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Ohio Laws and Rules
(A) Authority and purpose
Authority. Section 3901.041 of the Revised Code provides that the superintendent of insurance shall adopt, amend, and rescind rules and make adjudications, necessary to discharge his duties and exercise his powers under Chapters 1751. and 1753. and Title XXXIX of the Ohio Revised Code. This rule is promulgated under authority to provide for the regulation of viatical settlement brokers and providers authorized by sections 3916.01 to 3916.21 and 3916.99 of the Revised Code.
Purpose. Section 3916.01 to 3916.21 and 3916.99 of the Revised Code establish regulatory standards for viatical settlement brokers and providers. The purpose of this rule is to define the additional standards and procedures the superintendent of insurance has adopted.
(B) Definitions. As used in this rule:
(1)
(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 other person that has a direct ownership interest in a policy or certificate that is the subject of a viatical settlement contract and to which both of the following apply:
(i) Its principal activity related to the transaction is providing funds to effect the viatical settlement or the purchase of one or more viaticated policies.
(ii) It 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 non-accredited investor or viatical settlement purchaser.
(2) Notwithstanding section 1.59 of the Revised Code, “person” means a natural person or a legal entity, including, but not limited to, an individual, partnership, limited liability company, association, trust, or corporation.
(3) “Policy” means an individual or a group policy, group certificate, contract, or arrangement of insurance affecting the rights of a resident of this state or bearing a reasonable relation to this state, regardless of whether delivered or issued for delivery in this state.
(4) “Related provider trust” means a titling trust or any other trust established by a licensed viatical settlement provider or a financing entity for the sole purpose of holding ownership or beneficial interest in purchased policies in connection with a financing transaction, provided that the trust has a written agreement with the licensed viatical settlement provider under which the licensed viatical settlement provider is responsible for ensuring compliance with all statutory and regulatory requirements and under which the trust agrees to make all records and files related to viatical settlement transactions available to the superintendent as if those records and files were maintained directly by the licensed viatical settlement provider.
(5) “Special purpose entity” means a corporation, partnership, trust, limited liability company or other similar entity formed solely to provide access, either directly or indirectly, to institutional capital markets for a financing entity or licensed viatical settlement provider.
(6)
(a) “Viatical settlement broker” means a person that, on behalf of a viator and for a fee, commission, or other valuable consideration, offers or attempts to negotiate viatical settlements between a viator and one or more viatical settlement providers.
(b) “Viatical settlement broker” does not include an attorney, a certified public accountant, or a financial planner accredited by a nationally recognized accreditation agency, who is retained to represent the viator and whose compensation is not paid directly or indirectly by the viatical settlement provider or purchaser.
(7) “Viatical settlement contract” means any of the following:
(a) A written agreement establishing the terms under which compensation or any thing of value, that is less than the expected death benefit of the insurance policy or certificate will be paid in return for the viator’s assignment, transfer, sale, devise, or bequest of the death benefit or ownership of any portion of the insurance policy or certificate of insurance;
(b) A contract for a loan or any other financing transaction secured primarily by an individual or group life insurance policy or certificate, other than a loan by a life insurance company pursuant to the terms of the life insurance contract or a loan secured by the cash value of a policy or certificate.
(c) An agreement to transfer ownership or change the beneficiary designation of the policy or certificate at a later date, regardless of the date that compensation is paid to the viator.
(8)
(a) “Viatical settlement provider” means a person, other than a viator, that enters into or effectuates a viatical settlement contract.
(b) “Viatical settlement provider” does not include any of the following:
(i) A bank, savings bank, savings and loan association, credit union, or other financial institution that takes an assignment of a life insurance policy or certificate as collateral for a loan;
(ii) The issuer of a life insurance policy or certificate providing accelerated benefits as defined in section 3915.21 of the Revised Code and pursuant to the contract;
(iii) An individual who enters into or effectuates not more than one agreement in any calendar year for the transfer of life insurance policies or certificates for any value less than the expected death benefit;
(iv) An authorized or eligible insurer that provides stop loss coverage to a viatical settlement provider, purchaser, financing entity, special purchase entity, or related provider trust;
(v) A financing entity;
(vi) Special purchase entity;
(vii) A related provider trust;
(viii) A viatical settlement purchaser.
(9) “Viaticated policy” means a life insurance policy or certificate that has been acquired by a viatical settlement provider pursuant to a viatical settlement contract.
(10)
(a) “Viator” means the owner of a life insurance policy or certificate holder under a group policy who, in return for compensation or any thing of value that is less than the expected death benefit of the policy or certificate, assigns, transfers, sells, devises, or bequests the death benefit or ownership of any portion of the insurance policy or certificate of insurance. For the purposes of this chapter, a “viator” is not limited to an owner of a life insurance policy or a certificate holder under a group policy insuring the life of an individual with a terminal or chronic illness or condition except where specifically addressed.
(b) “Viator” does not include any of the following:
(i) A licensee under this chapter;
(ii) An accredited investor or qualified institutional buyer as defined respectively in regulation D, Rule 501 or Rule 144A of the Securities Act of 1933, as amended;
(iii) A financing entity;
(iv) A special purpose entity;
(v) A related provider trust.
(11)
(a) “Viatical settlement purchaser” means a person who gives a sum of money as consideration for a life insurance policy or an interest in the death benefits of a life insurance policy, or a person who owns, acquires, or is entitled to a beneficial interest in a trust that owns a viatical settlement contract or is the beneficiary of a life insurance policy that has been or will be the subject of a viatical settlement contract, for the purpose of deriving an economic benefit.
(b) “Viatical settlement purchaser” does not include any of the following:
(i) A licensee under this chapter;
(ii) An accredited investor or qualified institutional buyer as defined respectively in regulation D, Rule 144A of the Securities Act of 1933, as amended;
(iii) A financing entity;
(iv) A special purpose entity;
(v) A related provider trust;
(C) Application for license
An application for a viatical settlement broker or viatical settlement provider license shall be accompanied by all of the following:
(1) A nonrefundable filing fee in the amount of:
(a) If applying for a viatical settlement broker license: $200.00;
(b) If applying for a viatical settlement provider license: $1,000.00.
(2) A criminal records check conducted by the superintendent of the bureau of criminal identification and investigation in accordance with section 109.572 of the Revised Code. The applicant shall direct that the bureau’s written response to that request by transmitted to the superintendent of insurance, or to the superintendent’s designee, as specified on the form prescribed pursuant to that section. The superintendent of insurance, in the superintendent’s discretion may designate other governmental agencies or other sources to conduct the criminal records check. If other than an individual applicant, a criminal records check shall be submitted by each partner, officer, member, or designated employee of the person authorized to act as a viatical settlement broker or viatical settlement provider. The applicant shall pay any fee required for conducting the criminal records check.
(3) If applying for a viatical settlement provider license, a copy of the most recent audited financial statement, or, if an audited financial statement is not available, the superintendent may accept a financial statement certified as true and accurate by the chief financial officer of the applicant. These financial statements must demonstrate suitable fiscal soundness and capacity for the viatical settlement provider to operate and meet its obligations under Chapter 3916 of the Revised Code.
(4) If applicable, a copy of the articles of incorporation or organization, partnership agreement, trust agreement, or other such organizational documents of the applicant certified by the proper domiciliary official, and proof of registration with the Ohio secretary of state’s office.
(5) If a nonresident applicant, and required to be licensed in the applicant’s domicile state, a certificate of good standing from the applicant’s domicile state.
(6) A detailed plan of operation which addresses the following items:
(a) A description of the corporation organizational structure of the applicant, its parent company and all affiliates.
(b) A description of the procedures used by the applicant to ensure that viatical settlement proceeds will be sent to the viator within three business days as provided in section 3916.09 of the Revised Code.
(c) A description of the procedures used by the applicant to ensure that an insured’s identity, individual identification data, financial, and medical information are kept confidential as provided in section 3916.13 of the Revised Code.
(d) A description of the anti-fraud program.
(7) Copies of all contract, application, and disclosure forms intended for use in Ohio.
(8) Such other information as the superintendent may request.
(D) License renewal
In support of the application for license renewal, a viatical settlement broker or viatical settlement provider shall submit:
(1) A nonrefundable fee in the amount of:
(a) If a viatical settlement broker: $100.00;
(b) If a viatical settlement provider: $500.00.
Effective: 04/13/2006
R.C. 119.032 review dates: 12/21/2005 and 12/21/2010
Promulgated Under: 119.03
Statutory Authority: 3901.041, 3916.20, 3916.03
Rule Amplifies: 3916.01 to 3916.21 and 3916.99
Prior Effective Dates: 10/11/2001