2006 Ohio Revised Code - 3916.01. Definitions.

§ 3916.01. Definitions.
 

As used in this chapter: 

(A) "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, but not limited to, film strips, motion pictures, and videos, that is directly or indirectly published, disseminated, circulated, or placed before the public for the purpose of creating an interest in or inducing a person to sell a life insurance policy pursuant to a viatical settlement contract. 

(B) "Business of viatical settlements" means an activity involved in the offering, solicitation, negotiation, procurement, effectuation, purchasing, investing, financing, monitoring, tracking, underwriting, selling, transferring, assigning, pledging, or hypothecating of viatical settlement contracts or purchase agreements or any similar activity related to viatical settlement contracts or purchase agreements. 

(C) "Chronically ill" means any of the following: 

(1) Being unable to perform at least two activities of daily living, including, but not limited to, eating, toileting, transferring, bathing, dressing, or continence; 

(2) Requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment; 

(3) Having a level of disability similar to that described in division (C)(1) of this section, as determined by the United States secretary of health and human services; 

(D) (1) "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 other person that has a direct ownership interest in a policy or certificate that is the subject of a viatical settlement contract and to which both of the following apply: 

(a) Its principal activity related to the transaction is providing funds to effect the viatical settlement or the purchase of one or more viaticated policies. 

(b) It has an agreement in writing with one or more licensed viatical settlement providers to finance the acquisition of viatical settlement contracts. 

(2) "Financing entity" does not include a non-accredited investor or viatical settlement purchaser. 

(E) "Fraudulent viatical settlement act" means an act or omission committed by any person who, knowingly or with intent to defraud and for the purpose of depriving another of property or for pecuniary gain, commits, or permits any of its employees or agents to commit, any of the following acts: 

(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, financing entity, insurer, insurance broker, insurance agent, or any other person, any false material information, or concealing any material information, as part of, in support of, or concerning a fact material to, one or more of the following: 

(a) An application for the issuance of a viatical settlement contract or insurance policy or certificate; 

(b) The underwriting of a viatical settlement contract or insurance policy or certificate; 

(c) A claim for payment or benefit pursuant to a viatical settlement contract or insurance policy or certificate; 

(d) Any premiums paid on an insurance policy or certificate; 

(e) Any payments and changes in ownership or beneficiary made in accordance with the terms of a viatical settlement contract or insurance policy or certificate; 

(f) The reinstatement or conversion of an insurance policy or certificate; 

(g) The solicitation, offer, effectuation, or sale of a viatical settlement contract or insurance policy or certificate; 

(h) The issuance of written evidence of a viatical settlement contract or insurance policy or certificate; 

(i) A financing transaction. 

(2) In the furtherance of a fraud or to prevent the detection of a fraud, doing any of the following: 

(a) Removing, concealing, altering, destroying, or sequestering from the superintendent the assets or records of a licensee or another person engaged in the business of viatical settlements; 

(b) Misrepresenting or concealing the financial condition of a licensee, financing entity, insurer, or any other person; 

(c) Transacting the business of viatical settlements in violation of any law of this state requiring a license, certificate of authority, or other legal authority for the transaction of the business of viatical settlements; 

(d) Filing with the superintendent of insurance or the chief insurance regulatory official of another jurisdiction a document containing false information or otherwise concealing from the superintendent any information about a material fact. 

(3) Presenting, causing to be presented, or preparing with knowledge or reason to believe that it will be presented, to or by a viatical settlement provider, viatical settlement broker, insurer, insurance agent, financing entity, viatical settlement purchaser, or any other person, in connection with a viatical settlement transaction or insurance transaction, an insurance policy or certificate that the actor knows was fraudulently obtained by the insured, the owner, or any agent of the insured or owner; 

(4) Committing any embezzlement, theft, misappropriation, or conversion of moneys, funds, premiums, credits or other property of a viatical settlement provider, insurer, insured, viator, insurance policyowner, or any other person engaged in the business of viatical settlements or insurance; 

(5) Attempting to commit, assisting, aiding or abetting in the commission of, or conspiracy to commit any act or omission specified in divisions (E)(1) to (4) of this section. 

(F) Notwithstanding section 1.59 of the Revised Code, "person" means a natural person or a legal entity, including, but not limited to, an individual, partnership, limited liability company, association, trust, or corporation. 

(G) "Policy" means an individual or group policy, group certificate, contract, or arrangement of insurance affecting the rights of a resident of this state or bearing a reasonable relation to this state, regardless of whether delivered or issued for delivery in this state. 

(H) "Related provider trust" means a titling trust or any other trust established by a licensed viatical settlement provider or a financing entity for the sole purpose of holding ownership or beneficial interest in purchased policies in connection with a financing transaction, provided that the trust has 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 superintendent as if those records and files were maintained directly by the licensed viatical settlement provider. 

(I) "Special purpose entity" means a corporation, partnership, trust, limited liability company or other similar entity formed solely to provide access, either directly or indirectly, to institutional capital markets for a financing entity or licensed viatical settlement provider. 

(J) "Terminally ill" means having an illness or sickness that can reasonably be expected to result in death in twenty-four months or less. 

(K) "Viatical settlement broker" means a person that, on behalf of a viator and for a fee, commission, or other valuable consideration, offers or attempts to negotiate viatical settlements between a viator and one or more viatical settlement providers. "Viatical settlement broker" does not include an attorney, a 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. 

(L) "Viatical settlement contract" means any of the following: 

(1) A written agreement establishing the terms under which compensation or any thing of value, that is less than the expected death benefit of the insurance policy or certificate will be paid in return for the viator's assignment, transfer, sale, devise, or bequest of the death benefit or ownership of any portion of the insurance policy or certificate of insurance; 

(2) A contract for a loan or any other financing transaction secured primarily by an individual or group life insurance policy or certificate, other than a loan by a life insurance company pursuant to the terms of the life insurance contract or a loan secured by the cash value of a policy or certificate; 

(3) An agreement to transfer ownership or change the beneficiary designation of the policy or certificate at a later date, regardless of the date that compensation is paid to the viator. 

(M) (1) "Viatical settlement provider" means a person, other than a viator, that enters into or effectuates a viatical settlement contract. 

(2) "Viatical settlement provider" does not include any of the following: 

(a) A bank, savings bank, savings and loan association, credit union, or other financial institution that takes an assignment of a life insurance policy or certificate as collateral for a loan; 

(b) The issuer of a life insurance policy or certificate providing accelerated benefits as defined in section 3915.21 of the Revised Code and pursuant to the contract; 

(c) An individual who enters into or effectuates not more than one agreement in any calendar year for the transfer of life insurance policies or certificates for any value less than the expected death benefit; 

(d) An authorized or eligible insurer that provides stop loss coverage to a viatical settlement provider, purchaser, financing entity, special purpose entity, or related provider trust; 

(e) A financing entity; 

(f) Special purpose entity; 

(g) A related provider trust; 

(h) A viatical settlement purchaser. 

(N) "Viaticated policy" means a life insurance policy or certificate that has been acquired by a viatical settlement provider pursuant to a viatical settlement contract. 

(O) "Viator" means the owner of a life insurance policy or a certificate holder under a group policy who, in return for compensation or any thing of value that is less than the expected death benefit of the policy or certificate, assigns, transfers, sells, devises, or bequests the death benefit or ownership of any portion of the insurance policy or certificate of insurance. For the purposes of this chapter, a "viator" is not 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. "Viator" does not include any of the following: 

(1) A licensee under this chapter; 

(2) An accredited investor or qualified institutional buyer as defined respectively in Regulation D, Rule 501 or Rule 144A of the Securities Act of 1933, as amended; 

(3) A financing entity; 

(4) A special purpose entity; 

(5) A related provider trust. 

(P) "Viatical settlement purchaser" means a person who gives 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, 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. "Viatical settlement purchaser" does not include any of the following: 

(1) A licensee under this chapter; 

(2) An accredited investor or qualified institutional buyer as defined respectively in Regulation D, Rule 501 or Rule 144A of the Securities Act of 1933, as amended; 

(3) A financing entity; 

(4) A special purpose entity; 

(5) A related provider trust. 

(Q) "Licensee" means a person licensed under this chapter. 

(R) "NAIC" means the national association of insurance commissioners. 

(S) "Securities Act of 1933" has the same meaning as in section 1707.01 of the Revised Code. 
 

HISTORY: 148 v H 551. Eff 10-5-2001.
 

The effective date is set by section 3 of HB 551.