Surety Bond News

LB 853, a new Nebraska state law, was enacted concerning the proof of financial responsibility from viatical settlement providers. LB 853 requires viatical settlement providers and brokers to supply evidence of financial accountability, which could be in the form of a bond. The surety bond must be $250,000 and be issued by a state authorized insurance company. The surety bonds obtained must be in the favor of the state and authorize the Director of Insurance to make recoveries on behalf of any individual in the state who suffered damages as a result of a flawed act, conviction of fraud, or conviction of unfair procedures performed by a viatical settlement provider or broker. Alternative forms of such evidence that will be acknowledged include any combination of proof of financial responsibility, certificates of deposit, or cash. LB 853 is based on recent model legislation from the National Association of Insurance Commissioners.

Viatical settlement providers and brokers must abide by a new law in the state of Ohio. The new law, titled HB 404, states that viatical settlement brokers and providers must provide a bond from an insurer licensed in the state in the quantity of $250,000. There are other options besides the surety bond that will meet the requirement such as a deposit of cash, a certificate of deposit, or securities. The bond allows the Superintendent of Insurance to make recovery for any individual in the state who suffered damages resulting from an erroneous act, failure to act or conviction of fraud that were caused by a licensed viatical settlement provider/broker. HB 404 is based on new model legislation from the National Association of Insurance Commissioners.

SB 565, a new Oklahoma state law, involves viatical settlement providers and brokers. The new bill requires a surety bond of $50,000 issued from a surety licensed in the state from viatical settlement providers and brokers. SB 565 also states that securities, a certificate of deposit, cash or an errors and omissions insurance policy are also satisfactory. Any of these financial options listed above may be used in combination to meet the new requirements. When SB 565 was first established, it did not impact the bonding industry. The bonding requirements were added after eleven hours of the conference committee. Initially, SB 1980 would have enacted the NAIC model law for viatical settlement providers and brokers, which requires a $250,000 bond. The bill was amended; SB 1980 gave rulemaking ability to the Insurance Commissioner for the bond requirements and also authorizes them to decide on the amount. Now that SB 565 and SB 1980 have been enacted with contradictory bond requirements, SFAA will make contact with the Insurance Commissioner to request illumination and clarification.

SB 704 is a new law enacted in West Virginia which regulates viatical settlement providers and brokers. The law requires licensure and proof of financial accountability through a surety bond, cash, or cash equivalents. The bond must be $250,000 and from a surety company licensed in the state. The Commissioner of Insurance has the authority to waive the financial requirement if the applicant shows proof that an instrument has been filed within the applicant’s home state. The bond acquired would have to be in favor of the State; it would also have to sanction the Insurance Commissioner to make recovery for any individual in this state suffering damages that resulted from failure to act, faulty performance, conviction of fraud or conviction of deceitful methods of the viatical settlement provider or agent. The National Association of Insurance Commissioners model legislation is the reason for the up rise of this new law.