By Jim Connolly
Maine Insurance Superintendent Mila Kofman says that her state was one of the first to put life settlement legislation in place, a good law that only needs technical adjustments. In an interview with Life Settlement Review, Kofman explains why LD 1523 was introduced.
“Maine has had a framework for life settlements for a while. We were one of the first states to have one,” Kofman notes. However, at the end of the last session we were asked to give a report to the legislature about consumer protections, she continues. The report made the legislature aware of technical problems that were too late to fix in that session but which can be fixed in this session, she says.
Maine’s legislature meets in two year cycles. Last year was a long session that ended in June and the current session runs from Jan. 1 through mid-April, Kofman adds.
Among the issues that surfaced, she says was when it made sense for a life insurer to send out a pamphlet when an event concerning a policy change is triggered. Under the current law, she says, when an event such as the lapse of a policy or the failure to pay a premium occurs, the company is required to send out a notice detailing options available to the policyholder. Among the options detailed is the right to settle a policy.
For very small policies such as those with face amounts of $10,000 or lower, there is not likely to be a market to settle those contracts, according to Kofman. So, in such cases, it would not make sense to send out a notice about settlements for policies that are that small, she continues.
The department has suggested a threshold number of $100,000, but said that it is still a point that is being discussed, Kofman says.
She says that the Maine bureau hopes to make a pamphlet available by the end of February. Currently, it is waiting for Washington state to finish its pamphlet because it is not necessary to create a new document when that work is already being done, Kofman explains. There is an administrative savings to the Bureau by not duplicating work being completed by another state insurance department, according to Kofman. If work on the pamphlet is not completed in the next few weeks, Maine will write its own she says.
LD 1523 will also correct “confusion” in the last sentence of the current law, Kofman continues. “It is unclear and creates ambiguity,” she adds. The change would amend the definition of stranger-originated life insurance.
Kofman says that the Bureau’s position will be detailed in testimony during the first week of February.
To read the proposed amendments, go to:
This article first appeared at www.lifesettlementreview.com.