Life Insurance Settlement Association Delivers House Testimony on Industry’s Value to Consumers and Dismisses the Media’s Sensationalist Take on the Industry

Category LISA
Posted Date 09/25/2009
Publish By Life Insurance Settlement Association
Publish Date 09/25/2009
Rating Positive

Life Insurance Settlement Association. 25 September 2009

Washington D.C.

Yesterday on Capitol Hill, Russel Dorsett, President of the Life Insurance Settlement Association (LISA) testified before Congress on the benefits of life settlements to American consumers. In testimony to the House Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises, Mr. Dorsett reported that American consumers have benefited greatly from the life settlement market and have received nearly $10 billion over the past decade, “making it possible for them to afford retirement, medical care, or simply to enjoy the lifestyle they have earned,” said Dorsett, continuing: “The average settlement pays policy owners 4 to 6 times the policy’s cash value.”

In the hearing entitled “Recent Innovations in Securitization,” Chairman Paul Kanjorski affirmed the fact that the life settlement industry is “well established and quickly growing,” while noting that the securitization of this industry remains in its “infancy.” Though recently, much sensational press has focused on the securitization of life settlements, yesterday’s hearing was brought back down to earth as Mr. Dorsett noted that “the number of transactions [securitized life settlements] actually completed can be counted on one hand—with several fingers left over.” Indeed, Mr. Dorsett established the clear and unambiguous distinction between the activities of a few Wall Street banks and the thousands of senior citizens who, each year, carefully weigh their financial options in favor of life settlements.

Ranking Member Rep. Scott Garrett (R - NJ) reinforced this distinction noting that there have only been a few actual securitizations totaling around $3 billion. Rep. Garrett appeared incredulous at the notion that such a sum could ever “pose a threat to the broader life insurance market.” “I kind of find hard to believe,” Rep. Garrett declared, as he noted the “total outstanding dollar amount of life insurance policies” to be approximately $27 trillion.

Responding to the Subcommittee’s concern over the recent abuses of Wall Street in other markets, Mr. Dorsett declared: “The life settlement marketplace isn’t actually about Wall Street at all. It is, rather, about providing older Americans with the opportunity to profit from an asset for which they have bought and paid. It is about allowing seniors to benefit from a life insurance policy while they are still around to enjoy it.”

In his opening remarks, subcommittee member Rep. Alan Grayson (D-FL) cautioned the committee to not confuse the Wall Street mischief that led to the current economic hardships with an industry that’s “helping people get the full value of their policies.” Rep. Grayson poignantly closed his remarks stating: “And I don’t think that this industry should be called upon to answer for the serious abuses that pervaded this economy in other areas over the past two years. And the sins of others should not descend on you.”

Attending the hearing was LISA Executive Director Doug Head. Asked his perspective on the outcome of the hearing, Mr. Head bluntly stated: “Today’s hearing helped clear much of the misconceptions circulating the press. But fear not, industry opponents will undoubtedly continue their attempts to link this consumer-driven industry with the excesses of Wall Street. Nothing could be further from the truth. If we learned anything from today’s discussion it must surely be that a small but truly extraordinary financial option must be preserved and protected for American seniors.”

As the life settlement industry’s largest and most respected membership organization, LISA has also recently volunteered to share its marketplace expertise with the U.S. Securities and Exchange Commission. Last month SEC Chairman Mary Schapiro established an internal task force to examine life settlements. LISA welcomes the opportunity to help the SEC better understand the distinction between life settlements and securities.

Established in 1994, the Life Insurance Settlement Association is the oldest and largest trade organization in the industry. Its goal is to promote the development, integrity, and reputation of the life settlement industry, and to promote a competitive market for the people it serves. LISA now represents over 140 members with a wide variety of interests in the industry. For more about the association, visit http://www.thevoiceoftheindustry.com/.

Contact:

Doug Head
LISA Executive Director
PH: 407-894-3797

Copyright 2009. Life Insurance Settlement Association.

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