§ 7814 — Prohibited practices

§ 7814. Prohibited practices. (a) No person shall:\n (1) enter into a life settlement contract if the person knows or\nreasonably should have known that the policy was obtained in a false,\ndeceptive or misleading way;\n (2) engage in any transaction, practice or course of business if the\nperson knows or reasonably should have known that the intent was to\navoid the disclosure or other notice requirements of this article;\n (3) engage in any fraudulent act or practice in connection with any\ntransaction relating to any life settlement;\n (4)(A) enter into a premium finance loan with an applicant for a new\npolicy or an owner, pursuant to which the person providing premium\nfinancing, or any affiliate, parent corporation or subsidiary of the\nperson, shall receive any proceeds, fees or other consideration,\ndirectly or indirectly, from the policy or owner of the policy or any\nother person, other than commissions earned by a licensed insurance\nproducer on the policy, with respect to the premium finance loan, that\nare in addition to the amounts required to pay the principal, interest\nand any reasonable costs, fees or expenses incurred by the lender or\nborrower related to the premium finance loan or subsequent sale of such\nloan; provided, further, that any payments, charges, fees or other\namounts in addition to the amounts required to pay the principal,\ninterest and any reasonable costs or expenses incurred by the lender or\nborrower related to the premium finance loan shall be remitted to the\noriginal owner of the policy or to the original owner's estate if the\noriginal owner is not living at the time of the determination of the\noverpayment. For purposes of this paragraph, "owner" means the owner of\na policy whether or not entering into, or offering to enter into, a life\nsettlement contract;\n (B) If, at any time, a policy that is the subject of a premium finance\nloan specified in subparagraph (A) of this paragraph is sold, assigned,\ntransferred, devised or bequeathed pursuant to the terms of a premium\nfinance loan, any proceeds or other consideration received other than\nthe amounts specified in subparagraph (A) of this paragraph shall be\nremitted to the original owner of the policy or to the original owner's\nestate if the original owner is not then living;\n (5) with respect to any life settlement contract, knowingly fail to\ndisclose any affiliation or contractual arrangement as required by this\narticle;\n (6) directly or indirectly, purchase or obtain an interest in any\npolicy that is the subject of a life settlement contract where the\nperson has acted as a life settlement broker or life settlement\nintermediary with respect to the policy, unless such affiliation has\nbeen disclosed to the owner pursuant to paragraph three of subsection\n(c) of section seven thousand eight hundred eleven of this article; and\n(A) if a life settlement broker, the broker has provided all offers and\ncounter offers pursuant to paragraph two of subsection (c) of section\nseven thousand eight hundred eleven of this article, and has conducted\nthe transaction on a fair and equitable arm-length basis; or (B) with\nrespect to a life settlement intermediary, the intermediary complies\nwith subsection (o) of section seven thousand eight hundred thirteen of\nthis article;\n (7) directly or indirectly provide any compensation to any person\nacting in this state as a life settlement broker, and no person shall\naccept any such compensation, unless the person is a licensed life\nsettlement broker pursuant to the provisions of section two thousand one\nhundred thirty-seven of this chapter;\n (8) directly or indirectly pay any referral or finder's fee or provide\nany other compensation to any owner's physician, attorney, accountant,\ninsurance producer, insurance consultant, or other person providing\nmedical, legal or financial planning services to the owner, or to any\nother person, other than a life settlement broker, representing the\nowner with respect to the life settlement contract, and no person shall\naccept any such fee or compensation;\n (9) directly or indirectly provide compensation to a life settlement\nbroker, except where the compensation is for a specific life settlement\ncontract and is clearly disclosed to the owner as required in this\narticle;\n (10) directly or indirectly engage in any act determined by the\nsuperintendent to be an unfair or deceptive act or practice pursuant to\nthis chapter;\n (11) remove, conceal, alter, destroy or sequester from the\nsuperintendent the assets or records of a life settlement provider, life\nsettlement broker, life settlement intermediary or other person engaged\nin the business of life settlements;\n (12) misrepresent or conceal the financial condition of a life\nsettlement provider; or\n (13) in relation to the business of life settlements, file with the\nsuperintendent a document containing materially false information\nconcerning any fact material thereto or otherwise conceal information\nabout a fact material thereto from the superintendent.\n (b) No life settlement provider, life settlement broker, life\nsettlement intermediary, owner or any other person, as a condition of\nentering into a life settlement contract, shall request or require an\ninsured to submit to a medical examination at any time subsequent to the\nsettlement of the policy.\n (c) No life settlement provider shall enter into any life settlement\ncontract in which payments of proceeds are made in installments.\n (d) No life settlement provider, life settlement broker or life\nsettlement intermediary shall directly or indirectly:\n (1) be a party to or enter into an agreement or understanding limiting\nor restricting an owner's or life settlement broker's ability to seek\ncompetitive bids on policies to the extent that the agreement or\nunderstanding unlawfully restrains trade or constitutes anti-competitive\nbehavior;\n (2) monopolize or attempt to monopolize, or combine or conspire with\nany other person or persons to monopolize, in this state, the business\nof life settlements;\n (3) be a party to or enter into an agreement with a life settlement\nprovider, life settlement broker or life settlement intermediary to the\nextent that the agreement fixes or limits the value paid to owners;\n (4) be a party to or enter into any agreement or communication with a\nlife settlement provider or life settlement intermediary with respect to\nthe terms to be offered to an owner to the extent that the agreement or\nunderstanding unlawfully restrains trade or constitutes anti-competitive\nbehavior;\n (5) be a party to or enter into any agreement with a life settlement\nprovider, life settlement broker, life settlement intermediary or other\nperson to restrain trade or engage in any other anti-competitive\nbehavior;\n (6) be party to or enter into any agreement with a life settlement\nprovider, life settlement broker, life settlement intermediary or other\nperson the effect of which may be substantially to lessen competition in\nthe business of life settlements subject to this chapter; or\n (7) be a party to or enter into any agreement with a life settlement\nprovider, life settlement broker, life settlement intermediary or other\nperson to refuse to conduct business with any person in the business of\nlife settlements.\n (e) No life settlement intermediary shall:\n (1) represent, solicit, negotiate or act on behalf of, an owner, a\nlife settlement provider, or a life settlement broker; or\n (2) act as a life settlement provider or life settlement broker.\n (f) No insurer shall prohibit an insurance agent from disclosing to a\nclient the availability of a life settlement contract.\n (g) The failure to follow the provisions of this section shall be a\ndefined violation under article twenty-four of this chapter.\n