2023 New York Laws › ISC - Insurance › Article 78 - Life Settlements › 7814 - Prohibited Practices.

§ 7814. Prohibited practices. (a) No person shall:
(1)  enter  into  a  life  settlement  contract if the person knows or
reasonably should have known that the policy was obtained  in  a  false,
deceptive or misleading way;
(2)  engage  in any transaction, practice or course of business if the
person knows or reasonably should have known  that  the  intent  was  to
avoid the disclosure or other notice requirements of this article;
(3)  engage  in  any fraudulent act or practice in connection with any
transaction relating to any life settlement;
(4)(A) enter into a premium finance loan with an applicant for  a  new
policy  or  an  owner,  pursuant  to  which the person providing premium
financing, or any affiliate, parent corporation  or  subsidiary  of  the
person,  shall  receive  any  proceeds,  fees  or  other  consideration,
directly or indirectly, from the policy or owner of the  policy  or  any
other  person,  other  than  commissions  earned by a licensed insurance
producer on the policy, with respect to the premium finance  loan,  that
are  in  addition to the amounts required to pay the principal, interest
and any reasonable costs, fees or expenses incurred  by  the  lender  or
borrower  related to the premium finance loan or subsequent sale of such
loan; provided, further, that  any  payments,  charges,  fees  or  other
amounts  in  addition  to  the  amounts  required  to pay the principal,
interest and any reasonable costs or expenses incurred by the lender  or
borrower  related  to  the premium finance loan shall be remitted to the
original owner of the policy or to the original owner's  estate  if  the
original  owner  is  not  living at the time of the determination of the
overpayment. For purposes of this paragraph, "owner" means the owner  of
a policy whether or not entering into, or offering to enter into, a life
settlement contract;
(B) If, at any time, a policy that is the subject of a premium finance
loan  specified in subparagraph (A) of this paragraph is sold, assigned,
transferred, devised or bequeathed pursuant to the terms  of  a  premium
finance  loan,  any  proceeds or other consideration received other than
the amounts specified in subparagraph (A) of  this  paragraph  shall  be
remitted  to the original owner of the policy or to the original owner's
estate if the original owner is not then living;
(5) with respect to any life settlement contract,  knowingly  fail  to
disclose  any affiliation or contractual arrangement as required by this
article;
(6) directly or indirectly, purchase or  obtain  an  interest  in  any
policy  that  is  the  subject  of  a life settlement contract where the
person has  acted  as  a  life  settlement  broker  or  life  settlement
intermediary  with  respect  to  the policy, unless such affiliation has
been disclosed to the owner pursuant to paragraph  three  of  subsection
(c)  of section seven thousand eight hundred eleven of this article; and
(A) if a life settlement broker, the broker has provided all offers  and
counter  offers  pursuant  to paragraph two of subsection (c) of section
seven thousand eight hundred eleven of this article, and  has  conducted
the  transaction  on  a fair and equitable arm-length basis; or (B) with
respect to a life settlement  intermediary,  the  intermediary  complies
with  subsection (o) of section seven thousand eight hundred thirteen of
this article;
(7) directly or indirectly provide  any  compensation  to  any  person
acting  in  this  state as a life settlement broker, and no person shall
accept any such compensation, unless  the  person  is  a  licensed  life
settlement broker pursuant to the provisions of section two thousand one
hundred thirty-seven of this chapter;
(8) directly or indirectly pay any referral or finder's fee or provide
any  other  compensation to any owner's physician, attorney, accountant,

insurance producer, insurance  consultant,  or  other  person  providing
medical,  legal  or  financial planning services to the owner, or to any
other person, other than a  life  settlement  broker,  representing  the
owner  with respect to the life settlement contract, and no person shall
accept any such fee or compensation;
(9) directly or indirectly provide compensation to a  life  settlement
broker,  except where the compensation is for a specific life settlement
contract and is clearly disclosed to  the  owner  as  required  in  this
article;
(10)  directly  or  indirectly  engage  in  any  act determined by the
superintendent to be an unfair or deceptive act or practice pursuant  to
this chapter;
(11)   remove,   conceal,   alter,   destroy  or  sequester  from  the
superintendent the assets or records of a life settlement provider, life
settlement broker, life settlement intermediary or other person  engaged
in the business of life settlements;
(12)  misrepresent  or  conceal  the  financial  condition  of  a life
settlement provider; or
(13) in relation to the business of life settlements,  file  with  the
superintendent   a  document  containing  materially  false  information
concerning any fact material thereto or  otherwise  conceal  information
about a fact material thereto from the superintendent.
(b)   No  life  settlement  provider,  life  settlement  broker,  life
settlement intermediary, owner or any other person, as  a  condition  of
entering  into  a  life settlement contract, shall request or require an
insured to submit to a medical examination at any time subsequent to the
settlement of the policy.
(c) No life settlement provider shall enter into any  life  settlement
contract in which payments of proceeds are made in installments.
(d)  No  life  settlement  provider,  life  settlement  broker or life
settlement intermediary shall directly or indirectly:
(1) be a party to or enter into an agreement or understanding limiting
or restricting an owner's or life settlement broker's  ability  to  seek
competitive  bids  on  policies  to  the  extent  that  the agreement or
understanding unlawfully restrains trade or constitutes anti-competitive
behavior;
(2) monopolize or attempt to monopolize, or combine or  conspire  with
any  other  person or persons to monopolize, in this state, the business
of life settlements;
(3) be a party to or enter into an agreement with  a  life  settlement
provider,  life settlement broker or life settlement intermediary to the
extent that the agreement fixes or limits the value paid to owners;
(4) be a party to or enter into any agreement or communication with  a
life settlement provider or life settlement intermediary with respect to
the  terms to be offered to an owner to the extent that the agreement or
understanding unlawfully restrains trade or constitutes anti-competitive
behavior;
(5) be a party to or enter into any agreement with a  life  settlement
provider,  life settlement broker, life settlement intermediary or other
person to  restrain  trade  or  engage  in  any  other  anti-competitive
behavior;
(6)  be  party  to  or enter into any agreement with a life settlement
provider, life settlement broker, life settlement intermediary or  other
person the effect of which may be substantially to lessen competition in
the business of life settlements subject to this chapter; or
(7)  be  a party to or enter into any agreement with a life settlement
provider, life settlement broker, life settlement intermediary or  other

person  to refuse to conduct business with any person in the business of
life settlements.
(e) No life settlement intermediary shall:
(1)  represent,  solicit,  negotiate  or act on behalf of, an owner, a
life settlement provider, or a life settlement broker; or
(2) act as a life settlement provider or life settlement broker.
(f) No insurer shall prohibit an insurance agent from disclosing to  a
client the availability of a life settlement contract.
(g)  The  failure  to follow the provisions of this section shall be a
defined violation under article twenty-four of this chapter.