Earlier this month, California’s Assembly Committee on Insurance and the Appropriations Committee unanimously passed SB 1543, a bill regulating life settlements. For previous discussions on state regulation of life settlements, see our posts here, here, here and here. SB 1543, which is largely based on the NCOIL Model Act, imposes a two-year ban on life settlement transactions.
SB 1543 is similar to an earlier life settlement bill, SB 1224, which was approved by the California Senate in June, but failed in a California Assembly Committee due to a stalemate between the two houses. Proponents of SB 1543 are confident that it will avoid the fate of its predecessor.
SB 1543 has received support from trade groups representing the life settlement and insurance industries. The California Life Settlement Association, however, opposes SB 1543 claiming that its definition of Stranger-Originated Life Insurance (STOLI) is vague and ambiguous and would invite lawsuits.
SB 1543 will now head to the California Assembly floor for a full vote. If enacted, SB 1543 would take effect July 2009.