“Recklessly" means in conscious and clearly unjustifiable disregard of a substantial likelihood of the existence of the relevant facts or risks, the disregard involving a gross deviation from acceptable standards of conduct.
“Related provider trust" means a trust that is established by a licensed provider or a financing entity for the sole purpose of holding the ownership or beneficial interest in purchased policies in connection with a financing transaction and that has a written agreement with the licensed provider under which the licensed provider is responsible for ensuring compliance with all statutory and regulatory requirements and under which the trust agrees to make all records and files relating to life settlement transactions available to the commissioner as if those records were maintained directly by the licensed provider.
“Settled" means, with respect to a policy, acquired by a provider under a life settlement contract.
“Special purpose entity" means a corporation, partnership, trust, limited liability company, or other similar entity formed solely to provide either direct or indirect access to institutional capital markets either for a financing entity or provider or in connection with a transaction in which the securities in the special purpose entity are either acquired by the owner or by a qualified institutional buyer, as defined in 17 CFR 230.114
A (a) (1) or pay a fixed rate of return commensurate with established asset-backed institutional capital markets.
“Stranger-originated life insurance" or “STOLI" means an act, practice, plan, or arrangement, individually or in concert with others, to initiate a life insurance policy for the benefit of a 3rd-party investor who, at the time of policy origination, has no insurable interest in the insured. STOLI includes cases in which life insurance is purchased with resources or guarantees from or through a person or entity who, at the time of policy inception, could not lawfully initiate the policy by the person or entity, and in which, at the time of inception, there is an arrangement or agreement, whether verbal or written, to directly or indirectly transfer the ownership of the policy or the policy benefits to a 3rd party. Trusts that are created to give the appearance of insurable interest, and are used to initiate policies for investors, violate insurable interest laws under s. 631.07
and the common law prohibition against wagering on life. STOLI does not include a loan, agreement, assignment, arrangement, or transaction set forth in sub. (1) (j) 2.
“Terminally ill" means having an illness or sickness that can reasonably be expected to result in death in 24 months or less.
No person may act as a provider or broker for an owner, without holding a license from the commissioner.
A licensed attorney or a certified public accountant who is retained to represent the owner and whose compensation is not paid directly or indirectly by the provider or purchaser may negotiate life settlement contracts on behalf of the owner without having to obtain a license as a broker.
An applicant shall make an application for a license to the commissioner on a form prescribed by the commissioner. For a broker's license, the applicant shall submit the fee specified in s. 601.31 (1) (mr)
, subject to s. 601.31 (2m)
. For a provider's license, the applicant shall submit the fee specified in s. 601.31 (1) (mm)
, subject to s. 601.31 (2m)
The commissioner may not issue a license under this subsection unless the applicant provides his or her social security number or its federal employer identification number or, if the applicant does not have a social security number, a statement made or subscribed under oath or affirmation that the applicant does not have a social security number. An applicant who is providing a statement that he or she does not have a social security number, shall provide that statement along with the application for a license on a form prescribed by the department of children and families. A licensee shall provide to the commissioner the licensee's social security number, statement the licensee does not have the social security number, or federal employment identification number of the licensee at the time that the annual license renewal fee is paid, if not previously provided. The commissioner shall disclose a social security number obtained from an applicant or licensee to the department of children and families in the administration of s. 49.22
, as provided in a memorandum of understanding entered into under s. 49.857
. The commissioner may disclose the social security number or federal employment identification number of an applicant or licensee to the department of revenue for the purpose of requesting certifications under s. 73.0301
and to the department of workforce development for the purpose of requesting certifications under s. 108.227
The commissioner shall refuse to issue or renew a license under this subsection if the person is delinquent in court-ordered payments of child or family support, maintenance, birth expenses, medical expenses, or other expenses related to the support of a child or former spouse, or if the person fails to comply, after appropriate notice, with a subpoena or warrant issued by the department of children and families or a county child support agency under s. 59.53 (5)
and related to paternity or child support proceedings, as provided in a memorandum of understanding entered into under s. 49.857
The commissioner shall refuse to issue or renew a license under this subsection if the department of revenue certifies under s. 73.0301
that the applicant for the license or renewal of the license is liable for delinquent taxes or if the department of workforce development certifies under s. 108.227
that the applicant for the license or renewal of the license is liable for delinquent unemployment insurance contributions.
The applicant shall provide information that the commissioner may require on forms prepared by the commissioner. The commissioner may require the applicant, at any time, to fully disclose the identity of its partners, officers, employees, and stockholders, except stockholders owning fewer than 10 percent of the shares of an applicant whose shares are publicly traded. The commissioner may refuse to issue a license if not satisfied that any officer, employee, stockholder, or partner who may materially influence the applicant's conduct meets the standards of this section.
A license issued to a partnership, corporation, or other entity authorizes all members, officers, and designated employees to act as a licensee under the license, if those persons are named in the application or any supplements to the application.
Upon the filing of an application and the payment of the license fee, the commissioner shall make an investigation of each applicant and shall issue a license if the commissioner finds that the applicant satisfies all of the following:
If applying for a provider license, has provided a detailed plan of operation.
Is competent and trustworthy and intends to transact its business in good faith.
Has a good business reputation and has either the experience, training, or education so as to be qualified in the business for which the license is applicable.
If applying for a provider license, has demonstrated evidence of financial responsibility in a format prescribed by the commissioner through either a surety bond executed and issued by an insurer authorized to issue surety bonds in this state or a deposit of cash, certificates of deposit, or securities or any combination of those in the amount of $250,000. Any surety bond issued under this subd. 4. a.
shall be in the favor of this state and shall specifically authorize recovery by the commissioner on behalf of any person in this state who sustains damages as the result of erroneous acts, failure to act, conviction of fraud, or conviction of unfair practices by the provider. The commissioner shall accept as evidence of financial responsibility proof that financial instruments in accordance with the requirements in this subd. 4. a.
have been filed in one state where the applicant is licensed as a provider.
If applying for a broker license, has provided proof of the acquisition of a policy of professional liability insurance in an amount that is satisfactory to the commissioner.
If the applicant is a legal entity, is formed or organized under the laws of this state or is a foreign legal entity authorized to transact business in this state, or provides a certificate of good standing from the state of its domicile.
Has provided to the commissioner an antifraud plan that meets the requirements of sub. (15) (i)
The commissioner may request evidence of financial responsibility under par. (g) 4.
from an applicant at any time the commissioner deems necessary.
The commissioner 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 commissioner or unless the applicant has filed with the commissioner the applicant's irrevocable consent that any action against the applicant may be commenced against the applicant by service of process on the commissioner in accordance with the procedures set forth in ss. 601.72
Licenses may be renewed annually on July 1 upon payment of the fee specified in s. 601.31 (1) (ms)
by a broker, or the fee specified in s. 601.31 (1) (mp)
by a provider. Failure to pay the fee by the renewal date shall result in the automatic revocation of the license.
Each licensee shall file with the commissioner on or before the first day of March of each year an annual statement containing the information required under sub. (6) (a)
and any information the commissioner requires by rule.
A provider may not use any person to perform the functions of a broker unless the person holds a current, valid license as a broker.
A broker may not use any person to perform the functions of a provider unless the person holds a current, valid license as a provider.
A provider or broker shall provide to the commissioner new or revised information about officers, partners, directors, members, designated employees, or stockholders, except stockholders owning fewer than 10 percent of the shares of a provider or broker whose shares are publicly traded, within 30 days of the change.
The insurer that issued the policy that is the subject of a life settlement contract may not be held responsible for any act or omission of a broker or provider arising out of or in connection with the life settlement, unless the insurer receives compensation for the placement of a life settlement contract from the broker or provider or from a purchaser in connection with the life settlement contract.
An individual applicant for a license under sub. (2)
or a licensee who engages in the business of life settlements in this state shall receive training to ensure all of the following:
The individual understands the relation of life settlement transactions to the integrity of a comprehensive financial plan of an owner.
The individual has adequate knowledge to competently discuss the material aspects of life settlements with an owner.
The individual complies with the laws of this state relating to life settlements.
Training required under this subsection must be approved by the commissioner and provided by an education provider that is approved by the commissioner. The commissioner may approve the training required under this subsection for continuing education under s. 628.04 (3)
. Training required under this subsection shall not increase the credit hours of continuing education required by statute or rule. Certification and reporting of completion of the required training shall comply with the requirements of s. Ins 28.07
, Wis. Adm. Code. Any person failing to meet the requirements of this subsection shall be subject to the penalties imposed by the commissioner.
The satisfaction of the training requirements of another state that are substantially similar to the requirements set forth in this subsection, and are approved by the commissioner, satisfy the requirements of this subsection.
Training provided under this subsection shall include all of the following topics, at a minimum:
Legal relationships among the parties to a life settlement.
Ethical considerations in selling, soliciting, and negotiating life settlements.
Additional matters as determined by the commissioner.
An individual applicant for a license under sub. (2)
shall complete an initial training course of not less than 8 hours. An electronic confirmation of completion of initial training shall accompany the application for initial licensure. A licensee shall complete training of not less than 4 hours every 24 months after the initial training course. A person who holds a license under s. 632.68
, 2007 stats., on November 1, 2010, shall complete initial training within 6 months after November 1, 2010.
License suspension, revocation, or refusal to renew. 632.69(4)(a)(a)
The commissioner may suspend, revoke, or refuse to renew the license of any licensee if, after a hearing, the commissioner finds any of the following:
Any material misrepresentation in the application for the license.
That the licensee or any officer, partner, member, or director of the licensee is 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 licensee.
If the licensee is a provider, that the licensee demonstrates a pattern of unreasonably withholding payments to owners.
That the licensee no longer meets the requirements for licensure.
That the licensee or any officer, partner, member, or director of the licensee has been convicted of a felony or of any misdemeanor of which criminal fraud is an element or has pleaded other than not guilty with respect to any felony or any misdemeanor of which criminal fraud or moral turpitude is an element, regardless whether a judgment of conviction has been entered by the court.
If the licensee is a provider, that the licensee has entered into any life settlement contract the form of which has not been approved by the commissioner under this section.
If the licensee is a provider, that the licensee has failed to honor obligations set out in a life settlement contract.
If the licensee is a provider, that the licensee has assigned, transferred, or pledged a settled policy to a person other than a provider licensed in this state, a purchaser, an accredited investor as defined in 17 CFR 230.501
(a) or a qualified institutional buyer as defined in 17 CFR 230.144
A (a) (1), a financing entity, a special purpose entity, or a related provider trust.
That the licensee or any officer, partner, member, or key management personnel has violated any of the provisions of this section.
Nothing in this subsection limits the authority of the commissioner to summarily suspend a license under s. 227.51 (3)
The commissioner shall suspend a license if the licensee is delinquent in court-ordered payments of child or family support, maintenance, birth expenses, medical expenses, or other expenses related to the support of a child or former spouse or if the licensee fails to comply, after appropriate notice, with a subpoena or warrant issued by the department of children and families or a county child support agency under s. 59.53 (5)
that is related to paternity or child support proceedings, as provided in a memorandum of understanding entered into under s. 49.857
The commissioner shall revoke the license of a licensee if the department of revenue certifies under s. 73.0301
that the licensee is liable for delinquent taxes or if the department of workforce development certifies under s. 108.227
that the licensee is liable for delinquent unemployment insurance contributions.
No person may use a life settlement contract form or provide to an owner a disclosure statement form in this state unless first filed with and approved by the commissioner. The form is approved if the commissioner does not disapprove of the form within 30 days after filing or within a 30-day extension of that period ordered by the commissioner before the expiration of the first 30 days. To disapprove a form, the commissioner shall state in writing the reasons for disapproval sufficiently explicitly that the licensee is provided reasonable guidance in reformulating its forms. The commissioner shall disapprove a life settlement contract form or disclosure statement form if the commissioner determines the form or provisions contained in the form fail to meet the requirements of this section, are unreasonable, are contrary to the interests of the public, or are otherwise misleading or unfair to the owner.
No insurer may, as a condition of responding to a request for verification of coverage or in connection with the transfer of a policy under a life settlement contract, require that the owner, insured, provider, or broker sign any form, disclosure, consent, waiver, or acknowledgment that has not been expressly approved by the commissioner for use in connection with life settlement contracts in this state.
Reporting requirements and privacy. 632.69(6)(a)1.1.
In addition to any other requirements, the annual statement that is filed with the commissioner shall specify the total number, aggregate face amount, and life settlement proceeds of policies settled during the immediately preceding calendar year, together with a breakdown of the information by policy issue year. The annual statement shall also include the names of the insurance companies whose policies have been settled and the brokers that were involved in settling the policies. Each provider shall provide in the annual statement any information about any policy settled within 5 years of policy issuance that the commissioner may prescribe by rule.
Information provided in the annual statement shall be limited to those transactions in which the owner is a resident of this state and shall not include individual transaction data regarding the business of life settlements or information that there is a reasonable basis to believe could be used to identify the owner or the insured.
Every provider that willfully fails to file an annual statement as required in this section, or willfully fails to reply within 30 days to a written inquiry by the commissioner regarding the annual statement, shall be subject to a forfeiture under s. 601.64 (3) (c)
and to license suspension, revocation, or nonrenewal.
A provider, broker, insurance company, producer, information bureau, rating agency or company, or any other person with actual knowledge of an insured's identity, shall not disclose the identity of an insured or information that there is a reasonable basis to believe could be used to identify the insured or the insured's financial or medical information to any other person unless one of the following applies:
The disclosure is necessary to effect a life settlement contract between the owner and a provider, and the owner and insured have provided prior written consent to the disclosure.
The disclosure is necessary to effectuate a sale of life settlement contracts, or interests in life settlement contracts, as investments, if the sale is conducted in accordance with applicable state and federal securities law and if the owner and the insured have both provided prior written consent to the disclosure.
The disclosure is provided in response to an investigation or examination by the commissioner or any other governmental officer or agency or pursuant to the requirements of sub. (15)
The disclosure is a term or condition of the transfer of a policy by one provider to another provider. In such cases, the receiving provider shall be required to comply with the confidentiality requirements of this subsection.
The disclosure is necessary to allow the provider or broker or their authorized representatives to make contacts for the purpose of determining health status. For the purposes of this subdivision, “authorized representative" does not include any person who has or may have any financial interest in the life settlement contract other than a provider, broker, financing entity, related provider trust, or special purpose entity. A provider or broker shall require its authorized representative to agree in writing to adhere to the privacy provisions of this subsection.
The disclosure is required to purchase stop loss coverage.
Nonpublic personal information solicited or obtained in connection with a proposed or actual life settlement contract shall be subject to all applicable laws of this state relating to confidentiality of nonpublic personal information.
The commissioner may, whenever the commissioner determines it is necessary in order to be informed about any matter related to the enforcement of this section, examine the business and affairs of any licensee or applicant for a license, under the provisions of ss. 601.43
The commissioner shall consider names and individual identification data for all owners, purchasers, and insureds private and confidential information and shall not disclose names or identification data unless the disclosure is to another regulator or is required by law.
A person required to be licensed by this section shall for 5 years retain, and make available to the commissioner for inspection at all reasonable times in accordance with s. 601.42
, copies of all of the following:
Proposed, offered, or executed life settlement contracts, purchase agreements, underwriting documents, policy forms, and applications from the date of the proposal, offer, or execution of a life settlement contract or purchase agreement, whichever is later.