NAIC: Securitizing Life Insurance Settlements is Risky

WASHINGTON, D.C.—A relatively new phenomenon of securitizing life insurance settlements is drawing scrutiny from state regulators for potential risks to consumers in the financial marketplace, the National Association of Insurance Commissioners (NAIC) told Congress.

Testifying before the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, NAIC Vice President and Iowa Insurance Commissioner Susan Voss cautioned lawmakers about such innovative investment schemes.

Sometimes Necessary, But …

“Life insurance settlements are necessary transactions for some consumers, but they require appropriate regulation with a focus on disclosure and consumer protection,” Voss told

lawmakers. “This oversight is critical, particularly as stranger owned life insurance, or STOLI, continues to emerge.”

Beyond the Pale

Voss, who also regulates securities in her state, explained that “while such securitization is outside the jurisdiction of insurance regulators, we have concerns that securitization of life insurance settlements will incentivize would-be STOLI investors to attempt to expand the marketplace — much as securitization of mortgages helped dramatically expand that marketplace.”

Voss also raised concerns about the impact of securitization on policies that would otherwise lapse — requiring higher insurance premiums; and about the need to be certain that any securitization of life insurance settlements does not compromise the original policyholder’s rights and privacy.

hailstorm Pummels the
Bejeebers Out of el Paso

In This Issue

Trade Concession Puts U.S. Legal Protections in Jeopardy

EL PASO—El Paso’s east side was pounded by a violent hailstorm on Sept. 16. Insured losses have topped the $150 million mark, according to the Insurance Council of Texas.

Big “I” Notes: Large Agencies Continue hiring Producers

SELLING STRATEGIES: Will Obama Win the Olympics Race?

The fast-moving storm struck in the late afternoon, producing baseball size hail that pelted roofs, dented automobiles, and brought traffic on Interstate 10 to a standstill. An estimated 10,000 homes and 20,000 automobiles were damaged.

Foreclosed homes Create Added

Risks During hurricanes 10

TDI-DWC Names Utica Mutual

WC “high Performer” 11

“We had homes and businesses where people were ducking for cover because the hail was coming through the roofs,” said April Taylor, personal lines manager for continued on page 6

IT Spending for P&C Insurers Looks Flat through 2010

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