized delivery service.
(7)(a) Contacts with the insured for the purpose of determining
the health status of the insured by the life settlement provider
or life settlement broker after the life settlement has occurred
may be made only by the life settlement provider or broker
licensed in this state or its authorized representatives and are
limited to once every three months for insureds with a life
expectancy of more than one year, and to no more than once per
month for insureds with a life expectancy of one year or less.
(b) The limitations set forth in this subsection do not apply
to any contacts with an insured for reasons other than
determining the insured's health status. + }
SECTION 14. { + (1) A person may not enter into a life
settlement contract at any time prior to the application or
issuance of a policy that is the subject of a life settlement
contract or within a five-year period commencing with the date of
issuance of the insurance policy or certificate. However, this
five-year restriction does not apply if the owner certifies to
the life settlement provider that any one or more of the
following conditions has been met within the five-year period:
(a) The policy was issued upon the owner's exercise of
conversion rights arising out of a group or individual policy if
the total of the time covered under the conversion policy plus
the time covered under the prior policy is at least 60 months.
The time covered under a group policy is calculated without
regard to any change in insurance carriers, provided the coverage
has been continuous and under the same group sponsorship;
(b) The owner submits independent evidence to the life
settlement provider that one or more of the following conditions
have been met within the five-year period:
(A) The owner or insured is terminally ill or chronically ill;
(B) The owner's spouse dies;
(C) The owner divorces the owner's spouse;
(D) The owner retires from full-time employment;
(E) The owner becomes physically or mentally disabled and a
physician determines that the disability prevents the owner from
maintaining full-time employment; or
(F) A final order, judgment or decree is entered by a court of
competent jurisdiction, on the application of a creditor of the
owner, adjudicating the owner bankrupt or insolvent, or approving
a petition seeking reorganization of the owner or appointing a
receiver, trustee or liquidator to all or a substantial part of
the owner's assets; or
(c) The owner enters into a life settlement contract more than
two years after the date of issuance of a policy and, with
respect to the policy, at all times prior to the date that is two
years after policy issuance, the following conditions are met:
(A) Policy premiums have been funded exclusively with
unencumbered assets, including an interest in the life insurance
policy being financed only to the extent of its net cash
surrender value, provided by, or full recourse liability incurred
by, the insured or a person closely related to the insured by
blood or law or a party having a lawful substantial economic
interest in the continued life, health and bodily safety of the
person insured, or a trust established primarily for the benefit
of such parties;
(B) There is no agreement or understanding with any other
person to guarantee any such liability or to purchase or stand
ready to purchase the policy, including through an assumption or
forgiveness of the loan; and
(C) Neither the insured nor the policy has been evaluated for
settlement.
(2) Copies of the independent evidence described in subsection
(1)(b) of this section and documents required by section 13 (1)
of this 2009 Act must be submitted to the insurer when the life
settlement provider or other party entering into a life
settlement contract with an owner submits a request to the
insurer for verification of coverage. The copies must be
accompanied by a letter of attestation from the life settlement
provider that the copies are true and correct copies of the
documents received by the life settlement provider.
(3) If the life settlement provider submits to the insurer a
copy of the owner's or insured's certification described in and
the documents required by section 13 (1) of this 2009 Act when
the provider submits a request to the insurer to effect the
transfer of the policy or certificate to the life settlement
provider, the copy conclusively establishes that the life
settlement contract satisfies the requirements of this section
and the insurer shall respond in a timely manner to the request.
(4) An insurer may not, as a condition of responding to a
request for verification of coverage or effecting the transfer of
a policy pursuant to a life settlement contract, require that the
owner, insured, life settlement provider or life settlement
broker sign any forms, disclosures, consent or waiver form that
has not been expressly approved by the Director of the Department
of Consumer and Business Services for use in connection with life
settlement contracts in this state.
(5) Upon receipt of a properly completed request for a change
of ownership or beneficiary of a policy, the insurer shall
respond in writing within 30 calendar days with written
acknowledgement confirming that the change has been effected or
specifying the reasons why the requested change cannot be
processed. The insurer may not unreasonably delay effecting
change of ownership or beneficiary and may not otherwise seek to
interfere with any life settlement contract lawfully entered into
in this state. + }
SECTION 15. { + (1) With respect to a life settlement contract
or insurance policy, a life settlement broker may not knowingly
solicit an offer from, effectuate a life settlement with or make
a sale to any life settlement provider, life settlement
purchaser, life settlement investment agent, financing entity or
related provider trust that is controlling, controlled by or
under common control with the life settlement broker.
(2) With respect to a life settlement contract or insurance
policy, a life settlement provider may not knowingly enter into a
life settlement contract with an owner if, in connection with the
life settlement contract, anything of value will be paid to a
life settlement broker that is controlling, controlled by or
under common control with the life settlement provider or the
life settlement purchaser, life settlement investment agent,
financing entity or related provider trust that is involved in
the life settlement contract.
(3) A person may not issue, solicit, market or otherwise
promote the purchase of an insurance policy for the purpose of,
or with an emphasis on, settling the policy.
(4) A person may not enter into a premium finance arrangement
under which the person receives any proceeds, fees or other
consideration, directly or indirectly, from the proceeds of the
policy, from the owner of the policy or from any other person
with respect to the premium finance agreement, the life
settlement contract or any other transaction related to the
policy that are in addition to the amounts required to pay the
principal, interest and service charges related to the policy
premiums under the premium finance agreement or subsequent sale
of the agreement. Any payments, charges, fees or other amounts in
addition to the amounts required to pay the principal, interest
and service charges related to policy premiums paid under the
premium finance agreement must be remitted to the original owner
of the policy or the original owner's estate if the original
owner is not living at the time of the determination of
overpayment.
(5) In the solicitation, application or issuance of a life
insurance policy, a person may not employ any device, scheme or
artifice in violation of ORS 743.024.
(6) A life settlement provider may not enter into a life
settlement contract unless the life settlement promotional,
advertising and marketing materials, as may be prescribed by
regulation, have been filed with the Director of the Department
of Consumer and Business Services.
(7) A life insurance producer, insurance company, life
settlement broker, life settlement provider or life settlement
investment agent may not make any statement or representation to
the applicant or policyholder in connection with the sale or
financing of a life insurance policy to the effect that the
insurance is free or without cost to the policyholder for any
period of time unless provided in the policy.
(8) A person may not present, cause to be presented or prepare
with the knowledge or belief that it will be presented to or by a
life settlement provider, life settlement broker, life settlement
purchaser, life settlement investment agent, financing entity,
insurer, insurance producer or any other person, false material
information, or conceal material information, as part of, in
support of or concerning a fact material to one or more of the
following:
(a) An application for the issuance of a life settlement
contract or insurance policy;
(b) The underwriting of a life settlement contract or insurance
policy;
(c) A claim for payment or benefit pursuant to a life
settlement contract or insurance policy;
(d) Premiums paid on an insurance policy, or as a result of a
life settlement purchase agreement;
(e) Payments and changes in ownership or beneficiary made in
accordance with the terms of a life settlement contract, life
settlement purchase agreement or insurance policy;
(f) The reinstatement or conversion of an insurance policy;
(g) The solicitation, offer, effectuation or sale of a life
settlement contract, insurance policy or life settlement purchase
agreement;
(h) The issuance of written evidence of a life settlement
contract, life settlement purchase agreement or insurance; or
(i) A financing transaction.
(9) A person may not employ any plan, financial structure,
device, scheme or artifice to defraud related to settled
policies.
(10) A person may not enter into any practice or plan that
involves stranger-originated life insurance.
(11) A person may not fail to disclose to the insurer when
requested by the insurer that the prospective insured has
undergone a life expectancy evaluation by any person or entity
other than the insurer or its authorized representatives in
connection with the issuance of the policy.
(12) A person may not, and may not permit employees or agents
to:
(a) Remove, conceal, alter, destroy or sequester from the
director the assets or records of a licensee or other person
engaged in the business of life settlements;
(b) Misrepresent or conceal the financial condition of a
licensee, financing entity, insurer or other person;
(c) Transact the business of life settlements in violation of
laws requiring a license, certificate of authority or other legal
authority for the transaction of the business of life
settlements; or
(d) File with the director or the equivalent chief insurance
regulatory official of another jurisdiction a document containing
false information or otherwise conceal information about a
material fact from the director.
(13) A person may not embezzle, steal, misappropriate or
convert moneys, funds, premiums, credits or other property of a
life settlement provider, insurer, insured, owner, insurance
policyowner or any other person engaged in the business of life
settlements or insurance.
(14) A person may not recklessly enter into, negotiate, broker
or otherwise deal in a life settlement contract, the subject of
which is a life insurance policy that was obtained by presenting
false information concerning any fact material to the policy or
by concealing, for the purpose of misleading another, information
concerning any fact material to the policy, for which the person
or the persons intended to defraud the policy's issuer, the life
settlement provider or the owner. For the purposes of this
subsection, 'recklessly' means engaging in conduct in conscious
and clearly unjustifiable disregard of a substantial likelihood
of the existence of the relevant facts or risks, such disregard
involving a gross deviation from acceptable standards of conduct.
(15) A person may not facilitate the change of state of
ownership of a policy or certificate or the state of residency of
an owner to a state or jurisdiction that does not have a law
similar to ORS 744.319 to 744.358 for the express purposes of
evading or avoiding the provisions of ORS 744.319 to 744.358.
(16) A person may not attempt to commit, assist, aid or abet in
the commission of, or conspire to commit the acts or omissions
specified in, this subsection.
(17) A life settlement investment agent shall not have any
contact, directly or indirectly, with the owner or insured under
the policy or have knowledge of the identity of the owner or
insured. + }
SECTION 16. { + (1) This section applies to any advertising of
life settlement contracts, life purchase agreements or related
products or services intended for dissemination in this state,
including Internet advertising viewed by persons located in this
state. When disclosure requirements are established pursuant to
federal regulation, this section is interpreted so as to minimize
or eliminate conflict with federal regulation wherever possible.
(2) Every licensee must establish and at all times maintain a
system of control over the content, form and method of
dissemination of all advertisements of its contracts, products
and services. All advertisements, regardless of by whom written,
created, designed or presented, is the responsibility of the
licensees, as well as the individual who created or presented the
advertisement. A system of control must include regular routine
notification, at least once a year, to agents and others
authorized by the licensee who disseminate advertisements, of the
requirements of this section and the requirements adopted by the
Director of the Department of Consumer and Business Services in
the use of any advertisements not furnished by the licensee.
(3) Advertisements must be truthful and not misleading in fact
or by implication. The form and content of an advertisement of a
life settlement contract or life settlement purchase agreement
must be sufficiently complete and clear so as to avoid deception.
It may not have the capacity or tendency to mislead or deceive.
(4) An advertisement may not use the name or title of a life
insurance company or a life insurance policy unless the named
company or policy-holder consents to the usage in a form
prescribed by the director.
(5) An advertisement may not represent that premium payments
will not be required to be paid on the life insurance policy that
is the subject of a life settlement contract or life settlement
purchase agreement in order to maintain that policy, unless that
is the fact.
(6) An advertisement may not state or imply that a life
settlement contract or life settlement purchase agreement,
benefit or service has been approved or endorsed by a group of
individuals, society, association or other organization unless
that is the fact and unless any relationship between an
organization and the licensee is disclosed. If the entity making
the endorsement or testimonial is owned, controlled or managed by
the licensee, or receives any payment or other consideration from
the licensee for making an endorsement or testimonial, that fact
must be disclosed in the advertisement.
(7) When an endorsement refers to benefits received under a
life settlement contract or life settlement purchase agreement,
all pertinent information must be retained for a period of five
years after its use.
(8) An advertisement may not contain statistical information
unless it accurately reflects recent and relevant facts. The
source of all statistics used in an advertisement must be
identified.
(9) An advertisement may not directly or indirectly create the
impression that any division or agency of this state or of the
United States government endorses, approves or favors:
(a) Any licensee or its business practices or methods of
operation;
(b) The merits, desirability or advisability of any life
settlement contract or life settlement purchase agreement;
(c) Any life settlement contract or life settlement purchase
agreement; or
(d) Any life insurance policy or life insurance company.
(10) The director may adopt rules to implement this
section. + }
SECTION 17. { + (1) A person may not knowingly or
intentionally interfere with the enforcement of the provisions of
ORS 744.319 to 744.358 or investigations of suspected or actual
violations of ORS 744.319 to 744.358.
(2) A person in the business of life settlements may not
knowingly or intentionally permit any person convicted of a
felony involving dishonesty or breach of trust to participate in
the business of life settlements.
(3) Life settlements contracts and purchase agreement forms and
applications for life settlements, regardless of the form of
transmission, must contain the following statement or a
substantially similar statement: 'Any person who knowingly
presents false information in this application is guilty of a
crime and may be subject to fines and confinement in prison. '
(4) The lack of a statement as required in subsection (3) of
this section does not constitute a defense in any investigation
or prosecution for an act violating any provision of ORS 744.319
to 744.358.
(5) Any person engaged in the business of life settlements
having knowledge or a reasonable suspicion that a fraudulent life
settlement act is being, will be or has been committed must
provide to the Director of the Department of Consumer and
Business Services information as required by, and in a manner
prescribed by, the director.
(6) Any other person having knowledge or a reasonable belief
that a fraudulent life settlement act is being, will be or has
been committed may provide to the director the information
required by, and in a manner prescribed by, the director.
(7)(a) No civil liability is imposed on and no cause of action
arises from a person's furnishing information concerning
suspected, anticipated or completed fraudulent life settlement
acts or suspected or completed fraudulent insurance acts, if the
information is provided to or received from:
(A) The director or the director's employees, agents or
representatives;
(B) Federal, state or local law enforcement or regulatory
officials or their employees, agents or representatives;
(C) A person involved in the prevention and detection of
fraudulent life settlement acts or that person's agents,
employees or representatives;
(D) The National Association of Insurance Commissioners, the
Financial Industry Regulatory Authority or the North American
Securities Administrators Association, or their employees, agents
or representatives, or any other regulatory body overseeing life
insurance, life settlements, securities or investment fraud; or
(E) The life insurer that issued the life insurance policy
covering the life of the insured.
(b) Paragraph (a) of this subsection shall not apply to
statements made with actual malice. In an action brought against
a person for filing a report or furnishing other information
concerning a fraudulent life settlement act, the party bringing
the action must plead specifically any allegation that paragraph
(a) of this subsection does not apply because the person filing
the report or furnishing the information did so with actual
malice.
(c) A person furnishing information as identified in paragraph
(a) of this subsection is entitled to an award of attorney fees
and costs if the person is the prevailing party in a civil cause
of action for libel, slander or any other relevant tort arising
out of activities in carrying out the provisions of ORS 744.319
to 744.358 and the party bringing the action was not
substantially justified in doing so. For purposes of this
paragraph, a proceeding is 'substantially justified' if it had a
reasonable basis in law or fact at the time that it was
initiated. However, such an award does not apply to a person
furnishing information concerning the person's own fraudulent
life settlement acts.
(d) This section does not abrogate or modify common law or
statutory privileges or immunities enjoyed by a person described
in paragraph (a) of this subsection.
(8) The documents and evidence obtained by the director in an
investigation of suspected or actual fraudulent life settlement
acts are privileged and confidential under ORS 705.137.
(9) This section does not:
(a) Preempt the authority or relieve the duty of other law
enforcement or regulatory agencies to investigate, examine and
prosecute suspected violations of law;
(b) Prevent or prohibit a person from disclosing voluntarily
information concerning life settlement fraud to a law enforcement
or regulatory agency other than the Department of Consumer and
Business Services; or
(c) Limit the powers granted elsewhere by the laws of this
state to the director or any other state department or agency to
investigate and examine possible violations of law and to take
appropriate action against wrongdoers.
(10)(a) Life settlement providers and life settlement brokers
must have in place antifraud initiatives reasonably calculated to
detect, prosecute and prevent fraudulent life settlement acts. At
the discretion of the director, the director may order, or a
licensee may request and the director may grant, such
modifications of the required initiatives described in paragraph
(b) of this subsection as necessary to ensure an effective
antifraud program. The modifications may be more or less
restrictive than the required initiatives as long as the
modifications may reasonably be expected to accomplish the
purpose of this section.
(b) Antifraud initiatives must include:
(A) Fraud investigators, who may be life settlement provider or
life settlement broker employees or independent contractors; and
(B) An antifraud plan, which must be submitted to the director.
The antifraud plan must include, but is not limited to:
(i) A description of the procedures for detecting and
investigating possible fraudulent life settlement acts and
procedures for resolving material inconsistencies between medical
records and insurance applications;
(ii) A description of the procedures for reporting possible
fraudulent life settlement acts to the director;
(iii) A description of the plan for antifraud education and
training of underwriters and other personnel; and
(iv) A description or chart outlining the organizational
arrangement of the antifraud personnel who are responsible for
investigating and reporting possible fraudulent life settlement
acts and investigating unresolved material inconsistencies
between medical records and insurance applications.
(c) Antifraud plans submitted to the director are privileged
and confidential under ORS 705.137. + }
SECTION 18. { + (1) A person who violates any provision of ORS
744.319 to 744.358 is subject to civil penalties under ORS
731.988 and cease and desist orders under ORS 731.252.
(2) If a person violates any provision of ORS 744.319 to
744.358, the Director of the Department of Consumer and Business
Services may seek an injunction in a court of competent
jurisdiction and may apply for temporary and permanent orders
that the director determines are necessary to restrain the person
from committing the violation.
(3) A person damaged by the acts of a person in violation of
any provision of ORS 744.319 to 744.358 may bring a civil action
against the person committing the violation in a court of
competent jurisdiction.
(4) A violation of any provision of ORS 744.319 to 744.358
attendant to the execution of a life settlement purchase
agreement renders the life settlement purchase agreement voidable
and subject to rescission by the life settlement purchaser, upon
return of the policy received to the life settlement provider.
Suit for rescission may be brought in a court of competent
jurisdiction or where the alleged violator resides or has a
principal place of business or where the alleged violation
occurred.
(5) Except for an act under section 15 (8) to (16) of this 2009
Act, the enforcement provisions and penalties of this section do
not apply to an owner. + }
SECTION 19. { + (1) Violation of section 15 of this 2009 Act,
in addition to any applicable prescribed denial, suspension or
revocation of any license or civil forfeiture, shall be
punishable upon conviction as for the crime of theft under ORS
164.015 to 164.135 or the crime of forgery or related offenses
under ORS 165.002 to 165.070.
(2) A person convicted of a violation of section 15 of this
2009 Act may be ordered to pay restitution to persons aggrieved
by the violation of section 15 of this 2009 Act. Restitution may
be ordered in addition to a fine or imprisonment, but not in lieu
of a fine or imprisonment.
(3) Except for an act under section 15 (8) to (16) of this 2009
Act, the penalties of this section shall not apply to an
owner. + }
SECTION 20. ORS 744.358 is amended to read:
744.358. The Director of the Department of Consumer and
Business Services may adopt rules for the purpose of carrying out
ORS 744.319 to 744.358. In addition:
(1) The director may establish standards for evaluating
reasonableness of payments under life settlement contracts { +
for persons who are terminally ill or chronically ill + }. The
authority includes but is not limited to regulation of discount
rates used to determine the amount paid in exchange for
assignment, transfer, sale, devise or bequest of a benefit under
a life insurance policy { + insuring the life of a person who
is terminally ill or chronically ill + }. For the purpose of the
standards, the director shall consider payments made in regional
and national life settlement markets, to the extent such
information is available, as well as model standards developed by
the National Association of Insurance Commissioners.
{ - (2) The director may require a bond or an errors and
omissions insurance policy of either or both kinds of
licensees. - }
{ - (3) - } { + (2) + } The director may establish trade
practice standards by rule for the purpose of regulating
advertising and solicitation of life settlement contracts.
{ + (3) The director may adopt rules governing the
relationship and responsibilities of both insurers and life
settlement providers, life settlement brokers and life settlement
investment agents during the settlement of a life insurance
policy or certificate.
(4) The director may adopt rules governing disclosure by a life
settlement provider or broker to an insured of the tax
implications and effect on life insurance capacity of a life
settlement.
(5) The director may adopt rules governing the confidentiality
of an insured's personal financial or medical information
provided to a life settlement broker, life settlement provider or
life settlement investment agent. + }
SECTION 21. ORS 646.608, as amended by section 8, chapter 19,
Oregon Laws 2008, and section 5, chapter 31, Oregon Laws 2008, is
amended to read:
646.608. (1) A person engages in an unlawful practice when in
the course of the person's business, vocation or occupation the
person does any of the following:
(a) Passes off real estate, goods or services as those of
another.
(b) Causes likelihood of confusion or of misunderstanding as to
the source, sponsorship, approval, or certification of real
estate, goods or services.
(c) Causes likelihood of confusion or of misunderstanding as to
affiliation, connection, or association with, or certification
by, another.
(d) Uses deceptive representations or designations of
geographic origin in connection with real estate, goods or
services.
(e) Represents that real estate, goods or services have
sponsorship, approval, characteristics, ingredients, uses,
benefits, quantities or qualities that they do not have or that a
person has a sponsorship, approval, status, qualification,
affiliation, or connection that the person does not have.
(f) Represents that real estate or goods are original or new if
they are deteriorated, altered, reconditioned, reclaimed, used or
secondhand.
(g) Represents that real estate, goods or services are of a
particular standard, quality, or grade, or that real estate or
goods are of a particular style or model, if they are of another.
(h) Disparages the real estate, goods, services, property or
business of a customer or another by false or misleading
representations of fact.
(i) Advertises real estate, goods or services with intent not
to provide them as advertised, or with intent not to supply
reasonably expectable public demand, unless the advertisement
discloses a limitation of quantity.
(j) Makes false or misleading representations of fact
concerning the reasons for, existence of, or amounts of price
reductions.
(k) Makes false or misleading representations concerning credit
availability or the nature of the transaction or obligation
incurred.
(L) Makes false or misleading representations relating to
commissions or other compensation to be paid in exchange for
permitting real estate, goods or services to be used for model or
demonstration purposes or in exchange for submitting names of
potential customers.
(m) Performs service on or dismantles any goods or real estate
when not authorized by the owner or apparent owner thereof.
(n) Solicits potential customers by telephone or door to door
as a seller unless the person provides the information required
under ORS 646.611.
(o) In a sale, rental or other disposition of real estate,
goods or services, gives or offers to give a rebate or discount
or otherwise pays or offers to pay value to the customer in
consideration of the customer giving to the person the names of
prospective purchasers, lessees, or borrowers, or otherwise
aiding the person in making a sale, lease, or loan to another
person, if earning the rebate, discount or other value is
contingent upon occurrence of an event subsequent to the time the
customer enters into the transaction.
(p) Makes any false or misleading statement about a prize,
contest or promotion used to publicize a product, business or
service.
(q) Promises to deliver real estate, goods or services within a
certain period of time with intent not to deliver them as
promised.
(r) Organizes or induces or attempts to induce membership in a
pyramid club.
(s) Makes false or misleading representations of fact
concerning the offering price of, or the person's cost for real
estate, goods or services.
(t) Concurrent with tender or delivery of any real estate,
goods or services fails to disclose any known material defect or
material nonconformity.
(u) Engages in any other unfair or deceptive conduct in trade
or commerce.
(v) Violates any of the provisions relating to auction sales,
auctioneers or auction marts under ORS 698.640, whether in a
commercial or noncommercial situation.
(w) Manufactures mercury fever thermometers.
(x) Sells or supplies mercury fever thermometers unless the
thermometer is required by federal law, or is:
(A) Prescribed by a person licensed under ORS chapter 677; and
(B) Supplied with instructions on the careful handling of the
thermometer to avoid breakage and on the proper cleanup of
mercury should breakage occur.
(y) Sells a thermostat that contains mercury unless the
thermostat is labeled in a manner to inform the purchaser that
mercury is present in the thermostat and that the thermostat may
not be disposed of until the mercury is removed, reused, recycled
or otherwise managed to ensure that the mercury does not become
part of the solid waste stream or wastewater. For purposes of
this paragraph, 'thermostat' means a device commonly used to
sense and, through electrical communication with heating, cooling
or ventilation equipment, control room temperature.
(z) Sells or offers for sale a motor vehicle manufactured after
January 1, 2006, that contains mercury light switches.
(aa) Violates the provisions of ORS 803.375, 803.385 or 815.410
to 815.430.
(bb) Violates ORS 646A.070 (1).
(cc) Violates any requirement of ORS 646A.030 to 646A.040.
(dd) Violates the provisions of ORS 128.801 to 128.898.
(ee) Violates ORS 646.883 or 646.885.
(ff) Violates any provision of ORS 646A.020.
(gg) Violates ORS 646.569.
(hh) Violates the provisions of ORS 646A.142.
(ii) Violates ORS 646A.360.
(jj) Violates ORS 646.553 or 646.557 or any rule adopted
pursuant thereto.
(kk) Violates ORS 646.563.
(LL) Violates ORS 759.690 or any rule adopted pursuant thereto.
(mm) Violates the provisions of ORS 759.705, 759.710 and
759.720 or any rule adopted pursuant thereto.
(nn) Violates ORS 646A.210 or 646A.214.
(oo) Violates any provision of ORS 646A.124 to 646A.134.
(pp) Violates ORS 646A.254.
(qq) Violates ORS 646A.095.
(rr) Violates ORS 822.046.
(ss) Violates ORS 128.001.
(tt) Violates ORS 646.649 (2) to (4).
(uu) Violates ORS 646A.090 (2) to (4).
(vv) Violates ORS 87.686.
(ww) Violates ORS 646.651.
(xx) Violates ORS 646A.362.
(yy) Violates ORS 646A.052 or any rule adopted under ORS
646A.052 or 646A.054.
(zz) Violates ORS 180.440 (1).
(aaa) Commits the offense of acting as a vehicle dealer without
a certificate under ORS 822.005.
(bbb) Violates ORS 87.007 (2) or (3).
(ccc) Violates ORS 92.405 (1), (2) or (3).
(ddd) Engages in an unlawful practice under ORS 646.648.
(eee) Violates ORS 646A.365.
(fff) Violates ORS 98.854 or 98.858 or a rule adopted under ORS
98.864.
(ggg) Sells a gift card in violation of ORS 646A.276.
(hhh) Violates ORS 646A.102, 646A.106 or 646A.108.
(iii) Violates ORS 646A.430 to 646A.450.
{ + (jjj) Violates a provision of ORS 744.319 to 744.358. + }
{ - (jjj) - } { + (kkk) + } Violates a provision of
sections 2 to 6, chapter 19, Oregon Laws 2008.
{ - (kkk) - } { + (LLL) + } Violates section 2, chapter 31,
Oregon Laws 2008, 30 or more days after a recall notice, warning
or declaration described in section 2, chapter 31, Oregon Laws
2008, is issued for the children's product, as defined in section
1, chapter 31, Oregon Laws 2008, that is the subject of the
violation.
(2) A representation under subsection (1) of this section or
ORS 646.607 may be any manifestation of any assertion by words or
conduct, including, but not limited to, a failure to disclose a
fact.
(3) In order to prevail in an action or suit under ORS 646.605
to 646.652, a prosecuting attorney need not prove competition
between the parties or actual confusion or misunderstanding.
(4) An action or suit may not be brought under subsection
(1)(u) of this section unless the Attorney General has first
established a rule in accordance with the provisions of ORS
chapter 183 declaring the conduct to be unfair or deceptive in
trade or commerce.
(5) Notwithstanding any other provision of ORS 646.605 to
646.652, if an action or suit is brought under subsection (1)(zz)
of this section by a person other than a prosecuting attorney,
relief is limited to an injunction and the prevailing party may
be awarded reasonable attorney fees.
SECTION 22. { + ORS 744.319, 744.348, 744.351 and 744.356 are
repealed. + }
SECTION 23. { + A life settlement provider, life settlement
broker or life settlement investment agent transacting business
in this state may continue to do so pending approval or
disapproval of the provider, broker or investment agent's
application for a license if the application is filed with the
Director of the Department of Consumer and Business Services by
the effective date of this 2009 Act. + }
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