A key state insurance official has called upon the life settlements industry to keep Main Street policyholders in mind — or else.
Speaking at the Life Insurance Settlement Association's 15th annual conference in New York last Monday, Michael McRaith, director of the Illinois Division of Insurance, implored the attendees — including settlement brokers and financers — to bear in mind the senior citizens who are selling their policies on the secondary market.
Life settlements have been an area of focus for regulators and legislators, leading to two congressional hearings on the issue this year.
Mr. McRaith testified at one such hearing in April, speaking before the Senate Special Committee on Aging.
At last week's conference, he brought a laminated full-page ad from the Chicago Tribune that invited people 50 to 85 to meet ex-Chicago Bears coach Mike Ditka and “understand why Wall Street wants to buy your life insurance policy.”
“The point for you to understand is that while you sit in this conference and learn about this industry, there are people throughout the state of Illinois and throughout the country who are inviting seniors for continental breakfasts at the Best Western, where they learn about free life insurance,” Mr. McRaith said. “These are very serious problems for many seniors who are not as sophisticated as you would envision your clients and consumers.”
To that effect, Illinois has a law going into effect July 1 that will require individuals engaged in the solicitation and marketing of life settlements to seniors to be licensed as insurance producers, thus bringing them under the state insurance department's purview. Under that law, disreputable practices could be subject to criminal prosecution, Mr. McRaith said.
He predicted that if the states don't “get their act together” in the next few years, federal standards and laws regulating the transactions could come into play and states could be responsible for enforcing them.
“As you discuss the Wall Street angle, there is very much a Main Street impact, and this is what my world is focused on,” Mr. McRaith said.
E-mail Darla Mercado at [email protected].
