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Current Status Bill Number:View additional legislative information at the LPITS web site.4739 Type of Legislation:General Bill GB Introducing Body:House Introduced Date:20000307 Primary Sponsor:Limehouse All Sponsors:Limehouse, Tripp, Altman, Knotts, Bales, Bowers, Breeland, T. Brown, Clyburn, Davenport, Gourdine, Inabinett, Koon, Lee, Mack, Parks, Riser, Taylor, Trotter, Whatley and Whipper Drafted Document Number:l:\council\bills\pt\1882dw00.doc Residing Body:House Current Committee:Labor, Commerce and Industry Committee 26 HLCI Subject:Insurance, life; viatical settlement contracts; negotiation, execution, and solicitation of and entry into History Body Date Action Description Com Leg Involved ______ ________ ______________________________________ _______ ____________ House 20000307 Introduced, read first time, 26 HLCI referred to Committee Versions of This Bill
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 38-5-210 SO AS TO REGULATE THE AUTHORITY AND REQUIREMENTS FOR THE NEGOTIATION, EXECUTION, AND SOLICITATION OF AND ENTRY INTO VIATICAL SETTLEMENT AGREEMENTS, AND TO PROVIDE PENALTIES FOR VIOLATIONS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The 1976 Code is amended by adding:
"Section 38-5-210. (A) As used in this section, the term:
(1) 'Viatical settlement contract' means an agreement entered into between an owner of a life insurance policy, the insured under which has a catastrophic or life-threatening illness or condition, and a viatical settlement provider by which agreement the owner receives compensation or anything of value less than the death benefits of the insurance policy in return for an assignment, transfer, sale, devise, or bequest of the death benefits or ownership of the insurance policy. However, this does not include:
(a) an assignment of a life insurance policy as collateral for a loan; or
(b) a provision for payment of cash surrender values, loans, accelerated benefits, or other benefits in accordance with the policy provisions.
(2) 'Viatical settlement provider' means a person who, in this State or from this State, enters into a viatical settlement contract with a life insurance policy owner.
(3) 'Viatical settlement broker' means a person who, for valuable consideration:
(a) offers or negotiates viatical settlement contracts between a life insurance policy owner who is a resident of this State and one or more viatical settlement providers; or
(b) offers to buy or buys for sale to third persons who are residents of this State viatical settlement contracts as investment vehicles.
(4) 'Department' means the Department of Insurance of South Carolina.
(B) A person may not perform the functions of a viatical settlement provider or a viatical settlement broker or enter into, execute, or solicit a viatical settlement contract without having first obtained a license from the department. The person shall file an application for a license in the form prescribed by the department, and the application must be accompanied by a fee in an amount set by the department. The applicant shall provide information as the department may require. The department may issue a license or may deny the application if, in the discretion of the director of the department, it is determined that it is contrary to the interests of the public to issue a license to the applicant. The reasons for a denial must be set forth in writing within sixty days of the filing of the application.
(1) The department may examine the business and affairs of any licensee or applicant for a license to protect the interests of the public. The director has the authority to order any licensee or applicant to produce records, books, files, or other information 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 must be paid by the licensee or applicant.
(2) A person who is not a resident of this State may not receive or maintain a license unless a written designation of an agent for service or process if filed and maintained with the department.
(3) A viatical settlements licensee shall file with the department a copy of all viatical settlement forms used in this State. A licensee shall not use a viatical settlement form in this State unless it has been approved by the director. A viatical settlement form filed with the department is considered approved if it has not been disapproved within sixty days of filing. The director shall disapprove a viatical settlement form if, in his discretion, the form, or parts of it, are contrary to the interests of the public, or otherwise misleading or unfair. The director may rescind an approval for any reason or on any basis which would have justified initial disapproval. In the case of disapproval or rescission of approval, the licensee may request, within fifteen days of notice of the disapproval or rescission, a hearing before the director or his designee, and the hearing must be held within thirty days of the request.
(4) Each licensee shall owe and pay in advance to the department an annual renewal fee in an amount set by the department. This fee is for periods of twelve months commencing on July 1 of each year and ending on June 30 of each year, and is due on each March 1 and is delinquent after each March 31.
(5) A licensee shall file with the department before March 2 an annual statement in the form prescribed by the department.
(6) The department may investigate the conduct of a licensee, its officers, employees, agents, or any other person involved in the business of the licensee, whenever the director has reason to believe that the licensee may have acted, or may be acting, in violation of the law, or otherwise contrary to the interests of the public. The director may initiate an investigation on his own, or upon a complaint filed by another person.
(7) The department may issue orders to licensees whenever it is reasonably necessary to ensure or obtain compliance with this section. This authority includes, but is not limited to, orders directing a licensee to stop any practice which is in violation of this section or otherwise contrary to the interests of the public. A licensee to which an order, pursuant to this item, is issued may request, within fifteen days of receipt of that order, a hearing to challenge the order.
(8) Whenever it appears to the director that it is contrary to the interests of the public for a person licensed pursuant to this section to continue to transact viatical settlements business, a notice must be issued to the licensee stating the reasons for that determination. If, after a hearing, the director concludes that it is contrary to the interests of the public for the licensee to continue to transact viatical settlements business, he may revoke the person's license or issue an order suspending the license for a period as determined by the director.
(9) A licensee which intends to discontinue transacting viatical settlement contracts in this State shall notify the department and surrender its license.
(10) A person licensed pursuant to this section shall not engage in any false or misleading advertising, solicitation, or practice.
(11) The department shall construe liberally these provisions so as to protect the interests of the public.
(12) The department may promulgate regulations necessary to govern viatical settlement contracts. This 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 death benefit under a life insurance policy.
(C) A viatical settlement licensee, before entering into a viatical settlement contract with a person, shall
(1) obtain:
(a) a written statement from a licensed medical practitioner attending the person whose life is insured by the policy certifying that the person is:
(i) suffering from a catastrophic or life-threatening illness or condition; and
(ii) of sound mind and under no constraint or undue influence; and
(b) a duly witnessed and probated document in which the person whose life is insured by the policy consents to the viatical settlement, acknowledges the catastrophic or life-threatening illness, represents that he understands the viatical settlement and the benefits of the life insurance policy, releases his medical records, and acknowledges that he has entered into the settlement freely and voluntarily.
(2) disclose:
(a) possible alternatives to viatical settlement contracts for persons with catastrophic or life-threatening illness or condition including, but not limited to, options that may be offered by the life insurer;
(b) tax consequences that may result from entering into a viatical settlement contract; and
(c) the absolute right of the person entering into the viatical settlement contract with the viatical settlement licensee to rescind the contract within fifteen days of execution, regardless of any waiver or settlement language to the contrary.
(D) Violations of this section are subject to the following penalties:
(1) those provided for pursuant to the South Carolina Unfair Trade Practices Act, Chapter 5, Title 39;
(2) those provided for pursuant to the Insurance Law, Chapter 2, Title 38; and
(3) civil liability for damages to any person damaged by the acts of a person in violation of this section, together with court costs and reasonable attorney's fees incurred by the plaintiff."
SECTION 2. This act takes effect upon approval by the Governor.
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