KOHL RELEASES STATEMENT ON SEC ANNOUNCEMENT OF NEW LIFE SETTLEMENT TASK FORCE
WASHINGTON, D.C. - U.S. Senator Herb Kohl, Chairman of the Senate Special Committee on Aging, released the following statement in response to U.S. Securities and Exchange Commission (SEC) Chairman Mary Schapiro's announcement of an agency-wide taskforce to examine the life settlement industry. A life settlement is a financial arrangement in which a person sells their life insurance policy to investors, who continue to pay the policy premiums and collect the payout upon the seller's death.
"Chairman Shapiro's announcement exhibits a strong commitment to increasing oversight of the life settlement industry, just a few short months after our hearing in April. There's still so much we need to know about this burgeoning industry, and I'm grateful to the SEC for stepping up. My hope is that the new taskforce will determine that greater regulation by the agency is necessary for life settlement providers and brokers."
In April, Chairman Kohl held a hearing-entitled, "Betting on Death in the Life Settlement Market - What's At Stake For Seniors?"-to explore the growing life settlement market, an industry that has doubled in value since 2006 to a worth of $12 billion, and which analysts expect will exceed $160 billion within a few decades. A Committee investigation uncovered unintended consequences for consumers, sales and marketing abuses, and insurance fraud, all of which are exacerbated by the high commissions earned by life settlement brokers.
In the midst of a financial crisis that has been blamed on a lack of oversight and regulation, the Committee also examined how life settlements are being bundled and used as potentially risky investments by some of America's largest investment companies. Chairman Kohl wrote a letter to the SEC , urging the agency to issue relevant regulations to govern the industry. Schapiro responded at the time, clarifying the SEC's jurisdiction over most aspects of life settlement transactions, and assuring Chairman Kohl that the agency would look into the regulation of life settlement brokers.
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For Committee investigation findings and the SEC response, click here: http://www.aging.senate.gov/letters/lifesettlementfindings.pdf
"Wall Street Pursues Profit in Bundles of Life Insurance," The New York Times , September 5, 2009: http://www.nytimes.com/2009/09/06/business/06insurance.html?hp