SPONSOR:

Rep. B. Short & Sen. Poore

Reps. Baumbach, Brady, Keeley

HOUSE OF REPRESENTATIVES

149th GENERAL ASSEMBLY

HOUSE BILL NO. 393

AN ACT TO AMEND TITLE 18 OF THE DELAWARE CODE RELATING TO INSURANCE.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend § 7503 of Title 18 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows:

§ 7503 License and bond requirements.

(h) 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:

(4)a.  If a viatical settlement provider, has demonstrated evidence of financial responsibility in a format prescribed by the Commissioner through either a surety bond executed and issued by an insurer authorized to issue surety bonds in this State or a deposit of cash, certificates of deposit or securities or any combination thereof in the amount of $250,000. An applicant for licensure as a viatical settlement provider may provide proof of financial responsibility through one of the following means:

1. Submitting audited financial statements that show a minimum equity of not less than two hundred fifty thousand dollars in cash or cash equivalents;

2. Submitting both audited annual financial statements that show positive equity and either of the following:

A. A surety bond in the amount of two hundred fifty thousand dollars in favor of this state issued by an insurer authorized to issue surety bonds in this state;

B. An unconditional and irrevocable letter of credit, deposit of cash, or securities, in any combination, in the aggregate amount of two hundred fifty thousand dollars.

b. If a viatical settlement broker, has demonstrated evidence of financial responsibility in a format prescribed by the Commissioner through either a surety bond executed and issued by an insurer authorized to issue surety bonds in this State or a deposit of cash, certificates of deposit or securities or any combination thereof in the amount of $250,000. If an applicant is licensed as a viatical settlement provider in another state, the Commissioner may accept as valid any similar proof of financial responsibility the applicant filed in that state.

c. The Commissioner may ask for evidence request proof of financial responsibility at any time the Commissioner deems considers necessary.

d. Any surety bond issued pursuant to paragraph (h)(4) of this section must be in the favor of this State and must 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 viatical settlement provider or viatical settlement broker.

e. Notwithstanding any provision of this section to contrary, the Commissioner shall accept, as evidence of financial responsibility, proof that financial instruments in accordance with the requirements in this paragraph have been filed with 1 state where the applicant is licensed as a viatical settlement provider or viatical settlement broker.

SYNOPSIS

This Bill updates the Delaware Viatical Settlements Act by amending the license and bond requirements for a viatical settlement provider or viatical settlement broker. The Act allows an applicant seeking licensure as a viatical settlement provider to prove financial responsibility by (1) providing audited financial statements showing a minimum equity of more than 250 thousand dollars or (2) providing audited annual financial statements showing positive equity and a surety bond for 250 thousand dollars or a letter of credit amounting 250 thousand dollars. The applicant also may provide proof of financial responsibility if they are licensed in another state and have established proof of financial responsibility to said state.