Q Capital Archive

Appellate Court Rules in Favor of Life Insurance Settlement Association

Florida’s First District Court of Appeal in Tallahassee on April 9 ruled in favor of the Orlando-based Life Insurance Settlement Association in its court battle with the state’s Office of Insurance Regulation over whether life settlement providers doing business in Florida could be forced to disclose information about their businesses in other jurisdictions. The court summarily affirmed an administrative law judge’s finding of May 7, 2009. Florida law refers to life settlements as viatical settlements.

Doug Head, LISA’s executive director, said the association’s key issue was that Florida could not require companies to report about business they conduct in other jurisdictions. “Each state has different approaches to regulation, but no one state has been established to regulate nationally for the other states,” he told BestWire. “If California asked to see all the activities going on in Florida, the Florida legislators for sure and probably the governor would be upset. And yet Florida was trying to do exactly that with regard to California. And so we saw that as an inappropriate and very broad and wrong-headed approach.”

Head said the rule, had it been upheld by the courts, would have caused confusion among providers over what to report. California regulates traditional viatical settlements that were created to help terminally ill people sell their life insurance policies, but it does not currently regulate life settlements. Florida has a law that regulates life settlements, but it calls them viatical settlements, he said. “What would you report if you were based in Pennsylvania, licensed to do business in Florida, but also do business in California?” he asked.

The court affirmed the administrative law judge’s finding that the rule that would have required viatical settlement providers to file private financial and business information was an “impermissible exercise of legislative authority and therefore invalid,” said the association in a statement. The information had detailed business activities and settlements in other states and even other nations — jurisdictions that are not subject to Florida regulation, the statement said.

The administrative law judge in the 2009 ruling found the Office of Insurance Regulation had “not met their burden of persuasion to show that the rule is a valid exercise of delegated legislative authority.” The association said the judge found the collection of data mandated by the OIR about the viatical settlement companies was not authorized by any statute.

Oral arguments before the appellate court were heard on Feb. 23.

(By Ron Panko, senior associate editor, Best’s Review: Ronald.Panko@ambest.com)

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