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Minnesota Legislature

Office of the Revisor of Statutes

SF 3063

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to insurance; regulating viatical settlements; enacting and modifying
the Viatical Settlements Model Act of the National Association of Insurance
Commissions; providing criminal penalties; amending Minnesota Statutes 2006,
section 60A.964, subdivision 1; proposing coding for new law in Minnesota
Statutes, chapter 60A; repealing Minnesota Statutes 2006, sections 13.716,
subdivision 7; 60A.961; 60A.962; 60A.963; 60A.965; 60A.966; 60A.967;
60A.968; 60A.969; 60A.970; 60A.971; 60A.972; 60A.973; 60A.974.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [60A.957] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Terms. new text end

new text begin For purposes of sections 60A.957 to 60A.9585, the terms
defined in this section have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Advertising. new text end

new text begin "Advertising" means any written, electronic, or printed
communication or any communication 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 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 life insurance policy pursuant to a viatical settlement contract.
new text end

new text begin Subd. 3. new text end

new text begin Business of viatical settlements. new text end

new text begin "Business of viatical settlements" means
an activity involved in, but not limited to, the offering, soliciting, negotiating, procuring,
effectuating, purchasing, investing, financing, monitoring, tracking, underwriting, selling,
transferring, assigning, pledging, hypothecating, or in any other manner acquiring an
interest in a life insurance policy by means of a viatical settlement contract.
new text end

new text begin Subd. 4. new text end

new text begin Chronically ill. new text end

new text begin "Chronically ill" means:
new text end

new text begin (1) being unable to perform at least two activities of daily living (for example,
eating, toileting, transferring, bathing, dressing, or continence);
new text end

new text begin (2) requiring substantial supervision to protect the individual from threats to health
and safety due to severe cognitive impairment; or
new text end

new text begin (3) having a level of disability similar to that described in paragraph (1) as
determined by the secretary of health and human services;
new text end

new text begin Subd. 5. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of commerce.
new text end

new text begin Subd. 6. new text end

new text begin Financing entity. new text end

new text begin "Financing entity" means an underwriter, placement
agent, lender, purchaser of securities, purchaser of a policy or certificate from a viatical
settlement provider, credit enhancer, or any entity that has a direct ownership in a policy
or certificate that is the subject of a viatical settlement contract, but:
new text end

new text begin (1) whose principal activity related to the transaction is providing funds to effect the
viatical settlement or purchase of one or more viaticated policies; and
new text end

new text begin (2) who has an agreement in writing with one or more licensed viatical settlement
providers to finance the acquisition of viatical settlement contracts.
new text end

new text begin The term does not include a nonaccredited investor or a viatical settlement purchaser.
new text end

new text begin Subd. 7. new text end

new text begin Fraudulent viatical settlement act. new text end

new text begin "Fraudulent viatical settlement act"
includes:
new text end

new text begin (a) acts or omissions committed by any person who, knowingly or with intent to
defraud, for the purpose of depriving another of property or for pecuniary gain, commits,
or permits its employees or its agents to engage in acts including:
new text end

new text begin (1) presenting, causing to be presented or preparing with knowledge or belief that
it will be presented to or by a viatical settlement provider, viatical settlement broker,
viatical settlement purchaser, viatical settlement investment agent, financing entity,
insurer, insurance producer, or any other person, false material information, or concealing
material information, as part of, in support of, or concerning a fact material to one or
more of the following:
new text end

new text begin (i) an application for the issuance of a viatical settlement contract or insurance policy;
new text end

new text begin (ii) the underwriting of a viatical settlement contract or insurance policy;
new text end

new text begin (iii) a claim for payment or benefit pursuant to a viatical settlement contract or
insurance policy;
new text end

new text begin (iv) premiums paid on an insurance policy or as a result of a viatical settlement
purchase agreement;
new text end

new text begin (v) payments and changes in ownership or beneficiary made in accordance with
the terms of a viatical settlement contract, viatical settlement purchase agreement, or
insurance policy;
new text end

new text begin (vi) the reinstatement or conversion of an insurance policy;
new text end

new text begin (vii) in the solicitation, offer, effectuation, or sale of a viatical settlement contract,
insurance policy, or viatical settlement purchase agreement;
new text end

new text begin (viii) the issuance of written evidence of viatical settlement contract, viatical
settlement purchase agreement, or insurance; or
new text end

new text begin (ix) a financing transaction;
new text end

new text begin (2) employing any plan, financial structure, device, scheme, or artifice to defraud
related to viaticated policies;
new text end

new text begin (3) entering into any practice or plan which involves stranger-originated life
insurance; and
new text end

new text begin (4) failing to disclose to the insurer when requested by the insurer that the prospective
insured has undergone a life expectancy evaluation by any person or entity other than the
insurer or its authorized representatives in connection with the issuance of the policy;
new text end

new text begin (b) in the furtherance of a fraud or to prevent the detection of a fraud any person
commits or permits its employees or its agents to:
new text end

new text begin (1) remove, conceal, alter, destroy, or sequester from the commissioner the assets or
records of a licensee or other person engaged in the business of viatical settlements;
new text end

new text begin (2) misrepresent or conceal the financial condition of a licensee, financing entity,
insurer, or other person;
new text end

new text begin (3) transact the business of viatical settlements in violation of laws requiring a
license, certificate of authority, or other legal authority for the transaction of the business
of viatical settlements; or
new text end

new text begin (4) file with the commissioner or the equivalent chief insurance regulatory official
of another jurisdiction a document containing false information or otherwise conceal
information about a material fact from the commissioner;
new text end

new text begin (c) embezzlement, theft, misappropriation, or conversion of money, funds,
premiums, credits, or other property of a viatical settlement provider, insurer, viator,
insurance policyowner, or any other person engaged in the business of viatical settlements
or insurance;
new text end

new text begin (d) recklessly entering into, negotiating, brokering, otherwise dealing in a viatical
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 the persons intended to defraud the policy's issuer, the
viatical settlement provider, or the viator. "Recklessly" means engaging in the conduct in
conscious and clearly unjustifiable disregard of a substantial likelihood of the existence
of the relevant facts or risks; such disregard involving a gross deviation from acceptable
standards of conduct;
new text end

new text begin (e) facilitating the change of state of ownership of a policy or certificate or the state
of residency of a viator to a state or jurisdiction that does not have a law similar to sections
60A.957 to 60A.9585 for the express purposes of evading or avoiding the provisions of
sections 60A.957 to 60A.9585; or
new text end

new text begin (f) attempting to commit, assisting, aiding, or abetting in the commission of, or
conspiracy to commit, the acts or omissions specified in this subdivision.
new text end

new text begin Subd. 8. new text end

new text begin Life insurance producer. new text end

new text begin "Life insurance producer" means any person
licensed in this state as a resident or nonresident insurance producer who has received
qualification or authority for life insurance coverage or a life line of coverage pursuant to
chapter 60K.
new text end

new text begin Subd. 9. new text end

new text begin Person. new text end

new text begin "Person" means a natural person or a legal entity, including,
without limitation, an individual, partnership, limited liability company, association,
trust, or corporation.
new text end

new text begin Subd. 10. new text end

new text begin Policy. new text end

new text begin "Policy" means an individual or group policy, group 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.
new text end

new text begin Subd. 11. new text end

new text begin Related provider trust. new text end

new text begin "Related provider trust" means a titling trust or
other trust established by a licensed viatical settlement 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. The trust shall have a written agreement with the
licensed viatical settlement provider under which the licensed viatical settlement provider
is responsible for ensuring compliance with all statutory and regulatory requirements and
under which the trust agrees to make all records and files related to viatical settlement
transactions available to the commissioner as if those records and files were maintained
directly by the licensed viatical settlement provider.
new text end

new text begin Subd. 12. new text end

new text begin Special purpose entity. new text end

new text begin "Special purpose entity" means a corporation,
partnership, trust, limited liability company, or other similar entity formed solely to
provide either directly or indirectly access to institutional capital markets:
new text end

new text begin (1) for a financing entity or licensed viatical settlement provider; or
new text end

new text begin (2)(i) in connection with a transaction in which the securities in the special purposes
entity are acquired by the viator or by "qualified institutional buyers" as defined in Rule
144 promulgated under the Securities Act of 1933, as amended; or
new text end

new text begin (ii) the securities pay a fixed rate of return commensurate with established
asset-backed institutional capital markets.
new text end

new text begin Subd. 13. new text end

new text begin Stranger-originated life insurance; STOLI. new text end

new text begin "Stranger-originated life
insurance" or "STOLI," means a practice or a plan to initiate a life insurance policy for the
benefit of a third-party investor who, at the time of policy origination, has no insurable
interest in the insured. STOLI practices include but are not limited to 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 himself or
itself, and where, at the time of policy inception, there is an arrangement or agreement,
whether verbal or written, to directly or indirectly transfer either or both the ownership
of the policy and the policy benefits to a third party. Trusts that are created to give the
appearance of insurable interest, and are used to initiate policies for investors, violate
insurable interest laws and the prohibition against wagering on life. STOLI arrangements
do not include those practices set forth in subdivision 16, paragraph (c).
new text end

new text begin Subd. 14. new text end

new text begin Terminally ill. new text end

new text begin "Terminally ill" means having an illness or sickness that
can reasonably be expected to result in death in 24 months or less.
new text end

new text begin Subd. 15. new text end

new text begin Viatical settlement broker. new text end

new text begin "Viatical settlement broker" means a
person, including a life insurance producer as provided for in section 60A.9572, who,
working exclusively on behalf of a viator and for a fee, commission, or other valuable
consideration, offers or attempts to negotiate viatical settlement contracts between a viator
and one or more viatical settlement providers or one or more viatical settlement brokers.
Notwithstanding the manner in which the viatical settlement broker is compensated, a
viatical settlement broker is deemed to represent only the viator, and not the insurer or
the viatical settlement provider, and owes a fiduciary duty to the viator to act according
to the viator's instructions and in the best interest of the viator. The term does not
include an attorney, certified public accountant, or a financial planner accredited by a
nationally recognized accreditation agency, who is retained to represent the viator and
whose compensation is not paid directly or indirectly by the viatical settlement provider
or purchaser.
new text end

new text begin Subd. 16. new text end

new text begin Viatical settlement contract. new text end

new text begin (a) "Viatical settlement contract" means
a written agreement between a viator and a viatical settlement provider or any affiliate
of the viatical settlement provider establishing the terms under which compensation or
anything of value is or will be paid, which compensation or value is less than the expected
death benefits of the policy, in return for the viator's present or future assignment, transfer,
sale, devise, or bequest of the death benefit or ownership of any portion of the insurance
policy or certificate of insurance. "Viatical settlement contract" also includes the transfer
for compensation or value of ownership or beneficial interest in a trust or other entity that
owns such a policy if the trust or other entity was formed or availed of for the principal
purpose of acquiring one or more life insurance contracts, which life insurance contract
insures the life of a person residing in this state.
new text end

new text begin (b) Viatical settlement contract includes a premium finance loan made for a life
insurance policy by a lender to a viator on, before, or after the date of issuance of the
policy where:
new text end

new text begin (1) the viator or the insured receives on the date of the premium finance loan a
guarantee of a future viatical settlement value of the policy; or
new text end

new text begin (2) the viator or the insured agrees on the date of the premium finance loan to sell the
policy or any portion of its death benefit on any date following the issuance of the policy.
new text end

new text begin (c) Viatical settlement contract does not include:
new text end

new text begin (1) a policy loan or accelerated death benefit made by the insurer pursuant to the
policy's terms;
new text end

new text begin (2) loan proceeds that are used solely to pay:
new text end

new text begin (i) premiums for the policy; and
new text end

new text begin (ii) the costs of the loan, including, without limitation, interest, arrangement fees,
utilization fees and similar fees, closing costs, legal fees and expenses, trustee fees and
expenses, and third party collateral provider fees and expenses, including fees payable
to letter of credit issuers;
new text end

new text begin (3) a loan made by a bank or other licensed financial institution in which the lender
takes an interest in a life insurance policy solely to secure repayment of a loan or, if there
is a default on the loan and the policy is transferred, the transfer of such a policy by the
lender, provided that neither the default itself nor the transfer of the policy in connection
with the default is pursuant to an agreement;
new text end

new text begin (4) a loan made by a lender that does not violate chapter 59A, provided that the
premium finance loan is not described in clause (3);
new text end

new text begin (5) an agreement where all the parties (i) are closely related to the insured by blood
or law or (ii) have a lawful substantial economic interest in the continued life, health, and
bodily safety of the person insured, or are trusts established primarily for the benefit
of such parties;
new text end

new text begin (6) any designation, consent, or agreement by an insured who is an employee of an
employer in connection with the purchase by the employer, or trust established by the
employer, of life insurance on the life of the employee;
new text end

new text begin (7) a bona fide business succession planning arrangement:
new text end

new text begin (i) between one or more shareholders in a corporation or between a corporation and
one or more of its shareholders or one or more trusts established by its shareholders;
new text end

new text begin (ii) between one or more partners in a partnership or between a partnership and one
or more of its partners or one or more trusts established by its partners; or
new text end

new text begin (iii) between one or more members in a limited liability company or between a
limited liability company and one or more of its members or one or more trusts established
by its members;
new text end

new text begin (8) an agreement entered into by a service recipient, or a trust established by the
service recipient, and a service provider, or a trust established by the service provider, who
performs significant services for the service recipient's trade or business; or
new text end

new text begin (9) any other contract, transaction, or arrangement exempted from the definition
of viatical settlement contract by the commissioner based on a determination that the
contract, transaction, or arrangement is not of the type intended to be regulated by sections
60A.957 to 60A.9585.
new text end

new text begin Subd. 17. new text end

new text begin Viatical settlement investment agent. new text end

new text begin (a) "Viatical settlement
investment agent" means a person who is an appointed or contracted agent of a licensed
viatical settlement provider who solicits or arranges the funding for the purchase of a
viatical settlement by a viatical settlement purchaser and who is acting on behalf of a
viatical settlement provider.
new text end

new text begin (b) A viatical settlement investment agent shall not have any contact directly or
indirectly with the viator or insured or have knowledge of the identity of the viator
or insured.
new text end

new text begin (c) A viatical settlement investment agent is deemed to represent the viatical
settlement provider of whom the viatical settlement investment agent is an appointed
or contracted agent.
new text end

new text begin Subd. 18. new text end

new text begin Viatical settlement provider. new text end

new text begin (a) "Viatical settlement provider" means
a person, other than a viator, that enters into or effectuates a viatical settlement contract
with a viator resident in this state.
new text end

new text begin (b) Viatical settlement provider does not include:
new text end

new text begin (1) a bank, savings bank, savings and loan association, credit union, other licensed
lending institution, or premium financing company making premium finance loans and
exempted by the commissioner from the licensing requirement under the premium finance
laws, that takes an assignment of a life insurance policy solely as a collateral for a loan;
new text end

new text begin (2) a premium finance company making premium finance loans and exempted by the
commissioner from the licensing requirement under the premium finance laws that takes
an assignment of a life insurance policy solely as collateral for a loan;
new text end

new text begin (3) the issuer of the life insurance policy;
new text end

new text begin (4) an authorized or eligible insurer that provides stop-loss coverage or financial
guaranty insurance to a viatical settlement provider, purchaser, financing entity, special
purpose entity, or related provider trust;
new text end

new text begin (5) a natural person who enters into or effectuates no more than one agreement in a
calendar year for the transfer of life insurance policies for any value less than the expected
death benefit;
new text end

new text begin (6) a financing entity;
new text end

new text begin (7) a special purpose entity;
new text end

new text begin (8) a related provider trust;
new text end

new text begin (9) a viatical settlement purchaser; or
new text end

new text begin (10) any other person that the commissioner determines is not the type of person
intended to be covered by the definition of viatical settlement provider.
new text end

new text begin Subd. 19. new text end

new text begin Viatical settlement purchase agreement. new text end

new text begin "Viatical settlement purchase
agreement" means a contract or agreement, entered into by a viatical settlement purchaser,
to which the viator is not a party, to purchase a life insurance policy or an interest in a life
insurance policy, that is entered into for the purpose of deriving an economic benefit.
new text end

new text begin Subd. 20. new text end

new text begin Viatical settlement purchaser. new text end

new text begin (a) "Viatical settlement purchaser" means
a person who provides a sum of money as consideration for a life insurance policy or an
interest in the death benefits of a life insurance policy, or a person who owns or acquires or
is entitled to a beneficial interest in a trust that owns a viatical settlement contract or is
the beneficiary of a life insurance policy that has been or will be the subject of a viatical
settlement contract, for the purpose of deriving an economic benefit.
new text end

new text begin (b) Viatical settlement purchaser does not include:
new text end

new text begin (1) a licensee under sections 60A.957 to 60A.9585;
new text end

new text begin (2) an accredited investor or qualified institutional buyer as defined, respectively,
in Rule 501(a) or Rule 144A promulgated under the Federal Securities Act of 1933, as
amended;
new text end

new text begin (3) a financing entity;
new text end

new text begin (4) a special purpose entity; or
new text end

new text begin (5) a related provider trust.
new text end

new text begin Subd. 21. new text end

new text begin Viaticated policy. new text end

new text begin "Viaticated policy" means a life insurance policy or
certificate that has been acquired by a viatical settlement provider pursuant to a viatical
settlement contract.
new text end

new text begin Subd. 22. new text end

new text begin Viator. new text end

new text begin (a) "Viator" means the owner of a life insurance policy or a
certificate holder under a group policy who resides in this state and enters or seeks to
enter into a viatical settlement contract. For purposes of sections 60A.957 to 60A.9585,
a viator shall not be limited to an owner of a life insurance policy or a certificate holder
under a group policy insuring the life of an individual with a terminal or chronic illness or
condition except where specifically addressed. If there is more than one viator on a single
policy and the viators are residents of different states, the transaction shall be governed by
the law of the state in which the viator having the largest percentage ownership resides or,
if the viators hold equal ownership, the state of residence of one viator agreed upon in
writing by all the viators.
new text end

new text begin (b) Viator does not include:
new text end

new text begin (1) a license under this Act, including a life insurance producer acting as a viatical
settlement broker pursuant to sections 60A.957 to 60A.9585;
new text end

new text begin (2) a qualified institutional buyer as defined, respectively, in Rule 144A promulgated
under the Federal Securities Act of 1933, as amended;
new text end

new text begin (3) a financing entity;
new text end

new text begin (4) a special purpose entity; or
new text end

new text begin (5) a related provider trust.
new text end

Sec. 2.

new text begin [60A.9572] LICENSE AND BOND REQUIREMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Provider or broker license required. new text end

new text begin A person shall not operate as
a viatical settlement provider or viatical settlement broker without first obtaining a license
from the commissioner of the state of residence of the viator.
new text end

new text begin Subd. 2. new text end

new text begin Agent license required. new text end

new text begin A person shall not operate as a viatical settlement
investment agent without first obtaining a license from the commissioner of the state of
residence of the viatical settlement purchaser. If there is more than one purchaser of a
single policy and the purchasers are residents of different states, the viatical settlement
purchase agreement shall be governed by the law of the state in which the purchaser
having the largest percentage ownership resides or, if the purchasers hold equal ownership,
the state of residence of one purchaser agreed upon in writing by all purchasers.
new text end

new text begin Subd. 3. new text end

new text begin Life insurance provider. new text end

new text begin (a) A life insurance provider who has been duly
licensed as a resident insurance producer with a life line of authority in this state or his or
her home state for at least one year and is licensed as a nonresident producer in this state
shall be deemed to meet the licensing requirements of this section and shall be permitted
to operate as a viatical settlement broker.
new text end

new text begin (b) Not later than 30 days from the first day of operating as a viatical settlement
broker, the life insurance producer shall notify the commissioner that he or she is acting
as a viatical settlement broker on a form prescribed by the commissioner, and shall pay
any applicable fee to be determined by the commissioner. Notification shall include an
acknowledgment by the life insurance producer that he or she will operate as a viatical
settlement broker in accordance with sections 60A.957 to 60A.9585.
new text end

new text begin (c) The insurer that issued the policy being viaticated shall not be responsible
for any act or omission of a viatical settlement broker or viatical settlement provider
arising out of or in connection with the viatical settlement transaction, unless the insurer
receives compensation for the placement of a viatical settlement contract from the viatical
settlement provider or viatical settlement broker in connection with the viatical settlement
contract.
new text end

new text begin (d) A person licensed as an attorney, certified public accountant, or financial planner
accredited by a nationally recognized accreditation agency, who is retained to represent
the viator, whose compensation is not paid directly or indirectly by the viatical settlement
provider, may negotiate viatical settlement contracts on behalf of the viator without having
to obtain a license as a viatical settlement broker.
new text end

new text begin Subd. 4. new text end

new text begin Application. new text end

new text begin Application for a viatical settlement provider, viatical
settlement broker, or viatical settlement investment agent license shall be made to the
commissioner by the applicant on a form prescribed by the commissioner, and these
applications shall be accompanied by the fees specified in section 60A.964.
new text end

new text begin Subd. 5. new text end

new text begin Renewals. new text end

new text begin Licenses may be renewed from year to year on the anniversary
date upon payment of the annual renewal fees specified in section 60A.964. Failure to pay
the fees by the renewal date results in expiration of the license.
new text end

new text begin Subd. 6. new text end

new text begin Disclosures. new text end

new text begin The applicant shall provide information on forms required
by the commissioner. The commissioner shall have authority, at any time, to require the
applicant to fully disclose the identity of all stockholders, partners, officers, members, and
employees, and the commissioner may, in the exercise of the commissioner's discretion,
refuse to issue a license in the name of a legal entity if not satisfied that any officer,
employee, stockholder, partner, or member thereof who may materially influence the
applicant's conduct meets the standards of sections 60A.957 to 60A.9585.
new text end

new text begin Subd. 7. new text end

new text begin Legal entity license. new text end

new text begin A license issued to a legal entity authorizes all
partners, officers, members, and designated employees to act as viatical settlement
providers, viatical settlement brokers, or viatical settlement investment agents, as
applicable, under the license, and all those persons shall be named in the application
and any supplements to the application.
new text end

new text begin Subd. 8. new text end

new text begin Investigation. new text end

new text begin (a) Upon the filing of an application and the payment of the
license fee, the commissioner shall make an investigation of each applicant and issue a
license if the commissioner finds that the applicant:
new text end

new text begin (1) if a viatical settlement provider, has provided a detailed plan of operation;
new text end

new text begin (2) is competent and trustworthy and intends to act in good faith in the capacity
involved by the license applied for;
new text end

new text begin (3) has a good business reputation and has had experience, training, or education so
as to be qualified in the business for which the license is applied for;
new text end

new text begin (4)(i) if a viatical settlement provider, has demonstrated evidence of financial
responsibility in a format prescribed by the commissioner through either a surety bond
executed and issued by an insurer authorized to issue surety bonds in this state or a deposit
of cash, certificates of deposit, or securities or any combination thereof in the amount of
$250,000; and
new text end

new text begin (ii) if a viatical settlement broker, has demonstrated evidence of financial
responsibility in a format prescribed by the commissioner through either a surety bond
executed and issued by an insurer authorized to issue surety bonds in this state or a deposit
of cash, certificates of deposit, or securities or any combination thereof in the amount of
$250,000. The commissioner shall accept, as evidence of financial responsibility, proof
that financial instruments in accordance with the requirements in this paragraph have
been filed with one or more states where the applicant is licensed as a viatical settlement
provider or viatical settlement broker. The commissioner may ask for evidence of financial
responsibility at any time the commissioner deems necessary. Any surety bond issued
pursuant to this paragraph shall be in the favor of this state and shall specifically authorize
recovery by the commission on behalf of any person in this state who sustained damages
as the result of erroneous acts, failure to act, conviction of fraud, or conviction of unfair
practices by the viatical settlement provider or viatical settlement broker;
new text end

new text begin (5) if a legal entity, provides a certificate of good standing from the state of its
domicile; and
new text end

new text begin (6) if a viatical settlement provider or viatical settlement broker, has provided an
antifraud plan that meets the requirements of section 60A.9583.
new text end

new text begin (b) Notwithstanding any provision of this section to the contrary, the commissioner
shall accept, as evidence of financial responsibility, proof that financial instruments in
accordance with the requirements in paragraph (a), clause (4), have been filed with one
state where the applicant is licensed as a viatical settlement provider or viatical settlement
broker.
new text end

new text begin Subd. 9. new text end

new text begin Consent to service of process. new text end

new text begin The commissioner shall not issue a
license to a nonresident applicant, unless a written designation of an agent for service of
process is filed and maintained with the commissioner or the applicant has filed with
the commissioner, the applicant's written irrevocable consent that any action against
the applicant may be commenced against the applicant by service of process on the
commissioner.
new text end

new text begin Subd. 10. new text end

new text begin Duty to supplement information. new text end

new text begin A viatical settlement provider,
viatical settlement broker, or viatical settlement investment agent shall provide to the
commissioner new or revised information about officers, ten percent or more stockholders,
partners, directors, members, or designated employees within 30 days of the change.
new text end

new text begin Subd. 11. new text end

new text begin Training required. new text end

new text begin An individual licensed as a viatical settlement broker
shall complete on a biennial basis 15 hours of training related to viatical settlements and
viatical settlement transactions, as required by the commissioner; provided, however,
that a life insurance producer who is operating as a viatical settlement broker pursuant
to subdivision 3 shall not be subject to the requirements of this subdivision. Any person
failing to meet the requirements of this subdivision is subject to the penalties imposed by
the commissioner.
new text end

Sec. 3.

new text begin [60A.9573] LICENSE REVOCATION AND DENIAL.
new text end

new text begin Subdivision 1. new text end

new text begin Grounds. new text end

new text begin The commissioner may refuse to issue, suspend, revoke,
or refuse to renew the license of a viatical settlement provider, viatical settlement broker,
or viatical settlement investment agent if the commissioner finds that:
new text end

new text begin (1) there was any material misrepresentation in the application for the license;
new text end

new text begin (2) the licensee or any officer, partner, member, or key management personnel has
been convicted of fraudulent or dishonest practices, is subject to a final administrative
action or is otherwise shown to be untrustworthy or incompetent;
new text end

new text begin (3) the viatical settlement provider demonstrates a pattern of unreasonable payments
to viators;
new text end

new text begin (4) the licensee or any officer, partner, member, or key management personnel
has been found guilty of, or has pleaded guilty or nolo contendere to, any felony, or to
a misdemeanor involving fraud or moral turpitude, regardless of whether a judgment of
conviction has been entered by the court;
new text end

new text begin (5) the viatical settlement provider has entered into any viatical settlement contract
that has not been approved pursuant to sections 60A.957 to 60A.9585;
new text end

new text begin (6) the viatical settlement provider has failed to honor contractual obligations set out
in a viatical settlement contract or a viatical settlement purchase agreement;
new text end

new text begin (7) the licensee no longer meets the requirements for initial licensure;
new text end

new text begin (8) the viatical settlement provider has assigned, transferred, or pledged a viaticated
policy to a person other than a viatical settlement provider licensed in this state, viatical
settlement purchaser, an accredited investor, or qualified institutional buyer as defined
respectively in Rule 501(a) or Rule 144A promulgated under the Federal Securities Act of
1933, as amended, financing entity, special purpose entity, or related provider trust; or
new text end

new text begin (9) the licensee or any officer, partner, member, or key management personnel has
violated any provision of sections 60A.957 to 60A.9585.
new text end

new text begin Subd. 2. new text end

new text begin Bad faith by broker or producer. new text end

new text begin The commissioner may suspend,
revoke, or refuse to renew the license of a viatical settlement broker or a life insurance
producer operating as a viatical settlement broker pursuant to sections 60A.957 to
60A.9585 if the commissioner finds that the viatical settlement broker or life insurance
producer has violated the provisions of sections 60A.957 to 60A.9585 or has otherwise
engaged in bad faith conduct with one or more viators.
new text end

new text begin Subd. 3. new text end

new text begin License enforcement actions. new text end

new text begin Section 45.027 applies to any action
taken by the commissioner to deny a license application or suspend, revoke, or refuse to
renew the license of a viatical settlement provider, viatical settlement broker, or viatical
settlement investment agent, or suspend, revoke, or refuse to renew a license of a life
insurance producer operating as a viatical settlement broker pursuant to sections 60A.957
to 60A.9585.
new text end

Sec. 4.

new text begin [60A.9574] APPROVAL OF VIATICAL SETTLEMENT CONTRACTS
AND DISCLOSURE STATEMENTS.
new text end

new text begin A person shall not use a viatical settlement contract form or provide to a viator
a disclosure statement form in this state unless first filed with and approved by the
commissioner. The commissioner shall disapprove a viatical settlement contract form or
disclosure statement form if, in the commissioner's opinion, the contract or provisions
contained therein fail to meet the requirements of sections 60A.6577, 60A.9579,
60A.9582, and 60A.9583, subdivision 2, or are unreasonable, contrary to the interests
of the public, or otherwise misleading or unfair to the viator. At the commissioner's
discretion, the commissioner may require the submission of advertising material.
new text end

Sec. 5.

new text begin [60A.9575] REPORTING REQUIREMENTS AND PRIVACY.
new text end

new text begin Subdivision 1. new text end

new text begin Annual statement. new text end

new text begin Each viatical settlement provider shall file with
the commissioner on or before March 1 of each year an annual statement containing
the following information:
new text end

new text begin (1) for each policy viaticated, the date that the viatical settlement was entered into;
the life expectancy of the viator at the time of the contract; the face amount of the policy;
the amount paid by the viatical settlement provider to viaticate the policy; and if the viator
has died, the date of death and the total insurance premiums paid by the viatical settlement
provider to maintain the policy in force;
new text end

new text begin (2) a breakdown by disease category of applications received, accepted, and rejected;
new text end

new text begin (3) a breakdown of policies viaticated by issuer and policy type;
new text end

new text begin (4) the number of secondary market versus primary market transactions;
new text end

new text begin (5) the portfolio size; and
new text end

new text begin (6) the amount of outside borrowings.
new text end

new text begin The information shall be limited to only those transactions where the viator is
a resident of this state. Individual transaction data regarding the business of viatical
settlements or data that could compromise the privacy of personal, financial, and health
information of the viator or insured shall be filed with the commissioner on a confidential
basis.
new text end

new text begin Subd. 2. new text end

new text begin Identity disclosure restrictions. new text end

new text begin Except as otherwise allowed or required
by law, a viatical settlement provider, viatical settlement broker, or viatical settlement
investment agent, insurance company, insurance producer, information bureau, rating
agency or company, or any other person with actual knowledge of an insured's identity,
shall not disclose that identity as an insured, or the insured's financial or medical
information to any other person unless the disclosure:
new text end

new text begin (1) is necessary to effect a viatical settlement between the viator and a viatical
settlement provider and the viator and insured have provided prior written consent to
the disclosure;
new text end

new text begin (2) is necessary to effect a viatical settlement purchase agreement between the
viatical settlement purchaser and a viatical settlement provider and the viator and insured
have provided prior written consent to the disclosure;
new text end

new text begin (3) 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 section .......
new text end

new text begin (4) is a term of or condition to the transfer of a policy by one viatical settlement
provider to another viatical settlement provider;
new text end

new text begin (5) is necessary to permit a financing entity, related provider trust, or special purpose
entity to finance the purchase of policies by a viatical settlement provider and the viator
and insured have provided prior written consent to the disclosure;
new text end

new text begin (6) is necessary to allow the viatical settlement provider or viatical settlement broker
or their authorized representatives to make contacts for the purpose of determining health
status; or
new text end

new text begin (7) is required to purchase stop-loss coverage or financial guaranty insurance.
new text end

Sec. 6.

new text begin [60A.9576] EXAMINATION OR INVESTIGATIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Authority, scope, and scheduling of examinations. new text end

new text begin (a) The
commissioner may conduct an examination under this act of a licensee as often as the
commissioner in his or her discretion deems appropriate after considering the factors set
forth in this paragraph. Any examination must be conducted pursuant to section 60A.031.
new text end

new text begin (b) In scheduling and determining the nature, scope, and frequency of the
examinations, the commissioner shall consider such matters as the consumer complaints,
results of financial statement analyses and ratios, changes in management or ownership,
actuarial opinions, report of independent certified public accountants, and other relevant
criteria as determined by the commissioner.
new text end

new text begin (c) For purposes of completing an examination of a licensee under this act, the
commissioner may examine or investigate any person, or the business of any person, in
so far as the examination or investigation is, in the sole discretion of the commissioner,
necessary or material to the examination of the licensee.
new text end

new text begin (d) In lieu of an examination under this act of any foreign or alien licensee
licensed in this state, the commissioner may, at the commissioner's discretion, accept an
examination report on the licensee as prepared by the commissioner for the licensee's state
of domicile or port-of-entry state.
new text end

new text begin (e) As far as practical, the examination of a foreign or alien licensee shall be made in
cooperation with the insurance supervisory officials of other states in which the licensee
transacts business.
new text end

new text begin Subd. 2. new text end

new text begin Record retention requirements. new text end

new text begin (a) A person required to be licensed by
sections 60A.957 to 60A.9585 shall for five years retain copies of all:
new text end

new text begin (1) proposed, offered or executed contracts, purchase agreements, underwriting
documents, policy forms, and applications from the date of the proposal, offer, or
execution of the contract or purchase agreement, whichever is later;
new text end

new text begin (2) all checks, drafts, or other evidence and documentation related to the payment,
transfer, deposit, or release of funds from the date the transaction; and
new text end

new text begin (3) all other records and documents related to the requirements of sections ... to ....
new text end

new text begin (b) This section does not relieve a person of the obligation to produce these
documents to the commissioner after the retention period has expired if the person has
retained the documents.
new text end

new text begin (c) Records required to be retained by this section 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 the
reproduction of a record.
new text end

new text begin Subd. 3 new text end

new text begin Investigative authority of commissioner. new text end

new text begin The commissioner may
investigate suspected fraudulent viatical settlement acts and persons engaged in the
business of viatical settlements.
new text end

Sec. 7.

new text begin [60A.9577] DISCLOSURE TO VIATOR.
new text end

new text begin Subdivision 1. new text end

new text begin Application disclosures by provider and broker. new text end

new text begin With each
application for a viatical settlement, a viatical settlement provider or viatical settlement
broker shall provide the viator with at least the following disclosures no later than the
time the application for the viatical settlement contract is signed by all parties. The
disclosures shall be provided in a separate document that is signed by the viator and the
viatical settlement provider or viatical settlement broker, and shall provide the following
information:
new text end

new text begin (1) there are possible alternatives to viatical settlement contracts including any
accelerated death benefits or policy loans offered under the viator's life insurance policy;
new text end

new text begin (2) that a viatical settlement broker represents exclusively the viator, and not the
insurer or the viatical settlement provider, and owes a fiduciary duty to the viator, including
a duty to act according to the viator's instructions and in the best interest of the viator;
new text end

new text begin (3) some or all of the proceeds of the viatical settlement may be taxable under
federal income tax and state franchise and income taxes, and assistance should be sought
from a professional tax advisor;
new text end

new text begin (4) proceeds of the viatical settlement could be subject to the claims of creditors;
new text end

new text begin (5) receipt of the proceeds of a viatical settlement may adversely affect the viator's
eligibility for Medicaid or other government benefits or entitlements, and advice should
be obtained from the appropriate government agencies;
new text end

new text begin (6) the viator has the right to rescind a viatical settlement contract before the earlier
of 60 calendar days after the date upon which the viatical settlement contract is executed
by all parties or 30 calendar days after the viatical settlement proceeds have been paid to
the viator, as provided in section 60A.9578, subdivision 6. Rescission, if exercised by
the viator, is effective only if both notice of the rescission is given, and the viator repays
all proceeds and any premiums, loans, and loan interest paid on account of the viatical
settlement within the rescission period. If the insured dies during the rescission period, the
viatical settlement contract shall be deemed to have been rescinded, subject to repayment
by the viator or the viator's estate of all viatical settlement proceeds and any premiums,
loans, and loan interest to the viatical settlement within 60 days of the insured's death;
new text end

new text begin (7) funds will be sent to the viator within three business days after the
viatical settlement provider has received the insurer or group administrator's written
acknowledgment that ownership of the policy or interest in the certificate has been
transferred and the beneficiary has been designated;
new text end

new text begin (8) entering into a viatical settlement contract may cause other rights or benefits,
including conversion rights and waiver of premium benefits that may exist under the
policy or certificate, to be forfeited by the viator. Assistance should be sought from
a financial adviser;
new text end

new text begin (9) disclosure to a viator shall include distribution of a brochure describing the
process of viatical settlements. The NAIC's form for the brochure shall be used unless
another form is developed or approved by the commissioner;
new text end

new text begin (10) the disclosure document shall contain the following language: "All medical,
financial, or personal information solicited or obtained by a viatical settlement provider or
viatical settlement broker about an insured, including the insured's identity or the identity
of family members, a spouse, or a significant other may be disclosed as necessary to
effect the viatical settlement between the viator and the viatical settlement provider. If
you are asked to provide this information, you will be asked to consent to the disclosure.
The information may be provided to someone who buys the policy or provides funds for
the purchase. You may be asked to renew your permission to share information every
two years."; and
new text end

new text begin (11) following execution of a viatical contract, the insured may be contacted for the
purpose of determining the insured's health status and to confirm the insured's residential
or business street address and telephone number, or as otherwise provided in this act. This
contact shall be limited to once every three months if the insured has a life expectancy of
more than one year, and no more than once per month if the insured has a life expectancy
of one year or less. All such contracts shall be made only by a viatical settlement provider
licensed in the state in which the viator resided at the time of the viatical settlement, or by
the authorized representative of a duly licensed viatical settlement provider.
new text end

new text begin Subd. 2. new text end

new text begin Contract disclosures by provider. new text end

new text begin A viatical settlement provider shall
provide the viator with at least the following disclosures no later than the date the viatical
settlement contract is signed by all parties. The disclosures shall be conspicuously
displayed in the viatical settlement contract or in a separate document signed by the viator
and provide the following information:
new text end

new text begin (1) the affiliation, if any, between the viatical settlement provider and the issuer
of the insurance policy to be viaticated;
new text end

new text begin (2) the document shall include the name, business address, and telephone number of
the viatical settlement provider;
new text end

new text begin (3) any affiliations or contractual arrangements between the viatical settlement
provider and the viatical settlement purchaser;
new text end

new text begin (4) if an insurance policy to be viaticated has been issued as a joint policy or
involves family riders or any coverage of a life other than the insured under the policy to
be viaticated, the viator shall be informed of the possible loss of coverage on the other
lives under the policy and shall be advised to consult with his or her insurance producer or
the insurer issuing the policy for advice on the proposed viatical settlement;
new text end

new text begin (5) state the dollar amount of the current death benefit payable to the viatical
settlement provider under the policy or certificate. If known, the viatical settlement
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 or certificate, and the extent to which the viator's interest in those benefits will be
transferred as a result of the viatical settlement contract; and
new text end

new text begin (6) state whether the funds will be escrowed with an independent third party during
the transfer process, and if so, provide the name, business address, and telephone number
of the independent third-party escrow agent, and the fact that the viator or owner may
inspect or receive copies of the relevant escrow or trust agreements or documents.
new text end

new text begin Subd. 3. new text end

new text begin Contract disclosures by broker. new text end

new text begin A viatical settlement broker shall
provide the viator with at least the following disclosures no later than the date the viatical
settlement contract is signed by all parties. The disclosures shall be conspicuously
displayed in the viatical settlement contract or in a separate document signed by the viator
and provide the following information:
new text end

new text begin (1) the name, business address, and telephone number of the viatical settlement
broker;
new text end

new text begin (2) a full, complete, and accurate description of all offers, counteroffers, acceptances,
and rejections relating to the proposed viatical settlement contract;
new text end

new text begin (3) a written disclosure of any affiliations or contractual arrangements between the
viatical settlement broker and any person making an offer in connection with the proposed
viatical settlement contracts;
new text end

new text begin (4) the amount and method of calculating the broker's compensation, which term
"compensation" includes anything of value paid or given to a viatical settlement broker
for the placement of a policy; and
new text end

new text begin (5) where any portion of the viatical settlement broker's compensation, as defined in
subdivision 2, clause (3), is taken from a proposed viatical settlement offer, the broker
shall disclose the total amount of the viatical settlement offer and the percentage of the
viatical settlement offer comprised by the viatical settlement broker's compensation.
new text end

new text begin Subd. 4. new text end

new text begin Ownership and beneficiary changes. new text end

new text begin If the viatical settlement provider
transfers ownership or changes the beneficiary of the insurance policy, the provider shall
communicate in writing the change in ownership or beneficiary to the insured within
20 days after the change.
new text end

new text begin Subd. 5. new text end

new text begin Contract disclosures by provider or agent. new text end

new text begin A viatical settlement provider
or its viatical settlement investment agent shall provide the viatical settlement purchaser
with at least the following disclosures prior to the date the viatical settlement purchase
agreement is signed by all parties. The disclosures shall be conspicuously displayed in
any viatical purchase contract or in a separate document signed by the viatical settlement
purchaser and viatical settlement provider or viatical settlement investment agent, and
shall make the following disclosure to the viatical settlement purchaser:
new text end

new text begin (1) the purchaser will receive no returns, for example, dividends and interest, until
the insured dies and a death claim payment is made;
new text end

new text begin (2) the actual annual rate of return on a viatical settlement contract is dependent
upon an accurate projection of the insured's life expectancy, and the actual date of the
insured's death. An annual guaranteed rate of return is not determinable;
new text end

new text begin (3) the viaticated life insurance contract should not be considered a liquid purchase
since it is impossible to predict the exact timing of its maturity and the funds are probably
not available until the death of the insured. There is no established secondary market for
resale of these products by the purchaser;
new text end

new text begin (4) the purchaser may lose all benefits or may receive substantially reduced benefits
if the insurer goes out of business during the term of the viatical investment;
new text end

new text begin (5) the purchaser is responsible for payment of the insurance premium or other
costs related to the policy, if required by the terms of the viatical purchase agreement.
These payments may reduce the purchaser's return. If a party other than the purchaser is
responsible for the payment, the name and address of that party shall also be disclosed;
new text end

new text begin (6) the purchaser is responsible for payment of the insurance premiums or other
costs related to the policy if the insured returns to health. Disclose the amount of such
premiums, if applicable;
new text end

new text begin (7) state the name, business address, and telephone number of the independent third
party providing escrow services and the relationship to the broker;
new text end

new text begin (8) the amount of any trust fees or other expenses to be charged to the viatical
settlement purchaser shall be disclosed;
new text end

new text begin (9) state whether the purchaser is entitled to a refund of all or part of his or her
investment under the settlement contract if the policy is later determined to be null and
void;
new text end

new text begin (10) disclose that group policies may contain limitations or caps in the conversion
rights, additional premiums may have to be paid if the policy is converted, name the
party responsible for the payment of the additional premiums and, if a group policy
is terminated and replaced by another group policy, state that there may be no right
to convert the original coverage;
new text end

new text begin (11) disclose the risks associated with policy contestability including, but not limited
to, the risk that the purchaser will have no claim or only a partial claim to death benefits
should the insurer rescind the policy within the contestability period;
new text end

new text begin (12) disclose whether the purchaser will be the owner of the policy in addition to
being the beneficiary, and if the purchaser is the beneficiary only and not also the owner,
the special risks associated with that status, including, but not limited to, the risk that the
beneficiary may be changed or the premium may not be paid;
new text end

new text begin (13) describe the experience and qualifications of the person who determines the
life expectancy of the insured, for example, in-house staff, independent physicians, and
specialty firms that weigh medical and actuarial data; the information this projection is
based on; and the relationship of the projection maker to the viatical settlement provider, if
any; and
new text end

new text begin (14) disclosure to an investor shall include distribution of a brochure describing the
process of investment in viatical settlements. The NAIC's form for the brochure shall be
used unless one is developed by the commissioner.
new text end

new text begin Subd. 6. new text end

new text begin Transfer or sale disclosures by provider or agent. new text end

new text begin A viatical settlement
provider or its viatical settlement investment agent shall provide the viatical settlement
purchaser with at least the following disclosures no later than at the time of the
assignment, transfer, or sale of all or a portion of an insurance policy. The disclosures
shall be contained in a document signed by the viatical settlement purchaser and viatical
settlement provider or viatical settlement investment agent, and shall make the following
disclosures to the viatical settlement purchaser:
new text end

new text begin (1) disclose all the life expectancy certifications obtained by the provider in the
process of determining the price paid to the viator;
new text end

new text begin (2) state whether premium payments or other costs related to the policy have been
escrowed. If escrowed, state the date upon which the escrowed funds will be depleted
and whether the purchaser will be responsible for payment of premiums thereafter and, if
so, the amount of the premiums;
new text end

new text begin (3) state whether premium payments or other costs related to the policy have been
waived. If waived, disclose whether the investor will be responsible for payment of the
premiums if the insurer that wrote the policy terminates the waiver after purchase and
the amount of those premiums;
new text end

new text begin (4) disclose the type of policy offered or sold, for example, whole life, term life,
universal life, or a group policy certificate; any additional benefits contained in the policy;
and the current status of the policy;
new text end

new text begin (5) if the policy is term insurance, disclose the special risks associated with term
insurance including, but not limited to, the purchaser's responsibility for additional
premiums if the viator continues the term policy at the end of the current term;
new text end

new text begin (6) state whether the policy is contestable;
new text end

new text begin (7) state whether the insurer that wrote the policy has any additional rights that could
negatively affect or extinguish the purchaser's rights under the viatical settlement contract,
what these rights are, and under what conditions these rights are activated; and
new text end

new text begin (8) state the name and address of the person responsible for monitoring the insured's
condition. Describe how often the monitoring of the insured's condition is done, how the
date of death is determined, and how and when this information will be transmitted to
the purchaser.
new text end

new text begin Subd. 7. new text end

new text begin Agreement voidable. new text end

new text begin The viatical settlement purchase agreement is
voidable by the purchaser at any time within three days after the disclosures mandated by
subdivisions 4 and 5 are received by the purchaser.
new text end

Sec. 8.

new text begin [60A.9578] DISCLOSURE TO INSURER.
new text end

new text begin Prior to the initiation of a plan, transaction, or series of transactions, a viatical
settlement broker or viatical settlement provider shall fully disclose to an insurer a plan,
transaction, or series of transactions, to which the viatical settlement broker or viatical
settlement provider is a party, to originate, renew, continue, or finance a life insurance
policy with the insurer for the purpose of engaging in the business of viatical settlements
at anytime prior to, or during the first five years after, issuance of the policy.
new text end

Sec. 9.

new text begin [60A.9579] GENERAL RULES.
new text end

new text begin Subdivision 1. new text end

new text begin Provider requirements. new text end

new text begin (a) A viatical settlement provider entering
into a viatical settlement contract shall first obtain:
new text end

new text begin (1) if the viator is the insured, a written statement from a licensed attending
physician that the viator is of sound mind and under no constraint or undue influence to
enter into a viatical settlement contract; and
new text end

new text begin (2) a document in which the insured consents to the release of his or her medical
records to a licensed viatical settlement provider, viatical settlement broker, and the
insurance company that issued the life insurance policy covering the life of the insured.
new text end

new text begin (b) Within 20 days after a viator executes documents necessary to transfer any rights
under an insurance policy or within 20 days of entering any agreement, option, promise, or
any other form of understanding, expressed or implied, to viaticate the policy, the viatical
settlement provider shall give written notice to the insurer that issued that insurance policy
that the policy has or will become a viaticated policy. The notice shall be accompanied by
the documents required by paragraph (c).
new text end

new text begin (c) The viatical provider shall deliver a copy of the medical release required under
paragraph (a), clause (2), a copy of the viator's application for the viatical settlement
contract, the notice required under paragraph (b), and a request for verification of coverage
to the insurer that issued the life insurance policy that is the subject of the viatical
transaction. The NAIC's form for verification of coverage shall be used unless another
form is developed or approved by the commissioner.
new text end

new text begin (d) The insurer shall respond to a request for verification of coverage submitted on
an approved form by a viatical settlement provider or viatical settlement broker within 30
calendar days of 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
at this time regarding the validity of the insurance contract or possible fraud. The insurer
shall accept a request for verification of coverage made on an NAIC form or any other
form approved by the commissioner. The insurer shall accept an original or facsimile or
electronic copy of such request and any accompanying authorization signed by the viator.
Failure by the insurer to meet its obligations under this subdivision shall be a violation of
sections 60A.958, subdivision 3, and 60A.9585.
new text end

new text begin (e) Prior to or at the time of execution of the viatical settlement contract, the viatical
settlement provider shall obtain a witnessed document in which the viator consents
to the viatical settlement contract, represents that the viator has a full and complete
understanding of the viatical settlement contract, that he or she has a full and complete
understanding of the benefits of the life insurance policy, acknowledges that he or she is
entering into the viatical settlement contract freely and voluntarily and, for persons with
a terminal or chronic illness or condition, acknowledges that the insured has a terminal
or chronic illness and that the terminal or chronic illness or condition was diagnosed
after the life insurance policy was issued.
new text end

new text begin (f) If a viatical settlement broker performs any of these activities required of the
viatical settlement provider, the provider is deemed to have fulfilled the requirements
of this section.
new text end

new text begin Subd. 2. new text end

new text begin Confidentiality of personal information. new text end

new text begin All personal information
solicited or obtained by any licensee shall be subject to sections 72A.49 to 72A.505.
new text end

new text begin Subd. 3. new text end

new text begin General right of rescission. new text end

new text begin All viatical settlement contracts entered into
in this state shall provide the viator with an absolute right to rescind the contract before
the earlier of 60 calendar days after the date upon which the viatical settlement contract is
executed by all parties or 30 calendar days after the viatical settlement proceeds have been
sent to the viator as provided in subdivision 6. Rescission by the viator may be conditioned
upon the viator both giving notice and repaying to the viatical settlement provider within
the rescission period all proceeds of the settlement and any premiums, loans, and loan
interest paid by or on behalf of the viatical settlement provider in connection with or
as a consequence of the viatical settlement. If the insured dies during the rescission
period, the viatical settlement contract shall be deemed to have been rescinded, subject
to repayment to the viatical settlement provider or purchaser of all viatical settlement
proceeds, and any premiums, loans, and loan interest that have been paid by the viatical
settlement provider or purchaser, which shall be paid within 60 calendar days of the death
of the insured. In the event of any rescission, if the viatical settlement provider has paid
commissions or other compensation to a viatical settlement broker in connection with the
rescinded transaction, the viatical settlement broker shall refund all such commissions
and compensation to the viatical settlement provider within five business days following
receipt of written demand from the viatical settlement provider, which demand shall be
accompanied by either the viator's notice of rescission if rescinded at the election of the
viator, or notice of the death of the insured if rescinded by reason of the death of the
insured within the applicable rescission period.
new text end

new text begin Subd. 4. new text end

new text begin Right to rescind after mandated disclosures. new text end

new text begin The purchaser shall have
the right to rescind a viatical settlement contract within three days after the disclosures
mandated by section 60A.9577, subdivisions 4 and 5, are received by the purchaser.
new text end

new text begin Subd. 5. new text end

new text begin Payment of settlement proceeds. new text end

new text begin The viatical settlement provider shall
instruct the viator to send the executed documents required to effect the change in
ownership, assignment, or change in beneficiary directly to the independent escrow agent.
Within three business days after the date the escrow agent receives the document, or from
the date the viatical settlement provider receives the documents, if the viator erroneously
provides the documents directly to the provider, the provider shall pay or transfer the
proceeds of the viatical settlement into an escrow or trust account maintained in a state- or
federally chartered financial institution whose deposits are insured by the Federal Deposit
Insurance Corporation (FDIC). Upon payment of the settlement proceeds into the escrow
account, the escrow agent shall deliver the original change in ownership, assignment, or
change in beneficiary forms to the viatical settlement provider or related provider trust
or other designated representative of the viatical settlement provider. Upon the escrow
agent's receipt of the acknowledgment of the properly completed transfer of ownership,
assignment, or designation of beneficiary from the insurance company, the escrow agent
shall pay the settlement proceeds to the viator.
new text end

new text begin Subd. 6. new text end

new text begin Tendering consideration. new text end

new text begin Failure to tender consideration to the viator
for the viatical settlement contract within the time set forth in the disclosure pursuant
to section 60A.9577, subdivision 1, clause (7), renders the viatical settlement contract
voidable by the viator for lack of consideration until the time consideration is tendered to
and accepted by the viator. Funds shall be deemed sent by a viatical settlement provider
to a viator as of the date that the escrow agent either releases funds for wire transfer
to the viator or places a check for delivery to the viator by United States mail or other
nationally recognized delivery service.
new text end

new text begin Subd. 7. new text end

new text begin Health status contacts. new text end

new text begin Contacts with the insured for the purpose of
determining the health status of the insured by the viatical settlement provider or viatical
settlement broker after the viatical settlement has occurred shall only be made by the
viatical settlement provider or broker licensed in this state or its authorized representatives
and shall be limited to once every three months for insureds with a life expectancy of more
than one year, and to no more than once per month for insureds with a life expectancy of
one year or less. The provider or broker shall explain the procedure for these contacts
at the time the viatical settlement contract is entered into. The limitations set forth
in this subdivision shall not apply to any contacts with an insured for reasons other
than determining the insured's health status. Viatical settlement providers and viatical
settlement brokers shall be responsible for the actions of their authorized representatives.
new text end

Sec. 10.

new text begin [60A.958] PROHIBITED PRACTICES.
new text end

new text begin Subdivision 1. new text end

new text begin Viator's failure to certify conditions. new text end

new text begin It is a violation of sections
60A.957 to 60A.9585 for any person to enter into a viatical settlement contract at any time
prior to the application or issuance of a policy which is the subject of a viatical settlement
contract or within a five-year period commencing with the date of issuance of the
insurance policy or certificate unless the viator certifies to the viatical settlement provider
that one or more of the following conditions have been met within the five-year period:
new text end

new text begin (1) the policy was issued upon the viator'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 a group policy shall be calculated without regard to any change in insurance carriers,
provided the coverage has been continuous and under the same group sponsorship;
new text end

new text begin (2) the viator submits independent evidence to the viatical settlement provider that
one or more of the following conditions have been met within the five-year period:
new text end

new text begin (i) the viator or insured is terminally or chronically ill;
new text end

new text begin (ii) the viator's spouse dies;
new text end

new text begin (iii) the viator divorces the viator's spouse;
new text end

new text begin (iv) the viator retires from full-time employment;
new text end

new text begin (v) the viator becomes physically or mentally disabled and a physician determines
that the disability prevents the viator from maintaining full-time employment; or
new text end

new text begin (vi) a final order, judgment, or decree is entered by a court of competent jurisdiction,
on the application of a creditor of the viator, adjudicating the viator bankrupt or insolvent,
or approving a petition seeking reorganization of the viator or appointing a receiver,
trustee, or liquidator to all or a substantial part of the viator's assets; or
new text end

new text begin (3) the viator enters into a viatical settlement contract more than two years after the
date of issuance of a policy and, with respect to the policy, at all times prior to the date that
is two years after policy issuance, the following conditions are met:
new text end

new text begin (i) policy premiums have been funded exclusively with unencumbered assets,
including an interest in the life insurance policy being financed only to the extent of its net
cash surrender value, provided by, or fully recourse liability incurred by, the insured or a
person described in section 60A.957, subdivision 16, paragraph (c), clause (4);
new text end

new text begin (ii) there is no agreement or understanding with any other person to guarantee any
such liability or to purchase, or stand ready to purchase, the policy, including through an
assumption or forgiveness of the loan; and
new text end

new text begin (iii) neither the insured nor the policy has been evaluated for settlement in
connection with the issuance of the policy.
new text end

new text begin Subd. 2. new text end

new text begin Document submissions. new text end

new text begin Copies of the independent evidence described
in subdivision 1, clause (2), and documents required by section 60A.9579 shall be
submitted to the insurer when the viatical settlement provider or other party entering into a
viatical settlement contract with a viator submits a request to the insurer for verification
of coverage. The copies shall be accompanied by a letter of attestation from the viatical
settlement provider that the copies are true and correct copies of the documents received
by the viatical settlement provider.
new text end

new text begin Subd. 3. new text end

new text begin Certification submission. new text end

new text begin If the viatical settlement provider submits to
the insurer a copy of the owner or insured's certification described in and the independent
evidence required by subdivision 1, clause (2), when the provider submits a request to the
insurer to effect the transfer of the policy or certificate to the viatical settlement provider,
the copy shall be deemed to conclusively establish that the viatical settlement contract
satisfies the requirements of this section and the insurer shall timely respond to the request.
new text end

new text begin Subd. 4. new text end

new text begin Commissioner's form approval required. new text end

new text begin 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 viatical settlement contract, require that the viator, insured, viatical
settlement provider, or viatical settlement broker sign any forms, disclosures, consent,
or waiver form that has not been expressly approved by the commissioner for use in
connection with viatical settlement contracts in this state.
new text end

new text begin Subd. 5. new text end

new text begin Change of ownership or beneficiary. new text end

new text begin 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 written acknowledgment confirming that
the change has been effected or specifying the reasons why the requested change cannot
be processed. The insurer shall not unreasonably delay effecting change of ownership or
beneficiary and shall not otherwise seek to interfere with any viatical settlement contract
lawfully entered into in this state.
new text end

Sec. 11.

new text begin [60A.9581] PROHIBITED PRACTICES AND CONFLICTS OF
INTEREST.
new text end

new text begin Subdivision 1. new text end

new text begin Solicitations and sales to controlled person. new text end

new text begin With respect to any
viatical settlement contract or insurance policy, no viatical settlement broker knowingly
shall solicit an offer from, effectuate a viatical settlement with, or make a sale to any
viatical settlement provider, viatical settlement purchaser, viatical settlement investment
agent, financing entity, or related provider trust that is controlling, controlled by, or under
common control with such viatical settlement broker.
new text end

new text begin Subd. 2. new text end

new text begin Payment to controlled broker. new text end

new text begin With respect to any viatical settlement
contract or insurance policy, no viatical settlement provider knowingly may enter into a
viatical settlement contract with a viator, if, in connection with such viatical settlement
contract, anything of value will be paid to a viatical settlement broker that is controlling,
controlled by, or under common control with such viatical settlement provider or the
viatical settlement purchaser, viatical settlement investment agent, financing entity, or
related provider trust that is involved in such viatical settlement contract.
new text end

new text begin Subd. 3. new text end

new text begin Fraudulent viatical settlement act. new text end

new text begin A violation of subdivisions 1 and 2
shall be deemed a fraudulent viatical settlement act.
new text end

new text begin Subd. 4. new text end

new text begin Policy settlement. new text end

new text begin No person shall issue, solicit, market, or otherwise
promote the purchase of an insurance policy for the purpose of or with an emphasis on
settling the policy.
new text end

new text begin Subd. 5. new text end

new text begin Premium finance agreements. new text end

new text begin No person shall enter into a premium
finance agreement with any other 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 viatical 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 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 overpayment.
new text end

new text begin Subd. 6. new text end

new text begin Insurable interest. new text end

new text begin In the solicitation, application, or issuance of a life
insurance policy, no person shall employ any device, scheme, or artifice in violation
of insurable interest laws.
new text end

new text begin Subd. 7. new text end

new text begin Advertising. new text end

new text begin (a) No viatical settlement provider shall enter into a viatical
settlement contract unless the viatical settlement promotional, advertising, and marketing
materials, as may be prescribed by rule, have been filed with the commissioner. In no
event shall 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 a viator to reasonably believe that the insurance is free for any period of time shall
be considered a violation of sections 60A.957 to 60A.9585.
new text end

new text begin (b) No life insurance producer, insurance company, viatical settlement broker,
viatical settlement provider, or viatical settlement investment agent shall 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.
new text end

Sec. 12.

new text begin [60A.9582] ADVERTISING FOR VIATICAL SETTLEMENTS AND
VIATICAL SETTLEMENTS PURCHASE AGREEMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Application. new text end

new text begin This section applies to any advertising of viatical
settlement contracts, viatical purchase agreements, or related products or services intended
for dissemination in this state, including Internet advertising viewed by persons located in
this state. Where disclosure requirements are established pursuant to federal regulation,
this section shall be interpreted so as to minimize or eliminate conflict with federal
regulation wherever possible.
new text end

new text begin Subd. 2. new text end

new text begin System of control. new text end

new text begin Every viatical settlement licensee shall establish and at
all times maintain a system of control over the content, form, and method of dissemination
of all advertisements of its contracts, products, and services. All advertisements,
regardless of by whom written, created, designed, or presented, shall be the responsibility
of the viatical settlement licensees, as well as the individual who created or presented the
advertisement. A system of control shall include regular routine notification, at least once
a year, to agents and others authorized by the viatical settlement licensee who disseminate
advertisements of the requirements and procedures for approval prior to the use of any
advertisements not furnished by the viatical settlement licensee.
new text end

new text begin Subd. 3. new text end

new text begin Form and content. new text end

new text begin Advertisements shall be truthful and not misleading in
fact or by implication. The form and content of an advertisement of a viatical settlement
contract or viatical settlement purchase agreement, product, or service shall be sufficiently
complete and clear so as to avoid deception and it shall not have the capacity or tendency
to mislead or deceive. Whether an advertisement has the capacity or tendency to mislead
or deceive shall be determined by the commissioner 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.
new text end

new text begin Subd. 4. new text end

new text begin False and misleading advertisements. new text end

new text begin Certain viatical settlement
advertisements are deemed false and misleading on their face and are prohibited. False
and misleading viatical settlement advertisements include, but are not limited to, the
following representations:
new text end

new text begin (1) "guaranteed," "fully secured," "100 percent secured," "fully insured," "secure,"
"safe," "backed by rated insurance companies," "backed by federal law," "backed by state
law," or "state guaranty funds," or similar representations;
new text end

new text begin (2) "no risk," "minimal risk," "low risk," "no speculation," "no fluctuation," or
similar representations;
new text end

new text begin (3) "qualified or approved for individual retirement accounts (IRAs), Roth IRAs,
401(k) plans, simplified employee pensions (SEP), 403(b), Keogh plans, TSA, other
retirement account rollovers," "tax deferred," or similar representations;
new text end

new text begin (4) utilization of the word "guaranteed" to describe the fixed return, annual return,
principal, earnings, profits, investment, or similar representations;
new text end

new text begin (5) "no sales charges or fees" or similar representations;
new text end

new text begin (6) "high yield," "superior return," "excellent return," "high return," "quick profit,"
or similar representations; and
new text end

new text begin (7) purported favorable representations or testimonials about the benefits of viatical
settlement contracts or viatical settlement purchase agreements as an investment, taken
out of context from newspapers, trade papers, journals, radio and television programs, and
all other forms of print and electronic media.
new text end

new text begin Subd. 5. new text end

new text begin Disclosures regulated. new text end

new text begin (a) The information required to be disclosed under
this section shall not be minimized, rendered obscure, or presented in ambiguous fashion
or intermingled with the text of the advertisement so as to be confusing or misleading.
new text end

new text begin (b) An advertisement shall not 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 viators, purchasers, or prospective purchasers as to
the nature or extent of any benefit, loss covered, premium payable, or state or federal tax
consequence. The fact that the viatical settlement contract or viatical settlement purchase
agreement offered is made available for inspection prior to consummation of the sale, or
an offer is made to refund the payment if the viator is not satisfied or that the viatical
settlement contract or viatical settlement purchase agreement includes a "free look" period
that satisfies or exceeds legal requirements, does not remedy misleading statements.
new text end

new text begin (c) An advertisement shall not use the name or title of a life insurance company or a
life insurance policy unless the advertisement has been approved by the insurer.
new text end

new text begin (d) An advertisement shall not represent that premium payments will not be required
to be paid on the life insurance policy that is the subject of a viatical settlement contract
or viatical settlement purchase agreement in order to maintain that policy, unless that
is the fact.
new text end

new text begin (e) An advertisement shall not state or imply that interest charged on an accelerated
death benefit or a policy loan is unfair, inequitable, or in any manner an incorrect or
improper practice.
new text end

new text begin (f) The words "free," "no cost," "without cost," "no additional cost," "at no extra
cost," or words of similar import shall not be used with respect to any benefit or service
unless true. An advertisement may specify the charge for a benefit or a service or may
state that a charge is included in the payment or use other appropriate language.
new text end

new text begin (g) Testimonials, appraisals, or analysis used in advertisements must be genuine;
represent the current opinion of the author; be applicable to the viatical settlement contract
or viatical settlement purchase agreement product or service advertised, if any; and be
accurately reproduced with sufficient completeness to avoid misleading or deceiving
prospective viators or purchasers as to the nature or scope of the testimonials, appraisal,
analysis, or endorsement. In using testimonials, appraisals, or analysis, a licensee under
sections 60A.957 to 60A.9585 makes as its own all the statements contained therein, and
the statements are subject to all the provisions of this section.
new text end

new text begin (h) If the individual making a testimonial, appraisal, analysis, or endorsement has
a financial interest in the party making use of the testimonial, appraisal, analysis, or
endorsement, either directly or through a related entity as a stockholder, director, officer,
employee, or otherwise, or receives any benefit directly or indirectly other than required
union-scale wages, that fact shall be prominently disclosed in the advertisement.
new text end

new text begin (i) An advertisement shall not state or imply that a viatical settlement contract or
viatical settlement purchase agreement, benefit, or service has been approved or endorsed
by a group of individuals, society, association, or other organization unless that is the
fact and unless any relationship between an organization and the viatical settlement
licensee is disclosed. If the entity making the endorsement or testimonial is owned,
controlled, or managed by the viatical settlement licensee, or receives any payment or
other consideration from the viatical settlement licensee for making an endorsement or
testimonial, that fact shall be disclosed in the advertisement.
new text end

new text begin (j) When an endorsement refers to benefits received under a viatical settlement
contract or viatical settlement purchase agreement, all pertinent information shall be
retained for a period of five years after its use.
new text end

new text begin Subd. 6. new text end

new text begin Statistics. new text end

new text begin An advertisement shall not contain statistical information unless
it accurately reflects recent and relevant facts. The source of all statistics used in an
advertisement shall be identified.
new text end

new text begin Subd. 7. new text end

new text begin Disparaging advertisements. new text end

new text begin An advertisement shall not disparage
insurers, viatical settlement providers, viatical settlement brokers, viatical settlement
investment agents, insurance producers, policies, services, or methods of marketing.
new text end

new text begin Subd. 8. new text end

new text begin Licensee's name. new text end

new text begin The name of the viatical settlement licensee shall be
clearly identified in all advertisements about the licensee or its viatical settlement contract
or viatical settlement purchase agreements, products, or services, and if any specific
viatical settlement contract or viatical settlement purchase agreement is advertised, the
viatical settlement contract or viatical settlement purchase agreement shall be identified
either by form number or some other appropriate description. If an application is part
of the advertisement, the name of the viatical settlement provider shall be shown on
the application.
new text end

new text begin Subd. 9. new text end

new text begin Licensee disclosure. new text end

new text begin An advertisement shall not use a trade name, group
designation, name of the parent company of a viatical settlement licensee, name of a
particular division of the viatical settlement licensee, service mark, slogan, symbol, or
other device or reference without disclosing the name of the viatical settlement licensee, if
the advertisement would have the capacity or tendency to mislead or deceive as to the
true identity of the viatical settlement licensee, or to create the impression that a company
other than the viatical settlement licensee would have any responsibility for the financial
obligation under a viatical settlement contract or viatical settlement purchase agreement.
new text end

new text begin Subd. 10. new text end

new text begin Government sponsorship; misleading advertisements. new text end

new text begin An
advertisement shall not use any combination of words, symbols, or physical materials that
by 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 or otherwise appear to be of such a nature that they tend to mislead prospective
viators or purchasers into believing that the solicitation is in some manner connected with
a government program or agency.
new text end

new text begin Subd. 11. new text end

new text begin State licensure. new text end

new text begin An advertisement may state that a viatical settlement
licensee is licensed in the state where the advertisement appears, provided it does not
exaggerate that fact or suggest or imply that a competing viatical settlement licensee may
not be so licensed. The advertisement may ask the audience to consult the licensee's
Web site or contact the department of commerce to find out if the state requires licensing
and, if so, whether the viatical settlement provider, viatical settlement broker, or viatical
settlement investment agent is licensed.
new text end

new text begin Subd. 12. new text end

new text begin Government entity endorsement. new text end

new text begin An advertisement shall not create
the impression that the viatical settlement provider, its financial condition or status, the
payment of its claims, or the merits, desirability, or advisability of its viatical settlement
contracts or viatical settlement purchase agreement forms are recommended or endorsed
by any government entity.
new text end

new text begin Subd. 13. new text end

new text begin Name. new text end

new text begin The name of the actual licensee shall be stated in all of its
advertisements. An advertisement shall not use a trade name, any group designation, name
of any affiliate or controlling entity of the licensee, service mark, slogan, symbol, or other
device in a manner that would have the capacity or tendency to mislead or deceive as to
the true identity of the actual licensee or create the false impression that an affiliate or
controlling entity would have any responsibility for the financial obligation of the licensee.
new text end

new text begin Subd. 14. new text end

new text begin Government approval. new text end

new text begin An advertisement shall not directly or indirectly
create the impression that any division or agency of the state or of the United States
government endorses, approves, or favors:
new text end

new text begin (1) any viatical settlement licensee or its business practices or methods of operation;
new text end

new text begin (2) the merits, desirability, or advisability of any viatical settlement contract or
viatical settlement purchase agreement;
new text end

new text begin (3) any viatical settlement contract or viatical settlement purchase agreement; or
new text end

new text begin (4) any life insurance policy or life insurance company.
new text end

new text begin Subd. 15. new text end

new text begin Time frame disclosure. new text end

new text begin If the advertiser emphasizes the speed with
which the viatication will occur, the advertising must disclose the average time frame from
completed application to the date of offer and from acceptance of the offer to receipt of
the funds by the viator.
new text end

new text begin Subd. 16. new text end

new text begin Average purchase price. new text end

new text begin If the advertising emphasizes the dollar amounts
available to viators, the advertising shall disclose the average purchase price as a percent
of face value obtained by viators contracting with the licensee during the past six months.
new text end

Sec. 13.

new text begin [60A.9583] FRAUD PREVENTION AND CONTROL.
new text end

new text begin Subdivision 1. new text end

new text begin Fraudulent viatical settlement acts, interference, and
participation of convicted felons prohibited.
new text end

new text begin (a) A person shall not commit a fraudulent
viatical settlement act.
new text end

new text begin (b) A person shall not knowingly or intentionally interfere with the enforcement of
the provisions of sections 60A.957 to 60A.9585 or investigations of suspected or actual
violations of sections 60A.957 to 60A.9585.
new text end

new text begin (c) A person in the business of viatical settlements shall not knowingly or
intentionally permit any person convicted of a felony involving dishonesty or breach of
trust to participate in the business of viatical settlements.
new text end

new text begin Subd. 2. new text end

new text begin Fraud warning required. new text end

new text begin (a) Viatical settlements contracts and purchase
agreement forms and applications for viatical 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 or
viatical settlement contract or a viatical settlement purchase agreement is guilty of a crime
and may be subject to fines and confinement in prison."
new text end

new text begin (b) The lack of a statement as required in paragraph (a) does not constitute a defense
in any prosecution for a fraudulent viatical settlement act.
new text end

new text begin Subd. 3. new text end

new text begin Mandatory reporting of fraudulent viatical settlement acts. new text end

new text begin (a) Any
person engaged in the business of viatical settlements having knowledge or a reasonable
suspicion that a fraudulent viatical settlement act is being, will be, or has been committed
shall provide to the commissioner such information as required by, and in a manner
prescribed by, the commissioner.
new text end

new text begin (b) Any other person having knowledge or a reasonable belief that a fraudulent
viatical settlement act 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.
new text end

new text begin Subd. 4. new text end

new text begin Immunity from liability. new text end

new text begin (a) 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 fraudulent viatical settlement acts or suspected or completed
fraudulent insurance acts, if the information is provided to or received from:
new text end

new text begin (1) the commissioner or the commissioner's employees, agents, or representatives;
new text end

new text begin (2) federal, state, or local law enforcement or regulatory officials or their employees,
agents, or representatives;
new text end

new text begin (3) a person involved in the prevention and detection of fraudulent viatical settlement
acts or that person's agents, employees, or representatives;
new text end

new text begin (4) the National Association of Insurance Commissioners (NAIC), National
Association of Securities Dealers (NASD), the North American Securities Administrators
Association (NASAA), or their employees, agents, or representatives, or other regulatory
body overseeing life insurance, viatical settlements, securities, or investment fraud; or
new text end

new text begin (5) the life insurer that issued the life insurance policy covering the life of the insured.
new text end

new text begin (b) Paragraph (a) shall not apply to statements made with actual malice. In an action
brought against a person for filing a report or furnishing other information concerning
a fraudulent viatical settlement act, the party bringing the action shall plead specifically
any allegation that paragraph (a) does not apply because the person filing the report or
furnishing the information did so with actual malice.
new text end

new text begin (c) A person furnishing information as identified as paragraph (a) shall be entitled to
an award of attorney fees and costs if the person is the prevailing party in a civil cause
of action for libel, slander, or any other relevant tort arising out of activities in carrying
out the provisions of sections 60A.957 to 60A.9585 and the party bringing the action
was not substantially justified in doing so. For purposes of this section, a proceeding is
"substantially justified" if it had a reasonable basis in law or fact at the time that it was
initiated. However, such an award does not apply to any person furnishing information
concerning the person's own fraudulent viatical settlement acts.
new text end

new text begin (d) This section does not abrogate or modify common law or statutory privileges or
immunities enjoyed by a person described in paragraph (a).
new text end

new text begin Subd. 5. new text end

new text begin Confidentiality. new text end

new text begin (a) The documents and evidence provided pursuant to
subdivision 4 or obtained by the commissioner in an investigation of suspected or actual
fraudulent viatical settlement acts shall be privileged and confidential and shall not be a
public record and shall not be subject to discovery or subpoena in a civil or criminal action.
new text end

new text begin (b) Paragraph (a) does not prohibit release by the commissioner of documents and
evidence obtained in an investigation of suspected or actual fraudulent viatical settlement
acts:
new text end

new text begin (1) in administrative or judicial proceedings to enforce laws administered by the
commissioner;
new text end

new text begin (2) to federal, state, or local law enforcement or regulatory agencies, to an
organization established for the purpose of detecting and preventing fraudulent viatical
settlement acts or to the NAIC; or
new text end

new text begin (3) at the discretion of the commissioner, to a person in the business of viatical
settlements that is aggrieved by a fraudulent viatical settlement act.
new text end

new text begin (c) Release of documents and evidence under paragraph (b) does not abrogate or
modify the privilege granted in paragraph (a).
new text end

new text begin Subd. 6. new text end

new text begin Other law enforcement or regulatory authority. new text end

new text begin Sections 60A.957 to
60A.9585 shall not:
new text end

new text begin (1) preempt the authority or relieve the duty of other law enforcement or regulatory
agencies to investigate, examine, and prosecute suspected violations of law;
new text end

new text begin (2) prevent or prohibit a person from disclosing voluntarily information concerning
viatical settlement fraud to a law enforcement or regulatory agency other than the
insurance department; or
new text end

new text begin (3) limit the powers granted elsewhere by the laws of this state to the commissioner
or an insurance fraud unit to investigate and examine possible violations of law and to
take appropriate action against wrongdoers.
new text end

new text begin Subd. 7. new text end

new text begin Viatical settlement antifraud initiatives. new text end

new text begin (a) Viatical settlement providers
and viatical settlement brokers shall have in place antifraud initiatives reasonably
calculated to detect, prosecute, and prevent fraudulent viatical settlement acts. At the
discretion of the commissioner, the commissioner may order, or a licensee may request
and the commissioner may grant, such modifications of the following required initiatives
as necessary to ensure an effective antifraud program. The modifications may be more or
less restrictive than the required initiatives so long as the modifications may reasonably be
expected to accomplish the purpose of this section.
new text end

new text begin (b) Antifraud initiatives shall include:
new text end

new text begin (1) fraud investigators, who may be viatical settlement provider or viatical settlement
broker employees or independent contractors; and
new text end

new text begin (2) an antifraud plan, which shall be submitted to the commissioner. The antifraud
plan shall include, but not be limited to:
new text end

new text begin (i) a description of the procedures for detecting and investigating possible fraudulent
viatical settlement acts and procedures for resolving material inconsistencies between
medical records and insurance applications;
new text end

new text begin (ii) a description of the procedures for reporting possible fraudulent viatical
settlement acts to the commissioner;
new text end

new text begin (iii) a description of the plan for antifraud education and training of underwriters
and other personnel; and
new text end

new text begin (iv) a description or chart outlining the organizational arrangement of the antifraud
personnel who are responsible for the investigation and reporting of possible fraudulent
viatical settlement acts and investigating unresolved material inconsistencies between
medical records and insurance applications.
new text end

new text begin (c) Antifraud plans submitted to the commissioner shall be privileged and
confidential and shall not be a public record and shall not be subject to discovery or
subpoena in a civil or criminal action.
new text end

Sec. 14.

new text begin [60A.9584] CRIMINAL PENALTIES.
new text end

new text begin Subdivision 1. new text end

new text begin Sentence. new text end

new text begin A person convicted of a violation of sections 60A.957
to 60A.9585 by a court of competent jurisdiction may be sentenced as follows based on
the greater of (i) the value of property, services, or other benefit wrongfully obtained
or attempted to obtain, or (ii) the aggregate economic loss suffered by any person as
a result of the violation:
new text end

new text begin (1) to imprisonment for not more than 20 years or to payment of a fine of not more
than $100,000, or both, if the value of the viatical settlement contract is more than $35,000;
new text end

new text begin (2) to imprisonment for not more than ten years or to payment of a fine of not more
than $20,000, or both, if the value of the viatical settlement contract is more than $2,500
but not more than $35,000;
new text end

new text begin (3) to imprisonment for not more than five years or to payment of a fine of not
more than $10,000, or both, if the value of the viatical settlement contract is more than
$500 but not more than $2,500; or
new text end

new text begin (4) to imprisonment for not more than one year or to payment of a fine of not more
than $3,000, or both, if the value of the viatical settlement contract is $500 or less.
new text end

new text begin In any prosecution under this section under clauses (1), (2), (3), and (4), the value of
the viatical settlement contracts within any six-month period may be aggregated and the
defendant charged accordingly in applying the provisions of this section; provided that
when two or more offenses are committed by the same person in two or more counties, the
accused may be prosecuted in any county in which one of the offenses was committed
for all of the offenses aggregated under this section. The applicable statute of limitations
provision under chapter 541 shall not begin to run until the insurance company or
law enforcement agency is aware of the fraud, but in no event may the prosecution be
commenced later than seven years after the act has occurred. A person convicted of a
fraudulent viatical settlement act must be ordered to pay restitution to persons aggrieved
by the fraudulent viatical settlement act. Restitution must be ordered in addition to a
fine or imprisonment but not in lieu of a fine or imprisonment. A person convicted of a
violation of sections 60A.957 to 60A.9585 shall be ordered to pay restitution to persons
aggrieved by the violation of sections 60A.957 to 60A.9585. Restitution shall be ordered
in addition to a fine or imprisonment, but not in lieu of a fine or imprisonment.
new text end

new text begin Subd. 2. new text end

new text begin Nonapplication. new text end

new text begin Except for a fraudulent viatical settlement act committed
by a viator, the penalties of this section shall not apply to a viator.
new text end

Sec. 15.

new text begin [60A.9585] UNFAIR TRADE PRACTICES.
new text end

new text begin A violation of sections 60A.957 to 60A.9585, including the commission of a
fraudulent viatical settlement act, shall be considered an unfair trade practice under
section 72A.20.
new text end

Sec. 16.

Minnesota Statutes 2006, section 60A.964, subdivision 1, is amended to read:


Subdivision 1.

Amount.

The licensing fee for a viatical settlement providernew text begin, broker,
or investment agent
new text end license is $750 for initial licensure and $250 for each annual renewal.
The fees must be limited to the cost of license administration and enforcement and must
be deposited in the state treasury, credited to a special account, and appropriated to the
commissioner.

Sec. 17. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2006, sections 13.716, subdivision 7; 60A.961; 60A.962;
60A.963; 60A.965; 60A.966; 60A.967; 60A.968; 60A.969; 60A.970; 60A.971; 60A.972;
60A.973; and 60A.974,
new text end new text begin are repealed.
new text end

Sec. 18. new text beginEFFECTIVE DATE; APPLICATION.
new text end

new text begin This act is effective August 1, 2008. A viatical settlement provider, viatical
settlement broker, or viatical settlement investment agent transacting business in this
state may continue to do so pending approval or disapproval of the provider's, broker's,
or investment agent's application for a license as long as the application is filed with the
commissioner by ..........
new text end