To amend chapter 376, RSMo, by adding thereto eleven new sections relating to consumer protection, with penalty provisions and an effective date.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF MISSOURI, AS FOLLOWS:

     Section A. Chapter 376, RSMo, is amended by adding thereto eleven new sections, to be known as sections 376.1100, 376.1102, 376.1104, 376.1106, 376.1108, 376.1110, 376.1112, 376.1114, 376.1116, 376.1118 and 376.1120, to read as follows:

     376.1100. 1. Sections 376.1100 to 376.1120 may be cited as the "Viatical Settlements Act".

     2. As used in sections 376.1100 to 376.1120, the following terms mean:

     (1) "Director", the director of the department of insurance;

     (2) "Person", any natural or artificial entity, including but not limited to, individuals, partnerships, associations, trusts or corporations;

     (3) "Viatical settlement broker", an individual, partnership, corporation or other entity who or which for another and for a fee, commission or other valuable consideration, offers or advertises the availability of viatical settlements, introduces viators to viatical settlement providers, or offers or attempts to negotiate viatical settlements between a viator and one or more viatical settlement providers. "Viatical settlement broker" does not include an attorney, accountant or financial planner retained to represent the viator whose compensation is not paid by the viatical settlement provider;

     (4) "Viatical settlement contract", a written agreement entered into between a viatical settlement provider and a person owning a life insurance policy or who owns or is covered under a group policy insuring the life of a person who has a catastrophic or life-threatening illness or condition. The agreement shall establish the terms under which the viatical settlement provider will pay compensation or anything of value, which compensation or value is less than the expected death benefit of the insurance policy or certificate, in return for the policy owner's assignment, transfer, sale, devise or bequest of the death benefit or ownership of the insurance policy or certificate to the viatical settlement provider;

     (5) "Viatical settlement provider", an individual, partnership, corporation or other entity that enters into an agreement with a person owning a life insurance policy or who owns or is covered under a group policy insuring the life of a person who has a catastrophic or life-threatening illness or condition, under the terms of which the viatical settlement provider pays compensation or anything of value, which compensation or value is less than the expected death benefit of the insurance policy or certificate, in return for the policy owner's assignment, transfer, sale, devise or bequest of the death benefit or ownership of the insurance policy or certificate to the viatical settlement provider. Viatical settlement provider does not include:

     (a) Any bank, savings bank, savings and loan association, credit union or other licensed lending institution which takes an assignment of a life insurance policy as collateral for a loan; or

     (b) Any natural person who enters into no more than one agreement in a calendar year for the transfer of life insurance policies for any value less than the expected death benefit;

     (6) "Viator", the owner of a life insurance policy insuring the life of a person with a catastrophic or life-threatening illness or condition or the certificate holder who enters into an agreement under which the viatical settlement provider will pay compensation or anything of value, which compensation or value is less than the expected death benefit of the insurance policy or certificate, in return for the viator's assignment, transfer, sale, devise or bequest of the death benefit or ownership of the insurance policy or certificate to the viatical settlement provider.

     376.1102. 1. No individual, partnership, corporation or other entity may act as a viatical settlement provider or enter into or solicit a viatical settlement contract without first having obtained a license from the director.

     2. Application for a viatical settlement provider license shall be made to the director by the applicant on a form prescribed by the director, and the application shall be accompanied by a fee of one hundred dollars.

     3. Licenses may be renewed from year to year on the anniversary date upon payment of the annual renewal fee of one hundred dollars. Failure to pay the fee within the terms prescribed shall result in the automatic revocation of the license.

     4. The applicant shall provide such information as the director may require on forms prepared by the director. The director shall have authority, at any time, to require the applicant to fully disclose the identity of all stockholders, partners, officers and employees, and the director may, in the exercise of discretion, refuse to issue a license in the name of any firm, partnership or corporation if not satisfied that any officer, employee, stockholder or partner thereof who may materially influence the applicant's conduct meets the standards of sections 376.1100 to 376.1120.

     5. A license issued to a partnership, corporation or other entity authorizes all members, officers and designated employees to act as viatical settlement providers under the license, and all those persons must be named in the application and any supplements to the application.

     6. Upon the filing of an application and the payment of the license fee, the director shall make an investigation of each applicant and may issue a license if the director finds that the applicant:

     (1) Has provided a detailed plan of operation;

     (2) Is competent and trustworthy and intends to act in good faith in the capacity involved by the license applied for;

     (3) 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; and

     (4) If a corporation, is incorporated under the laws of this state or a foreign corporation authorized to transact business in this state.

     7. The director shall not issue any license to any nonresident applicant, unless a written designation of an agent for service of process is filed and maintained with the director or unless the applicant has filed with the director the applicant's written irrevocable consent that any action against the applicant may be commenced against the applicant by service of process on the director.

     376.1104. 1. The director may suspend, revoke or refuse to renew the license of any viatical settlement provider if the director finds that:

     (1) There was any misrepresentation in the application for the license;

     (2) The holder of the license has been guilty of fraudulent or dishonest practices, is subject to a final administrative action or is otherwise shown to be untrustworthy or incompetent to act as a viatical settlement provider;

     (3) The licensee demonstrates a pattern of unreasonable payments to policy owners;

     (4) The licensee has been convicted of a felony or any misdemeanor of which criminal fraud is an element; or

     (5) The licensee has violated any of the provisions of sections 376.1100 to 376.1120.

     2. Before the director shall deny a license application or suspend, revoke or refuse to renew the license of a viatical settlement provider, the director shall conduct a hearing in accordance with chapter 536, RSMo.

     376.1106. No viatical settlement provider may use any viatical settlement contract in this state unless it has been filed with and approved by the director. Any viatical settlement contract form filed with the director shall be deemed approved if it has not been disapproved within sixty days of the filing. The director shall disapprove a viatical settlement contract form if, in the director's opinion, the contract or provisions contained therein are unreasonable, contrary to the interests of the public, or otherwise misleading or unfair to the policy owner.

     376.1108. Each licensee shall file with the director on or before the first day of March of each year an annual statement containing such information as the director by rule may prescribe.

     376.1110. 1. The director may, when the director deems it reasonably necessary to protect the interests of the public, examine the business and affairs of any licensee or applicant for a license. The director may order any licensee or applicant to produce any records, books, files or other information reasonably necessary to ascertain whether or not the licensee or applicant is acting or has acted in violation of the law or otherwise contrary to the interests of the public. The expenses incurred in conducting any examination shall be paid by the licensee or applicant.

     2. Names and individual identification data for all viators shall be considered private and confidential information and shall not be considered public records nor disclosed by the director unless otherwise specifically required by law.

     3. Records of all transactions of viatical settlement contracts shall be maintained by the licensee and shall be available to the director for inspection during reasonable business hours.

     376.1112. A viatical settlement provider shall disclose the following information to the viator no later than the date the viatical settlement contract is signed by all parties:

     (1) Possible alternatives to viatical settlement contracts for persons with catastrophic or life-threatening illnesses, including, but not limited to, accelerated benefits offered by the issuer of the life insurance policy;

     (2) That some or all of the proceeds of the viatical settlement may be taxable, and that assistance should be sought from a personal tax advisor;

     (3) That the viatical settlement could be subject to the claims of creditors;

     (4) That receipt of a viatical settlement may adversely affect the recipients' eligibility for public assistance or other government benefits or entitlements, and that advice should be obtained from the appropriate agencies;

     (5) The policy owner's right to rescind a viatical settlement contract within thirty days of the date it is executed by all parties or fifteen days of the receipt of the viatical settlement proceeds by the viator, whichever is less, as provided in subsection 3 of section 376.1114; and

     (6) The date by which the funds will be available to the viator and the source of the funds.

     376.1114. 1. A viatical settlement provider entering into a viatical settlement contract with any person with a catastrophic or life-threatening illness or condition shall first obtain:

     (1) A written statement from a licensed attending physician that the person is of sound mind and under no constraint or undue influence; and

     (2) A witnessed document in which the person consents to the viatical settlement contract, acknowledges the catastrophic or life-threatening illness, represents that such person has a full and complete understanding of the viatical settlement contract, that such person has a full and complete understanding of the benefits of the life insurance policy, releases medical records, and acknowledges that such person has entered into the viatical settlement contract freely and voluntarily.

     2. All medical information solicited or obtained by any licensee shall be subject to the applicable provision of state law relating to confidentiality of medical information, including section 191.227, RSMo.

     3. All viatical settlement contracts entered into in this state shall contain an unconditional refund provision of at least thirty days from the date of the contract, or fifteen days of the receipt of the viatical settlement proceeds, whichever is less.

     4. Immediately upon receipt from the viator of documents to effect the transfer of the insurance policy, the viatical settlement provider shall pay the proceeds of the settlement to an escrow or trust account managed by a trustee or escrow agent in a bank approved by the director pending acknowledgement of the transfer by the issuer of the policy. The trustee or escrow agent shall be required to transfer the proceeds due to the viator immediately upon receipt of acknowledgement of the transfer from the insurer.

     5. Failure to tender the viatical settlement by the date disclosed to the viator renders the contract null and void.

     376.1116. The director may:

     (1) Promulgate regulations implementing sections 376.1100 to 376.1120, pursuant to section 376.982 and chapter 536, RSMo; and

     (2) Establish standards for evaluating reasonableness of payments under viatical settlement contracts. This authority includes, but is not limited to, regulation of discount rates used to determine the amount paid in exchange for assignment, transfer, sale, devise or bequest of a benefit under a life insurance policy; and

     (3) Establish appropriate licensing requirements and fees for agents and brokers; and

     (4) Require a bond.

     376.1118. A violation of sections 376.1100 to 376.1120 shall be considered an unfair trade practice under sections 375.930 to 375.948, RSMo, and subject to the penalties contained in sections 375.930 to 375.948, RSMo.

     376.1120. Sections 376.1100 to 376.1120 shall take effect on January 1, 1998. No viatical settlement provider transacting business in this state may continue to do so after January 1, 1998, unless it is in compliance with sections 376.1100 to 376.1120.