§3836. License and bond requirements

Link to law: http://legislature.vermont.gov/statutes/section/08/103/03836
Published: 2015

Print

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.)
Read Entire Law on legislature.vermont.gov