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The Vermont Statutes Online
Title
08
:
Banking and Insurance
Chapter
103
:
LIFE INSURANCE POLICIES AND ANNUITY CONTRACTS
Subchapter
005B
:
LIFE SETTLEMENTS
§
3836. License and bond requirements
(a) Life
settlement providers.
(1) No person
shall operate as a life settlement provider without first obtaining a license
from the commissioner.
(2) Application
for a life settlement provider license shall be made to the commissioner by the
applicant on a form prescribed by the commissioner, and the application shall
be accompanied by an application fee of $50.00 and a license fee of $400.00.
(3) Licenses may
be renewed from year to year on a date prescribed by the commissioner of the
odd-numbered year next following the date of issuance upon payment of a
biennial renewal fee of $400.00. Failure to pay the fee by the renewal date
shall result in expiration of the license.
(4) The
applicant shall provide information on forms required by the commissioner. The
commissioner shall have authority at any time to require the applicant to
disclose fully the identity of all stockholders, partners, officers, members,
and employees, and the commissioner may, in the exercise of the commissioner's
discretion, refuse to issue a license in the name of a legal entity if not
satisfied that any officer, employee, stockholder, partner, or member thereof
who may materially influence the applicant's conduct meets the standards of
this subchapter.
(5) Upon the
filing of an application and the payment of the license fee, the commissioner
shall make an investigation of each applicant and issue a license if the
commissioner finds that the applicant:
(A) has provided
a detailed and sound plan of operation;
(B) is competent
and trustworthy and intends to act in good faith in the capacity involved by
the license applied for;
(C) has a good
business reputation and has had experience, training, or education so as to be
qualified in the business for which the license is applied for;
(D) has
demonstrated evidence of financial responsibility in a format and in substance
as prescribed by the commissioner through a surety bond executed and issued by
an insurer authorized to issue surety bonds in this state in the amount set
forth below, or a letter of credit in the amount set forth below on a form and
in a manner approved by the commissioner, or such other amount as the
commissioner may require. The commissioner may ask for evidence of financial
responsibility at any time the commissioner deems necessary. Any surety bond or
letter of credit issued pursuant to this subdivision shall be solely in the
favor of this state and shall specifically authorize recovery by the
commissioner on behalf of any person in this state who sustained damages as the
result of erroneous acts, failure to act, conviction of fraud, or conviction of
unfair practices by the life settlement provider. The minimum amount of the
bond or letter of credit shall be based on the annual aggregate life settlement
payments attributable to the licensee to policy owners in Vermont, as follows.
The commissioner may adjust by rule the ranges established below if necessary
to be consistent with the aggregate payment data filed in annual statements
pursuant to section 3839 of this title:
(i) $0.00 to
$1,000,000.00, a bond or letter of credit not less than $50,000.00;
(ii)
$1,000,000.01 to $15,000,000.00, a bond or letter of credit not less than
$100,000.00;
(iii)
$15,000,000.00 or more, a bond or letter of credit not less than $150,000.00;
and
(E) has provided
an anti-fraud plan that meets the requirements of section 3847 of this
subchapter.
(6) The
commissioner shall not issue a license to a nonresident applicant unless a
written designation of an agent for service of process is filed and maintained
with the secretary of state or the applicant has filed with the commissioner
the applicant's written irrevocable consent that any action against the
applicant may be commenced against the applicant by service of process on the
secretary of state, in accordance with section 1633 of Title 11.
(7) A life
settlement provider shall provide to the commissioner new or revised
information about officers, stockholders holding 10 percent or more, partners,
directors, members, or designated employees within 30 days of the change.
(b) Life
settlement broker.
(1) A person
shall not operate as a life settlement broker without first obtaining a license
from the commissioner.
(2) A person
licensed as an attorney or certified public accountant who is retained to
represent the policy owner and whose compensation is not paid directly or
indirectly by the life settlement provider may negotiate life settlement
contracts on behalf of the policy owner without having to obtain a license as a
life settlement broker.
(3) Application
for a life settlement broker license shall be made to the commissioner by the
applicant on a form prescribed by the commissioner, and the application shall
be accompanied by an application fee of $30.00 and a license fee of $100.00.
(4) Licenses may
be renewed by the commissioner on the even-numbered year next following the
date of issuance upon payment of a biennial renewal fee of $100.00. Failure to
pay the fee by the renewal date shall result in expiration of the license.
(5) The
applicant shall provide information on forms required by the commissioner.
(6) Upon the
filing of an application and the payment of the license fee, the commissioner
shall make an investigation of each applicant and issue a license if the
commissioner finds that the applicant:
(A) is competent
and trustworthy.
(B) has a good
business reputation and has had at least two years' prior experience as a
licensed life insurance producer.
(C) has
demonstrated evidence of financial responsibility in a format and in substance
as prescribed by the commissioner through a surety bond executed and issued by
an insurer authorized to issue surety bonds in this state in the amount set
forth below, or a letter of credit in the amount set forth below on a form and
in a manner approved by the commissioner, or such other amount as the
commissioner may require. The commissioner may ask for evidence of financial
responsibility at any time the commissioner deems necessary. Any surety bond or
letter of credit issued pursuant to this subdivision shall be solely in the
favor of this state and shall specifically authorize recovery by the
commissioner on behalf of any person in this state who sustained damages as the
result of erroneous acts, failure to act, conviction of fraud, or conviction of
unfair practices by the life settlement broker. The minimum amount of the bond
or letter of credit shall be based on the annual aggregate life settlement
payments attributable to the licensee to policy owners in Vermont, as follows.
The commissioner may adjust by rule the ranges established below if necessary
to be consistent with the aggregate payment data filed in annual statements
pursuant to section 3839 of this title:
(i) $0.00 to
$2,000,000.00, a bond or letter of credit not less than $25,000.00;
(ii)
$2,000,000.01 to $5,000,000.00, a bond or letter of credit not less than
$50,000.00;
(iii)
$5,000,000.01 to $15,000,000.00, a bond or letter of credit not less than
$75,000.00; and
(iv)
$15,000,000.01 and more, a bond or letter of credit not less than $100,000.00.
(7) The
commissioner shall not issue a license to a nonresident applicant unless a
written designation of an agent for service of process is filed and maintained
with the commissioner or the applicant has filed with the commissioner the
applicant's written irrevocable consent that any action against the applicant
may be commenced against the applicant by service of process on the secretary
of state, in accordance with section 1633 of Title 11.
(8) An
individual licensed as a life settlement broker shall complete on a biennial
basis an additional 15 hours of life insurance producer training related to
life settlements and life settlement transactions as determined by the
commissioner. Such additional training requirements shall be approved for
education under section 4800a of this title. Any person failing to meet the
requirements of this subsection shall be subject to the penalties imposed by
the commissioner.
(9) No life
settlement broker may charge or receive a fee, a commission, or other valuable
consideration in excess of two percent of the amount paid by the life
settlement company to the policy owner on a policy that is the subject of the
life settlement broker's services. Upon the written request of the life
settlement broker and after conferring with the policy owner, the commissioner
may approve another rate of compensation as reasonable and appropriate under
highly unusual circumstances.
(c) The insurer
that issued the policy subject to a life settlement shall not be responsible
for any act or omission of a life settlement broker or life settlement provider
arising out of or in connection with the life settlement transaction unless the
insurer receives compensation for the placement of a life settlement contract
from the life settlement provider or life settlement broker in connection with
the life settlement contract. (Added 2009, No. 53, § 1, eff. Jan. 1, 2010.)