(a) For any policy settled within five years of policy issuance, each provider shall file with the commissioner on or before March 1 of each year an annual statement containing the information as the commissioner may prescribe by rule. In addition to any other requirements, the annual statement shall:

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Terms Used In Hawaii Revised Statutes 431C-6

  • Broker: means a person who, on behalf of an owner and for a fee, commission, or other valuable consideration, offers or attempts to negotiate life settlement contracts between an owner and providers, represents only the owner, and owes a fiduciary duty to the owner to act according to the owner's instructions, and in the best interest of the owner, notwithstanding the manner in which the broker is compensated. See Hawaii Revised Statutes 431C-2
  • Business of life settlements: means an activity involved in but not limited to offering to enter into the soliciting, negotiating, procuring, effectuating, monitoring, or tracking of life settlement contracts. See Hawaii Revised Statutes 431C-2
  • Commissioner: means the insurance commissioner. See Hawaii Revised Statutes 431C-2
  • Contract: A legal written agreement that becomes binding when signed.
  • Financing entity: means an underwriter, placement agent, lender, purchaser of securities, purchaser of a policy or certificate from a provider, credit enhancer, or any entity that has a direct ownership in a policy or certificate that is the subject of a life settlement contract, but:

    (1) Whose principal activity related to the transaction is providing funds to effect the life settlement contract or purchase of one or more policies; and

    (2) Who has an agreement in writing with one or more providers to finance the acquisition of life settlement contracts. See Hawaii Revised Statutes 431C-2

  • Insured: means the person covered under the policy being considered for sale in a life settlement contract. See Hawaii Revised Statutes 431C-2
  • Life settlement contract: means :

    (a)

    (1) A written agreement entered into between a provider and an owner, establishing the terms under which compensation or any thing of value will be paid, which compensation or thing of value is less than the expected death benefit of the owner's policy or certificate, in return for the owner's assignment, transfer, sale, devise, or bequest of the death benefit or any portion of the policy or certificate for compensation, where the minimum value of the contract is greater than a cash surrender value or accelerated death benefit available under the policy or certificate at the time of an application for a life settlement contract;

    (2) The transfer for compensation or value of ownership or beneficial interest in a trust or other entity that owns such policy or certificate if the trust or other entity was formed or availed of for the principal purpose of acquiring one or more life insurance contracts, which life insurance contract insures the life of a person residing in this State; or

    (3)

    (A) A written agreement for a loan or other lending transaction, secured primarily by an individual or group policy; or

    (B) A premium finance loan made for a policy on or before the date of issuance of the policy where:

    (i) The loan proceeds are not used solely to pay premiums for the policy and any costs or expenses incurred by the lender or the borrower in connection with the financing;

    (ii) The owner receives on the date of the premium finance loan a guarantee of the future life settlement value of the policy; or

    (iii) The owner agrees on the date of the premium finance loan to sell the policy or any portion of its death benefit on any date following the issuance of the policy. See Hawaii Revised Statutes 431C-2

  • Owner: means the owner of a policy or a certificate holder under a group policy, with or without a terminal illness, who enters or seeks to enter into a life settlement contract, but shall not be limited to an owner of a policy or a certificate holder under a group policy that insures the life of an individual with a terminal or chronic illness or condition, except where specifically addressed. See Hawaii Revised Statutes 431C-2
  • Person: means any natural person or legal entity, including but not limited to a partnership, limited liability company, association, trust, or corporation. See Hawaii Revised Statutes 431C-2
  • Policy: means an individual or group policy, certificate, contract, or arrangement of life insurance owned by a resident of this State, regardless of whether delivered or issued for delivery in this State. See Hawaii Revised Statutes 431C-2
  • Provider: means a person, other than an owner, who enters into or effectuates a life settlement contract with an owner. See Hawaii Revised Statutes 431C-2
  • Related provider trust: means a titling trust or other trust 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, that includes 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 insurance division as if those records and files were maintained directly by the licensed provider. See Hawaii Revised Statutes 431C-2
  • Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
  • Special purpose entity: means a corporation, partnership, trust, limited liability company, or other legal entity formed solely to provide either directly or indirectly access to institutional capital markets for a financing entity or provider in connection with a transaction in which the securities in the special purpose entity:

    (1) Are acquired by the owner or by a "qualified institutional buyer" as defined in Rule 144A of the Securities Act of 1933, as amended; or

    (2) Pay a fixed rate of return commensurate with established asset-backed institutional capital markets. See Hawaii Revised Statutes 431C-2

(1) 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; and
(2) Include the names of the insurance companies whose policies have been settled and the brokers who have settled said policies.

The information shall be limited to only those transactions where the insured 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 wilfully fails to file an annual statement as required in this section, or wilfully fails to reply within thirty days to a written inquiry by the commissioner in connection therewith, in addition to other penalties provided by this chapter, and upon due notice and opportunity to be heard, shall be subject to a penalty of up to $250 per day of delay, not to exceed $25,000 in the aggregate, for each such failure.

(b) Except as otherwise allowed or required by law, a provider, broker, insurance company, insurance 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 the disclosure:

(1) 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;
(2) Is necessary to effectuate the sale of life settlement contracts, or interests therein, as investments, so long as the sale is conducted in accordance with applicable state and federal securities law and the owner and the insured have both provided prior written consent to the disclosure;
(3) Is provided in response to an investigation or examination by the commissioner pursuant to the requirements of § 431C-17 or any other governmental officer or agency;
(4) Is a term or condition to the transfer of a policy by one provider to another provider, in which case the receiving provider shall be required to comply with the confidentiality requirements of this section;
(5) 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 paragraph, the term “authorized representative” shall not include any person who has or may have any financial interest in the life settlement contract other than a provider, licensed 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 section; or
(6) Is required to purchase stop loss coverage.
(c) Non-public personal information solicited or obtained in connection with a proposed or actual life settlement contract shall be subject to the provisions applicable to financial institutions under the federal Gramm-Leach-Bliley Act, P.L. 106-102, and all other applicable state and federal laws relating to confidentiality of non-public personal information.

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