§ 26.1-33.4-11 — Authority to adopt regulations - Conflict of laws

North Dakota § 26.1-33.4-11

• Jurisdiction: North Dakota
• Title 26.1: Insurance
• Ch. 26.1-33.4: Life Settlements

Text

1. The commissioner may adopt rules implementing this chapter and regulating the
activities and relationships of providers, brokers, and insurers and their agents.
2. The commissioner may establish standards for evaluating reasonableness of a
payment under a life settlement contract for an individual who is terminally or
chronically ill. This authority includes 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 an individual who is chronically or
terminally ill.
3. The commissioner may establish appropriate licensing requirements, fees, and
standards for continued licensure for providers and brokers.
4. a. If there is more than one owner on a single policy and the owners are residents of
different states, the life settlement contract must be governed by the law of the
state in which the owner having the largest percentage ownership resides, or if
the owners hold equal ownership, the state of residence of one owner agreed
upon in writing by all of the owners. The law of the state of the insured governs if
equal owners fail to agree in writing upon a state of residence for jurisdictional
purposes.

b. A provider from this state who enters a life settlement contract with an owner who
is a resident of another state that has enacted statutes or adopted regulations
governing life settlement contracts is governed in the effectuation of that life
settlement contract by the statutes and regulations of the owner's state of
residence. If the state in which the owner is a resident has not enacted statutes or
regulations governing life settlement contracts, the provider shall give the owner
notice that neither state regulates the transaction upon which the owner is
entering. For transactions in those states, however, the provider is to maintain all
records required if the transactions were executed in the state of residence. The
forms used in those states need not be approved by the commissioner.
c. If there is a conflict in the laws that apply to an owner and a purchaser in any
individual transaction, the laws of the state that apply to the owner shall take
precedence and the provider shall comply with those laws.
26.1-33.4-12. Prohibited practices.
1. It is unlawful for any person to:
a. Enter a life settlement contract if such person knows or reasonably should have
known that the life insurance policy was obtained by means of a false, deceptive,
or misleading application for such policy;
b. Engage in any transaction, practice, or course of business if such person knows
or reasonably should have known that the intent was to avoid the notice
requirements of this chapter;
c. Engage in any fraudulent act or practice in connection with any transaction
relating to any settlement involving an owner who is a resident of this state;
d. Issue, solicit, market, or otherwise promote the purchase of an insurance policy
for the purpose of or with an emphasis on settling the policy;
e. Enter a premium finance agreement with any person or agency, or any person
affiliated with such person or agency, pursuant to which such person shall receive
any proceeds, fees, or other consideration, directly or indirectly, from the policy or
owner of the policy or any other person with respect to the premium finance
agreement or any settlement contract or other transaction related to such policy
that are in addition to the amounts required to pay the principal, interest, and
service charges related to policy premiums pursuant to the premium finance
agreement or subsequent sale of such agreement; provided, further, that 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 to the original owner's estate if the original owner is not living at the
time of the determination of the overpayment;
f. With respect to any settlement contract or insurance policy and a broker,
knowingly solicit an offer from, effectuate a life settlement contract with, or make
a sale to any provider, financing entity, or related provider trust that is controlling,
controlled by, or under common control with such broker;
g. With respect to any life settlement contract or insurance policy and a provider,
knowingly enter into a life settlement contract with an owner, if, in connection with
such life settlement contract, anything of value will be paid to a broker that is
controlling, controlled by, or under common control with such provider or the
financing entity or related provider trust that is involved in such settlement
contract;
h. With respect to a provider, 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 commissioner. In no event may
any marketing materials expressly reference that the insurance is "free" for any
period of time. The inclusion of any reference in the marketing materials that
would cause an owner to reasonably believe that the insurance is free for any
period of time must be considered a violation of this chapter; or

i. With respect to any life insurance producer, insurance company, broker, or
provider, 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.
2. A violation of this section is deemed a fraudulent life settlement act.