Life Insurance Settlement Association Applauds GAO and SEC Studies Validating the Life Settlement Option for Consumers

Category LISA
Posted Date 07/22/2010
Publish By Marketwire
Publish Date 07/22/2010
Rating Positive

Marketwire, 22 July 2010

Today the U.S. Government Accountability Office (GAO) and the U.S. Securities and Exchange Commission (SEC) both released large studies of the Life Settlement Industry, on which they had each worked for the last year, recognizing the growth of the life settlement market and, importantly, that life settlements are a valuable alternative to the lapse or surrender of a life insurance policy for American consumers.

The 120-page GAO report released today documents the emergence of the life settlement market, and the concomitant growth of regulation of the market. Most importantly, the GAO report provides conclusive evidence that American consumers benefit from the existence of a regulated life settlement market, documenting that life insurance policyowners received an average of 7 times more in a life settlement than if they had surrendered their policies back to the insurance company.

While citing that there are “inconsistencies” in state regulation, the report concludes that most states do regulate life settlements and that there are very few reports of consumer complaints in the life settlement market. LISA and its members have been champions of state regulation of life settlements and are proud that the laws on the books in 40 states today provide more protections and transparency for consumers than any other insurance transaction in the United States today.

The SEC report, also issued today almost a year after forming its internal Life Settlements Task Force, examined the history and growth of the life settlement market, with a particular emphasis on investor protection in the market. The SEC concludes the 90-page report with five recommendations for future action by the agency. LISA will be reviewing these recommendations and providing further comment as necessary. “The GAO and SEC reports document that life settlements are here to stay, that they provide tremendous value to consumers and that the rapid development of state regulation of the market, while not always uniform, has provided strong consumer protection in life settlement transactions,” said Doug Head, Executive Director of LISA. “More Americans should learn that before they surrender their policy back to the insurance company that they can sell it in a well-regulated market and receive an average of 700 percent more than the cash surrender value,” continued Head.

Forty states today have life settlement laws to protect consumers representing 86% of the nation’s consumers with legislation currently pending in several other states, most notably Massachusetts and Michigan. Most of these laws are based on model life settlement law adopted by the National Conference of Insurance Legislators in 2007 which ensures strong consumer protections in life settlement transactions. According to the National Association of Insurance Commissioners, since 2007, consistent with the adoption of new life settlement laws, there have been fewer than 20 reported complaints involving life settlement transactions from consumers. By comparison, the NAIC reported that state regulators had received approximately 80,000 consumer complaints involving life insurance and annuities. “LISA looks forward to continuing to work with all interested public policy makers to address the issues affecting our relatively small industry which has brought so much value to consumers in the face of great hostility from some historically large financial services players,” said Head.

About LISA

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 120 members with a wide variety of interests in the industry. For more about the association, visit www.thevoiceoftheindustry.com

Contact:
Doug Head
LISA Executive Director
doug@lisassociation.org  

DISCLAIMER: The trademarks and copyrighted material found on this page are property of their respective owners.