§ 632.69 — Life settlements.

Wisconsin § 632.69

• Jurisdiction: Wisconsin
• Ch. 632: Insurance contracts in specific lines
• Subch.: subch. V of ch. 632 SUBCHAPTER V

Text

632.69
632.69(1) (1) Definitions. In this section:
632.69(1)(a) (a) “Advertisement” means any written, electronic, or printed communication or any communication made by means of recorded telephone messages or transmitted on radio, television, the Internet, or similar communications media, including film strips, motion pictures, and videos, published, disseminated, circulated, or placed, directly or indirectly, before the public in this state for the purpose of creating an interest in or inducing a person to purchase or sell, assign, devise, bequeath, or transfer the death benefit or ownership of a policy or an interest in a policy pursuant to a life settlement contract.
632.69(1)(b) (b) “Broker” means a person who, on behalf of an owner and for a fee, commission, or other valuable consideration, offers or attempts to negotiate life settlement contracts between an owner and one or more providers, or one or more brokers. “Broker” does not include an attorney or certified public accountant who is retained to represent the owner and whose compensation is not paid directly or indirectly by the provider or purchaser.
632.69(1)(c) (c) “Business of life settlements” means an activity involved in the offering soliciting, negotiating, procuring, effectuating, purchasing, investing in, financing, monitoring, tracking, underwriting, selling, transferring, assigning, pledging, hypothicating, or in any other manner, acquiring an interest in a policy by means of a life settlement contract.
632.69(1)(d) (d) “Chronically ill” means any of the following:
632.69(1)(d)1. 1. Being unable to perform at least 2 activities of daily living, including eating, toileting, transferring, bathing, dressing, or continence.
632.69(1)(d)2. 2. Requiring substantial supervision to monitor the health and safety of the individual due to his or her severe cognitive impairment.
632.69(1)(d)3. 3. Having a level of disability similar to that described in subd. 1. , as defined by the U.S. department of health and human services.
632.69(1)(e) (e) “Financing entity” means a person whose principal activity related to a life settlement is providing funds to effect the life settlement contract or purchase of one or more policies and who has an agreement in writing with one or more providers to finance the acquisition of life settlement contracts, including an underwriter, placement agent, lender, purchaser of securities, purchaser of a policy from a life settlement provider, credit enhancer, or any entity that has a direct ownership in a policy that is the subject of a life settlement contract. “Financing entity” does not include an investor that is not an accredited investor, as defined in 17 CFR 230.501 (a) , or a purchaser.
632.69(1)(f) (f) “Financing transaction” means a transaction in which a licensed provider obtains financing from a financing entity including any secured or unsecured financing, any securitization transaction, or any securities offering which is either registered or exempt from registration under federal and state securities law.
632.69(1)(g) (g) “Fraudulent life settlement act” includes all of the following:
632.69(1)(g)1. 1. Acts or omissions that are committed by any person, or that a person permits its employees or its agents to engage in, for the purpose of pecuniary gain, including any of the following:
632.69(1)(g)2. 2. Any of the following acts that any person does, or permits its employees or agents to do, in the furtherance of a fraud or to prevent the detection of a fraud:
632.69(1)(g)3. 3. Embezzlement, theft, misappropriation, or conversion of monies, funds, premiums, credits, or other property of a life settlement provider, insurer, insured, owner, or any other person engaged in the business of life settlements or insurance.
632.69(1)(g)4. 4. Recklessly entering into, negotiating, brokering, or otherwise dealing 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, where the person or persons intended to defraud the policy’s issuer, the provider, or the owner.
632.69(1)(g)5. 5. Attempting to commit; assisting, aiding, or abetting in the commission of; or conspiring to commit the acts or omissions specified in this paragraph.
632.69(1)(g)6. 6. Misrepresenting the state of residence of an owner to be a state that does not have a law substantially similar to this section for the purpose of evading or avoiding the provisions of this section.
632.69(1)(g)7. 7. STOLI.
632.69(1)(h) (h) “Licensee” means a provider or broker that holds a license under sub. (2) .
632.69(1)(i) (i) “Life expectancy” means the arithmetic mean, considering medical records and appropriate experiential data, of the number of months an insured under the policy to be settled can be expected to live.
632.69(1)(j) (j)
632.69(1)(j)1. 1. “Life settlement” means an agreement regarding the terms under which compensation or any thing of value will be paid, which compensation or thing of value is less than the expected death benefit of the policy but greater than the cash surrender value or accelerated death benefit available under the policy at the time of the application for the life settlement, in return for the owner’s present or future assignment, transfer, sale, devise, or bequest of the death benefit or any interest in a policy. “Life settlement” includes all of the following:
632.69(1)(j)2. 2. “Life settlement” does not include any of the following:
632.69(1)(k) (k) “Life settlement contract” means a written document providing for and establishing the terms of a life settlement.
632.69(1)(L) (L) “Owner” means the owner of a policy or a certificate holder under a group policy who resides in this state, unless the context requires otherwise, and enters or seeks to enter into a life settlement contract. “Owner” does not include any of the following:
632.69(1)(L)1. 1. A licensee under this section, including a producer acting as a broker under this section.
632.69(1)(L)2. 2. A qualified institutional buyer, as defined in 17 CFR 230.144 A (a) (1).
632.69(1)(L)3. 3. A financing entity.
632.69(1)(L)4. 4. A special purpose entity.
632.69(1)(L)5. 5. A related provider trust.
632.69(1)(m) (m) “Policy” means an individual or group policy, 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.
632.69(1)(n) (n) “Premium finance loan” means a loan made primarily for the purpose of making premium payments on a policy that is secured by an interest in the policy.
632.69(1)(o) (o) “Producer” means any person licensed in this state as a resident or nonresident insurance intermediary or agent who has received qualification or authority for life insurance coverage or a life line of coverage pursuant to s. 628.04 .
632.69(1)(p) (p) “Provider” means a person, other than an owner, that enters into or effectuates a life settlement contract with an owner. “Provider” does not include:
632.69(1)(p)1. 1. A bank, savings bank, savings and loan association, credit union, or other licensed lending institution that takes an assignment of a policy solely as collateral for a loan.
632.69(1)(p)2. 2. A premium finance company making premium finance loans and exempted by the commissioner from the licensing requirement under the premium finance law under s. 138.12 that takes an assignment of a policy solely as collateral for a loan.
632.69(1)(p)3. 3. The issuer of a policy.
632.69(1)(p)4. 4. An authorized or eligible insurer that provides stop loss coverage or financial guaranty insurance to a provider, purchaser, financing entity, special purpose entity, or related provider trust.
632.69(1)(p)5. 5. Any natural person who enters into or effectuates no more than one agreement in a calendar year for the transfer of a policy for any value less than the expected death benefit.
632.69(1)(p)6. 6. A special purpose entity.
632.69(1)(p)7. 7. A related provider trust.
632.69(1)(p)8. 8. A purchaser.
632.69(1)(p)9. 9. A person that the commissioner excludes by rule under sub. (20) (a) after determining that the definition is not intended to cover the person.
632.69(1)(q) (q) “Purchase agreement” means a contract or agreement entered into by a purchaser, to which the owner is not a party, to purchase a settled policy or an interest in a settled policy for the purpose of deriving an economic benefit.
632.69(1)(r) (r) “Purchaser” means a person who provides a sum of money as consideration for a policy or an interest in the death benefits of a policy, or a person who 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 policy that has been or will be the subject of a life settlement contract, for the purpose of deriving an economic benefit. “Purchaser” does not include any of the following:
632.69(1)(r)1. 1. A licensee.
632.69(1)(r)2. 2. An accredited investor, as defined in 17 CFR 230.501 (a) , or qualified institutional buyer, as defined in 17 CFR 230.114 A (a) (1).
632.69(1)(r)3. 3. A financing entity.
632.69(1)(r)4. 4. A special purpose entity.
632.69(1)(r)5. 5. A related provider trust.
632.69(1)(s) (s) “Recklessly” means in conscious and clearly unjustifiable disregard of a substantial likelihood of the existence of the relevant facts or risks, the disregard involving a gross deviation from acceptable standards of conduct.
632.69(1)(t) (t) “Related provider trust” means a trust that is established by a licensed 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 and that has a written agreement with the licensed provider under which the licensed provider is responsible for ensuring compliance with all statutory and regulatory requirements and under which the trust agrees to make all records and files relating to life settlement transactions available to the commissioner as if those records were maintained directly by the licensed provider.
632.69(1)(u) (u) “Settled” means, with respect to a policy, acquired by a provider under a life settlement contract.
632.69(1)(v) (v) “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 either for a financing entity or provider or in connection with a transaction in which the securities in the special purpose entity are either acquired by the owner or by a qualified institutional buyer, as defined in 17 CFR 230.114 A (a) (1) or pay a fixed rate of return commensurate with established asset-backed institutional capital markets.
632.69(1)(w) (w) “Stranger-originated life insurance” or “STOLI” means an act, practice, plan, or arrangement, individually or in concert with others, to initiate a life insurance policy for the benefit of a 3rd-party investor who, at the time of policy origination, has no insurable interest in the insured. STOLI includes 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 by the person or entity, and in which, at the time of 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 3rd party. Trusts that are created to give the appearance of insurable interest, and are used to initiate policies for investors, violate insurable interest laws under s. 631.07 and the common law prohibition against wagering on life. STOLI does not include a loan, agreement, assignment, arrangement, or transaction set forth in sub. (1) (j) 2.
632.69(1)(x) (x) “Terminally ill” means having an illness or sickness that can reasonably be expected to result in death in 24 months or less.
632.69(2) (2) Licensing requirements.
632.69(2)(a) (a)
632.69(2)(a)1. 1. No person may act as a provider or broker for an owner, without holding a license from the commissioner.
632.69(2)(a)2. 2. A licensed attorney or a certified public accountant who is retained to represent the owner and whose compensation is not paid directly or indirectly by the provider or purchaser may negotiate life settlement contracts on behalf of the owner without having to obtain a license as a broker.
632.69(2)(b) (b) An applicant shall make an application for a license to the commissioner on a form prescribed by the commissioner. For a broker’s license, the applicant shall submit the fee specified in s. 601.31 (1) (mr) , subject to s. 601.31 (2m) . For a provider’s license, the applicant shall submit the fee specified in s. 601.31 (1) (mm) , subject to s. 601.31 (2m) .
632.69(2)(c) (c) The commissioner may not issue a license under this subsection unless the applicant provides his or her social security number or its federal employer identification number or, if the applicant does not have a social security number, a statement made or subscribed under oath or affirmation that the applicant does not have a social security number. An applicant who is providing a statement that he or she does not have a social security number, shall provide that statement along with the application for a license on a form prescribed by the department of children and families. A licensee shall provide to the commissioner the licensee’s social security number, statement the licensee does not have the social security number, or federal employment identification number of the licensee at the time that the annual license renewal fee is paid, if not previously provided. The commissioner shall disclose a social security number obtained from an applicant or licensee to the department of children and families in the administration of s. 49.22 , as provided in a memorandum of understanding entered into under s. 49.857 . The commissioner may disclose the social security number or federal employment identification number of an applicant or licensee to the department of revenue for the purpose of requesting certifications under s. 73.0301 and to the department of workforce development for the purpose of requesting certifications under s. 108.227 .
632.69(2)(d) (d)
632.69(2)(d)1. 1. The commissioner shall refuse to issue or renew a license under this subsection if the person is delinquent in court-ordered payments of child or family support, maintenance, birth expenses, medical expenses, or other expenses related to the support of a child or former spouse, or if the person fails to comply, after appropriate notice, with a subpoena or warrant issued by the department of children and families or a county child support agency under s. 59.53 (5) and related to paternity or child support proceedings, as provided in a memorandum of understanding entered into under s. 49.857 .
632.69(2)(d)2. 2. The commissioner shall refuse to issue or renew a license under this subsection if the department of revenue certifies under s. 73.0301 that the applicant for the license or renewal of the license is liable for delinquent taxes or if the department of workforce development certifies under s. 108.227 that the applicant for the license or renewal of the license is liable for delinquent unemployment insurance contributions.
632.69(2)(e) (e) The applicant shall provide information that the commissioner may require on forms prepared by the commissioner. The commissioner may require the applicant, at any time, to fully disclose the identity of its partners, officers, employees, and stockholders, except stockholders owning fewer than 10 percent of the shares of an applicant whose shares are publicly traded. The commissioner may refuse to issue a license if not satisfied that any officer, employee, stockholder, or partner who may materially influence the applicant’s conduct meets the standards of this section.
632.69(2)(f) (f) A license issued to a partnership, corporation, or other entity authorizes all members, officers, and designated employees to act as a licensee under the license, if those persons are named in the application or any supplements to the application.
632.69(2)(g) (g) Upon the filing of an application and the payment of the license fee, the commissioner shall make an investigation of each applicant and shall issue a license if the commissioner finds that the applicant satisfies all of the following:
632.69(2)(g)1. 1. If applying for a provider license, has provided a detailed plan of operation.
632.69(2)(g)2. 2. Is competent and trustworthy and intends to transact its business in good faith.
632.69(2)(g)3. 3. Has a good business reputation and has either the experience, training, or education so as to be qualified in the business for which the license is applicable.
632.69(2)(g)4. 4.
632.69(2)(g)5. 5. If the applicant is a legal entity, is formed or organized under the laws of this state or is a foreign legal entity authorized to transact business in this state, or provides a certificate of good standing from the state of its domicile.
632.69(2)(g)6. 6. Has provided to the commissioner an antifraud plan that meets the requirements of sub. (15) (i) .
632.69(2)(g)7. 7. Has completed the initial training course under sub. (3) (e) .
632.69(2)(h) (h) The commissioner may request evidence of financial responsibility under par. (g) 4. from an applicant at any time the commissioner deems necessary.
632.69(2)(i) (i) The commissioner shall not issue any license to any nonresident applicant, unless a written designation of an agent for service of process is filed and maintained with the commissioner or unless the applicant has filed with the commissioner the applicant’s irrevocable consent that any action against the applicant may be commenced against the applicant by service of process on the commissioner in accordance with the procedures set forth in ss. 601.72 and 601.73 .
632.69(2)(j) (j) Licenses may be renewed annually on July 1 upon payment of the fee specified in s. 601.31 (1) (ms) by a broker, or the fee specified in s. 601.31 (1) (mp) by a provider. Failure to pay the fee by the renewal date shall result in the automatic revocation of the license.
632.69(2)(k) (k) Each licensee shall file with the commissioner on or before the first day of March of each year an annual statement containing the information required under sub. (6) (a) and any information the commissioner requires by rule.
632.69(2)(L) (L) A provider may not use any person to perform the functions of a broker unless the person holds a current, valid license as a broker.
632.69(2)(m) (m) A broker may not use any person to perform the functions of a provider unless the person holds a current, valid license as a provider.
632.69(2)(n) (n) A provider or broker shall provide to the commissioner new or revised information about officers, partners, directors, members, designated employees, or stockholders, except stockholders owning fewer than 10 percent of the shares of a provider or broker whose shares are publicly traded, within 30 days of the change.
632.69(2)(o) (o) The insurer that issued the policy that is the subject of a life settlement contract may not be held responsible for any act or omission of a broker or provider arising out of or in connection with the life settlement, unless the insurer receives compensation for the placement of a life settlement contract from the broker or provider or from a purchaser in connection with the life settlement contract.
632.69(3) (3) Training.
632.69(3)(a) (a) An individual applicant for a license under sub. (2) or a licensee who engages in the business of life settlements in this state shall receive training to ensure all of the following:
632.69(3)(a)1. 1. The individual understands the relation of life settlement transactions to the integrity of a comprehensive financial plan of an owner.
632.69(3)(a)2. 2. The individual has adequate knowledge to competently discuss the material aspects of life settlements with an owner.
632.69(3)(a)3. 3. The individual complies with the laws of this state relating to life settlements.
632.69(3)(b) (b) Training required under this subsection must be approved by the commissioner and provided by an education provider that is approved by the commissioner. The commissioner may approve the training required under this subsection for continuing education under s. 628.04 (3) . Training required under this subsection shall not increase the credit hours of continuing education required by statute or rule. Certification and reporting of completion of the required training shall comply with the requirements of s. Ins 28.07 , Wis. Adm. Code. Any person failing to meet the requirements of this subsection shall be subject to the penalties imposed by the commissioner.
632.69(3)(c) (c) The satisfaction of the training requirements of another state that are substantially similar to the requirements set forth in this subsection, and are approved by the commissioner, satisfy the requirements of this subsection.
632.69(3)(d) (d) Training provided under this subsection shall include all of the following topics, at a minimum:
632.69(3)(d)1. 1. Legal structuring of life settlements.
632.69(3)(d)2. 2. Legal relationships among the parties to a life settlement.
632.69(3)(d)3. 3. Required disclosures and privacy requirements.
632.69(3)(d)4. 4. Ethical considerations in selling, soliciting, and negotiating life settlements.
632.69(3)(d)5. 5. Contract requirements.
632.69(3)(d)6. 6. Advertising.
632.69(3)(d)7. 7. Remedies.
632.69(3)(d)8. 8. Licensing requirements.
632.69(3)(d)9. 9. Additional matters as determined by the commissioner.
632.69(3)(e) (e) An individual applicant for a license under sub. (2) shall complete an initial training course of not less than 8 hours. An electronic confirmation of completion of initial training shall accompany the application for initial licensure. A licensee shall complete training of not less than 4 hours every 24 months after the initial training course. A person who holds a license under s. 632.68 , 2007 stats., on November 1, 2010, shall complete initial training within 6 months after November 1, 2010.
632.69(4) (4) License suspension, revocation, or refusal to renew.
632.69(4)(a) (a) The commissioner may suspend, revoke, or refuse to renew the license of any licensee if, after a hearing, the commissioner finds any of the following:
632.69(4)(a)1. 1. Any material misrepresentation in the application for the license.
632.69(4)(a)2. 2. That the licensee or any officer, partner, member, or director of the licensee is guilty of fraudulent or dishonest practices, is subject to a final administrative action, or is otherwise shown to be untrustworthy or incompetent to act as a licensee.
632.69(4)(a)3. 3. If the licensee is a provider, that the licensee demonstrates a pattern of unreasonably withholding payments to owners.
632.69(4)(a)4. 4. That the licensee no longer meets the requirements for licensure.
632.69(4)(a)5. 5. That the licensee or any officer, partner, member, or director of the licensee has been convicted of a felony or of any misdemeanor of which criminal fraud is an element or has pleaded other than not guilty with respect to any felony or any misdemeanor of which criminal fraud or moral turpitude is an element, regardless whether a judgment of conviction has been entered by the court.
632.69(4)(a)6. 6. If the licensee is a provider, that the licensee has entered into any life settlement contract the form of which has not been approved by the commissioner under this section.
632.69(4)(a)7. 7. If the licensee is a provider, that the licensee has failed to honor obligations set out in a life settlement contract.
632.69(4)(a)8. 8. If the licensee is a provider, that the licensee has assigned, transferred, or pledged a settled policy to a person other than a provider licensed in this state, a purchaser, an accredited investor as defined in 17 CFR 230.501 (a) or a qualified institutional buyer as defined in 17 CFR 230.144 A (a) (1), a financing entity, a special purpose entity, or a related provider trust.
632.69(4)(a)9. 9. That the licensee or any officer, partner, member, or key management personnel has violated any of the provisions of this section.
632.69(4)(b) (b) Nothing in this subsection limits the authority of the commissioner to summarily suspend a license under s. 227.51 (3) .
632.69(4)(c) (c) The commissioner shall suspend a license if the licensee is delinquent in court-ordered payments of child or family support, maintenance, birth expenses, medical expenses, or other expenses related to the support of a child or former spouse or if the licensee fails to comply, after appropriate notice, with a subpoena or warrant issued by the department of children and families or a county child support agency under s. 59.53 (5) that is related to paternity or child support proceedings, as provided in a memorandum of understanding entered into under s. 49.857 .
632.69(4)(d) (d) The commissioner shall revoke the license of a licensee if the department of revenue certifies under s. 73.0301 that the licensee is liable for delinquent taxes or if the department of workforce development certifies under s. 108.227 that the licensee is liable for delinquent unemployment insurance contributions.
632.69(5) (5) Contract requirements.
632.69(5)(a) (a) No person may use a life settlement contract form or provide to an owner a disclosure statement form in this state unless first filed with and approved by the commissioner. The form is approved if the commissioner does not disapprove of the form within 30 days after filing or within a 30-day extension of that period ordered by the commissioner before the expiration of the first 30 days. To disapprove a form, the commissioner shall state in writing the reasons for disapproval sufficiently explicitly that the licensee is provided reasonable guidance in reformulating its forms. The commissioner shall disapprove a life settlement contract form or disclosure statement form if the commissioner determines the form or provisions contained in the form fail to meet the requirements of this section, are unreasonable, are contrary to the interests of the public, or are otherwise misleading or unfair to the owner.
632.69(5)(b) (b) No insurer may, as a condition of responding to a request for verification of coverage or in connection with the transfer of a policy under a life settlement contract, require that the owner, insured, provider, or broker sign any form, disclosure, consent, waiver, or acknowledgment that has not been expressly approved by the commissioner for use in connection with life settlement contracts in this state.
632.69(6) (6) Reporting requirements and privacy.
632.69(6)(a) (a)
632.69(6)(a)1. 1. In addition to any other requirements, the annual statement that is filed with the commissioner shall specify the total number, 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 shall also include the names of the insurance companies whose policies have been settled and the brokers that were involved in settling the policies. Each provider shall provide in the annual statement any information about any policy settled within 5 years of policy issuance that the commissioner may prescribe by rule.
632.69(6)(a)2. 2. Information provided in the annual statement shall be limited to those transactions in which the owner is a resident of this state and shall not include individual transaction data regarding the business of life settlements or information that there is a reasonable basis to believe could be used to identify the owner or the insured.
632.69(6)(a)3. 3. Every provider that willfully fails to file an annual statement as required in this section, or willfully fails to reply within 30 days to a written inquiry by the commissioner regarding the annual statement, shall be subject to a forfeiture under s. 601.64 (3) (c) and to license suspension, revocation, or nonrenewal.
632.69(6)(b) (b) A provider, broker, insurance company, producer, information bureau, rating agency or company, or any other person with actual knowledge of an insured’s identity, shall not disclose the identity of an insured or information that there is a reasonable basis to believe could be used to identify the insured or the insured’s financial or medical information to any other person unless one of the following applies:
632.69(6)(b)1. 1. The disclosure is necessary to effect a life settlement contract between the owner and a provider, and the owner and insured have provided prior written consent to the disclosure.
632.69(6)(b)2. 2. The disclosure is necessary to effectuate a sale of life settlement contracts, or interests in life settlement contracts, as investments, if the sale is conducted in accordance with applicable state and federal securities law and if the owner and the insured have both provided prior written consent to the disclosure.
632.69(6)(b)3. 3. The disclosure is provided in response to an investigation or examination by the commissioner or any other governmental officer or agency or pursuant to the requirements of sub. (15) .
632.69(6)(b)4. 4. The disclosure is a term or condition of the transfer of a policy by one provider to another provider. In such cases, the receiving provider shall be required to comply with the confidentiality requirements of this subsection.
632.69(6)(b)5. 5. The disclosure is necessary to allow the provider or broker or their authorized representatives to make contacts for the purpose of determining health status. For the purposes of this subdivision, “authorized representative” does not include any person who has or may have any financial interest in the life settlement contract other than a provider, broker, financing entity, related provider trust, or special purpose entity. A provider or broker shall require its authorized representative to agree in writing to adhere to the privacy provisions of this subsection.
632.69(6)(b)6. 6. The disclosure is required to purchase stop loss coverage.
632.69(6)(c) (c) Nonpublic personal information solicited or obtained in connection with a proposed or actual life settlement contract shall be subject to all applicable laws of this state relating to confidentiality of nonpublic personal information.
632.69(7) (7) Examinations and alternatives.
632.69(7)(a) (a) The commissioner may, whenever the commissioner determines it is necessary in order to be informed about any matter related to the enforcement of this section, examine the business and affairs of any licensee or applicant for a license, under the provisions of ss. 601.43 to 601.45 .
632.69(7)(b) (b) The commissioner shall consider names and individual identification data for all owners, purchasers, and insureds private and confidential information and shall not disclose names or identification data unless the disclosure is to another regulator or is required by law.
632.69(7)(c) (c)
632.69(7)(c)1. 1. A person required to be licensed by this section shall for 5 years retain, and make available to the commissioner for inspection at all reasonable times in accordance with s. 601.42 , copies of all of the following:
632.69(7)(c)2. 2. Records required to be retained under subd. 1. 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 reproduction of a record.
632.69(8) (8) Disclosures to owner; disclosure to insured.
632.69(8)(a) (a)
632.69(8)(a)1. 1. With each application for a life settlement, a provider or broker shall disclose to the owner, in a separate document that is signed by the owner and the provider or broker, at least all of the following information no later than the time the application for the life settlement is signed by all parties:
632.69(8)(a)2. 2. At the time the disclosures in subd. 1. are provided, the broker or provider shall provide to the owner a brochure describing the process of life settlements that is approved by the commissioner.
632.69(8)(b) (b) A provider shall disclose to the owner, either conspicuously displayed in the life settlement contract or in a separate document signed by the owner, at least all of the following information no later than the date the life settlement contract is signed by all parties:
632.69(8)(b)1. 1. The affiliation, if any, between the provider and the issuer of the policy to be settled.
632.69(8)(b)2. 2. The name, business address, and telephone number of the provider.
632.69(8)(b)3. 3. Any affiliation or contractual arrangements between the provider and the purchaser.
632.69(8)(b)4. 4. If a policy to be settled has been issued as a joint policy or involves family riders or any coverage of a life other than that of the insured under the policy to be settled, the possible loss of coverage on the other lives under the policy, together with a statement advising the owner to consult with the insurer issuing the policy for advice concerning the proposed life settlement.
632.69(8)(b)5. 5. The dollar amount of the current death benefit that will be payable to the provider under the policy. If known, the provider shall also disclose the availability of any additional guaranteed insurance benefits, the dollar amount of any accidental death and dismemberment benefits under the policy, and the extent to which the owner’s interest in those benefits will be transferred as a result of the life settlement contract.
632.69(8)(b)6. 6. That the funds will be escrowed with an independent 3rd party during the transfer process; the name, business address, and telephone number of the independent 3rd party escrow agent; and that the owner may inspect or receive copies of the relevant escrow or trust agreements or documents.
632.69(8)(c) (c) A broker shall disclose to the owner, either conspicuously displayed in the life settlement contract or in a separate document signed by the owner, at least all of the following information no later than the date the life settlement contract is signed by all parties:
632.69(8)(c)1. 1. The name, business address, and telephone number of the broker.
632.69(8)(c)2. 2. A full, complete, and accurate description of all offers, counteroffers, acceptances, and rejections related to the proposed life settlement contract.
632.69(8)(c)3. 3. A written statement of any affiliation or contractual arrangement between the broker and any person making an offer in connection with the proposed life settlement contract.
632.69(8)(c)4. 4. The amount of the broker’s compensation, including anything of value paid or given to the broker for the placement of the policy.
632.69(8)(c)5. 5. If any portion of the broker’s compensation is taken from a proposed life settlement, the total amount of the life settlement offer and the percentage of the life settlement comprised by the broker’s compensation.
632.69(8)(d) (d) If the provider transfers ownership or changes the beneficiary of the policy, the provider shall communicate in writing the change in ownership or beneficiary to the insured within 20 days after the change.
632.69(9) (9) Disclosures to purchaser.
632.69(9)(a) (a)
632.69(9)(a)1. 1. A provider shall disclose to a purchaser, conspicuously displayed in the purchase agreement or in a separate document signed by the purchaser and provider, at least all of the following information prior to the date the purchase agreement is signed by all parties:
632.69(9)(a)2. 2. At the time the disclosures in subd. 1. are provided, the provider shall provide to the purchaser a brochure approved by the commissioner describing the process of the purchase of a settled policy.
632.69(9)(b) (b) A provider shall disclose to a purchaser, in a document signed by the purchaser and provider, at least all of the following no later than at the time of the assignment, transfer, or sale of all of or an interest in a policy:
632.69(9)(b)1. 1. All the life expectancy certifications obtained by the provider in the process of determining the price to be paid to the owner.
632.69(9)(b)2. 2. Whether the premium payments or other costs related to the policy have been escrowed and, if so, the date upon which the escrowed funds will be depleted, whether the purchaser will be responsible for payment of premiums after the depletion of escrowed funds, and the amount of the premium if the purchaser is responsible for payment.
632.69(9)(b)3. 3. Whether the premiums or other costs related to the policy have been waived and, if so, whether the purchaser will be responsible for payment of the premiums if the insurer that issued the policy terminates the waiver after purchase and, if so, the amount of the premiums.
632.69(9)(b)4. 4. Whether the type of policy offered or sold is whole life, term life, universal life, a group policy, or another type of policy, any additional benefits contained in the policy, and the current status of the policy.
632.69(9)(b)5. 5. If the policy is term insurance, the special risks associated with term insurance including the purchaser’s responsibility for additional premiums if the owner continues the term policy at the end of the current term.
632.69(9)(b)6. 6. Whether the policy is contestable.
632.69(9)(b)7. 7. Whether the insurer that issued the policy has any additional rights that could negatively affect or extinguish the purchaser’s rights under the purchase agreement and, if so, what those rights are and under what conditions those rights are activated.
632.69(9)(b)8. 8. The name and address of the person responsible for monitoring the insured’s condition, how often the monitoring is done, how the date of death is determined, and how and when the information will be transmitted to the purchaser.
632.69(10) (10) Disclosure to insurer. Before initiating a plan, transaction, or series of transactions, a broker or provider shall fully disclose to the insurer a plan, transaction, or series of transactions to which the broker or provider is a party to originate, renew, continue, or finance a policy with the insurer for the purpose of engaging in the business of life settlements at any time prior to, or during the first 5 years after, issuance of the policy.
632.69(11) (11) General requirements.
632.69(11)(a) (a)
632.69(11)(a)1. 1. Before entering into a life settlement contract, a provider shall obtain all of the following:
632.69(11)(a)2. 2. Within 20 days after an owner executes documents necessary to transfer any rights under a policy or within 20 days after the owner enters any agreement, option, promise, or any other form of understanding, express or implied, to settle the policy, the provider shall give written notice to the insurer that issued the policy that the policy has or will become a settled policy.
632.69(11)(a)3. 3. The provider shall deliver a copy of the medical release required under subd. 1. b. , a copy of the owner’s application for the life settlement contract, the notice required under subd. 2. , and a request for verification of coverage to the insurer that issued the policy that is the subject of the life settlement. The provider shall use a form created by the National Association of Insurance Commissioners for verification of coverage unless the commissioner develops and approves another form.
632.69(11)(a)4. 4. The insurer shall respond to a request for verification of coverage that is submitted on an approved form by a provider or broker within 30 calendar days after 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 regarding the validity of the insurance contract or possible fraud. The insurer shall accept a request for verification of coverage made on a form created by the National Association of Insurance Commissioners or any other form approved by the commissioner, and shall accept an original, facsimile, or electronic copy of the request and any accompanying signed authorization.
632.69(11)(a)5. 5. Before or at the time of execution of the life settlement contract, the provider shall obtain a witnessed document in which the owner does all of the following:
632.69(11)(a)6. 6. If a broker performs any of the activities required in subd. 1. , 2. , 3. , or 5. , the provider shall be considered to have performed that activity.
632.69(11)(b) (b) All medical information solicited or obtained by any licensee shall be subject to the applicable provisions of state law relating to confidentiality of medical information, including s. 610.70 .
632.69(11)(c) (c) All life settlement contracts entered into in this state shall provide the owner with an absolute right to rescind the contract before the earlier of 30 calendar days after the date on which the life settlement contract is executed by all parties or 15 calendar days after the life settlement proceeds have been sent to the owner as provided in par. (d) . Rescission by the owner may be conditioned upon the owner both giving notice and repaying to the provider, within the rescission period, all proceeds of the settlement and any premiums, loans, and loan interest paid by or on behalf of the provider in connection with or as a consequence of the life settlement. If the insured dies during the rescission period, the life settlement contract is rescinded, subject to repayment, within 60 calendar days after the death of the insured, by the owner or the owner’s estate to the provider or purchaser of all life settlement proceeds and any premiums, loans, and loan interest that have been paid by the provider or purchaser. If a life settlement contract is rescinded under this paragraph, ownership of the policy shall revert to the owner or the owner’s estate if the owner is deceased, irrespective of any transfer of ownership of the policy by the owner, provider, or any other person. In the event of any rescission, if the provider has paid commissions or other compensation to a broker in connection with the rescinded life settlement contract, the broker shall refund the commissions and compensation to the provider within 5 business days following receipt of written demand from the provider, which demand shall be accompanied by the applicable document initiating the rescission within the rescission period, either the owner’s notice of rescission or the notice of death of the insured.
632.69(11)(d) (d) The provider shall instruct the owner to send the executed documents required to effect the change in ownership, assignment, or change in beneficiary directly to the independent escrow agent. Within 3 business days after the date the independent escrow agent receives the documents, or after the date the 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 that is maintained in a state or federally chartered financial institution whose deposits are insured by the Federal Deposit Insurance Corporation and managed by an independent trustee or escrow agent. Upon payment of the life settlement proceeds into the escrow account, the independent escrow agent shall deliver the original change in ownership, assignment, or change in beneficiary form to the provider or related provider trust or other designated representative of the provider. Upon the escrow agent’s receipt of acknowledgement of the properly completed transfer of ownership, assignment, or designation of beneficiary from the insurer, the independent escrow agent shall pay the life settlement proceeds to the owner.
632.69(11)(e) (e) Failure to tender the life settlement proceeds to the owner within the time set forth in the disclosure under sub. (8) (a) 1. g. , renders the life settlement contract voidable by the owner for lack of consideration until the time the proceeds are tendered to and accepted by the owner. Funds are sent by a provider to an 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 U.S. postal service or other nationally recognized delivery service.
632.69(11)(f) (f) For the purpose of determining the health status of the insured after the life settlement has occurred, only the provider or broker licensed in this state or a person it authorizes may contact the insured. Contact with the insured shall be limited to once every 3 months for an insured with a life expectancy of more than one year, and to no more than once per month for an insured with a life expectancy or one year or less. The provider or broker shall explain the procedure for the contacts to the owner at the time the life settlement contract is entered into. The limitations in this paragraph do not apply to any contacts with an insured for reasons other than determining the insured’s health status. Providers and brokers shall be responsible for the actions of a person they authorize to make the contact.
632.69(12) (12) Prohibited contracts; required form; acknowledgement; fiduciary duty.
632.69(12)(a) (a) No person may enter into a life settlement contract at any time before the application or issuance of a policy that is the subject of a life settlement contract or within a 5-year period commencing with the date of issuance of the policy unless any of the following conditions have been met:
632.69(12)(a)1. 1. The owner certifies to the provider that, within the 5-year period, the policy was issued upon the owner’s exercise of conversion rights arising out of a group or individual policy, provided 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 the group policy shall be calculated without regard to any change in insurance carriers, if the coverage has been continuous and under the same group sponsorship.
632.69(12)(a)2. 2. The owner submits independent evidence to the provider that any of the following conditions have been met within the 5-year period:
632.69(12)(a)3. 3. The owner certifies to the provider that the owner is entering into a life settlement contract more than 2 years after the date of issuance of a policy and, with respect to the policy, at all times before the date that is 2 years after policy issuance all of the following conditions are met:
632.69(12)(b) (b) Copies of the independent evidence described in par. (a) 2. and documents required by sub. (11) (a) shall be submitted to the insurer when the provider entering into a life settlement contract with an owner submits a request to the insurer for verification of coverage. The provider shall submit, along with the copies, a letter of attestation from the provider that the copies are true and correct copies of the documents received by the provider.
632.69(12)(c) (c) If the provider submits to the insurer a copy of the owner’s certification under par. (a) 1. or 3. or independent evidence under par. (a) 2. when the provider submits a request to the insurer to effect the transfer of the policy to the provider, the copy conclusively establishes that the life settlement contract satisfies the requirements of this subsection and the insurer shall timely respond to the request.
632.69(12)(d) (d) No insurer may, 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, provider, or broker sign any form, disclosure, consent, or waiver that has not been expressly approved by the commissioner for use in connection with life settlement contracts in this state.
632.69(12)(e) (e) Upon receipt of a properly completed request for change of ownership or beneficiary of a policy, the insurer shall respond in writing within 30 calendar days with acknowledgement confirming that the change has been effected or specifying the reasons why the requested change cannot be processed.
632.69(12)(f) (f) A broker represents only the owner and owes a fiduciary duty to the owner to act according to the owner’s instructions and in the best interest of the owner, notwithstanding the manner in which the broker is compensated.
632.69(13) (13) Prohibited practices and conflicts of interest.
632.69(13)(a) (a) No person may enter into a life settlement contract if the person knows or reasonably should have known that the policy that is the subject of the life settlement contract was obtained by means of a false, deceptive, or misleading application for the policy.
632.69(13)(b) (b) No person may engage in any transaction, practice, or course of business if the person knows or reasonably should know that the intent is to avoid the notice requirements of this section.
632.69(13)(c) (c) No person may engage in any fraudulent act or practice in connection with any transaction relating to any life settlement involving an owner.
632.69(13)(d) (d) No person may issue, solicit, market, or otherwise promote the purchase of a policy for the primary purpose of or with a primary emphasis on settling the policy.
632.69(13)(e) (e) No person may enter into a premium finance agreement with any person or agency, or any person affiliated with such person or agency, pursuant to which the person who is providing premium financing receives 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 life settlement contract or other transaction related to the policy that is 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 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 shall be remitted to the original owner of the policy or to the owner’s estate if the owner is not living at the time of the determination of the overpayment.
632.69(13)(f) (f) With respect to any life settlement contract or policy, no broker may knowingly solicit an offer from, effectuate a life settlement with, or make a sale to any provider, purchaser, financing entity, or related provider trust that is controlling, controlled by, or under common control with the broker unless the relationship is disclosed to the owner.
632.69(13)(g) (g) With respect to any life settlement contract or policy, no provider may 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 broker that is controlling, controlled by, or under common control with the provider or the purchaser, financing entity, or related provider trust that is involved in the life settlement contract unless the relationship is disclosed to the owner.
632.69(13)(h) (h) No life settlement promotional, advertising, or marketing materials may represent that the insurance is “free” for any period of time, or include any reference that would cause an owner to reasonably believe that the insurance is free for any period of time.
632.69(13)(i) (i) No producer, insurer, broker, or provider may make any statement or representation to an applicant or policyholder in connection with the sale or financing of a 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.
632.69(14) (14) Advertisements of life settlement contracts and purchase agreements.
632.69(14)(a) (a) This subsection applies to any advertising of life settlement contracts, purchase agreements, or related products or services intended for dissemination in this state, including Internet advertising viewed by persons located in this state.
632.69(14)(b) (b) If disclosure requirements are established by federal regulation, this subsection shall be interpreted so as to minimize or eliminate conflict with federal regulation.
632.69(14)(c) (c) The commissioner may require a broker or provider to submit advertising material at any time.
632.69(14)(d) (d) Every licensee shall establish and maintain a system of control over the content, form, and method of dissemination of all advertisements of its life settlement contracts, products, and services. All advertisements, regardless who wrote, created, designed, or presented the advertisement, shall be the responsibility of the licensee and the person who created or presented the advertisement. The system of control shall include regular routine notification of the requirements and procedures for approval prior to use of any advertisements not furnished by the licensee, at least once a year, to producers, brokers, and others authorized by the licensee who disseminate advertisements.
632.69(14)(e) (e) Advertisements shall be truthful and not misleading in fact or by implication. The form and content of an advertisement of a life settlement contract or purchase agreement, product, or service shall be sufficiently complete and clear so as to avoid deception. The advertisement may not have the capacity or tendency to mislead or deceive. The commissioner shall determine whether an advertisement has the capacity or tendency to mislead or deceive from the overall impression that the advertisement may be reasonably expected to create upon a person of average education or intelligence within the segment of the public to which it is directed.
632.69(14)(f) (f) Disclosures that are required under this subsection may not be minimized, rendered obscure, presented in an ambiguous fashion, or intermingled with the text of the advertisement so as to be confusing or misleading.
632.69(14)(g) (g) An advertisement may not do any of the following:
632.69(14)(g)1. 1. Omit material information or use words, phrases, statements, references, or illustrations if the omission or use has the capacity, tendency, or effect of misleading or deceiving an owner, purchaser, or prospective purchaser as to the nature or extent of any benefit, covered loss, premium payable, or state or federal tax consequences. A misleading statement is not remedied by any of the following:
632.69(14)(g)2. 2. Use the name or title of a life insurance company or a policy unless the advertisement has been approved by the insurer.
632.69(14)(g)3. 3. Represent that premium payments will not be required on the policy that is the subject of a life settlement contract or purchase agreement in order to maintain the policy unless that is the fact.
632.69(14)(g)4. 4. State or imply that interest charged on an accelerated death benefit or loan is unfair, inequitable, or, in any manner, an incorrect or improper practice.
632.69(14)(g)5. 5. Use the words “free,” “no cost,” “without cost,” “no additional cost,” “at no extra cost,” or similar words or phrases with respect to any benefit or services, unless true. An advertisement may specify the charge for a benefit or service or may state that a charge is included in the payment or use other appropriate language.
632.69(14)(g)6. 6. Use testimonials, appraisals, analyses, or endorsements in advertisements unless they are genuine; represent the current opinion of the author; are applicable to the life settlement contract or purchase agreement, product, or service advertised; and are reproduced with sufficient completeness to avoid misleading or deceiving prospective owners or purchasers as to the nature or scope of the testimonial, appraisal, analysis, or endorsement. Any financial interest in or benefit received from the licensee by the person making a testimonial, appraisal, or analysis, directly or indirectly, shall be prominently disclosed in the advertisement. If an endorsement refers to benefits received under a life settlement contract or purchase agreement, the licensee shall retain all pertinent information forming a basis of the endorsement for a period of 5 years following its use.
632.69(14)(g)7. 7. State or imply that a life settlement contract or purchase agreement, benefit, or service has been approved or endorsed by a group, society, association, or other organization unless that is the fact and unless any relationship between the organization and the licensee is disclosed. If the entity making the endorsement 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.
632.69(14)(g)8. 8. Contain statistical information unless the information accurately reflects recent and relevant facts. An advertisement shall identify the source of all statistics used in the advertisement.
632.69(14)(g)9. 9. Disparage insurers, providers, brokers, producers, policies, services, or methods of marketing.
632.69(14)(g)10. 10. Omit the name of the actual licensee from any advertisement. No advertisement may use a trade name, group designation, name of the parent company of a licensee, name of a division of a life settlement licensee, service mark, slogan, symbol, or other device or reference if the advertisement would have the capacity or tendency to mislead or deceive as to the true identity of the licensee or to create the impression that any entity other than the licensee would have any responsibility for the financial obligation under a life settlement contract or purchase agreement.
632.69(14)(g)11. 11. Use any combination of words, symbols, or physical materials that by the their content, phraseology, shape, color, or other characteristics are so similar to a combination of words, symbols, or physical materials used by a government program or agency that they tend to mislead or deceive prospective owners or purchasers into believing the advertisement is in some manner connected with a government program or agency.
632.69(14)(g)12. 12. Exaggerate the fact that a licensee under this section is licensed in the state where the advertisement appears or suggest or imply that competing licensees may not be so licensed. An advertisement may ask the audience to consult the licensee’s website or contact the office of the commissioner for licensing requirements and the status of a license.
632.69(14)(g)13. 13. Create the impression, directly or indirectly, that a licensee; its business practices or methods of operation; the merits, desirability, or advisability of any life settlement contract or purchase agreement; or any life insurance company are recommended, approved, or endorsed by any government entity.
632.69(14)(g)14. 14. Emphasize the speed with which the settlement will occur, except that the advertisement may disclose the average time from the completion of the application to the date of offer and from the acceptance of the offer to receipt of the settlement funds by the owner.
632.69(14)(g)15. 15. Emphasize the dollar amounts available to an owner, except that the advertisement may disclose the average purchase price as a percent of the face value obtained by owners contracting with the licensee during the prior 6 months.
632.69(14)(h) (h) The name of the licensee shall be clearly identified in all advertisements about the licensee or its life settlement contracts, purchase agreements, products, or services. If any specific life settlement contract or purchase agreement of a licensee is advertised, the contract or agreement shall be identified either by form number or other appropriate description. If an application is part of the advertisement, the name of the provider shall be shown on the application.
632.69(15) (15) Fraud prevention and control; fraudulent life settlement acts.
632.69(15)(a) (a) No person may commit a fraudulent life settlement act.
632.69(15)(b) (b) No person may knowingly or intentionally interfere with the enforcement of this subsection or sub. (13) or investigations of suspected or actual violations of this subsection or sub. (13) .
632.69(15)(c) (c) No person in the business of life settlements may knowingly or intentionally permit any person convicted of a felony involving dishonesty or breach of trust to participate in the business of life settlements.
632.69(15)(d) (d)
632.69(15)(d)1. 1. Life settlement contracts, purchase agreements, and applications for life settlements, regardless of the form of transmission, shall contain the following statement or a substantially similar statement: “Any person who knowingly presents false information in an application for insurance, a life settlement, or a purchase agreement may be subject to civil and criminal penalties.”
632.69(15)(d)2. 2. A person may not use the lack of the statement required under subd. 1. as a defense to any prosecution for a violation of this subsection or sub. (13) .
632.69(15)(e) (e)
632.69(15)(e)1. 1. Any person engaged in the business of life settlements having knowledge or a reasonable belief that a violation of this subsection or sub. (13) is being, will be, or has been committed shall provide to the commissioner the information required by, and in a manner prescribed by, the commissioner.
632.69(15)(e)2. 2. Any other person having knowledge or a reasonable belief that a violation of this subsection or sub. (13) is being, will be, or has been committed may provide to the commissioner the information required by, and in a manner prescribed by, the commissioner.
632.69(15)(f) (f)
632.69(15)(f)1. 1. In the absence of actual malice, no civil liability shall be imposed on and no cause of action shall arise from a person’s furnishing information concerning suspected, anticipated, or completed violations of this subsection or sub. (13) or suspected, anticipated, or completed fraudulent insurance acts, if the information is provided to or received from any of the following:
632.69(15)(f)2. 2. This paragraph does not abrogate or modify common law or statutory privileges or immunities enjoyed by a person who supplies information concerning suspected, anticipated, or completed fraudulent acts related to life settlements or insurance.
632.69(15)(g) (g) Information, documents, and evidence provided under par. (e) or obtained by the commissioner in an investigation of suspected or actual violations of this subsection or sub. (13) shall be privileged and confidential, shall not be a public record, and shall not be subject to discovery or subpoena in a civil or criminal action. The commissioner may release information, documents, and evidence provided under par. (e) or obtained in an investigation of suspected or actual violations of this subsection or sub. (13) in administrative or judicial proceedings to enforce laws administered by the commissioner, to federal, state, or local law enforcement or regulatory agencies, to an organization established for the purpose of detecting and preventing fraud related to life settlements, to the National Association of Insurance Commissioners, or, at the discretion of the commissioner, to a person in the business of life settlements that is aggrieved by a violation of this subsection or sub. (13) . Release by the commissioner of information, documents, and evidence as set forth in this paragraph does not abrogate, modify, or waive the privilege established in this paragraph.
632.69(15)(h) (h) This section does not do any of the following:
632.69(15)(h)1. 1. Preempt the authority or relieve the duty of law enforcement or regulatory agencies other than the commissioner to investigate, examine, and prosecute suspected violations of law.
632.69(15)(h)2. 2. Prevent or prohibit a person from disclosing voluntarily information concerning life settlement fraud to a law enforcement or regulatory agency other than the commissioner.
632.69(15)(h)3. 3. Limit the powers granted elsewhere by the laws of this state to the commissioner to investigate and examine possible violations of law and to take appropriate action.
632.69(15)(i) (i)
632.69(15)(i)1. 1. Providers and brokers shall have in place antifraud initiatives reasonably calculated to detect, prosecute, and prevent violations of this subsection and sub. (13) . The commissioner may modify the antifraud initiatives from time to time as necessary to ensure an effective antifraud program and to accomplish the purpose of this paragraph.
632.69(15)(i)2. 2. Antifraud initiatives shall include having fraud investigators, who may be employees of the provider or broker or who may be independent contractors, and an antifraud plan, which the provider or broker shall submit to the commissioner and which shall include all of the following:
632.69(15)(i)3. 3. Antifraud plans submitted to the commissioner are privileged and confidential, are not a public record, and are not subject to discovery or subpoena in a civil or criminal action.
632.69(16) (16) Conflicts of law. If there is more than one owner on a single policy and the owners are residents of different states, a life settlement shall 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 owners.
632.69(17) (17) Fraternal benefit societies. Nothing in this section shall prohibit a fraternal benefit society under ch. 614 from enforcing the terms of its bylaws or rules regarding permitted beneficiaries and owners.
632.69(18) (18) Civil action. Any person damaged by a violation of this section may bring a civil action against the person committing the violation in a court of competent jurisdiction.
632.69(19) (19) Penalties. Any person who violates this section is subject to the penalties provided under s. 601.64 , suspension or revocation of a license or certificate of authority, and an order under s. 601.41 .
632.69(20) (20) Powers of commissioner. The commissioner may do any of the following:
632.69(20)(a) (a) Adopt rules implementing and administering this section.
632.69(20)(b) (b) Establish standards for evaluating the reasonableness of payments under life settlement contracts for persons who are terminally or chronically ill, including regulation of discount rates used to determine the amount paid in exchange for assignment, transfer, sale, devise, or bequest of a benefit under a policy insuring the life of a person who is terminally or chronically ill.
632.69(20)(c) (c) Establish appropriate licensing requirements and standards for continued licensure for providers and brokers.
632.69(20)(d) (d) Require a bond or other mechanism for financial accountability for providers and brokers.
632.69(20)(e) (e) Adopt rules governing the relationship and responsibilities of insurers, providers, and brokers during settlement of a policy.

Legislative History

632.69 History History: 2009 a. 344 ; 2011 a. 209 ; 2011 a. 260 s. 81 ; 2013 a. 36 ; 2017 a. 365 s. 112 .