GALLAGHER COMMENDS STATE LAWMAKERS FOR APPROVING INVESTOR PROTECTION LEGISLATION
Florida’s Chief Financial Officer Tom Gallagher applauded lawmakers for approving legislation to better protect Florida investors from viatical companies that commit fraud or fail to properly disclose the risks involved when investing in viatical settlements. The legislation, which would define viatical settlements as “securities,” was unanimously approved by the Florida House of Representatives. The Florida Senate passed the bill last week.
“The legislation approved by lawmakers will enable us to proactively protect investors and aggressively pursue fraudulent practices in this industry,” said Gallagher, who oversees the Florida Department of Financial Services
Gallagher thanked Senator Rudy Garcia from Miami and Representative Dudley Goodlette from Naples for their efforts to champion the legislation. "I commend Senator Garcia and Representative Goodlette for the leadership and courage they displayed in promoting this legislation," he said.
Viatical settlement providers match those who want to sell their life insurance policies at a discount to investors willing to buy the rights to those policies.
For investors, the new law would mean access to company information, any promises made to investors would have to be documented and approved by state regulators, and a determination of the investment’s suitability would have to be considered, including the purchaser’s financial and tax status, and the purchaser’s investment objectives.
To also better protect investors from fraud, the bill requires individuals who estimate the life expectancies on policies purchased by investors to be registered with the Office of Insurance Regulation. Viatical settlement companies would also be required to provide regulators the names of the life expectancy providers it has used. The legislation would also require brokers selling viaticals to be licensed with the Office of Financial Regulation.
Fraud in this industry has potentially cost investors up to $2 billion in losses since 1996. The average age of the investor defrauded is 70 years old and the average loss is $40,000. Currently, Florida is one of only four states that doesn’t regulate investments in viaticals as securities.
The bill now heads to Governor Bush for signature.