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Stranger-Originated Life Insurance (STOLI)

Stranger-Originated Life Insurance (STOLI) Hearing

The Office of Insurance Regulation (Office) held a public hearing August 28 on Stranger-Originated Life Insurance (STOLI) to give all interested parties an opportunity to voice their issues and concerns on STOLI arrangements.  The testimony and material submitted at the hearing assisted the Office in producing a report entitled Stranger-Originated Life Insurance and the Use of Fraudulent Activity to Circumvent the Intent of Florida's Insurable Interest Law, which was released on February 5, 2009.

Additionally, Florida's Deputy Insurance Commissioner for Life and Health, Mary Beth Senkewicz, testified before the Senate Special Committee on Aging in Washington, D.C. on April 29, 2009. A video of the hearing, entitled Betting on Death in the Life Settlement Market - What's at Stake for Seniors?, and a copy of the testimony are available for viewing.

These STOLI arrangements have gained attention because, generally, a party purchasing life insurance must have an ?insurable interest? in the person being insured. For example, a person has an insurable interest in his or her spouse.

In a STOLI transaction, however, a person with no insurable interest (a stranger) in another persuades the other person to obtain life insurance with the understanding that after a certain time (usually two years) the insured will sell the policy to the stranger.

These arrangements circumvent public policy requirements behind insurable interest laws. The Office is now in the process of assessing whether those arrangements require specific regulation, and, if so, what are possible next steps for regulating such arrangements in Florida.

If you feel that you have been victimized by a STOLI transaction, please contact the Office's Deputy General Counsel, Susan Dawson, at (850) 413-4195 or susan.dawson@floir.com.

Video of hearing (Part 1, Part 2 and Part 3).

The links below are to documents provided for the record of that hearing.