Late last month, the California legislature approved California Senate Bill 1543 which targets stranger originated life insurance (“STOLI”) transactions. See our earlier post on SB 1543 here.
SB 1543 is generally based on the NCOIL Model Act, imposing a two-year ban on life settlements, establishing a statutory definition of STOLI and classifying such transactions as fraudulent acts. SB 1543 also requires licensed life settlement providers to provide annual statements to the California Insurance Department on the policies settled during the immediate preceding calendar year.
Trade groups such as the National Association of Insurance and Financial Advisors, and the Association for Advanced Life Underwriting have expressed strong support for the legislation. Additionally, the American Council of Life Insurers has noted that, if signed into law, California would become the 13th state to enact such legislation. Governor Schwarzenegger has until September 30th, to sign or veto the bill. If passed, SB 1543 will take effect July 1, 2009.