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 Section 38a-465 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2008):

As used in sections 38a-465 to [38a-465q] 38-465p, inclusive, as amended by this act, and subdivision (20) of section 38a-816:

(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)] (A) 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)] (B) 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] (6) "Financing entity" does not include a nonaccredited investor or viatical settlement purchaser.

[(6)] (7) "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.

(8) "Fraudulent viatical settlement act" means:

(A) Acts or omissions committed by any person who, knowingly and with intent to defraud, for the purpose of depriving another of property or for pecuniary gain, commits or permits its employees or its agents to engage in acts including, but not limited to:

(i) Presenting, causing to be presented or preparing with knowledge and belief that it will be presented to or by a viatical settlement provider, viatical settlement broker, insurer, insurance producer or any other person, false material information, or concealing material information, as part of, in support of, or concerning a fact material to one or more of the following: (I) An application for the issuance of a viatical settlement contract or policy; (II) the underwriting of a viatical settlement contract or policy; (III) a claim for payment or benefit pursuant to a viatical settlement contract or policy; (IV) premiums paid on a policy; (V) payments and changes in ownership or beneficiary made in accordance with the terms of a viatical settlement contract or policy; (VI) the reinstatement or conversion of a policy; (VII) in the solicitation, offer to enter into, or effectuation of a viatical settlement contract or policy; (VIII) the issuance of written evidence of viatical settlement contract or policy; (IX) any application for or the existence of or any payments related to a loan secured directly or indirectly by any interest in a policy; or (X) enter into any practice or plan that involves stranger-originated life insurance;

(ii) Employing any device, scheme or artifice to defraud in the business of viatical settlements;

(iii) In the solicitation, application or issuance of a policy, employing any device, scheme or artifice in violation of state insurable interest laws;

(B) In the furtherance of a fraud or to prevent the detection of a fraud any person commits or permits its employees or its agents to;

(i) Remove, conceal, alter, destroy or sequester from the commissioner the assets or records of a licensee or other person engaged in the business of viatical settlements;

(ii) Misrepresent or conceal the financial condition of a licensee, financing entity, insurer or other person;

(iii) Transact the business of viatical settlements in violation of laws requiring a license, certificate of authority or other legal authority for the transaction of the business of viatical settlements;

(iv) File with the commissioner a document containing false information or otherwise concealing information about a material fact from the commissioner;

(v) Engage in embezzlement, theft, misappropriation or conversion of monies, funds, premiums, credits or other property of a viatical settlement provider, insurer, insured, owner, insurance, policy owner or any other person engaged in the business of viatical settlements or insurance;

(vi) Knowingly and with intent to defraud, enter into, broker, or otherwise deal in a viatical settlement contract, the subject of which is a life insurance policy that was obtained by presenting false information concerning any fact material to the policy or by concealing, for the purpose of misleading another, information concerning any fact material to the policy, where the owner or the owner's agent intended to defraud the policy's issuer;

(vii) Attempt to commit, assist, aid or abet in the commission of, or conspiracy to commit the acts or omissions specified in this subsection; or

(viii) Misrepresent the state of residence of an owner to be a state or jurisdiction that does not have a law substantially similar to this part for the purpose of evading or avoiding the provisions of this part.

[(7)] (9) "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)] (10) "Nonaccredited investor" means an investor that does not qualify as an accredited investor.

[(9)] (11) "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)] (12) "Qualified institutional buyer" means a qualified institutional buyer, as defined in 17 CFR Section 230.144A, as amended from time to time.

[(11)] (13) "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)] (14) "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.

(15) "Stranger-originated life insurance" means a written agreement for the procurement of a new life insurance policy for the benefit of a person who, at the time of policy origination, has no insurable interest in the insured. Such agreements include, but are not limited to, cases in which life insurance is purchased with resources or guarantees from or through a person or entity, who, at the time of policy inception could not lawfully initiate the policy and where, at the time of policy inception, there is a written agreement to directly or indirectly transfer the ownership of the policy or the policy benefits to a person who lacks insurable interest. Trusts that are created to give the appearance of insurable interest and that are used to initiate policies for a person who lacks insurable interest violate insurable interest laws and the prohibition against wagering on life. "Stranger-originated life insurance" does not include those practices set forth in subparagraph (B) of subdivision (19) of this section.

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

[(14)] (17) "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)] (18) "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)] (19) (A) "Viatical settlement contract" means:

[a] (i) A written agreement between a viator and a viatical settlement provider 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 present or future 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.]

(ii) The transfer for compensation or value of ownership or beneficial interest in a trust or other entity that owns such policy if the trust or other entity was formed or availed of for the principal purpose of acquiring one or more life insurance contracts, which life insurance contract insures the life of a person residing in this state; or

(iii) A premium finance loan made for a life insurance policy by a lender to viator on or before the date of issuance of the policy where, pursuant to the terms of such loan, (I) the viator or the insured receives on the date of the premium finance loan a guarantee of a future viatical settlement value of the policy, or (II) the viator or the insured agrees on the date of the premium finance loan to sell the policy or any portion of its death benefit on any date following the issuance of the policy;

(B) "Viatical settlement contract" does not include:

(i) A policy loan by a life insurance company pursuant to the terms of the life insurance policy or accelerated death provisions contained in the life insurance policy, whether issued with the original policy or as a rider;

(ii) A premium finance loan, as defined in subparagraph (A)(iii) of subdivision (19) of this section, or any loan made by a bank or other licensed financial institution, provided that neither default on such loan nor the transfer of the policy in connection with such default is pursuant to an agreement or understanding with any other person for the purpose of evading regulation under this part;

(iii) A collateral assignment of a life insurance policy by an owner of a policy;

(iv) A loan made by a lender that does not violate sections 38a-162 to 38a-170, inclusive, provided such loan is not specified as described in subparagraph (A) of this subdivision and is not otherwise within the definition of a viatical settlement contract;

(v) An agreement where all the parties are closely related to the insured by blood or law or have a lawful substantial economic interest in the continued life, health and bodily safety of the person insured, or are trusts established primarily for the benefit of such parties;

(vi) Any designation, consent or agreement by an insured who is an employee of an employer in connection with the purchase by the employer, or trust established by the employer, of life insurance on the life of the employee;

(vii) A bona fide business succession planning arrangement: (I) Between one or more shareholders in a corporation or between a corporation and one or more of its shareholders or one or more trusts established by its shareholders; (II) between one or more partners in a partnership or between a partnership and one or more of its partners or one or more trusts established by its partners; or (III) between one or more members in a limited liability company or between a limited liability company and one or more of its members or one or more trusts established by its members; or

(viii) An agreement entered into by a service recipient or a trust established by the service recipient, and a service provider or a trust established by the service provider, that performs significant services for the service recipient's trade or business.

[(18)] (20) "Viatical settlement provider" means a person, other than a viator, who enters into or effectuates a viatical settlement contract. [Viatical settlement provider] "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)] (21) "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] "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)] (22) "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)] (23) "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] "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, 2008):

(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 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 of the 2008 supplement to the general statutes, as amended by this act, sections 38a-465 to [38a-465q] 38-465p, inclusive, as amended by 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 of the 2008 supplement to the general statutes, 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.

(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 of the 2008 supplement to the general statutes, 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.

(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-465q] 38-465p, inclusive, as amended by this act.

(f) A viatical settlement provider [,] or 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.

(g) A viatical settlement provider license [,] or 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.]

(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, 2008):

(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-465q] 38-465p, inclusive, as amended by 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] viaticated policy to a person other than a viatical settlement provider licensed in this state, 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 chapter 54. Hearings may be held by the commissioner or by any person designated by the commissioner. Whenever an individual other than the commissioner acts as the hearing officer, the individual shall submit to the commissioner a memorandum of findings and recommendations upon which the commissioner may base 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-465q] 38-465p, inclusive, as amended by 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, 2008):

No person [may] shall 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. The commissioner [may] shall disapprove a viatical settlement contract or disclosure statement [,] if 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-465q] 38-465p, inclusive, as amended by 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, 2008):

(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 chapter 54, to prescribe the contents of such annual statements.

(b) Notwithstanding the provisions of subsection (a) of this section, no licensee [may] shall 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 an insured's identity, [may] shall 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; (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)] (4) 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)] (5) 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)] (6) 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, 2008):

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

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

(7) 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] viaticated policy or interest in the certificate has been transferred and the beneficiary has been designated pursuant to sections 38a-465 to [38a-465q] 38-465p, inclusive, as amended by this act;

(8) Entering into the viatical settlement contract may cause other rights or benefits, including conversion rights and waiver of premium benefits that may exist under the policy or certificate, to be forfeited by the viator 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.]

(d) In an application for life insurance, an insurance company may inquire, in addition to other questions it may lawfully pose to a life insurance applicant, whether the proposed owner intends to pay premiums with the assistance of financing from a lender that will use the policy as collateral to support the financing.

(1) If, as specified in subparagraph (A)(iii) of subdivision (19) of section 38a-465, as amended by this act, the loan provides funds that can be used for purposes other than paying for premiums, costs and expenses associated with obtaining and maintaining the life insurance policy and loan, the application shall be rejected by the insurance company as a violation of section 38a-465i, as amended by this act.

(2) If such loan does not provide funds that can be used for purposes other than paying for premiums, costs and expenses associated with obtaining and maintaining the life insurance policy and loan, the insurance company:

(A) May make disclosures, including, but not limited to, the following, to the applicant and the insured, in the application or an amendment to the application completed not later than the delivery of the policy: "If you have entered into a loan arrangement where the policy is used as collateral, and the policy does change ownership at some point in the future in satisfaction of the loan, the following may be true: (i) A change of ownership could lead to a stranger owning an interest in the insured's life; (ii) a change of ownership could in the future limit your ability to purchase future insurance on the insured's life because there is a limit to how much coverage insurers will issue on one life; (iii) should there be a change of ownership and you wish to obtain more insurance coverage on the insured's life in the future, the insured's higher issue age, a change in health status or other factors may reduce the ability to obtain coverage and may result in significantly higher premiums; (iv) you should consult a professional advisor, since a change in ownership in satisfaction of the loan may result in tax consequences to the owner, depending on the structure of the loan"; and

(B) May require the applicant or the insured to certify that:

(i) Such applicant or insured has not entered into any agreement or arrangement providing for the future sale of such life insurance policy;

(ii) The loan arrangement for such policy provides funds sufficient for partial or full payment of the premiums, costs and expenses associated with obtaining and maintaining such life insurance policy, and that such applicant or insured has not entered into any agreement by which such applicant or insured will receive consideration in exchange for procuring such policy; and

(iii) The borrower has an insurable interest in the insured.

(e) For each individual life insurance policy or certificate for a group life insurance policy issued by an insurance company, such insurance company shall send written notice to the owner of such policy or certificate where the insured under such policy or certificate is sixty years of age or older, or is known to be terminally ill or chronically ill, that a viatical settlement is an available alternative transaction to such owner at the time of any of the following:

(1) When a life insurance company receives from such owner a request to surrender, in whole or in part, an individual life insurance policy or a certificate under a group life insurance policy;

(2) When a life insurance company receives from such owner a request to receive an accelerated death benefit under an individual life insurance policy or a certificate under a group life insurance policy;

(3) When a life insurance company receives from such owner a request to collaterally assign an individual life insurance policy or a certificate under a group life insurance policy as security for a loan;

(4) When a life insurance company sends to such owner a notice of lapse of an individual life insurance policy or a certificate under a group life insurance policy; or

(5) At any other time that the commissioner may require by rule or by regulation.

Sec. 7. Section 38a-465g of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2008):

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

(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

(B) A witnessed document executed by the insured person in which the person consents to the release of the person's medical records 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.

(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.

(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 are received by the purchaser.]

[(e)] (d) 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)] (e) 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.

[(g)] (f) No viatical settlement broker 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.

[(h)] (g) 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.

[(i)] (h) 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.

[(j)] (i) 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.

[(k)] (j) 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, 2008):

(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 or viatical settlement broker; and

(2) A written request for such information from the named viatical settlement provider 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 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 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] shall enter into a viatical settlement contract at any time prior to or at the time of application for or issuance of a policy, or 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.

(g) It shall be a violation of this part for any person to:

(1) Enter into a viatical settlement if such person knows or reasonably should have known that the life insurance policy was obtained by means of a false, deceptive or misleading application for such policy;

(2) Engage in any transaction, practice or course of business if such person knows or reasonably should have known that the intent was to avoid the notice requirements of this section;

(3) Engage in any fraudulent viatical settlement act involving a viator who is a resident of this state;

(4) Issue, solicit, market or otherwise promote the purchase of an insurance policy for the sole purpose of or with the emphasis on entering into a viatical settlement contract;

(5) Enter into a viatical settlement contract on a policy that was the subject of a premium finance agreement, as specified in subparagraph (A)(iii) of subdivision (19) of section 38a-465, as amended by this act; and

(6) If an insurer, to (A) prohibit, restrict, limit or impair a life insurance producer from lawfully negotiating a life settlement contract on behalf of an owner, aiding and assisting an owner with a life settlement contract, or otherwise participating in a life settlement transaction under this section, (B) engage in or permit any discrimination between individuals of the same class, same policy amount and equal expectation of life in the rates charged for any life insurance policy or annuity contract based upon an individual's having entered into a life settlement contract or being insured under a settled policy, (C) make any false or misleading statement as to the business of life settlements or financing premiums due for a policy or to any owner or insured for the purpose of inducing or tending to induce the owner or insured not to enter into a life settlement contract, or (D) engage in any transaction, act, practice or course of business or dealing which restricts, limits or impairs in any way the lawful transfer of ownership, change of beneficiary or assignment of a policy.

Sec. 9. Section 38a-465m of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2008):

(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, and sections 38a-465n to [38a-465q] 38-465p, inclusive, as amended by 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 [,] and 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, and viatical settlement brokers [and viatical settlement investment agents] during the viatication of a life insurance policy or certificate.

Sec. 10. Section 38a-465n of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2008):

(a) This section shall apply to the advertising of viatical settlement contracts [, viatical settlement purchase agreements or] and 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 this part 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] "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 [,] or 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.

(q) No advertising by any person shall solicit, market or otherwise promote the purchase of an insurance policy for the sole purpose of or with the primary emphasis on entering into a viatical settlement contract.

Sec. 11. Section 38a-465p of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2008):

[(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.]

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.

Sec. 12. Subsection (a) of section 38a-11 of the 2008 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2008):

(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, except that no filing fee shall be payable for a request for agent appointment by an insurance company domiciled in a state or foreign country which does not require any filing fee for a request for agent appointment for a Connecticut insurance company; (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; (C) a fee of forty dollars per year, or any portion thereof, for each license renewed; and (D) a fee of forty dollars for any license renewed under the transitional process established in section 38a-784; (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; 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 preferred provider networks, a fee of two thousand five hundred dollars for each license issued or renewed; [(27)] (26) with respect to rental companies, as defined in section 38a-799, a fee of forty dollars for each permit issued or renewed; [(28)] (27) with respect to medical discount plan organizations licensed under section 38a-479rr, a fee of five hundred dollars for each license issued or renewed; [(29)] (28) with respect to pharmacy benefits managers, an application fee of fifty dollars for each registration issued or renewed; and [(30)] (29) with respect to each duplicate license issued a fee of twenty-five dollars for each license issued.

Sec. 13. Subsection (a) of section 38a-25 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2008):

(a) The Insurance Commissioner is the agent for receipt of service of legal process on the following:

(1) Foreign and alien insurance companies authorized to do business in this state in any proceeding arising from or related to any transaction having a connection with this state.

(2) Fraternal benefit societies authorized to do business in this state.

(3) Insurance-support organizations as defined in section 38a-976, transacting business outside this state which affects a resident of this state.

(4) Risk retention groups, as defined in section 38a-250.

(5) Purchasing groups designating the Insurance Commissioner as agent for receipt of service of process pursuant to section 38a-261.

(6) Eligible surplus lines insurers authorized by the commissioner to accept surplus lines insurance.

(7) Except as provided by section 38a-273, unauthorized insurers or other persons assisting unauthorized insurers who directly or indirectly do any of the acts of insurance business as set forth in subsection (a) of section 38a-271.

(8) The Connecticut Insurance Guaranty Association and the Connecticut Life and Health Insurance Guaranty Association.

(9) Insurance companies designating the Insurance Commissioner as agent for receipt of service of process pursuant to subsection (g) of section 38a-85.

(10) Nonresident insurance producers and nonresident surplus lines brokers licensed by the Insurance Commissioner.

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

(12) Nonresident reinsurance intermediaries designating the commissioner as agent for receipt of service of process pursuant to section 38a-760b.

(13) Workers' compensation self-insurance groups, as defined in section 38a-1001.

(14) Persons alleged to have violated any provision of section 38a-130.

(15) Captive insurers, as defined in section 38a-91k.

Sec. 14. (Effective October 1, 2008) Section 38a-465q of the general statutes is repealed.

Statement of Purpose:

To make conforming changes to the viatical settlement statutes.

[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]