N.Y. Insurance Law § 7814: Prohibited practices

§ 7814. Prohibited practices. (a) No person shall:

(1) enter into a life settlement contract if the person knows or

reasonably should have known that the policy was obtained in a false,

deceptive or misleading way;

(2) engage in any transaction, practice or course of business if the

person knows or reasonably should have known that the intent was to

avoid the disclosure or other notice requirements of this article;

(3) engage in any fraudulent act or practice in connection with any

transaction relating to any life settlement;

(4)(A) enter into a premium finance loan with an applicant for a new

policy or an owner, pursuant to which the person providing premium

financing, or any affiliate, parent corporation or subsidiary of the

person, shall receive any proceeds, fees or other consideration,

directly or indirectly, from the policy or owner of the policy or any

other person, other than commissions earned by a licensed insurance

producer on the policy, with respect to the premium finance loan, that

are in addition to the amounts required to pay the principal, interest

and any reasonable costs, fees or expenses incurred by the lender or

borrower related to the premium finance loan or subsequent sale of such

loan; provided, further, that any payments, charges, fees or other

amounts in addition to the amounts required to pay the principal,

interest and any reasonable costs or expenses incurred by the lender or

borrower related to the premium finance loan shall be remitted to the

original owner of the policy or to the original owner's estate if the

original owner is not living at the time of the determination of the

overpayment. For purposes of this paragraph, "owner" means the owner of

a policy whether or not entering into, or offering to enter into, a life

settlement contract;

(B) If, at any time, a policy that is the subject of a premium finance

loan specified in subparagraph (A) of this paragraph is sold, assigned,

transferred, devised or bequeathed pursuant to the terms of a premium

finance loan, any proceeds or other consideration received other than

the amounts specified in subparagraph (A) of this paragraph shall be

remitted to the original owner of the policy or to the original owner's

estate if the original owner is not then living;

(5) with respect to any life settlement contract, knowingly fail to

disclose any affiliation or contractual arrangement as required by this

article;

(6) directly or indirectly, purchase or obtain an interest in any

policy that is the subject of a life settlement contract where the

person has acted as a life settlement broker or life settlement

intermediary with respect to the policy, unless such affiliation has

been disclosed to the owner pursuant to paragraph three of subsection

(c) of section seven thousand eight hundred eleven of this article; and

(A) if a life settlement broker, the broker has provided all offers and

counter offers pursuant to paragraph two of subsection (c) of section

seven thousand eight hundred eleven of this article, and has conducted

the transaction on a fair and equitable arm-length basis; or (B) with

respect to a life settlement intermediary, the intermediary complies

with subsection (o) of section seven thousand eight hundred thirteen of

this article;

(7) directly or indirectly provide any compensation to any person

acting in this state as a life settlement broker, and no person shall

accept any such compensation, unless the person is a licensed life

settlement broker pursuant to the provisions of section two thousand one

hundred thirty-seven of this chapter;

(8) directly or indirectly pay any referral or finder's fee or provide

any other compensation to any owner's physician, attorney, accountant,

insurance producer, insurance consultant, or other person providing

medical, legal or financial planning services to the owner, or to any

other person, other than a life settlement broker, representing the

owner with respect to the life settlement contract, and no person shall

accept any such fee or compensation;

(9) directly or indirectly provide compensation to a life settlement

broker, except where the compensation is for a specific life settlement

contract and is clearly disclosed to the owner as required in this

article;

(10) directly or indirectly engage in any act determined by the

superintendent to be an unfair or deceptive act or practice pursuant to

this chapter;

(11) remove, conceal, alter, destroy or sequester from the

superintendent the assets or records of a life settlement provider, life

settlement broker, life settlement intermediary or other person engaged

in the business of life settlements;

(12) misrepresent or conceal the financial condition of a life

settlement provider; or

(13) in relation to the business of life settlements, file with the

superintendent a document containing materially false information

concerning any fact material thereto or otherwise conceal information

about a fact material thereto from the superintendent.

(b) No life settlement provider, life settlement broker, life

settlement intermediary, owner or any other person, as a condition of

entering into a life settlement contract, shall request or require an

insured to submit to a medical examination at any time subsequent to the

settlement of the policy.

(c) No life settlement provider shall enter into any life settlement

contract in which payments of proceeds are made in installments.

(d) No life settlement provider, life settlement broker or life

settlement intermediary shall directly or indirectly:

(1) be a party to or enter into an agreement or understanding limiting

or restricting an owner's or life settlement broker's ability to seek

competitive bids on policies to the extent that the agreement or

understanding unlawfully restrains trade or constitutes anti-competitive

behavior;

(2) monopolize or attempt to monopolize, or combine or conspire with

any other person or persons to monopolize, in this state, the business

of life settlements;

(3) be a party to or enter into an agreement with a life settlement

provider, life settlement broker or life settlement intermediary to the

extent that the agreement fixes or limits the value paid to owners;

(4) be a party to or enter into any agreement or communication with a

life settlement provider or life settlement intermediary with respect to

the terms to be offered to an owner to the extent that the agreement or

understanding unlawfully restrains trade or constitutes anti-competitive

behavior;

(5) be a party to or enter into any agreement with a life settlement

provider, life settlement broker, life settlement intermediary or other

person to restrain trade or engage in any other anti-competitive

behavior;

(6) be party to or enter into any agreement with a life settlement

provider, life settlement broker, life settlement intermediary or other

person the effect of which may be substantially to lessen competition in

the business of life settlements subject to this chapter; or

(7) be a party to or enter into any agreement with a life settlement

provider, life settlement broker, life settlement intermediary or other

person to refuse to conduct business with any person in the business of

life settlements.

(e) No life settlement intermediary shall:

(1) represent, solicit, negotiate or act on behalf of, an owner, a

life settlement provider, or a life settlement broker; or

(2) act as a life settlement provider or life settlement broker.

(f) No insurer shall prohibit an insurance agent from disclosing to a

client the availability of a life settlement contract.

(g) The failure to follow the provisions of this section shall be a

defined violation under article twenty-four of this chapter.