Bill to clamp down on viaticals advances
By David Sedore
Palm Beach Post Staff Writer
Thursday, April 28, 2005
TALLAHASSEE � A bill that would require viaticals to be regulated as an investment product rather than as an insurance policy is one step from passing in the state Senate.
The bill, aimed at reducing fraud, would require viatical sellers to disclose the same financial information as stockholder-owned companies are.
It also would require that those selling viaticals have the same license as a stockbroker.
Viaticals involve a company buying life insurance policies of someone who is terminally ill.
The company pays the policyholder a portion of the value of the policy, then sells the policy to investors. When the policyholder dies, the investors collect.
Opponents of the Senate measure � supported by both Gov. Jeb Bush and state Chief Financial Officer Tom Gallagher � say it would kill off smaller viatical companies, hurting both investors and the terminally ill who sell off their life insurance policies.
“It’s not going to help consumers of the state of Florida,” said Sen. Steven Geller, D-Hallandale. “I’m not aware that reducing competition can actually help consumers.”
The viaticals industry has produced more than its share of fraud, costing investors hundreds of millions of dollars.
Raphael Ray Levy, a former Greenacres police officer who ran a Lake Worth company called American Benefits Services, is serving a 14-year sentence for taking investors for more than $100 million in a viaticals fraud.
Opponents argued that most of the fraud occurred years ago, and that Florida has adequate laws to protect investors.
“If we do have laws on the books, apparently they’re not working,” said Mike Fasano, R-New Port Richey.
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