26.1-33.4-02. Licensing and bonding requirements

26.1-33.4-02. Licensing and bonding requirements

1. A person, wherever located, may not act as a provider or broker with an owner or

multiple owners who is a resident of this state without first having obtained a license

from the commissioner. If there is more than one owner on a single policy and the

owners are residents of different states, the life settlement contract must be governed

by the law of the state in which the owner having the largest percentage ownership

resides or, if the owners hold equal ownership, the state of residence of one owner

agreed upon in writing by all owners.

2. Application for a provider or broker license must be made to the commissioner by the

applicant on a form prescribed by the commissioner, and the application must be

accompanied by a fee in an amount established by the commissioner; provided,

however, that the license and renewal fees for a provider license must be reasonable

and that the license and renewal fees for a broker license may not exceed those

established for an insurance producer, as such fees are otherwise provided for in this

title.

3. A life insurance producer who has been duly licensed as a resident insurance

producer with a life line of authority in this state or the producer's home state for at

least one year and is licensed as a nonresident producer in this state is deemed to

meet the licensing requirements of this section and must be permitted to operate as a

broker.

4. Not later than thirty days from the first day of operating as a broker, the life insurance

producer shall notify the commissioner that the broker is acting as a broker on a form

prescribed by the commissioner, and shall pay any applicable fee to be determined by

the commissioner. Notification must include an acknowledgement by the life insurance

producer that the broker will operate as a broker in accordance with this chapter.

5. The insurer that issued the policy that is the subject of a life settlement contract may

not be responsible for any act or omission of a broker, provider, or purchaser 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 provider,

purchaser, or broker in connection with the life settlement contract.

6. An individual licensed as an attorney, certified public accountant, or financial planner

accredited by a nationally recognized accreditation agency, who is retained to

represent the owner, whose compensation is not paid directly or indirectly by the

provider or purchaser, may negotiate life settlement contracts on behalf of the owner

without having to obtain a license as a broker.

7. Licenses may be renewed annually on or before April thirtieth upon payment of the

periodic renewal fee. As specified in subsection 2, the renewal fee for a provider may

not exceed a reasonable fee. Failure to pay the fee within the terms prescribed results

in the automatic revocation of the license requiring periodic renewal. A license issued

after January first is not required to renew until April thirtieth of the following calendar

year.

8. The term of provider license must be equal to that of a domestic stock life insurance

company and the term of a broker license must be equal to that of an insurance

producer license. Licenses requiring periodic renewal may be renewed on or before

April thirtieth upon payment of the periodic renewal fee as specified in subsection 2.

Failure to pay the fees before the expiration of the renewal date results in expiration of

the license. A license issued after January first is not required to be renewed until April

thirtieth of the following calendar year.

9. The applicant shall provide such information as the commissioner may require on

forms prepared by the commissioner. The commissioner, at any time, may require the

applicant to fully disclose the identity of the applicant's stockholders (except

expiration of

the license. A license issued after January first is not required to be renewed until April

thirtieth of the following calendar year.

9. The applicant shall provide such information as the commissioner may require on

forms prepared by the commissioner. The commissioner, at any time, may require the

applicant to fully disclose the identity of the applicant's stockholders (except

stockholders owning fewer than ten percent of the shares of an applicant whose

shares are publicly traded), partners, officers, and employees, and the commissioner

may refuse to issue the license in the name of any person if not satisfied that any

officer, employee, stockholder, or partner thereof who may materially influence the

applicant's conduct meets the standards of this chapter.

10. A license issued to a partnership, corporation, or other entity authorizes all members,

officers, and designated employees to act as a licensee under the license, if those

individuals are named in the application and any supplements to the application.

11. Upon the filing of an application and the payment of the license fee, the commissioner

shall make an investigation of each applicant and may issue a license if the

commissioner finds that the applicant:

a. If a provider, has provided a detailed plan of operation;

b. Is competent and trustworthy and intends to transact the applicant's business in

good faith;

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;

d. If the applicant is a legal entity, is formed or organized pursuant to the laws of this

state, or is a foreign legal entity authorized to transact business in this state, or

provides a certificate of good standing from the state of its domicile;

e. Has provided to the commissioner an antifraud plan that meets the requirements

of section 26.1-33.4-12 and includes:

(1) A description of the procedures for detecting and investigating possible

fraudulent acts and procedures for resolving material inconsistencies

between medical records and insurance applications;

(2) A description of the procedures for reporting fraudulent insurance acts to the

commissioner;

(3) A description of the plan for antifraud education and training of the

applicant's underwriters and other personnel; and

(4) A written description or chart outlining the arrangement of the antifraud

personnel who are responsible for the investigation and reporting of possible

fraudulent insurance acts and investigating unresolved material

inconsistencies between medical records and insurance applications; and

f. If a provider or broker, has demonstrated evidence of financial responsibility in a

format prescribed by the commissioner through a surety bond executed and

issued by an insurer authorized to issue surety bonds in this state or through a

deposit of cash, certificates of deposit, or securities or any combination thereof in

the amount of one hundred fifty thousand dollars. The commissioner shall accept,

as evidence of financial responsibility under this subdivision, proof that financial

instruments in accordance with the requirements in this subdivision have been

filed with one or more states in which the applicant is licensed as a provider or

broker. The commissioner may ask for evidence of financial responsibility at any

time the commissioner determines necessary. Any surety bond issued pursuant

to this subdivision must specifically authorize recovery by the commissioner on

behalf of any person in this state which sustained damages as the result of

erroneous acts, failure to act, conviction of fraud, or conviction of unfair practices

by the provider or broker.

12. The commissioner may not issue any license to any nonresident applicant unless a

written designation of an agent for service of process is filed and maintained with the

recovery by the commissioner on

behalf of any person in this state which sustained damages as the result of

erroneous acts, failure to act, conviction of fraud, or conviction of unfair practices

by the provider or broker.

12. The commissioner may not issue any license to any nonresident applicant unless a

written designation of an agent for service of process is filed and maintained with the

commissioner or unless 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 commissioner.

13. Each licensee shall file with the commissioner before March first of each year an

annual statement containing such information as the commissioner by rule may

prescribe.

14. A provider may not use any person to perform the functions of a broker, as provided

under this chapter, unless the person holds a current, valid license as a broker, and as

provided in this section.

15. A broker may not use any person to perform the functions of a provider as defined in

this chapter unless such person holds a current, valid license as a provider and as

provided in this section.

16. A provider or broker shall provide to the commissioner new or revised information

about officers, ten percent or more stockholders, partners, directors, members, or

designated employees within thirty days of the change.

17. An individual licensed as a broker shall complete on a biennial basis fifteen hours of

training related to life settlements and life settlement transactions as required by the

commissioner; provided, however, that a life insurance producer who is operating as a

broker pursuant to this section is not subject to the requirements of this subsection.

Any person failing to meet the requirements of this subsection shall be subject to the

penalties imposed by the commissioner.