Connecticut Seal

Senate Bill No. 916

Public Act No. 03-152

AN ACT CONCERNING VIATICAL SETTLEMENTS.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 38a-465 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

As used in [subsection (a) of section 38a-11,] sections 38a-465 to 38a-465m, inclusive, as amended by this act, sections 12 to 15, inclusive, of this act and subdivision (20) of section 38a-816:

[(1) "Certificate" means any certificate of group life insurance.

(2) "Commissioner" means the Insurance Commissioner.

(3) "Financing entity" means any participant, or any transferee of or successor to the interest of a participant, in any financing transaction.

(4) "Financing transaction" means any transaction in which financing is obtained for the purchase, acquisition, transfer or other assignment of one or more viatical settlement contracts, viaticated policies or interests in such contracts or policies, including, but not limited to, any secured or unsecured financing, any securitization transaction or any securities offering which is registered or exempt from registration under federal and applicable state securities law, or in which one or more viatical settlement contracts, viaticated policies or interests therein are sold, assigned, transferred, pledged, hypothecated or otherwise disposed of.

(5) "Participant" means an underwriter, placement agent, lender, purchaser of securities, credit enhancer or other participant, other than a viatical settlement provider, in any financing transaction.

(6) "Person" means any natural or artificial entity, including, but not limited to, any individual, partnership, association, trust or corporation.

(7) "Viatical settlement agent" means any person who is an authorized agent of a licensed viatical settlement provider, and any subagent or other representative of such agent, who acts or aids in any manner in the solicitation of a viatical settlement on behalf of such viatical settlement provider. Viatical settlement agent shall not include (A) a viatical settlement provider, viatical settlement broker or financing entity, (B) an attorney, accountant, financial planner or any person exercising a power of attorney granted by a viator, (C) any person who is retained to represent a viator and whose compensation is paid by or at the discretion of the viator regardless of whether the viatical settlement is consummated or (D) a credit union, employer or association which provides information relating to viatical settlements to its members or employees. A viatical settlement agent is deemed to represent only the viatical settlement provider.

(8) "Viatical settlement broker" means any person who, for a fee, commission or other valuable consideration, advertises or advises a person on the availability of a viatical settlement, introduces viators to viatical settlement providers, and offers or attempts to negotiate viatical settlements between a viator and one or more viatical settlement providers. Viatical settlement broker shall not include (A) an attorney, accountant or financial planner retained to represent a viator and whose compensation is paid by or at the discretion of the viator, (B) a viatical settlement provider, viatical settlement agent or financing entity, or (C) a credit union, employer or association which provides information relating to viatical settlements to its members or employees. A viatical settlement broker is deemed to represent only the viator's interests and shall owe a fiduciary duty to the viator to act according to the viator's instructions and in the viator's best interests.

(9) "Viatical settlement contract" means a written agreement entered into between a viatical settlement provider and a viator that establishes the terms under which the viatical settlement provider will pay compensation or anything of value, which compensation or value is less than the expected death benefit of the insurance policy or certificate, in return for the viator's assignment, transfer, sale, devise or bequest of the death benefit or ownership of all or a portion of the insurance policy or certificate of insurance to the viatical settlement provider. "Viatical settlement contract" includes a contract for a loan or other financial transaction secured primarily by an individual or group life insurance policy, other than a loan by a life insurance company pursuant to the terms of a life insurance contract, or a loan secured by the cash value of the policy.

(10) "Viatical settlement provider" means a person, other than a viator, who (A) enters into one or more viatical settlement contracts or (B) obtains financing from a financing entity for the purchase, acquisition, transfer or other assignment of one or more viatical settlement contracts, viatical policies or interests therein, or otherwise sells, assigns, transfers, pledges, hypothecates or otherwise disposes of one or more viatical settlement contracts, viatical policies or interests therein. Viatical settlement provider shall not include: (i) Any bank, as defined in section 36a-2, credit union as defined in said section, or other licensed lending institution which takes an assignment of a life insurance policy as collateral for a loan; (ii) the issuer of a life insurance policy providing accelerated benefits pursuant to section 38a-457; (iii) a viator's adult family member, including, but not limited to, a parent, child, spouse, brother, sister, grandfather, grandmother, uncle, aunt, cousin, mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law or daughter-in-law who has not entered into a viatical settlement contract during the period of twelve months immediately preceding the date of the viatical settlement contract in question.

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

(12) "Viator" means the owner of a life insurance policy, or a holder of a certificate, which policy or certificate insures the life of an individual with a catastrophic or life-threatening illness or condition and who enters or seeks to enter into a viatical settlement contract. Viator shall not include a viatical settlement provider, viatical settlement agent, viatical settlement broker or financing entity.

(13) "Viatical settlement" means a transaction between a viator and a viatical settlement provider in which the viatical settlement provider pays compensation or other value in return for the viator's assignment, transfer, sale, devise or bequest to the viatical settlement provider of the ownership of or the death benefit payable under a life insurance policy or a certificate. ]

(1) "Accredited investor" means an accredited investor, as defined in 17 CFR Section 230.501(a), as amended from time to time.

(2) "Advertising" or "advertisement" 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, published, disseminated, circulated or placed before the public, directly or indirectly, for the purpose of creating an interest in or inducing a person to purchase or sell a life insurance policy or an interest in a life insurance policy pursuant to a viatical settlement contract or a viatical settlement purchase agreement.

(3) "Chronically ill" means: (A) Being unable to perform at least two activities of daily living, including, but are not limited to, eating, toileting, transferring, bathing, dressing or continence; (B) requiring substantial supervision to protect from threats to health and safety due to severe cognitive impairment; or (C) having a level of disability similar to that described in subparagraph (A) of this subdivision as determined by the federal Secretary of Health and Human Services.

(4) "Commissioner" means the Insurance Commissioner.

(5) (A) "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:

(i) Whose principal activity related to the transaction is providing funds to effect the viatical settlement or purchase of one or more viaticated policies; and

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

(B) Financing entity does not include a nonaccredited investor or viatical settlement purchaser.

(6) "Financing transaction" means any transaction in which financing is obtained for the purchase, acquisition, transfer or other assignment of one or more viatical settlement contracts, viaticated policies or interests in such contracts or policies, including, but not limited to, any secured or unsecured financing, any securitization transaction or any securities offering which is registered or exempt from registration under federal or state securities law, or in which one or more viatical settlement contracts, viaticated policies or interests therein are sold, assigned, transferred, pledged, hypothecated or otherwise disposed of.

(7) "Person" means a natural person or a legal entity, including, but not limited to, an individual, partnership, limited liability company, association, trust or corporation.

(8) "Nonaccredited investor" means an investor that does not qualify as an accredited investor.

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

(10) "Qualified institutional buyer" means a qualified institutional buyer, as defined in 17 CFR Section 230.144A, as amended from time to time.

(11) "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.

(12) "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 for a financing entity or licensed viatical settlement provider.

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

(14) "Viatical settlement" means a transaction between a viator and a viatical settlement provider in which the viatical settlement provider pays compensation or other value in return for the viator's assignment, transfer, sale, devise or bequest to the viatical settlement provider of the ownership of, or the death benefit payable under, a life insurance policy or a certificate.

(15) "Viatical settlement broker" or "broker" means a person who, 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. "Viatical settlement broker" 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 viatical settlement purchaser.

(16) "Viatical settlement contract" means a written agreement establishing the terms under which compensation or anything of value will be paid, which compensation or value is less than the expected death benefit of a policy in return for the viator's assignment, transfer, sale, devise or bequest of the death benefit or ownership of any portion of the policy. A viatical settlement contract includes, but is not limited to, (A) a contract for a loan or other financing transaction with a viator secured primarily by an individual or group life insurance policy, 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 (B) an agreement with a viator to transfer ownership or change the beneficiary designation at a later date regardless of the date that compensation is paid to the viator.

(17) "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.

(18) "Viatical settlement provider" means a person, other than a viator, who enters into or effectuates a viatical settlement contract. Viatical settlement provider does not include:

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

(B) The issuer of a life insurance policy providing accelerated benefits pursuant to section 38a-457 and pursuant to the contract;

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

(D) A natural person who enters into or effectuates no more than one agreement in a calendar year for the transfer of a life insurance policy for any value less than the expected death benefit;

(E) A financing entity;

(F) A special purpose entity;

(G) A related provider trust;

(H) A viatical settlement purchaser; or

(I) An accredited investor or qualified institutional buyer who purchases a viaticated policy from a viatical settlement provider.

(19) "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.

(20) "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 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. Viatical settlement purchaser does not include:

(A) A licensee under this part;

(B) An accredited investor or qualified institutional buyer;

(C) A financing entity;

(D) A special purpose entity; or

(E) A related provider trust.

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

(22) "Viator" means the owner of a life insurance policy or a certificate holder under a group policy who enters or seeks to enter into a viatical settlement contract. For the purposes of this part, 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 provided. Viator does not include:

(A) A licensee under this part;

(B) An accredited investor or qualified institutional buyer;

(C) A financing entity;

(D) A special purpose entity; or

(E) A related provider trust.

Sec. 2. Section 38a-465a of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(a) Except as otherwise provided in this part, no person may act as a viatical settlement provider, [or] viatical settlement broker or viatical settlement investment agent until [he] the person is licensed by the commissioner pursuant to this section, except that any person who holds a resident or nonresident insurance producer license pursuant to chapter 702 may act as a viatical settlement broker, and shall be subject to the provisions of subsection (a) of section 38a-11, as amended by this act, sections 38a-465 to 38a-465m, inclusive, as amended by this act, sections 12 to 15, inclusive, of this act and subdivision (20) of section 38a-816, as if such person is a licensed viatical settlement broker.

(b) Any applicant for a license as a viatical settlement provider, [or] viatical settlement broker or viatical settlement investment agent shall submit written application to the commissioner. Such applicants shall provide such information as the commissioner requires. All initial applications shall be accompanied by a filing fee specified in section 38a-11, as amended by this act.

(c) Upon the filing of an application and full payment of the license fee, the commissioner shall investigate the applicant and shall issue a license if the commissioner determines that:

(1) The applicant has provided a detailed plan of operation;

(2) The applicant is competent and trustworthy, and intends to act in good faith pursuant to the license applied for;

(3) The applicant has a good business reputation and adequate experience, training or education so as to be qualified in the business for which the license is applied for;

(4) If the applicant is a corporation, partnership, limited liability company or other legal entity, the applicant has provided a certificate of good standing from its state of domicile and, if such applicant is not domiciled in this state, a certificate of good standing from this state dated not more than fifteen days before or after the date of filing of the application; and

(5) Neither the applicant, nor any partner, key manager, director, officer or majority stockholder of the applicant has been convicted of a felony.

[(c)] (d) Any license issued for a viatical settlement provider, [or] a viatical settlement broker or a viatical settlement investment agent shall be in force only until the last day of March in each year, but may be renewed by the commissioner without formality other than proper application. The fees for such licenses shall be assessed annually as provided in section 38a-11, as amended by this act. If such broker, [or] provider or investment agent fails to timely pay the renewal fee, such license shall be automatically revoked if the license fee is not received by the commissioner not later than the fifth day after the commissioner sends by first class mail a written notice of nonrenewal to the principal office of the broker, [or] provider or investment agent, provided such notice may only be mailed after said last day of March.

[(d)] (e) The commissioner may, at any time, require the applicant to fully disclose the identity of all of its stockholders, partners, key management personnel, directors, officers, members and employees, and the commissioner may deny any application for a license if the commissioner determines that any partner, key manager, director, officer, employee stockholder or member thereof who may materially influence the applicant's conduct fails to meet any of the standards set forth in sections 38a-465 to 38a-465m, inclusive, as amended by this act and sections 12 to 15, inclusive, of this act.

(f) A viatical settlement provider, viatical settlement broker or viatical settlement investment agent shall provide to the commissioner new or revised information about officers, stockholders holding ten per cent or more of the company's stock, partners, directors, members or designated employees not later than thirty days after the change in information.

[(e)] (g) A viatical settlement provider [or] license, a viatical settlement broker license or a viatical settlement investment agent license issued to a corporation, partnership, limited liability company or other legal entity authorizes all of such legal entity's stockholders, partners, key managers, directors, officers and employees named in the application for such license, and any supplements to the application, to act on such entity's behalf as if such individuals are licensed. Such authorization shall terminate upon the expiration, suspension or revocation of the viatical settlement provider license, [or] a viatical settlement broker license or a viatical settlement investment agent license.

[(f) Upon the filing of an application and full payment of the license fee, the commissioner shall investigate the applicant and shall issue a license if the commissioner determines that:

(1) The applicant has provided a detailed plan of operation;

(2) The applicant is competent and trustworthy, and intends to act in good faith pursuant to the license;

(3) The applicant has a good business reputation and adequate experience, training or education to conduct viatical settlement business;

(4) If the applicant is a corporation, partnership, limited liability company or other legal entity, the applicant has provided a certificate of good standing from its state of domicile and, if such applicant is not domiciled in this state, a certificate of good standing from this state dated not more than fifteen days before or after the date of filing of the application; and

(5) Neither the applicant, nor any partner, key manager, director, officer or majority stockholder of the applicant has been convicted of a felony. ]

[(g)] (h) The commissioner shall maintain a complete listing of all viatical settlement providers, [and] viatical settlement brokers and viatical settlement investment agents licensed in this state which shall be available to the general public for inspection.

Sec. 3. Section 38a-465b of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(a) The commissioner may deny a license application, or suspend, revoke or refuse to renew the license of any viatical settlement provider, [or] viatical settlement broker or viatical settlement investment agent if the commissioner determines that:

(1) There was a material misrepresentation in the license application or in other information submitted to the commissioner;

(2) The licensee, or any partner, key manager, director, officer or majority stockholder of the licensee has been convicted of a felony, is subject to a final administrative action to suspend or revoke a license granted by the chief insurance regulatory official of another state, or is otherwise shown to be untrustworthy or incompetent to act as a viatical settlement provider, [or] viatical settlement broker or viatical settlement investment agent;

(3) The licensee has wilfully violated any of the provisions of this part;

(4) The viatical settlement provider demonstrates a pattern of unreasonably low payments to viators;

(5) The licensee 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 or conviction has been entered by the court;

(6) The viatical settlement provider has entered into any viatical settlement contract that has not been approved pursuant to sections 38a-465 to 38a-465m, inclusive, as amended by this act, and sections 12 to 15, inclusive, of this act;

(7) The viatical settlement provider has failed to honor contractual obligations set out in a viatical settlement contract or a viatical settlement purchase agreement;

(8) The licensee no longer meets the requirements for initial licensure; or

(9) The viatical settlement provider has assigned, transferred or pledged a viatical policy to a person other than [(A)] a viatical settlement provider licensed in this state, [or (B) a financing entity] a viatical settlement purchaser, an accredited investor, a qualified institutional buyer, a financing entity, special purpose entity or related provider trust.

(b) If the commissioner denies a license application, or suspends, revokes or refuses to renew the license of a viatical settlement provider, [or] viatical settlement broker or viatical settlement investment agent, the applicant or licensee aggrieved by such denial, suspension, revocation or refusal to renew a license may appeal such action in accordance with [the provisions of] chapter 54. Hearings may be held by the commissioner or by any person designated by the commissioner. Whenever [a person] an individual other than the commissioner acts as the hearing officer, [he] the individual shall submit to the commissioner a memorandum of [his] findings and recommendations upon which the commissioner may base [his] a decision.

(c) In addition to denying a license application, or suspending, revoking or refusing to renew a license, the commissioner may assess a fine of up to one thousand dollars against a viatical settlement provider or viatical settlement investment agent for each wilful violation by the viatical settlement provider of any provision of this part or regulations adopted pursuant to this part.

(d) In addition to denying a license application, or suspending, revoking or refusing to renew a license, the commissioner may assess a fine of up to one thousand dollars against a viatical settlement broker if:

(1) Such viatical settlement broker has knowingly received a commission or other payment or benefit from a viatical settlement provider who is unlicensed in this state in connection with a viatical settlement contract entered into with a viator resident in this state;

(2) Such viatical settlement broker has defrauded, misled or mistreated viators; or

(3) Such viatical settlement broker has wilfully violated any provision of sections 38a-465 to 38a-465m, inclusive, as amended by this act, sections 12 to 15, inclusive, of this act, or regulations adopted pursuant to said sections.

Sec. 4. Section 38a-465c of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

No [viatical settlement provider, viatical settlement broker or viatical settlement agent] person may use any form of viatical settlement contract or disclosure statement in this state when dealing with a viator unless such form has been filed with and approved by the commissioner. [Any viatical settlement contract or disclosure statement filed with the commissioner shall be deemed approved by the commissioner unless, not later than sixty days after filing, the commissioner sends, by first class mail, a notice of disapproval to the party that made the filing. ] The commissioner may disapprove a viatical settlement contract or disclosure statement, if [he] the commissioner finds any provision in said form is unreasonable, contrary to the interests of the public, fails to comply with the provisions of sections 38a-465 to 38a-465m, inclusive, as amended by this act, or sections 12 to 15, inclusive, of this act, or is misleading to viators or the public.

Sec. 5. Section 38a-465d of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(a) Except as provided in subsection (b) of this section, on or before the last day of March of each year, each viatical settlement provider shall file with the commissioner an annual statement containing such information as the commissioner may prescribe. The commissioner shall adopt regulations, in accordance with [the provisions of] chapter 54, to prescribe the contents of such annual statements.

(b) Notwithstanding the provisions of subsection (a) of this section, no licensee may submit to the commissioner information which identifies any viator except with the express written permission of such viator or the viator's estate or representative.

(c) Except as otherwise required or permitted by law, no person, including, but not limited to, any viatical settlement provider, viatical settlement investment agent, viatical settlement broker, insurance company, insurance producer, information bureau, rating agency or company, or any other person with actual knowledge of [a viator's] an insured's identity, may disclose such identity to any other person unless such disclosure: (1) Is necessary to effect a viatical settlement between the viator and a viatical settlement provider and the viator has provided prior written consent to such disclosure; (2) is provided in response to an investigation by the commissioner or any other governmental office or agency; [or (3) is a term of or condition to a financing transaction or to the transfer by one viatical settlement provider to another viatical settlement provider in a single transaction of two or more viaticated policies] (3) 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; (4) is a term of or condition to the transfer of a policy by one viatical settlement provider to another viatical settlement provider; (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; (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 (7) is required to purchase stop loss coverage.

(d) The commissioner shall not disclose the names of or other data identifying viators unless such disclosure is required by law.

Sec. 6. Section 38a-465f of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

[Each viatical settlement provider and viatical settlement broker shall disclose in writing the following information to each viator prior to the date all parties execute a viatical settlement contract: ]

(a) 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 not later than at the time the application for the viatical settlement contract is signed by all parties. Disclosure to a viator shall include distribution of a brochure developed or authorized by the commissioner describing the process of viatical settlements. 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." The disclosure 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 at least the following disclosures:

[(1) The possible alternatives to, or options that may be exercised in conjunction with, the viatical settlement contract, including, but not limited to, accelerated death benefits offered by the insurer of such viator's life insurance policy or group life insurance policy to which the viator's certificate relates; ]

(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;

[(2) That some or all of the proceeds of the viatical settlement may be free from federal income tax or from state tax, and shall advise parties to seek assistance from a professional tax advisor; ]

(2) Some or all of the proceeds of the viatical settlement may be taxable under federal income tax, and assistance should be sought from a professional tax advisor;

(3) [That receipt] Receipt of the viatical settlement proceeds may adversely affect the viator's eligibility for Medicaid or other government benefits or entitlements, and advice should be obtained from the appropriate governmental agencies or advisors;

(4) [That the] The viatical settlement provider may assign or otherwise transfer its interests in the viaticated policy to a third party;

[(5) That the viator may rescind the viatical settlement contract within fifteen days after the viator's receipt of the viatical settlement proceeds; ]

(5) The viator has the right to rescind a viatical settlement contract for fifteen calendar days after the receipt of the viatical settlement proceeds by the viator, as provided in subsection (c) of section 38a-465g, as amended by this act. If the insured dies during the rescission period, the settlement contract shall be deemed to have been rescinded, subject to repayment of all viatical settlement proceeds and any premiums, loans and loan interest to the viatical settlement provider or viatical settlement purchaser;

[(6) That the viatical settlement proceeds may be subject to the claims of creditors; ]

(6) Proceeds of the viatical settlement may be subject to the claims of general creditors;

(7) [That funds] Funds will be sent to the viator within two business days after the viatical settlement provider has received the insurer or group administrator's acknowledgment that ownership of the viatical policy or interest in the certificate has been transferred and the beneficiary has been designated pursuant to sections 38a-465 to 38a-465m, inclusive, as amended by this act, and sections 12 to 15, inclusive, of this act; [and]

(8) [That entering] Entering into the viatical settlement contract may cause other rights or benefits, including conversion rights [, a] and waiver of premium benefits that may exist under the policy or certificate, to be forfeited by the viator and that assistance should be sought from a financial advisor;

(9) The insured may be contacted by either the viatical settlement provider or broker or its authorized representative for the purpose of determining the insured's health status. This contact is limited to once every three months following the date the viatical settlement proceeds are released to the viator if the insured has a life expectancy of more than one year, and no more than once per month following such date if the insured has a life expectancy of one year or less.

(b) A viatical settlement provider shall provide the viator with at least the following disclosures not 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 the viatical settlement provider or viatical settlement broker, and shall provide at least the following disclosures:

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

(2) The name, address and telephone number of the viatical settlement provider;

(3) 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 the viator's insurance producer or the insurer issuing the policy for advice on the proposed viatical settlement;

(4) 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 viatical settlement provider's interest in those benefits;

(5) 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.

(c) If the viatical settlement provider transfers ownership or changes the beneficiary of the insurance policy, the viatical settlement provider shall communicate the change in ownership or beneficiary to the insured not later than twenty days after the change.

(d) 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 settlement purchase agreement or in a separate document signed by the viatical settlement purchaser and viatical settlement provider or viatical settlement investment agent and shall provide at least the following disclosures:

(1) The purchaser will receive no returns, including, but not limited to, dividends and interest, until the insured dies;

(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;

(3) The viaticated life insurance contract should not be considered a liquid purchase because it is impossible to predict the exact timing of the contract's maturity and the funds may not be available until the death of the insured. There is no established secondary market for resale of these contracts by the purchaser;

(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;

(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 settlement purchase agreement. Such 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 be disclosed;

(6) The purchaser is responsible for payment of the insurance premiums or other costs related to the policy if the insured returns to good health. The amount of such premiums shall be disclosed, if applicable;

(7) The name and address of any person providing escrow services and the person's relationship to the broker;

(8) The amount of any trust fees or other expenses to be charged to the viatical settlement purchaser;

(9) Whether the purchaser is entitled to a refund of all or part of the purchaser's investment under the viatical settlement contract if the policy is later determined to be null and void;

(10) That group policies may contain limitations or caps in the conversion rights, additional premiums may be required to be paid if the policy is converted, the party responsible for the payment of the additional premiums shall be named and, if a group policy is terminated and replaced by another group policy, that there may be no right to convert the original coverage;

(11) 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 if the insurer rescinds the policy within the contestability period;

(12) 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;

(13) (A) The experience and qualifications of the person who determines the life expectancy of the insured, such as in-house staff, independent physicians and specialty firms that weigh medical and actuarial data; (B) the information the determination of life expectancy is based on; and (C) the relationship of the person making the determination to the viatical settlement provider, if any;

(14) Disclosure to an investor shall include distribution of a brochure, developed or authorized by the commissioner, describing the process of investment in viatical settlements.

(e) A viatical settlement provider or its viatical settlement investment agent shall provide the viatical settlement purchaser with at least the following disclosures not 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 provide at least the following disclosures:

(1) All life expectancy certifications obtained by the provider in the process of determining the price paid to the viator;

(2) Whether premium payments or other costs related to the policy have been escrowed. If such costs have been escrowed, disclosure is required regarding the date upon which the escrowed funds will be depleted and whether the purchaser will be responsible for payment of premiums after that date, and, if so, the amount of the premiums;

(3) Whether premium payments or other costs related to the policy have been waived. If such costs have been waived, disclosure is required regarding 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;

(4) The type of policy offered or sold, such as, 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;

(5) If the policy is term insurance, 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;

(6) Whether the policy is contestable;

(7) 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 the rights are, and under what conditions the rights are activated;

(8) The name and address of the person responsible for monitoring the insured's condition, a description of 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.

(f) The viatical settlement purchase agreement may be voided by the purchaser at any time before the end of the third day after the disclosures required by subsections (d) and (e) of this section are received by the purchaser.

Sec. 7. Section 38a-465g of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(a) (1) Before entering into a viatical settlement contract, a viatical settlement provider shall obtain:

[(1)] (A) If the viator is the individual whose life is insured by the viator's life insurance policy or certificate, a written statement from a licensed physician that the viator is of sound mind and under no undue influence to enter into the viatical settlement contract; and

[(2) If the viator is not the individual whose life is insured by the viator's life insurance policy or certificate, a] (B) A witnessed document executed by the insured person in which the person consents to the release of [his] the person's medical records [; and] to a viatical settlement provider, viatical settlement broker and the insurance company that issued the life insurance policy covering the life of the insured. The consent for the release of medical records shall only be obtained for the insurance company if the life insurance policy covering the insured was issued within forty-eight months of the date of the viator's application for the viatical settlement contract.

[(3) A witnessed document executed by the viator in which he (A) consents to the viatical settlement contract; (B) acknowledges that the person whose life is insured by the viator's life insurance policy or certificate has a catastrophic or life threatening illness; (C) represents that the viator has a full and complete understanding of the viatical settlement contract and that the viator has a full and complete understanding of the insurance coverage under the life insurance policy or certificate; (D) consents to the release of the viator's medical records if the viator is the person whose life is insured; and (E) acknowledges that the viator has entered into the viatical settlement contract freely and voluntarily. ]

(2) Not later than twenty days after a viator executes the documents necessary to transfer any rights under a policy or not later than twenty days after 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 the policy that the policy has or will become a viaticated policy. The notice shall be accompanied by the documents required by subdivision (3) of this subsection.

(3) The viatical settlement provider shall deliver a copy of the medical release required under subparagraph (B) of subdivision (1) of this subsection, a copy of the viator's application for the viatical settlement contract, the notice required under subdivision (2) of this subsection and a request for verification of coverage to the insurer that issued the policy that is the subject of the viatical transaction. The commissioner may adopt regulations, in accordance with chapter 54, to prescribe the form or forms to be used for verification of coverage.

(4) The insurer shall respond to a request for verification of coverage submitted on an approved form by a viatical settlement provider not later than thirty calendar days after the date the request was received and shall indicate whether, based on the medical evidence and documents provided, the insurer intends, at the time of the response, to pursue an investigation regarding the validity of the policy.

(5) 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 the viator has a full and complete understanding of the benefits of the life insurance policy, acknowledges that the viator 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.

(6) If a viatical settlement broker performs any of the activities required of the viatical settlement provider under this section, the provider shall be deemed to have fulfilled the requirements of this section.

(b) All medical information solicited or obtained by any person licensed pursuant to this part shall be subject to applicable provisions of law relating to the confidentiality of medical information.

[(b)] (c) Each viatical settlement contract entered into in this state or entered into with residents of this state shall provide that the viator may rescind the viatical settlement contract within fifteen days from the viator's receipt of the viatical settlement proceeds. Such rescission shall be effective only if both notice of rescission is delivered by the viator to the viatical settlement provider and a full return of funds to the viatical settlement provider is made before the expiration of the applicable rescission period. 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 viatical settlement purchaser of all viatical settlement proceeds, and any premiums, loans and loan interest that has been paid by the viatical settlement provider or viatical settlement purchaser.

(d) The viatical settlement purchaser shall have the right to rescind a viatical settlement contract until the end of the third day after the disclosures required by subsections (d) and (e) of section 38a-465f, as amended by this act, are received by the purchaser.

[(c) Immediately following execution of a viatical settlement contract, the viator shall deposit documents effecting the transfer of the viator's life insurance policy or certificate, and the viatical settlement provider shall pay the viatical settlement proceeds into an escrow account. The proceeds shall be held in an escrow account in a bank, as defined in section 36a-2, pending acknowledgment by the issuer of the policy of the transfer of ownership of the insurance policy or certificate to the viatical settlement provider.

(d) A viatical settlement contract shall be null and void if the viatical settlement proceeds payable pursuant to said contract are not received by the viator or the viator's designee strictly in accordance with the terms of the viatical settlement contract and the provisions of sections 38a-465 to 38a-465m, inclusive. ]

(e) 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. Not later than two business days after the date the escrow agent receives the document, or not later than two business days after 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. 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. 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.

(f) Failure to tender consideration to the viator for the viatical settlement contract within the time set forth in section 38a-465f, as amended by this act, shall render the viatical settlement contract voidable by the viator for lack of consideration until the time such consideration is tendered to, and accepted by, the viator.

[(e)] (g) No viatical settlement broker [or viatical settlement agent] shall receive from a viatical settlement provider a fee, commission or other valuable consideration for services rendered to or in connection with viators resident in this state unless such viatical settlement provider is licensed in this state.

[(f)] (h) Viatical settlement proceeds received by a viator from a licensed viatical settlement provider pursuant to a viatical settlement contract shall not be subject to state taxation under title 12.

[(g)] (i) Following the consummation of a viatical settlement, no person may initiate contact with the insured under the viaticated policy for purposes of determining the insured's health status (1) more than one time during each consecutive three-month period following the date the viatical settlement proceeds are released to the viator if the insured has an estimated life expectancy of more than one year from such date, or (2) more than one time during each month following such date if the insured has an estimated life expectancy of one year or less. The viatical settlement provider shall notify the viator of said limitations on contacts with the insured prior to the consummation of the viatical settlement in accordance with section 38a-465f, as amended by this act. The limitations set forth in this subsection shall not apply to any contacts with an insured under a viaticated policy 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.

[(h) Nothing in sections 38a-465 to 38a-465m, inclusive, shall be construed to authorize the commissioner to determine or authorize the amount to be paid by a licensed viatical settlement provider to a viator, viatical settlement broker or viatical settlement agent pursuant to or in connection with a viatical settlement contract. ]

[(i)] (j) An insured shall have the right, where permitted under the life insurance policy or certificate, to assign, transfer, sell or bequest the net death benefit payable under or ownership of a life insurance policy or certificate for any remaining portion of such coverage. An insured shall also have the right, where permitted under the life insurance policy or certificate, to assign, transfer, sell or bequest the net death benefit payable under or ownership of a life insurance policy or certificate at any time such coverage is on disability waiver of premium.

[(j)] (k) Unless otherwise agreed to in writing by the viator and the viatical settlement provider, the amount payable to a viatical settlement provider upon the insured's death shall be the amount (1) which would have been payable to the viatical settlement provider if the insured had died on the first day following the date of the viatical settlement contract, less (2) (A) any double or additional indemnity amount, if any, payable under the viaticated policy if the insured's death is accidental, and (B) all other amounts required to be deducted from the death benefit. Any other additional amounts shall remain payable to the beneficiary last named by the viator prior to entering into the viatical settlement contract, or to such other beneficiary, other than the viatical settlement provider, as the viator may designate after entering into the viatical settlement contract, or in the absence of a designation, to the estate of the viator.

Sec. 8. Section 38a-465i of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(a) Each life insurance company licensed in this state shall promptly respond to reasonable requests for policy or certificate information following the receipt of the following documents by the insurer or its agent:

(1) An instruction executed by the viator requiring the insurer to release specified information regarding the policy or certificate to a named viatical settlement provider [, viatical settlement agent] or viatical settlement broker; and

(2) A written request for such information from the named viatical settlement provider [, viatical settlement agent] or viatical settlement broker.

(b) Requests for the following items are deemed to be reasonable: (1) Ownership of and death benefits payable under the viaticated policy; (2) premium information on the viaticated policy; (3) liens on and assignments and additional benefits of the viaticated policy; (4) waiver of premium of the viaticated policy; and (5) ownership of and assignment provisions under the viaticated policy. The commissioner may adopt regulations, in accordance with [the provisions of] chapter 54, to identify additional requests for information which shall also be deemed reasonable.

(c) An insurer or third party administrator of a group life insurance policy shall promptly issue an individual conversion policy if the conversion is being requested for the purpose of entering into a viatical settlement contract.

(d) Nothing in this section shall be construed to prohibit a policy owner or certificate holder, pursuant to the provisions of the policy or certificate, from assigning [his] rights or benefits under the policy or certificate to a viatical settlement provider or from converting such coverage to an individual life insurance policy.

(e) No person may enter into a viatical settlement contract within a two-year period from the date of issuance of an 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 two-year period:

(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 twenty-four 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;

(2) (A) The viator submits independent evidence to the viatical settlement provider that one or more of the following conditions have been met within the two-year period:

(i) The viator or insured is terminally or chronically ill; or

(ii) The viator disposes of the viator's entire ownership interests in a closely held corporation pursuant to the terms of a buyout or other similar agreement in effect at the time the insurance policy was initially issued;

(B) Copies of the independent evidence described in subparagraph (A) of this subdivision and documents required by subsection (a) of section 38a-465g, as amended by this act, shall be submitted to the insurer when the viatical settlement provider submits a request to the insurer for verification of coverage. The copies shall be accompanied by a letter from the viatical settlement provider that the copies are true and correct copies of the documents received by the viatical settlement provider;

(f) If the viatical settlement provider submits to the insurer a copy of the owner or insured's certification described in subdivision (2) of subsection (e) of this section 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.

Sec. 9. Section 38a-465m of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(a) The commissioner may adopt regulations, in accordance with the provisions of chapter 54, to implement the provisions of sections 38a-465 to 38a-465l, inclusive, as amended by this act, and sections 12 to 15, inclusive, of this act.

(b) Such regulations may establish standards for evaluating reasonableness of payments under viatical settlement contracts for persons who are terminally or chronically ill. Such regulations may include, but are not limited to, the regulation of discount rates used to determine the amount paid in exchange for assignment, transfer, sale, devise or bequest of a benefit under a life insurance policy.

(c) Such regulations may establish appropriate licensing requirements and standards for continued licensure for viatical settlement providers, viatical settlement brokers and viatical settlement investment agents.

(d) The commissioner may require a bond or other mechanism for financial accountability for viatical settlement providers and brokers.

(e) Such regulations may adopt rules governing the relationship and responsibilities of both insurers and viatical settlement providers, viatical settlement brokers and viatical settlement investment agents during the viatication of a life insurance policy or certificate.

Sec. 10. Subsection (a) of section 38a-11 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(a) The commissioner shall demand and receive the following fees: (1) For the annual fee for each license issued to a domestic insurance company, one hundred dollars; (2) for receiving and filing annual reports of domestic insurance companies, twenty-five dollars; (3) for filing all documents prerequisite to the issuance of a license to an insurance company, one hundred seventy-five dollars, except that the fee for such filings by any health care center, as defined in section 38a-175, shall be one thousand one hundred dollars; (4) for filing any additional paper required by law, fifteen dollars; (5) for each certificate of valuation, organization, reciprocity or compliance, twenty dollars; (6) for each certified copy of a license to a company, twenty dollars; (7) for each certified copy of a report or certificate of condition of a company to be filed in any other state, twenty dollars; (8) for amending a certificate of authority, one hundred dollars; (9) for each license issued to a rating organization, one hundred dollars. In addition, insurance companies shall pay any fees imposed under section 12-211; (10) a filing fee of twenty-five dollars for each initial application for a license made pursuant to section 38a-769; (11) with respect to insurance agents appointments: (A) A filing fee of twenty-five dollars for each request for any agent appointment; (B) a fee of forty dollars for each appointment issued to an agent of a domestic insurance company or for each appointment continued; and (C) a fee of twenty dollars for each appointment issued to an agent of any other insurance company or for each appointment continued, except that no fee shall be payable for an appointment issued to an agent of an insurance company domiciled in a state or foreign country which does not require any fee for an appointment issued to an agent of a Connecticut insurance company; (12) with respect to insurance producers: (A) An examination fee of seven dollars for each examination taken, except when a testing service is used, the testing service shall pay a fee of seven dollars to the commissioner for each examination taken by an applicant; (B) a fee of forty dollars for each license issued; and (C) a fee of forty dollars for each license renewed; (13) with respect to public adjusters: (A) An examination fee of seven dollars for each examination taken, except when a testing service is used, the testing service shall pay a fee of seven dollars to the commissioner for each examination taken by an applicant; and (B) a fee of one hundred twenty-five dollars for each license issued or renewed; (14) with respect to casualty adjusters: (A) An examination fee of ten dollars for each examination taken, except when a testing service is used, the testing service shall pay a fee of ten dollars to the commissioner for each examination taken by an applicant; (B) a fee of forty dollars for each license issued or renewed; and (C) the expense of any examination administered outside the state shall be the responsibility of the entity making the request and such entity shall pay to the commissioner one hundred dollars for such examination and the actual traveling expenses of the examination administrator to administer such examination; (15) with respect to motor vehicle physical damage appraisers: (A) An examination fee of forty dollars for each examination taken, except when a testing service is used, the testing service shall pay a fee of forty dollars to the commissioner for each examination taken by an applicant; (B) a fee of forty dollars for each license issued or renewed; and (C) the expense of any examination administered outside the state shall be the responsibility of the entity making the request and such entity shall pay to the commissioner one hundred dollars for such examination and the actual traveling expenses of the examination administrator to administer such examination; (16) with respect to certified insurance consultants: (A) An examination fee of thirteen dollars for each examination taken, except when a testing service is used, the testing service shall pay a fee of thirteen dollars to the commissioner for each examination taken by an applicant; (B) a fee of two hundred dollars for each license issued; and (C) a fee of one hundred twenty-five dollars for each license renewed; (17) with respect to surplus lines brokers: (A) An examination fee of ten dollars for each examination taken, except when a testing service is used, the testing service shall pay a fee of ten dollars to the commissioner for each examination taken by an applicant; and (B) a fee of five hundred dollars for each license issued or renewed; (18) with respect to fraternal agents, a fee of forty dollars for each license issued or renewed; (19) a fee of thirteen dollars for each license certificate requested, whether or not a license has been issued; (20) with respect to domestic and foreign benefit societies shall pay: (A) For service of process, twenty-five dollars for each person or insurer to be served; (B) for filing a certified copy of its charter or articles of association, five dollars; (C) for filing the annual report, ten dollars; and (D) for filing any additional paper required by law, three dollars; (21) with respect to foreign benefit societies: (A) For each certificate of organization or compliance, four dollars; (B) for each certified copy of permit, two dollars; and (C) for each copy of a report or certificate of condition of a society to be filed in any other state, four dollars; (22) with respect to reinsurance intermediaries: A fee of five hundred dollars for each license issued or renewed; (23) with respect to viatical settlement providers: (A) A filing fee of thirteen dollars for each initial application for a license made pursuant to section 38a-465a, as amended by this act; and (B) a fee of twenty dollars for each license issued or renewed; (24) with respect to viatical settlement brokers: (A) A filing fee of thirteen dollars for each initial application for a license made pursuant to section 38a-465a, as amended by this act; and (B) a fee of twenty dollars for each license issued or renewed; (25) with respect to viatical settlement investment agents: (A) A filing fee of thirteen dollars for each initial application for a license made pursuant to section 38a-465a, as amended by this act; and (B) a fee of twenty dollars for each license issued or renewed; (26) with respect to rental companies, as defined in section 38a-799, a fee of forty dollars for each permit issued or renewed; and [(26)] (27) with respect to each duplicate license issued a fee of twenty-five dollars for each license issued.

Sec. 11. Subdivision (11) of section 38a-25 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(11) Viatical settlement providers, [and] viatical settlement brokers, and viatical settlement investment agents licensed by the commissioner.

Sec. 12. (NEW) (Effective October 1, 2003) (a) This section shall apply to the advertising of viatical settlement contracts, viatical settlement purchase agreements or related products or services. Where disclosure requirements are established pursuant to federal law, this section shall be interpreted to minimize or eliminate conflict with the federal law.

(b) Each person licensed pursuant to part III of chapter 700b of the general statutes 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. Each advertisement, regardless of by whom written, created, designed or presented, shall be the responsibility of the viatical settlement licensee, 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 licensee who disseminate advertisements of the requirements and procedures for approval prior to the use of any advertisements not furnished by the licensee.

(c) 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. The advertisement 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.

(d) 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, advertisements that include the following representations:

(1) "Guaranteed", "fully secured", "100 per cent secured", "fully insured", "secure", "safe", "backed by rated insurance companies", "backed by federal law", "backed by state law", "state guaranty funds" or similar representations;

(2) "No risk", "minimal risk", "low risk", "no speculation", "no fluctuation" or similar representations;

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

(4) Utilization of the word "guaranteed" to describe the fixed return, annual return, principal, earnings, profits, investment or similar representations;

(5) "No sales charges or fees" or similar representations;

(6) "High yield", "superior return", "excellent return", "high return", "quick profit" or similar representations;

(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 or electronic media.

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

(1) 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 shall not remedy misleading statements;

(2) Use the name or title of a life insurance company or a life insurance policy unless the advertisement has been approved by the insurance company;

(3) 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;

(4) 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;

(5) Include the words "free", "no cost", "without cost", "no additional cost", "at no extra cost" or words of similar meaning 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;

(6) Include testimonials, appraisals or analysis that are not genuine. Testimonials, appraisals and analysis shall (A) represent the current opinion of the author; (B) be applicable to the viatical settlement contract or viatical settlement purchase agreement, product or service advertised, if any; and (C) be accurately reproduced with sufficient completeness to avoid misleading or deceiving prospective viators or purchasers as to the nature or scope of the testimonials, appraisals, analysis or endorsement. In using testimonials, appraisals or analysis, the licensee makes as its own all the statements contained therein, and the statements shall be subject to the provisions of this subdivision.

(i) If the individual making a testimonial, appraisal, analysis or an endorsement has a financial interest in the viatical settlement provider or 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.

(ii) 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.

(iii) 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.

(f) An advertisement shall not contain statistical information unless the information accurately reflects recent and relevant facts. The source of all statistics used in an advertisement shall be identified.

(g) An advertisement shall not disparage insurers, viatical settlement providers, viatical settlement brokers, viatical settlement investment agents, insurance producers, policies, services or methods of marketing.

(h) The name of the 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.

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

(j) 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.

(k) An advertisement may state that a licensee is licensed in the state where the advertisement appears, provided it does not exaggerate that fact or suggest or imply that competing licensees may not be so licensed. The advertisement may ask the audience to consult the licensee's web site or contact the Insurance Department 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.

(l) 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.

(m) The name of the licensee shall be stated in all of the licensee's 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 licensee or create the false impression that an affiliate or controlling entity would have any responsibility for the financial obligation of the licensee.

(n) 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:

(1) Any licensee or its business practices or methods of operation;

(2) The merits, desirability or advisability of any viatical settlement contract or viatical settlement purchase agreement;

(3) Any viatical settlement contract or viatical settlement purchase agreement; or

(4) Any life insurance policy or life insurance company.

(o) If the advertisement emphasizes the speed with which the viatication will occur, the advertisement shall 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.

(p) If the advertisement emphasizes the dollar amounts available to viators, the advertisement shall disclose the average purchase price as a per cent of face value obtained by viators contracting with the licensee during the past six months.

Sec. 13. (NEW) (Effective October 1, 2003) Notwithstanding the manner in which the viatical settlement broker is compensated, a viatical settlement broker is deemed to represent only the viator and owes a fiduciary duty to the viator to act according to the viator's instructions and in the best interest of the viator.

Sec. 14. (NEW) (Effective October 1, 2003) (a) A viatical settlement investment agent shall not have any contact directly or indirectly with the viator or have knowledge of the identity of the viator.

(b) A viatical settlement investment agent is deemed to represent the viatical settlement provider for whom the viatical settlement investment agent is an appointed or contracted agent.

Sec. 15. (NEW) (Effective October 1, 2003) A related provider 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.

Approved June 26, 2003