Chapter 4 — Market Regulation

The secondary market for life insurance has attracted regulatory attention from the beginning. Early abuses — including fraud by both buyers and sellers — prompted states to begin licensing and regulating settlement companies and brokers. Federal agencies have also taken an interest, and the industry itself has developed self-regulatory mechanisms to promote ethical conduct and consumer protection.

The important points addressed in this chapter are:

• Abuses and fraudulent practices that have occurred in the settlement market
• State regulation of viatical and life settlement providers and brokers
• The role of federal agencies — including the SEC and FTC — in overseeing the market
• Florida’s Viatical Settlement Act and its key provisions
• Industry self-regulatory organizations and their standards