The “Concept” of a Model Act

Abstract

The National Association of Insurance Commissioners (the “NAIC”) voted on June 4, 2007 to approve certain proposed amendments to its 2001 Viatical Settlements Model Act (the “Model Act”). The amendments contain a number of useful updates to the prior NAIC model act adopted in 2001 that are aimed at protecting consumers, while others, if ultimately adopted by state legislatures, would appear to be squarely aimed at stifling the rapidly developing life settlement market. While the NAIC voted to approve the proposed amendments as a new model act, it is unlikely that many states will adopt the new Model Act in its adopted form, in view of certain overreaching provisions that are contained in the model. Ironically, the amended Model Act most likely will result in a much greater diversification of life settlement statutes among states that regulate life settlements, rather than the national uniform standard that the NAIC had perhaps hoped would result from its efforts. Adding to the mixed response to the Model Act, the National Conference of Insurance Legislators (“NCOIL”), a non-governmental organization comprised of state legislators involved in insurance legislation, has been reviewing and revising its own model act governing life settlements.