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304.15-700 Licensing requirements governing life settlement providers and
brokers -- Contracts -- Commissioner's approval required -- Forms.
(1)
(2)
No person may act as a life settlement provider without first having obtained a
license as a life settlement provider from the commissioner.
Except as provided in paragraph (b) or (c) of this subsection, no person may
broker, solicit, or negotiate life settlement contracts between an owner and one
(1) or more life settlement providers or otherwise act on behalf of an owner
without first having obtained a license as a life settlement broker from the
commissioner as follows:
(a) All applicants for a life settlement broker license shall attend the required
life broker training and pass a life broker examination designated by the
commissioner through administrative regulation;
(b) A person licensed as a resident or nonresident insurance agent with a life
line of authority, as set forth in KRS 304.9-030(2)(a), shall be deemed to
meet the licensing requirements of a life settlement broker and shall be
permitted to operate as a life settlement broker without obtaining a license
as a life settlement broker as set forth in this subtitle if:
1.
That person has been licensed as a resident insurance agent with a
life line of authority in his home state for at least one (1) year;
2.
Not later than thirty (30) days from the first day of operating as a life
settlement broker, the agent notifies the commissioner, on a
notification form prescribed by the commissioner, that he is acting as
a life settlement broker and pays any applicable fees to be
determined by the commissioner. The notification shall include an
acknowledgment by the agent that he will operate as a life
settlement broker in accordance with this subtitle; and
3.
Irrespective of the manner in which a life settlement broker or life
insurance agent is compensated, the life settlement broker or life
insurance agent is deemed to represent only the owner and owes a
fiduciary duty to the owner to act according to the owner's
instructions and in the best interests of the owner;
(c) Notwithstanding this subsection, 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 owner,
whose compensation is not paid directly or indirectly by the life settlement
provider, may negotiate life settlement contracts without having to obtain
a license as a life settlement broker; and
(d) A life insurance agent operating as a life settlement broker in accordance
with paragraph (b) of this subsection, prior to the execution of the life
settlement contract by all the parties for which such agent is operating as
a life settlement broker, shall have in force evidence of financial
responsibility as follows:
1.
A policy of insurance covering the legal liability of the agent as the
result of erroneous acts or failure to act in his or her capacity as a
life settlement broker, and inuring to the benefit of any aggrieved
party as the result of any single occurrence in the sum of not less
(3)
(4)
(5)
(6)
than twenty thousand dollars ($20,000) and one hundred thousand
dollars ($100,000) in the aggregate for all occurrences within one (1)
year; or
2.
An agreement with a licensed life settlement provider whereby the
agent is an additional insured on the policy of insurance covering the
legal liability of both the life settlement provider and the agent as the
result of erroneous acts or failure to act in his or her capacity as a
life settlement broker on a life settlement contract to which the life
settlement provider is a party, in the sum of twenty thousand dollars
($20,000) for any single occurrence; or
3.
A cash surety bond, executed by an insurer authorized to write
business in this Commonwealth, in the sum of twenty thousand
dollars ($20,000), which shall be subject to lawful levy of execution
by any party to whom the agent has been found to be legally liable
as the result of erroneous acts or failure to act in his or her capacity
as a life settlement broker.
Application for a life settlement provider license or a life settlement broker
license shall be made in accordance with KRS 304.9-150.
Licenses for life settlement providers and life settlement brokers shall be in
accordance with Subtitle 9 of KRS Chapter 304. A business entity licensed as
a life settlement broker or life settlement provider shall designate individuals to
act under its license in accordance with KRS 304.9-133.
Prior to issuance of a license as a life settlement broker or life settlement
provider, except as provided in subsection (2)(d) of this section, the applicant
shall obtain, and thereafter for as long as the license remains in effect shall
keep in force, evidence of financial responsibility in the sum of not less than
twenty thousand dollars ($20,000) per occurrence, and the sum of one hundred
thousand dollars ($100,000) in the aggregate, for all occurrences within one (1)
year. This evidence shall be in the form of an errors and omissions insurance
policy issued by an authorized insurer, a bond issued by an authorized
corporate surety, a deposit, or any combination of these evidences of financial
responsibility. The policy, bond, deposit, or combination thereof shall not be
terminated without thirty (30) days' prior written notice to the licensee. This
subsection shall not apply to a life insurance agent operating as a life
settlement broker in accordance with subsection (2) of this section.
No person shall use a life settlement contract form or provide to an owner a
disclosure statement form in this Commonwealth unless it has been filed with
and approved by the commissioner in the following manner:
(a) At the expiration of sixty (60) days from the date the filing is complete, the
form filed shall be deemed approved unless the commissioner has by
order given prior approval or disapproval. Approval of a form by the
commissioner shall constitute a waiver of any unexpired portion of the
waiting period. The commissioner may extend by not more than thirty (30)
days the time period in which he or she may approve or disapprove the
form. The commissioner shall give notice to the licensee of the extension
before expiration of the initial sixty (60) day period. At the expiration of the
extended period, and in the absence of the prior approval or disapproval,
the form shall be deemed approved. The commissioner may at any time,
after notice and for cause shown, withdraw any approval. The
commissioner shall disapprove a life settlement contract form or
disclosure statement form if, in the determination of the commissioner, the
contract or provisions contained therein are unreasonable, contrary to the
interests of the public, or otherwise are misleading or unfair to the owner.
Upon notice and hearing the commissioner shall withdraw approval of any
contract later determined to be unreasonable, misleading, unfair, or
contrary to the interest of the public; and
(b) Forms may be submitted simultaneously with an application or at any
time during the process of approving an application for a license pursuant
to this subtitle or at any other time.
(7) A licensed life settlement provider shall not use any person to perform the
functions of a life settlement broker as defined in KRS 304.15-020 unless the
person holds a current and valid license or is a licensed insurance agent
authorized pursuant to this subtitle to operate as a life settlement broker. A
licensed life settlement broker shall not use any person to perform the
functions of a life settlement provider as defined in KRS 304.15-020 unless the
person holds a current and valid license as a life settlement provider.
(8) If any employee of a licensee violates any provision of KRS 304.15-020,
304.15-700 to 304.15-720, 304.42-190, and 304.99-126, the department may
take disciplinary action against the employer licensee.
(9) When a life settlement provider elects to use a related provider trust, the life
settlement provider shall file notice of its intention to use that trust with the
department with a copy of the trust agreement. Any change in the trust
agreement shall be filed with the commissioner prior to its effect.
(10) Any additional death benefit payment on a life insurance policy that is the
subject of a life settlement contract with a double or additional indemnity for
accidental death shall be payable to the following:
(a) The beneficiary last named by the policy owner prior to entering into the
life settlement contract; or
(b) To the estate of the owner in the absence of a beneficiary.
(11) An insurer that issued a policy that is the subject of a life settlement contract
shall not be responsible for any act or omission of a broker, provider, or
purchaser arising out of or in connection with the life settlement transaction,
unless the insurer receives compensation for the placement of the life
settlement contract from the provider, purchaser, or broker in connection with
the life settlement contract.
(12) No insurer may, as a condition of responding to a request for verification of
coverage or in connection with the transfer of a policy pursuant to a life
settlement contract, require that the owner, insured, provider, or broker sign
any form, disclosure, consent, waiver, or acknowledgment that has not been
expressly approved by the commissioner for use in connection with life
settlement contracts in the Commonwealth.
Effective:July 12, 2012
History: Amended 2012 Ky. Acts ch. 74, sec. 11, effective July 12, 2012. -Amended 2010 Ky. Acts ch. 24, sec. 1190, effective July 15, 2010. -- Amended
2008 Ky. Acts ch. 32, sec. 2, effective July 15, 2008. -- Amended 2006 Ky. Acts
ch. 54, sec. 1, effective July 12, 2006. -- Amended 2005 Ky. Acts ch. 58, sec. 7,
effective June 20, 2005. -- Amended 2000 Ky. Acts ch. 472, sec. 2, effective
July 14, 2000. -- Created 1998 Ky. Acts ch. 403, sec. 2, effective July 15, 1998.
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