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1995 SESSION

LD5829476
HOUSE JOINT RESOLUTION NO. 566
Offered January 23, 1995
Requesting the Bureau of Insurance within the State Corporation Commission to study the need for regulation of viatical agreements.
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Patrons--Van Landingham, Almand, Cohen, Cooper, Cunningham, Darner, Jones, J.C., Plum, Scott and Van Yahres; Senators: Earley, Holland, E.M. and Miller, Y.B.
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Referred to Committee on Rules
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WHEREAS, many persons living with terminal illnesses are responsible, hard-working individuals who remain employed until very ill; and

WHEREAS, after becoming very sick, many terminally ill people must use their own resources to finance their treatment; and

WHEREAS, in 1990, life insurance issues related to “living benefits” or “accelerated benefits” were studied by the Joint Subcommittee Studying AIDS; and

WHEREAS, because the Commissioner and Bureau of Insurance had already begun to regulate these insurance provisions, the joint subcommittee did not recommend legislative action; and

WHEREAS, the term “viatical” is derived from the Latin, “viaticum,” meaning supplies or provisions for a journey and the communion bread given to the dying; and

WHEREAS, in recent years, unregulated activities referred to as “viatical settlements” have become more and more important as a means of securing financial assistance among terminally ill individuals; and

WHEREAS, unlike living or accelerated benefits which are only accessible to individuals with six-month life expectancies whose policies include such benefits, viatical agreements or settlements are available to individuals with two years or more in life expectancy; and

WHEREAS, the amount paid to the individual in a viatical settlement will depend on such factors as projected life expectancy, the policy's face value, disability premium waivers, potential for development of life-prolonging technology, litigation risks, policy type, the issuing company's finances, and interest rate fluctuations; and

WHEREAS, although no real crises have yet developed, at least one disaster was avoided in Florida through the quick action of the National Viatical Association, which bought the policies purchased by a failing company and honored the contracts; and

WHEREAS, several states have enacted regulatory statutes, and the National Association of Insurance Commissioners has proposed model law and regulations; and

WHEREAS, because the number of settlement firms is growing and settlement firms are an unregulated industry with an increasingly aggressive marketing approach targeted to terminally ill persons, it must be remembered that assignment of life insurance benefits without an insurable interest in the life of the person should only be made in good faith and not for a wager, and that such assignment must not promote an interest in the early death of the insured; and

WHEREAS, a terminally ill individual, frequently without other resources, should, however, have a right to utilize his life insurance to obtain funding for life-sustaining treatment, comfort or care; and

WHEREAS, there is, nonetheless, a need to protect terminally ill individuals from exploitation and unfair competition, to provide the public with complete and honest disclosure of the choices available and the tax and inheritance consequences, to protect medical record confidentiality, and to ensure financial viability in this new industry; now, therefore, be it

RESOLVED by the House of Delegates, the Senate concurring, That the Bureau of Insurance within the State Corporation Commission be requested to study the need for regulation of viatical agreements and to report its recommendations by December 1, 1995, to the Joint Subcommittee Studying the Issues, Policies and Programs Relating to Infection with Human Immunodeficiency Viruses. The Bureau of Insurance shall include in its study all of the issues noted in this resolution and shall evaluate the models proposed by the National Association of Insurance Commissioners and the views of the insurance and viatical industries.

The Bureau of Insurance shall complete its work in time to submit its findings and recommendations to the Governor and the 1996 Session of the General Assembly as provided in the procedures of the Division of Legislative Automated Systems for processing legislative documents.