Chairman Schapiro established the Life Settlements Task Force in August 2009 to examine emerging issues in the life settlements market and to advise the Commission whether market practices and regulatory oversight could be improved. A life settlement is a transaction in which an insurance policy owner sells a life insurance policy to a third party for an amount that exceeds the policy’s cash surrender value, but is less than the expected death benefit of the policy. Reports indicate that the life settlements market had experienced robust growth up until 2007 when it was estimated that $12 billion in face amount, or stated benefit amount, of life insurance was sold in life settlement transactions. More recently, the amount sold has declined. Based on a recent estimate, $7.01 billion of face amount in life insurance was sold in life settlement transactions in 2009.
The Task Force was set up as a cross-Divisional SEC Staff task force to bring a multi-disciplinary approach to the review. The Task Force reviewed articles and other resources related to life settlements, and met with 23 outside groups knowledgeable about the life settlements market, its regulation, its participants and its impact on policy owners and investors. In addition to meeting with industry participants, the Task Force also met with the Financial Industry Regulatory Authority (“FINRA”), the U.K.’s Financial Services Authority (“FSA”), the U.S. Government Accountability Office (“GAO”), and state insurance commissioners and securities regulators and their representatives.
This Report outlines the Task Force’s findings about the life settlements market and recommends that the Commission consider certain actions to improve market practices and regulatory oversight in the life settlements market. The views expressed in this Report are those of the Task Force and do not necessarily reflect the views of the Commission or the individual Commissioners.
Life Settlements Task Force