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Ohio adopts updated viatical settlement law
Ohio is the first state to pass viatical settlement legislation based upon the National Association of Insurance Commissioners' (NAIC) revised Viatical Settlements Model Act. The new legislation, signed into law on Jan. 5, 2001, gives the Ohio Department of Insurance (DOI) jurisdiction over the viatical industry, including the areas of fraud control and broker licensing.
The new law expands the definition of viatical settlements to include life settlements and senior settlements. Life settlements are the sale of life insurance policies by healthy individuals in exchange for cash, and so-called "senior settlements" are the sale of life insurance policies by senior citizens who do not need life insurance or cannot pay the premiums.
Neither life nor senior settlements were previously regulated alongside viatical settlements. The NAIC updated its Viatical Settlements Model Act in December 2000, and Ohio is the first state to adopt the changes.
Viatical providers or brokers must now be licensed by the DOI before engaging in viatical sales. Brokers are required to make full disclosure regarding their role in the transaction and how they will be compensated. The act also includes detailed definitions of viatical fraud, outlining penalties for violation, and requires licensed viatical providers and brokers to provide an "anti-fraud plan" detailing their efforts to prevent and report viatical fraud.
The law also prohibits brokers from entering into a viatical settlement contract on a life insurance policy they have sold within the first two years that the policy is in-force.