In a generalized sense, insurers use life expectancies to price life policy products when they use mortality tables to provide a guideline of the life expectancies of each cohort market group. Mortality tables and ratings allow them to project future premium revenues vs. expected death benefit payments (including lapses), thereby knowing the potential profit potential for each line of insurance product. Based on the estimate of the insured’s life expectancy, insurers will assign the insured into one of several typical risk classifications. (These classifications may differ among insurance companies.)
The assigned risk category will determine the policy premium cost and/or whether or not a life insurance policy will be issued.

Commentary by Life Policy Group:
This is an excellent study worthy of reading and debate. However, investors should note that with more lives in your investment the greater the chance of good, consistent returns. Investors should also note the emphasis on medical underwriting.
http://www.insurancestudies.org/wp-content/uploads/2010/08/ISI_Evolution-of-Life-Expectancies-Aug-4-2010.pdf

By Trevor Thomas

The California Department of Insurance (CDI) has revised its proposed emergency regulations regulating life settlement providers in the state to make them less onerous to life settlement industry.

Among other changes, the revised rules state that audited financial statements submitted by life settlement providers to the CDI shall be held in confidence. The earlier version of the rules would have opened that information to scrutiny by the public, a fact that members of the settlement industry objected to.

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Lifemark, one of the life settlements groups behind Keydata, could be facing liquidation after US hedge fund CarVal pulled a $60m rescue offer.

CarVal entered a six-week exclusivity period with Luxembourg-based Lifemark last month to try and thrash out a deal but this has failed, according to the Life Settlements Wire.

It had already stumped up £3.5m in short-term loans to Lifemark, which ran bonds backing Keydata plans owned by 23,000 customers who invested £350m.

Read original article here

Commentary by Life Policy Group:
The media and political coverage of the industry and its predilection with ‘bad’ news has created an impression of an industry filled with fraudulent practice and consequently confidence is low. Perhaps these changes will help to raise the industry profile and give investors and regulators more comfort.
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By Darla Mercado

On Thursday, a government task force recommended treating life settlements as securities, thus bringing the instruments under tighter regulatory scrutiny.

On Friday, some market participants backed the idea. But others bashed the plan, claiming that such a proposal would place sizable burdens on providers — and offer little added protection for institutional investors.

Commentary by Life Policy Group:
At this stage unfortunately regulation is needed which may ‘kill off’ some of the smaller players in the market, but it may well produce a more settled and professional industry. These developments are all part of the industry growing up and very much echo the experience of the UK secondary market which began its development perhaps ten tears earlier than the US life settlement market.
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By: Trevor Thomas

The Wisconsin Senate Tuesday unanimously passed a bill requiring life insurance policies to be in force at least 5 years before consumers can sell the policies through a settlement. The bill, S.B. 513, would change an older law that has permitted consumers to sell policies after holding the policies for 2 years.

Commentary by Life Policy Group:

Evidence that consumer choice is restricted again because the regulators and the life offices will not properly monitor the applications for life insurance and act accordingly.

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By: Darla Mercado

State insurance regulators Monday voted in favor of a proposal that would allow carriers to terminate an annuity living or death benefit if a client sold the contract over the secondary market.

The management committee and full commission of the Interstate Insurance Product Regulation Commission, a group that’s affiliated with the National Association of Insurance Commissioners, voted in favor of a uniform set of additional standards for guaranteed living and death benefits that are attached to individual deferred annuities.

Some 36 jurisdictions, including Puerto Rico, comprise the IIPRC. Thirty regulators took part in the full commission vote on Monday. Only Indiana voted against the proposal.

Commentary by Life Policy Group:

It’s difficult to see the logic in this.  It hardly enhances customer choice and yet again returns power to  the few!

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By: Bob Graham

A new policy statement from a life insurers’ group, suggesting that the securitization of life settlements needs to be regulated, has sparked a sharp response from a life settlement trade group.

The American Council of Life Insurers (ACLI), representing nearly 300 companies providing life insurance, recommended that the securitization of life settlements “be prohibited by legislation or regulation.”

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By: Trevor Thomas

Several life settlement organizations have reacted strongly to the American Council of Life Insurers’ recent statement calling for a ban on the securitization of life settlements.

“Once again. ACLI has chosen to mix apples and oranges when condemning the life settlement market,” said Jack Kelly, director of government affairs for the Institutional Life Markets Association, Washington. He was responding to a policy statement from the ACLI, Washington, holding that the securitizations of life insurance settlements should be prohibited by legislation and regulation.

Commentary by Life Policy Group:

It’s good to hear the comments of Jack Kelly.  Let’s hope that there are more people in government affairs who will stand up and be counted.

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By: Darla Mercado

The American Council of Life Insurers is asking policymakers to bar the securitization of life settlements.  The group said yesterday that securitization would encourage promoters — keen on developing a secondary market — to entice seniors to sell their life insurance policies, even when it’s not in their best interests to do so.

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