§ 3836. License and bond requirements

(a) Life settlement providers.

(1) No person shall operate as a life settlement provider without first obtaining a license from the Commissioner.

(2) Application for a life settlement provider license shall be made to the Commissioner by the applicant on a form prescribed by the Commissioner, and the application shall be accompanied by an application fee of $50.00 and a license fee of $400.00.

(3) Licenses may be renewed from year to year on a date prescribed by the Commissioner of the odd-numbered year next following the date of issuance upon payment of a biennial renewal fee of $400.00. Failure to pay the fee by the renewal date shall result in expiration of the license.

(4) The applicant shall provide information on forms required by the Commissioner. The Commissioner shall have authority at any time to require the applicant to disclose fully the identity of all stockholders, partners, officers, members, and employees, and the Commissioner may, in the exercise of the Commissioner’s discretion, refuse to issue a license in the name of a legal entity if not satisfied that any officer, employee, stockholder, partner, or member thereof who may materially influence the applicant’s conduct meets the standards of this subchapter.

(5) Upon the filing of an application and the payment of the license fee, the Commissioner shall make an investigation of each applicant and issue a license if the Commissioner finds that the applicant:

(A) Has provided a detailed and sound plan of operation.

(B) Is competent and trustworthy and intends to act in good faith in the capacity involved by the license applied for.

(C) Has a good business reputation and has had experience, training, or education so as to be qualified in the business for which the license is applied for.

(D) Has demonstrated evidence of financial responsibility in a format and in substance as prescribed by the Commissioner through a surety bond executed and issued by an insurer authorized to issue surety bonds in this State in the amount set forth below, or a letter of credit in the amount set forth below on a form and in a manner approved by the Commissioner, or such other amount as the Commissioner may require. The Commissioner may ask for evidence of financial responsibility at any time the Commissioner deems necessary. Any surety bond or letter of credit issued pursuant to this subdivision shall be solely in the favor of this state and shall specifically authorize recovery by the Commissioner on behalf of any person in this State who sustained damages as the result of erroneous acts, failure to act, conviction of fraud, or conviction of unfair practices by the life settlement provider. The minimum amount of the bond or letter of credit shall be based on the annual aggregate life settlement payments attributable to the licensee to policy owners in Vermont, as follows. The Commissioner may adjust by rule the ranges established below if necessary to be consistent with the aggregate payment data filed in annual statements pursuant to section 3839 of this title:

(i) $0.00 to $1,000,000.00, a bond or letter of credit not less than $50,000.00;

(ii) $1,000,000.01 to $15,000,000.00, a bond or letter of credit not less than $100,000.00;

(iii) $15,000,000.00 or more, a bond or letter of credit not less than $150,000.00.

(E) Has provided an anti-fraud plan that meets the requirements of section 3847 of this subchapter.

(6) The Commissioner shall not issue a license to a nonresident applicant unless a written designation of an agent for service of process is filed and maintained with the Secretary of State or the applicant has filed with the Commissioner the applicant’s written irrevocable consent that any action against the applicant may be commenced against the applicant by service of process on the Secretary of State, in accordance with 11 V.S.A. § 1633.

(7) A life settlement provider shall provide to the Commissioner new or revised information about officers, stockholders holding 10 percent or more, partners, directors, members, or designated employees within 30 days of the change.

(b) Life settlement broker.

(1) A person shall not operate as a life settlement broker without first obtaining a license from the Commissioner.

(2) A person licensed as an attorney or certified public accountant who is retained to represent the policy owner and whose compensation is not paid directly or indirectly by the life settlement provider may negotiate life settlement contracts on behalf of the policy owner without having to obtain a license as a life settlement broker.

(3) Application for a life settlement broker license shall be made to the Commissioner by the applicant on a form prescribed by the Commissioner, and the application shall be accompanied by an application fee of $30.00 and a license fee of $100.00.

(4) Licenses may be renewed by the Commissioner on the even-numbered year next following the date of issuance upon payment of a biennial renewal fee of $100.00. Failure to pay the fee by the renewal date shall result in expiration of the license.

(5) The applicant shall provide information on forms required by the Commissioner.

(6) Upon the filing of an application and the payment of the license fee, the Commissioner shall make an investigation of each applicant and issue a license if the Commissioner finds that the applicant:

(A) Is competent and trustworthy.

(B) Has a good business reputation and has had at least two years’ prior experience as a licensed life insurance producer.

(C) Has demonstrated evidence of financial responsibility in a format and in substance as prescribed by the Commissioner through a surety bond executed and issued by an insurer authorized to issue surety bonds in this State in the amount set forth below, or a letter of credit in the amount set forth below on a form and in a manner approved by the Commissioner, or such other amount as the Commissioner may require. The Commissioner may ask for evidence of financial responsibility at any time the Commissioner deems necessary. Any surety bond or letter of credit issued pursuant to this subdivision shall be solely in the favor of this State and shall specifically authorize recovery by the Commissioner on behalf of any person in this State who sustained damages as the result of erroneous acts, failure to act, conviction of fraud, or conviction of unfair practices by the life settlement broker. The minimum amount of the bond or letter of credit shall be based on the annual aggregate life settlement payments attributable to the licensee to policy owners in Vermont, as follows. The Commissioner may adjust by rule the ranges established below if necessary to be consistent with the aggregate payment data filed in annual statements pursuant to section 3839 of this title:

(i) $0.00 to $2,000,000.00, a bond or letter of credit not less than $25,000.00;

(ii) $2,000,000.01 to $5,000,000.00, a bond or letter of credit not less than $50,000.00;

(iii) $5,000,000.01 to $15,000,000.00, a bond or letter of credit not less than $75,000.00; and

(iv) $15,000,000.01 and more, a bond or letter of credit not less than $100,000.00.

(7) The Commissioner shall not issue a license to a nonresident applicant unless a written designation of an agent for service of process is filed and maintained with the Commissioner or the applicant has filed with the Commissioner the applicant’s written irrevocable consent that any action against the applicant may be commenced against the applicant by service of process on the Secretary of State, in accordance with 11 V.S.A. § 1633.

(8) An individual licensed as a life settlement broker shall complete on a biennial basis an additional 15 hours of life insurance producer training related to life settlements and life settlement transactions as determined by the Commissioner. Such additional training requirements shall be approved for education under section 4800a of this title. Any person failing to meet the requirements of this subsection shall be subject to the penalties imposed by the Commissioner.

(9) No life settlement broker may charge or receive a fee, a commission, or other valuable consideration in excess of two percent of the amount paid by the life settlement company to the policy owner on a policy that is the subject of the life settlement broker’s services. Upon the written request of the life settlement broker and after conferring with the policy owner, the Commissioner may approve another rate of compensation as reasonable and appropriate under highly unusual circumstances.

(c) The insurer that issued the policy subject to a life settlement shall not be responsible for any act or omission of a life settlement broker or life settlement provider arising out of or in connection with the life settlement transaction unless the insurer receives compensation for the placement of a life settlement contract from the life settlement provider or life settlement broker in connection with the life settlement contract. (Added 2009, No. 53, § 1, eff. Jan. 1, 2010.)