§ 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;
and
(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.)