Life Insurance Policy Expertise

Print Friendly, PDF & Email

My experience in life insurance policies is introduced in the video below, followed by further details of my annuities expertise.

Life Insurance Expertise of William D. Hager

1. Expertise As to Life Insurance Policies.

A. Life Insurance Policy Expertise as an Insurance Regulator. I have had extensive and substantive experience relating directly to life insurance policies, including interpreting policy language and determining the insurer’s obligations under such policies. As a regulator for eight years in three positions ((i) Assistant Attorney General assigned to the Department of Insurance (Iowa), (ii) First Deputy Commissioner of Insurance and (iii) Commissioner of Insurance), along with my staff, I approved (or disapproved) of the language of life insurance policies used by each of the 500 life insurance companies doing business in the state. This regulatory action also included the approval of policy application forms. In addition, I regularly served as an Administrative Law Judge (then known as a “Hearing Officer”) in matters relating directly to life insurance policies.

B. Life Insurance Policy Expertise: NAIC. While Commissioner, I also served as a member of the National Association of Insurance Commissioners (“NAIC”), (including membership on its Executive Committee), the nationwide organization of all state insurance commissioners. That organization has responsibilities for establishing model insurance administrative regulations and model statutes for consideration by all of the states. While with the NAIC, I served as, among other things:

Member of the Executive (EX) Committee. As stated, I served for a number of years as a member of the NAIC Executive Committee. That Committee had organizational oversight of all of the workings of the NAIC including oversight over its entire committee structure.

The mission of the Executive (EX) Committee is to manage the affairs of the NAIC in a manner consistent with the Articles of Incorporation and Bylaws. Its role is to provide ongoing Support of NAIC Programs, Products or Services as follows:

  • Based on input of the membership, identify goals and priorities of the organization and make recommendations to achieve such goals and priorities. Make recommendations to the Commissioners’ Conference.
  • Create/terminate task force(s) and/or executive working groups to address special issues and monitor the work of these groups. Create necessary task forces and/or executive working groups as necessary.
  • Submit reports and recommendations to NAIC members concerning the activities of its subcommittee and the standing committees. Submit report at each national meeting.
  • Consider requests from NAIC members for friend-of-the-court briefs.
  • Establish and allocate functions and responsibilities to be performed by each zone.
  • Pursuant to the Bylaws, oversee the NAIC offices to assist the organization and the individual members in achieving the goals of the organization.
  • Conduct strategic planning on an ongoing basis.
  • Plan, implement and coordinate communications and activities with the Federal Insurance Office (FIO).
  • Plan, implement and coordinate communications and activities with other state, federal, local, and international government organizations to advance the goals of the NAIC and promote understanding of state insurance regulation.
  • Review and approve requests for development of model laws. Coordinate review of existing model laws.

The Life and Annuity Committee: Chairman. As stated, the Executive Committee had oversight of all of the NAIC committees including the Life Insurance and Annuity Committee. In addition to Executive Committee oversight, as indicated, I served as chairman of the Life Insurance and Annuities (A) Committee. In that regard, the following task forces and working groups currently report to the Life Insurance and Annuities (A) Committee:

  • Annuity Disclosure Working Group
  • Contingent Deferred Annuity Working Group
  • ERISA Retirement Income Working Group
  • Life Actuarial Task Force

The current mission of the Life Insurance and Annuities (A) Committee is to consider issues relating to life insurance and annuities and review new life insurance products and provide ongoing Maintenance of NAIC Programs, Products or Services as follows:

  • Monitor the activities of the Life Actuarial (A) Task Force.
  • Oversee development of the principle-based reserving system.
  • Review and revise, as necessary the Life Insurance Buyer’s Guide in conjunction with Appendix A of the Life Insurance Disclosure Model Regulation (#580).
  • Oversee changes and provide technical assistance as appropriate for the production of the Market Share Reports for the Top 125 Life and Fraternal Insurance Groups and Companies by State.
  • Appoint the Annuity Disclosure (A) Working Group to review and revise, as necessary, the Buyer’s Guides to Fixed Deferred Annuities, which was Appendix A of the Annuity Disclosure Model Regulation (#245).
  • Appoint a Viatical Settlements (A) Working Group to review and consider revisions to the Viatical Settlements Model Regulation (#698) for consistency with the 2007 revisions made to the Viatical Settlements Model Act (#697),including reviewing and considering revisions to or replacement of, as appropriate, Appendix A – Informational Brochure.
  • Review the U.S. Securities and Exchange Commission (SEC) Life Settlements Task Force Staff Report and the U.S. Government Accountability Office (GAO) Report to the U.S. Senate Special Committee on Aging on Life Insurance Settlements and assess their effect on the functional state regulation of life settlements, if any, and make recommendations, as necessary, to the NAIC.
  • Appoint the Contingent Deferred Annuity (A) Working Group to review the issues identified in the Life Actuarial (A) Task Force referral concerning contingent annuities and report the results of its review to the Committee.
  • Appoint an ERISA Retirement Income Working Group to work with representatives of the U.S. Department of Labor (DOL), the White House Council of Economic Advisors (CEA), the U.S. Department of the Treasury and any other appropriate federal agencies, in coordination with the NAIC Government Relations Leadership Council (GRLC), to consider possible options for easing plan sponsor concerns with the financial soundness of annuity providers as related to the DOL annuity safe harbor plan sponsor selection of annuity provider and fiduciary responsibility requirements.

In addition to serving as Chair of the Life Insurance Committee, I served as well in the following leadership positions as to life insurance:

  • Chair of the Universal Life Insurance Task Force. The charge of this Committee was oversight of universal life and similar products; and
  • Chair of the Life Insurance Product Development Task Force. While Chairman of this Task Force, I led the development of model disclosure statements for universal and indeterminate premium life products designed to assist consumers in their comparison of different types of life insurance products.

C. Life Insurance Policy Expertise: American Academy of Actuaries. Along these same lines, I served as general counsel and chief lobbyist to the American Academy of Actuaries, Washington, D.C. The Academy is the national professional association for actuaries, the professionals who establish premium levels for policies. In addition, because policy language dictates premium levels, actuaries are also active in determining policy language.

D. Life Insurance Policy Expertise: CEO of A Major US Insurance Entity. After serving as a regulator, I served as President and Chief Executive Officer for the National Council on Compensation Insurance (“NCCI”), New York City, a nationwide industry owned organization with about 1,500 employees with annual revenues of about $150 million that did (and does) business in about 40 states. NCCI was domiciled in Florida and did business in throughout the U.S.

This means that while I was CEO, NCCI was subject to the full authority of the various state Department of Insurance (“DOIs”) and subject as well to the various state Insurance Codes as well as the jurisdiction of all state and federal courts.

Among my responsibilities at NCCI was (together with my staff) to formulate all workers compensation insurance policy forms as used in our 40 states of operation. This work included drafting all policy language (tailored to the specific state’s insurance code) as well as drafting all endorsements and all other policy forms. In addition, my responsibilities included gaining state insurance department approval of all such policy forms as a condition precedent to their use as submitted by some 600 insurance companies. Finally, I note that among others, the life insurance benefit under workers compensation is an important coverage. I am very familiar with the meaning and relevance of specific state approval of policy forms, endorsements and applications and related documents and matters.

E. Life Insurance Policy Expertise: Reinsurance Arbitrator. I am also one of about 400+ certified reinsurance arbitrators (by ARIAS-US) and have sat as an arbitrator on life insurance issues in disputes about policy language between reinsurers and their insurers.

2. Claims: Expertise as to Duties of Life Insurance Companies Including Claims.

A. Expertise as to Duties of Life Insurance Companies As Commissioner of Insurance: Claims. I have also had significant experience and responsibility in connection with determining and passing judgment on insurers’ responsibilities as to insurance agents and as to applicants, insureds, owners and beneficiaries. In particular, in my three regulatory positions previously described, I had daily responsibility to assure and to hold accountable all of the state’s 500 life insurers for their related obligations. I did so through a series of action steps and tools. The action steps and tools included the following:

  • NAIC Market Regulation Handbook: Claims. As Commissioner, I had as an available tool, the NAIC Market Regulation Handbook (“Examiners Handbook” or “Handbook”). Among other things, this Handbook sets forth standards to assess life insurer behavior relating to (i) policy application, (ii) policy issuance, (iii) claims and (iv) responsibilities relating to their agents. The Handbook also sets forth standards of review as to agent contracts and appointments by insurers of agents. The Handbook is used by every department of insurance in the United States. The standards have been universally agreed to by all of the nation’s Commissioners of Insurance as adopted formally by them through the NAIC. The standards of the Handbook are universally recognized as appropriate standards against which to judge life insurer behavior.
  • Market Conduct Examinations: Claims. On a regular basis, my regulatory agency conducted Market Conduct Examinations of life insurers utilizing the Examiners Handbook to determine whether in fact the target insurer was meeting all of their obligations to their insureds and others. This action entailed physically going into the insurers’ application and policy issuance files to determine any errant action or inappropriate policy behavior. As further discussed below, errant insurers were warned, disciplined and prosecuted as required.
  • NAIC Financial Examiners Handbook: Claims. As Commissioner, I had available another tool, namely the NAIC Financial Examiners Handbook (“Financial Examiners Handbook”). Among other things, the Financial Examiners Handbook sets forth standards to assess life insurer solvency on a triennial basis. Among other documents reviewed by examiners in reaching financial conclusions are agent contracts and policyholder matters. As with the Market Conduct Examiners Handbook, the Financial Examiners Handbook is used by every department of insurance in the United States including. Similarly, these standards have been universally agreed to by all of the nation’s Commissioners of Insurance as adopted formally by them through the NAIC. The standards of the Financial Examiners Handbook are universally recognized as appropriate standards against which to judge life insurer behavior.
  • Financial Examinations: Claims. On a regular basis, my Department conducted financial examinations of life insurers utilizing the Financial Examiners Handbook to determine whether in fact the insurer was, and would likely remain, solvent. As with market conduct exams, financial examinations entailed physically going into the insurers’ operations and studying files and other items to (i) assure compliance with agent and policyholder duties (claims) and (ii) to assure that financial reporting as to agent and policyholder matters were properly carried out. As further discussed below, errant insurers were warned, disciplined and prosecuted as required.
  • Complaints From the Public: Claims. On a daily basis, my Department received incoming consumer complaints as to life insurance company practices. This Consumer Protection Division was staffed by Department lawyers who resolved the individual complaint and also, equally important, those lawyers also determined whether an insurer evidenced unacceptable practices — that is to say, whether the incoming consumer complaints in fact constituted a red flag as to the life insurance company’s potential behavior across the board.
  • Prosecution. To the extent insurer behavior required formal action (whether as a result of complaints from the public or as a result of Department investigation through a Market Conduct Examination or the Financial Examination), my Department prosecuted such life insurers under the state’s civil Administrative Procedures Act. In connection with such prosecutions, I served in various capacities during my eight years as a regulator, including serving as (i) prosecutor (as Assistant Attorney General), (ii) as the decision maker as to whether to initiate prosecution in the first instance (while First Deputy and Commissioner of Insurance) and (iii) as the Administrative Law Judge (“ALJ”) who presided over the prosecution and entered findings of fact and conclusions of law as to insurer coverage determinations and claim settlement practices. I have served as an ALJ in scores of such cases where the life insurer’s (i) agent, (ii) policy form, (iii) policy application and (iv) overall conduct were the primary issues and I entered final decisions and orders in such matters.

B. Expertise As to Duties of Life Insurance Companies as an Insurance Industry Executive: CEO of a Major US Insurance Organization: Claims. I discuss my executive experience at NCCI under this section because in addition to expertise as to policies (discussed above), my experience at NCCI also resulted in expertise as to insurer responsibilities as to applications, policy issuance and their agents.While I was President and CEO, NCCI was subject to the full range of authority of the state DOIs as discussed above. I am very familiar with the duties of admitted insurers relating to their obligations and responsibilities and the regulatory scheme in place in as to such matters.

While President and CEO of NCCI, I visited and physically toured and reviewed in excess of 400 insurance companies and gained direct exposure to the procedures and processes and standard industry practices of the U.S. insurance community including the life insurance community in that any number of those insurers had life insurance operations.

C. Expertise as to Duties of Life Insurance Companies: General Counsel to the American Academy of Actuaries: Claims. As stated above, I served as General Counsel and Director of Government Relations for the American Academy of Actuaries. I mention it again here in connection with insurer agent and policy obligations because Academy members included affiliation with virtually every life insurance company in America. Among other things, such actuaries had duties relating to policy language and policy pricing. The Academy’s Board of Directors was likewise made up of leading insurance company executives from such life insurance companies.

D. Expertise as to Duties of Life Insurance Companies: Attorney in Private Practice Iowa: Claims. As an attorney in private practice, I represented a number of agent and insurer interests and became familiar with applicable life industry standards of practice, including insurer responsibilities toward their agents. Those interests also included intimate involvement with insurance forms as counsel to the (i) Professional Insurance Agents of Iowa and (ii) the Iowa Association of Life Underwriters (life, health and annuity insurance agents).

3. Expertise as to Life Insurance Underwriting.

A. Expertise as to Underwriting Duties and Responsibilities of Life Insurance Companies As Commissioner of Insurance. Consistent with the discussion immediately above, I have also had significant experience and responsibility in connection with determining and passing judgment on life insurance companies’ underwriting duties and responsibilities.

In particular, in my three regulatory positions previously described, I had daily responsibility to assure and to hold accountable all of the state’s 500 life insurance companies for their underwriting obligations. As I did in connection with the general duties of life companies (discussed above), I did so as well as to underwriting through a series of action steps and tools. The action steps and tools included the following:

  • Underwriting: NAIC Market Regulation Handbook. As Commissioner, consistent with the prior discussion, I also utilized the NAIC Examiners Handbook in that it sets forth standards to assess the underwriting behavior of insurance companies relating to (i) underwriting during the policy application process, (ii) underwriting during the time of policy issuance, (iii) underwriting responsibilities relating to the insurance company’s agents and (iv) underwriting matters that arise subsequent to policy issuance, for example during claim settlement time. As discussed above, the standards are utilized by every state department of insurance and the standards of the Examiners Handbook are universally recognized as appropriate standards against which to judge the underwriting duties and responsibilities of life insurance companies.
  • Underwriting: Market Conduct Examinations. Also as discussed above, on a regular basis, Market Conduct Examinations of life insurers were conducted utilizing the Examiners Handbook to determine whether in fact the target insurer was meeting all of their obligations to their insureds and others as to underwriting issues. This action entailed physically going into the insurers’ application and policy issuance files to determine any errant action or inappropriate underwriting behavior. As further discussed below, errant insurers were warned, disciplined and prosecuted as required.
  • Underwriting: NAIC Financial Examiners Handbook. As above, I had available another tool, namely the Financial Examiners Handbook, which (parallel to the above discussion) sets forth standards to assess life insurer solvency on a triennial basis. Among other documents reviewed by examiners in reaching financial conclusions are insurer underwriting files and matters. These standards have been universally agreed to by all of the nation’s Commissioners of Insurance as adopted formally by them through the NAIC and are universally recognized as appropriate standards against which to judge life insurer behavior, including underwriting.
  • Underwriting: Financial Examinations. As above, my Department conducted financial examinations of life insurers utilizing the Financial Examiners Handbook to determine, as with market conduct exams, among others things, (i) assurance of compliance underwriting duties and (ii) assurance that financial reporting matters were properly carried out. As further discussed below (and above), errant insurers were warned, disciplined and prosecuted as required.
  • Underwriting: Complaints From the Public. On a daily basis, my Department received incoming consumer complaints as to underwriting practices of life insurance companies. This Consumer Protection Division was staffed by Department lawyers who resolved the individual complaint and also, equally importantly, were trained to determine whether an insurer evidenced unacceptable practices — that is to say, whether the incoming consumer complaints in fact constituted a red flag as to an insurance company’s potential underwriting behavior across the board.
  • Underwriting: Prosecution. To the extent insurer behavior required formal action (whether as a result of complaints from the public or as a result of Department investigation through a Market Conduct Examination or the Financial Examination), my Department prosecuted such insurance companies under the state’s civil Administrative Procedures Act consistent with the discussion in the prior section.

B. Expertise As to Underwriting Duties and Responsibilities of Insurance Companies as an Insurance Industry Executive: CEO of a Major US Insurance Organization with Major Underwriting Duties. I discuss my executive experience at NCCI under this section because my experience at NCCI also resulted in expertise as to insurer responsibilities as to (i) underwriting during the policy application process, (ii) underwriting during the time of policy issuance, (iii) underwriting responsibilities relating to the insurance company’s agents and (iv) underwriting matters that arise subsequent to policy issuance, for example during claim settlement time.

The Gold Standard of Underwriting. While I was CEO, NCCI had the responsibility to formulate and submit for approval to most all of the Insurance Commissioners in the U.S., the underwriting standards used for underwriting most all of the workers compensation policies in this nation. Underwriting for workers compensation is routinely recognized throughout the industry as involving the most intense underwriting of all lines of insurance. This is so because there are over 600 officially designated workers compensation classification codes an employee may be placed in based on their principal job duties.

NCCI authored and maintained a detailed, word-by-word, phrase by phrase description as to each of these 600 classification codes, as to which insurers were required to adhere. That entire intense underwriting process inclusive of its classifications is encompassed in an industry wide recognized and used document called the Scopes Manual and is recognized as the Gold Standard for underwriting workers compensation insurance. Furthermore, the underwriting process, regardless of the line of insurance is fundamentally the same. This is because most all insurers (including life insurers) are about the business in the underwriting process of selecting the most favorable risks and rejecting the least favorable risks, regardless of the line of insurance. As such, it is the same process brought to bear on different lines of insurance – always with the same goal: identifying good risks and rejecting bad risks.

C. Expertise as to the Underwriting Duties of Life Insurance Companies: General Counsel to the American Academy of Actuaries. I served as General Counsel and Director of Government Relations for the American Academy of Actuaries. Academy members included affiliation with virtually every insurance company in America. Among other things, such actuaries had duties relating to the underwriting duties and responsibilities of insurance companies. The Academy’s Board of Directors was likewise made up of leading insurance company executives from such insurance companies.

D. Expertise as to the Underwriting Duties and Responsibilities of Life Insurance Companies: Attorney in Private Practice Iowa. As an attorney in private practice, I represented a number of insurer interests and became familiar with applicable life industry standards of practice, including insurer responsibilities toward the underwriting process, including working directly with the Iowa Association of Life Underwriters (whose duties included among others, the first line of life underwriting).

4. Expertise As to Life Insurance Agents.

A. Expertise as to Insurance Agents as a Regulator: Licensure. I have had extensive and substantive experience relating directly to the duty of care that comes to bear on insurance agents and agencies in their various relationships with life insurance companies. As an Assistant Attorney General (see above), I have prosecuted life insurance agents for violations relating to their duty of care. As an insurance regulator (see above), along with my staff, I have screened hundreds of thousands of agents for character and background (separate and apart from subject matter testing). As to subject matter, I have formulated agent-licensing exams in the first instance. Upon passage of the exam, I have licensed hundreds of thousands of insurance agents.

B. Expertise as to Insurance Agents as a Regulator: Prosecution and CE. I have had full responsibility for continuing education for licensed life insurance agents (approving CE courses in the first instance for acceptable content; overseeing the administration of such courses and granting and denying credit for such courses). I have initiated agent revocation actions and prosecuted those actions to completion.

C. Expertise as to Insurance Agents as a Regulator: ALJ. I have sat as the Administrative Law Judge in such actions and entered findings of facts and conclusions of law in scores of cases in which agents were prosecuted for violations relating to standards of care in connection with life insurance matters and I have had direct responsibility for the appointment process by life insurance companies (some 500 life insurance companies) of all of their life agents. I have supervised as well the ongoing relationship of all life insurance companies in the state with all of their appointed agents.

D. Expertise as to Insurance Agents: Legal Representation. As a lawyer, I have defended life insurance agents and brokers against allegations (in administrative law forums) of violations of their duty of care.

E. Expertise as to Insurance Agents: Industry CEO. As President and Chief Executive Officer of a major Florida domiciled and broadly licensed insurance entity (NCCI) doing business in some 40 states, I have had substantial working relationships with the U.S. insurance agent and agency community.

5. Expertise As to Actuarial Issues.

A. Expertise as to Actuarial Issues as a Regulator. As Insurance Commissioner, my agency was responsible for solvency oversight, insurance company examinations and financial and accounting matters of insurance companies. In particular, that oversight included the responsibility of overseeing practices of insurers, agents and actuaries who formulated their rates. In addition, I oversaw the state regulation of the securities industry with Iowa’s Superintendent of Securities reporting directly to me.

As a member of the NAIC, I served as both Vice Chairman and Chairman of the NAIC Life Insurance Committee. The charge of this Committee was oversight of all issues relating to life insurance products as well as life insurers, including practices such as underwriting. This Committee’s work included considerations relating to underlying actuarial issues as to the pricing and unfolding of this product.

B. Expertise as to Actuarial Issues as a CEO. During my tenure as CEO, NCCI had (and continues to have) responsibility to accurately price and file pricing for some $12 – $15 billion of workers compensation insurance in 39 states throughout the U.S. NCCI prepared proposed premium filings for regulators to approve by extracting key data from its 600 member insurance companies and then used that data to project necessary premium changes. NCCI carried out its intense pricing work though the professional efforts of an actuarial division of about 150 personnel. These individuals included support staff; statisticians; actuarial students and qualified actuaries. This staff produced about 40 major rate filings annual covering 40 states, pricing some $12 to $15 billion of insurance (workers compensation); and included the responsibility to advocate those rate changes before state government.

C. Expertise as to Actuarial Issues: American Academy of Actuaries. I served as General Counsel and Director of Government Relations for the American Academy of Actuaries, including advising on admissions, discipline, federal antitrust and general corporate law. I represented the 10,000-member professional organization before Congress (e.g., Senate Committees on Banking, Commerce, Finance and Labor, and House committees on Education, Labor, Energy, and Ways and Means) and the various federal regulatory agencies. The Academy is the professional organization of actuaries and includes qualified actuaries from all disciplines and all forms of insurers. Academy members included affiliation with virtually every property casualty insurance company and actuarial consulting company in America. The Academy’s Board of Directors was likewise made up of leading insurance company executives from such companies.

D. Expert Experience and Authorship on Actuarial Issues. I have served in a number of cases as an expert on actuarial issues, including in Arizona, Florida and California. I am also the author of a number of articles on the actuarial profession.

E. Actuarial Issues as Reinsurance Arbitrator. I am certified by ARIAS as one of about 400 U.S. certified reinsurance arbitrators and sit as an arbitrator on disputes between insurers and their reinsurers; actuarial issues routinely arise in such disputes in the form of pricing disputes including information (and mis-information) supplied by the ceding company and that information’s (and mis-information’s) positive or adverse effect on the pricing that was agreed to at the time of the initial reinsurance agreement.

6. Expertise as to the Secondary Market. The secondary market or life settlement market has emerged as a viable market in the last 15 years or so. It is nothing more than the buy/sell of life insurance policies or their beneficial interests (or combination thereof) between the underlying owner and entities representing investors or the entity itself, who end up with title to the stated interest in the policy and have a vested interest in maintaining the policy through the death of the insured, thereby collecting the face amount of the policy at death.

Policy owners with unneeded or unaffordable life insurance can surrender their policies to their insurance companies for the cash surrender value. In addition, beginning in the late 1990s, the life settlement market began to provide policy owners with another option: in a life settlement transaction, third-party investors compete to buy an existing, or in-force, policy from its owner—potentially resulting in an offer for the policy that is higher than its cash surrender value. (Note: Policy owners have had the right to sell their life insurance policies before the emergence of the life settlement market. The U.S. Supreme Court has determined that a life insurance policy is private property that can be sold at the will of the owners. See, the Supreme Court decision in 1911 Grigsby v. Russell, 222 U.S. 149. )

In exchange for the payment, the investor becomes the new policy owner and is responsible for paying the policy premiums but is entitled to receive the policy death benefit when the insured dies.

The life settlement market itself is organized as an informal network of intermediaries facilitating the sale of life insurance policies by owners to third-party investors. Policy owners may sell policies directly to investors in some cases, but owners (sellers) and investors (buyers) commonly use intermediaries.

Life settlement brokers represent policy owners for a fee or commission and may solicit bids for policies from multiple life settlement providers with the goal of obtaining the best price. Life settlement providers buy life insurance policies for investors or for their own accounts.

Most recently, there were 40 or so states had insurance laws specifically regulating life settlements. State insurance regulators focus on regulating life settlements to protect policy owners by imposing licensing, disclosure, and other requirements on brokers and providers. The Securities and Exchange Commission (SEC), where its jurisdiction permits, and state securities regulators regulate investments in life settlements to protect investors. State securities regulators and, in certain circumstances, SEC regulate investments in life settlements (the back-end transaction) to protect investors. Variable life policies are securities; thus, settlements involving these policies are securities subject to SEC’s and FINRA’s sales practice rules.

Life settlements evolved from viatical settlements, which historically have involved insured persons who are chronically or terminally ill and expected to live 2 years or less. In contrast, life settlements traditionally have involved policies covering older persons (for example, 65 or older) who are expected to live more than 2 years.

In connection with the life settlement market, I show specific expertise as follows:

  • Recognized as an Expert. I have been received twice to date in Federal Court as an expert as to the life settlement markets and have testified specifically as to that market in trial. In addition, I have been retained on another dozen or so cases (most all in federal court) as an expert as to the life settlement markets.
  • Expertise in the Life Settlement Market Relies on Expertise in the Life Insurance Market. The foundation of most all knowledge of the life settlement market (sometimes, the “secondary market”) is the knowledge of life insurance and the life insurance marketplace. In that regard, in support of the expertise, I cite all of the materials above as to my background in the life insurance market. In particular, I cite my expertise and experience as to life insurance in the following exemplary areas:
    • Underwriting
    • Claims
    • Actuarial elements
    • Agents
    • Brokers
    • Life insurance policies
    • The regulation of life insurance in all of its aspects
    • Financial reporting, both at the NAIC/State DOI level and at the SEC level
    • The use of trusts in connection with life insurance policies
    • Beneficial interests
    • And the balance of the elements of the industry.
  • Life Settlement Market sits on top of the Life Insurance Market and is a Small Sliver of the Market. The life settlement market or secondary market is simply a thin layer that sits on top of the existing life insurance industry. The additional knowledge required as to the life settlement market includes the following areas, each of which I have expertise as to and each of which I have testified as an expert:
    • The life settlement buy/ sell agreement;
    • The regulation of the life settlement market; which is evidenced by the NAIC 2007 related model act which has been adopted in substantially similar forms by some 40 states to date;
    • The players in the market and by that I mean the brokers and ultimate buyers and their nature and expectations and requirements;
    • The roles of the players in the market and by that I mean the sellers, the brokers and the buyers (investors);
    • The scope and nature of the documents involved in the buy sell transaction;
    • Custom and practice in the life settlement business.
  • National Market. Part and parcel of this discussion requires an understanding that the life settlement market is a national market. Generally, as long as local laws are complied with, neither the seller nor the broker nor the buyer care where the other is located. This means that knowledge of the life settlement market is not knowledge of a state specific marketplace, but instead, knowledge of the market nationally. This means there is one expertise as to life settlement markets, not a state by state expertise.
  • Florida Market. In addition, have been a player in the Florida insurance market for the last 22 years, during which I have participated in the life settlement market. In Florida, I have served as  (i) CEO of a large property casualty insurance entity doing business throughout the U.S., (ii) I am a Florida lawyer practicing in the area of insurance and (iii) I am an elected Member of the Florida Legislature. Florida has been and continues to be a focal point of the life settlement market for a number of reasons including the fact that (i) a significant number of brokers are Florida based, (ii) in addition, Florida’s Insurance Commissioner, Kevin McCarty has been extremely active in the life settlement market, both as a Florida regulator and as recent past president of the NAIC.
  • Member of the Florida Legislature: Member of the Insurance and Civil Justice Committees. Further, I am an elected Member of the Florida House of Representatives where I sit as a Member and Vice Chairman of the Insurance Committee and Member and Vice Chairman of the Civil Justice Committee. These committees have had ongoing oversight of the life settlement markets in connection with related legislation.
  • Reinsurance Arbitrator. I have also sat as an arbitrator between life insurers and their reinsurance companies where issues of polices sold by the insurer in circumstances where it was clear that the policy would be sold into the secondary market arose.
  • Legal Consultation. I have provided consultation with players in the market on many of the pivotal issues involved in the secondary market including the issues of (i) return of premium, (ii) the contestability period, (iii) rescission and (iv) fraud.
  • NAIC/ Regulation. As a former Commissioner of Insurance and active insurance executive, I followed the promulgation of the 2007 NAIC model act as to life settlements. In addition, as a former Member of the NAIC and former Member of the Executive Committee and former Chairman of the Life Insurance Committee, I am familiar with the (i) promulgation process, (ii) the model act itself and (iii) the relevance of the act in connection with the ultimate legislation passed on a state by state basis.
  • Conclusion. In all of this, I show expertise as to the life settlement market, sometimes, the secondary market.

II. MORE GENERAL LIFE INSURANCE EXPERTISE
Among my positions and experiences, the following are also contributive to my life insurance expertise and should be read together with the material above and my Curriculum Vitae:

A. Formal Education.

1. Bachelors Degree in Mathematics. I hold a bachelors degree in secondary mathematics education from the University of Northern Iowa;

2. Masters Degree in Education (Psychology). I hold a masters degree in educational psychology from the University of Hawaii; and

3. Juris Doctor Degree. I hold a Juris Doctorate degree from the University of Illinois.

B. Legal Background.

4. Lawyer. I am a member of the Florida Bar, and have been an insurance lawyer since 1975. I am also licensed to practice law in the states of Iowa and Illinois, and before the U.S. Supreme Court. (Note: My Illinois law license is currently inactive at my request and is eligible for reactivation at any time upon my request.)

C. Licensure and Certification.

5. Certified Reinsurance Arbitrator. I am certified by AIDA Reinsurance and Insurance Arbitration Society-United States (sometimes “ARIAS-US”) as one of approximately 400+ U.S. certified reinsurance arbitrators, and sit as an arbitrator on disputes between life insurers and their reinsurers.

D. Insurance Expert.

6. Expert Witness. I have served as an expert witness throughout the U.S., and have been qualified as an expert witness in more than 20 states.

7. Consultant to the U.S. Attorney. By way of example of my various assignments, I have been retained in the past by the U.S. Attorney, Middle District of Florida, as an insurance consultant in a complex civil insurance matter.

8. Insurance Consultant: U.S. Department of Justice. Similarly, I have also been retained by the U.S. Department of Justice as an insurance consultant in a complex insurance case.

9. Expert Witness: United States Air Force. I have served as an expert witness to the United States Air Force in a complex environmental pollution matter.

Expert Witness: Various State Departments of Insurance. I have also been retained by the Liquidation Division of the Florida Department of Financial Services as an expert witness and have testified on its behalf in both Federal Court in Tampa and in a Florida County Circuit Court as its expert in complex insurance liquidation matters. I have similarly been retained as an insurance expert by the state of Arizona in a major liquidation case. Likewise, I have been accepted as and testified as an insurance expert before the Arizona, Oklahoma, South Dakota, Nevada and Texas Departments of Insurance, among others.

E. Reinsurance Arbitrator. 

10. Reinsurance Arbitrator, November 2003 to Present. As indicated above, my background includes extensive exposure to the various reinsurance mechanisms and relationships. Further details are set forth below relating to this experience. In addition, I am a certified ARIAS-US reinsurance arbitrator (see immediately below). The relevance of this experience is that reinsurers have substantial influence on the behavior of their underlying life insurers from whom business is ceded.

As of November 2003, I was certified by ARIAS-US as an arbitrator for reinsurance and insurance matters. Today, there are more than 400+ individuals so certified by ARIAS-US in the United States.

ARIAS-US certifies knowledgeable and reputable professionals for service as panel members in reinsurance and insurance arbitration matters. The organization’s criteria for certification are as follows:

  • 10 years of significant specialization in the insurance/reinsurance industry;
  • Arbitration experience–must have completed appropriate credited ARIAS seminars;
  • A member in good standing of ARIAS-US; and
  • Appropriate endorsement from existing members.

F. Industry Background.

11. Chief Executive Officer of a Major Insurance Industry Regulated Organization—President and CEO of the National Council on Compensation Insurance (sometimes “NCCI”), 1990–1998. NCCI is one of the larger and more pervasive U.S. insurance organizations. During my tenure as CEO, NCCI had (and continues to have) responsibility to accurately price and file pricing for some $12-$15 billion of workers compensation insurance in 40 states throughout the U.S. NCCI prepared proposed premium filings for regulators to approve by extracting key data from its 600 member insurance companies, and then used that data to project necessary premium changes. NCCI accomplished this mission through some 1,000 employees, approximately 600 of which were professionals, and had annual revenues of $150 million.

Regulated by Throughout the U.S. While I was President and CEO of NCCI, the company did business in approximately 40 states. As such, the company was governed throughout the U.S by the various state Insurance Codes (and continues to be so governed today), including all applicable provisions relating to those various state insurance law. In addition, NCCI was subject to pervasive regulatory oversight by the state DOIs. Finally, NCCI was subject to the applicable jurisdiction of all state and federal courts. As a result, I am generally familiar with applicable insurance laws, regulations, and related civil proceedings.

Life Insurance Program. As CEO, I had daily exposure and responsibilities to the U.S. workers’ compensation program as administered by the various states. This program constitutes one of the largest life insurance programs in the world, with some 100 million worker lives insured (of course, other important coverages are provided through workers compensation, most notably, wage replacement and medical coverage).

Insurance Company Practices. In addition, NCCI had a vested interest in member insurers’ reputation for fairness because it impacted regulatory attitudes toward NCCI’s premium approval process.

Sales Practices. In addition, NCCI had a vested interest in member insurer sales practices in that the industry’s reputation for fair sales practices ultimately impacted regulatory attitudes toward NCCI’s premium approval process.

Agent and Broker Practices. Most all workers’ compensation products are sold through agents and brokers and as such, as CEO of NCCI, my responsibilities included creating and sustaining liaison with all of the operative U.S. agent associations and communities. I have had extensive exposure to agent and insurer practices and procedures.

Industry Standards of Practice. While President and CEO of NCCI, I visited, physically toured, and reviewed more than 400 insurance companies. I also gained direct exposure to the procedures, processes, and standard industry practices of the U.S. insurance community and its agents. As stated, most all workers’ compensation products are sold through agents, and accordingly as CEO of NCCI, my responsibilities included creating and sustaining liaisons with all of the operative U.S. agent associations and communities. Furthermore, I have had extensive exposure to agent and insurer practices and procedures. In addition, regarding workers’ compensation, many of these companies were also licensed to sell life insurance.

12. General Counsel and Director of Government Relations to the American Academy of Actuaries (Washington, D.C.), 1980-1983. I served as General Counsel and Director of Government Relations for the American Academy of Actuaries (sometimes “the Academy”). My responsibilities in this position included advising on admissions, discipline, federal antitrust law, and general corporate law. I represented this 10,000 member professional organization before Congress (e.g., Senate Committees on Banking, Commerce, Finance and Labor, and House Committees on Education, Labor, Energy, and Ways and Means) and the various federal regulatory agencies.

Life Insurance Companies: Agents and Brokers. The Academy is the professional organization of actuaries, and includes qualified actuaries from all disciplines and all forms of insurers. The Academy’s members had affiliations with virtually every life insurance company in the U.S. The Academy’s Board of Directors likewise was comprised of leading insurance company executives from such companies whose duties included that of sales oversight.

13. Risk Metrics Corporation: Marketing to Agents and Brokers. I co-founded this Florida-based information company in 1998. Risk Metrics (including Datalister, Inc.) gathers and sells public data relating to workers’ compensation insurance to a wide range of insurance-oriented customers, including insurance agents and brokers. Within the last number of years, I have sold my interest in this corporation.

14. Attorney in Private Practice. As an attorney in private practice, I represented a number of agent and insurer interests, and became familiar with regulatory and industry standards of practice. Those interests included the position of Iowa Counsel to the Property Casualty Insurers Association of America (“PCIAA”).

Life Issues. Those interests also included intimate involvement with the agent community as counsel to the:

  • Professional Insurance Agents of Iowa; and
  • Iowa Association of Life Underwriters (i.e., life insurance agents).

My specific duties as counsel to both the Professional Insurance Agents of Iowa and the Iowa Association of Life Underwriters included an in-depth familiarity with life insurance products and insurance agents and their issues.

G. Regulatory.

15. Commissioner of Insurance, Iowa, 1986-1990. As Insurance Commissioner appointed by Governor Terry Branstad in July 1986, I was responsible for the regulatory oversight of all insurance companies, agents, and brokers authorized to conduct business in the state of Iowa. My Department was responsible for solvency oversight, insurance company examinations, financial and accounting matters of insurance companies, consumer protection, agent and broker licensing, and oversight of the property and casualty and life insurance company practices. In particular, that oversight included the responsibility of overseeing practices of life insurance agents and brokers. In addition, I oversaw the state regulation of the securities industry, with Iowa’s Superintendent of Securities reporting directly to me.

Regulatory Oversight: Life Insurer Practices. As Insurance Commissioner, my responsibilities included oversight of the education, licensing, discipline, and general supervision of all life insurance companies and all life insurance agents in the state of Iowa. Consequently, I am very familiar with the responsibilities and applicable duty of care that come to bear upon life insurance companies and their agents.

Regulatory Oversight: Life Insurance Agent Practices: Prosecutions. As Insurance Commissioner, I also had day-to-day responsibility to assure that all relationships carried out by insurance companies doing business in the state met all of their duties, obligations and statutory and regulatory responsibilities as they conducted business with their agents. This included oversight of (i) screening for character and competency on a pre-licensure basis, (ii) licensing, (iii) revocation of licenses, (iv) continuing education and its administration and enforcement, (v) accounting and (vi) agent relationships with their insurers.

Examination of Life Insurance Companies. As Insurance Commissioner, I directed and oversaw the examination of all insurance companies authorized to do business in the state of Iowa. Those examinations included a focus on both financial matters (so-called triennial examinations of insurers—more than 100 such examinations were conducted while I was Commissioner) and examinations of specific complaints about insurers (so-called Market Conduct Examinations—more than 50 such exams were conducted while I was Commissioner).

Market Conduct Examinations of Life Insurer Practices Including Practices With Their Agents. Market Conduct Examinations focused on marketplace issues, including examining life insurance companies as to compliance with their agent and policyholder duties. Concurrent with such exams, I personally reviewed and approved the final examination reports before they were issued. In addition, in many of these instances, I visited the subject life insurer before the examination report was issued. These visits involved walking the floors of such insurance companies; in other words, reviewing their affected operations first-hand.

Prosecution of Life Insurance Companies for Violations of Standard of Care. As Insurance Commissioner, I employed a full-time team of lawyers who fielded consumer complaints relating to all areas of life insurers as well as premium finance companies. Indeed, many of these complaints as well as results of Market Conduct Examinations resulted in formal action under the state’s Administrative Procedures Act, with the life insurer’s license to conduct business in the state at risk for failing to adhere to their duties. At times, I served as the Hearing Officer on such matters.

Major Insurance State. Iowa has approximately 1,000 authorized property and casualty insurance companies, more than 500 life insurance companies, and an unusually large number of domestic insurance companies. As such, insurance regulation in that state is a serious job.

16. National Association of Insurance Commissioners, 1986-1990. Concurrent with my service as Iowa Insurance Commissioner, I served as a member of the NAIC. The NAIC is an organization of the Insurance Commissioners of all 50 states, and meets quarterly in locations throughout the U.S. to consider and evaluate national insurance issues. Further, the organization is professionally staffed with more than 100 personnel. The organization is based in Kansas City, Missouri. The NAIC considers all major insurance issues, and then promulgates model insurance laws and regulations, which are routinely (but optionally) adopted at the individual state level.

NAIC Chairmanships–Chairman of the Midwest Zone. I was elected by my fellow Insurance Commissioners from the Midwest Zone (composed of the Midwest states, which constitutes approximately one quarter of all of the states) to provide leadership and representation of the Midwest before the balance of the states. This position included a position on the Executive Committee of the NAIC, as well as major responsibilities relating to the assignment of states (and their related examiners) to specific examinations, both triennial and Market Conduct.

NAIC Leadership—Member of the Executive Committee. I also served as an elected member of the Executive Committee of the NAIC, the body that served as the steering committee of the organization, providing leadership between full membership meetings and recommendations to the full membership as to complex or politically-charged issues within the organization. In addition, this position included oversight responsibility over the following NAIC Committees: A, B, C, D and E.

NAIC Chairmanships–Chair of the Life Insurance Committee: Underwriting Issues. As a member of the NAIC, I served as both Vice-Chairman and Chairman of the NAIC Life Insurance Committee. The charge of this Committee was oversight over all issues relating to life insurance products as well as life insurers, including practices such as underwriting.

NAIC Chairmanships—Chair of the Universal Life Insurance Task Force. In addition to chairing the Life Insurance Committee, I also chaired the Universal Life Insurance Task Force.

NAIC Chairmanships—Chair of the Life Insurance Product Development Task Force. I also chaired the Life Insurance Product Development Task Force. While Chairman of this Task Force, I led the development of model disclosure statements for universal and indeterminate premium life products designed to assist consumers in their comparison of different types of life insurance products.

Other NAIC Chairmanships. I also served in a number of NAIC capacities, including Chairman of the Financial Services and Insurance Regulation Task Force.

Member—Commercial Lines Committee. In addition, I served as a member of the NAIC Commercial Lines Committee. This committee considered all issues relating to commercial lines policies.

My service on the following NAIC Committees was also helpful in this regard:

  • Member, the Blanks Committee;
  • Member, Guarantee Fund Committee;
  • Member, Rehabilitator and Liquidators Committee;
  • Member, Casualty Actuarial Committee;
  • Member, Commercial Lines Committee;
  • Member, Valuation of Securities Committee;
  • Member, International Insurance Relations Committee;
  • Member, Accounting Practices and Procedures Committee; and
  • Member, State and Federal Legislative Committee.

Ongoing Regulatory Involvement. In the years since leaving the regulatory ranks, I have continued to be closely involved with the NAIC and the regulatory community. As President and CEO of NCCI, I was in regular attendance at meetings of the NAIC. I continue to attend these meetings and to be actively engaged with the regulatory process. Included in attendance at NAIC meetings were my observations at the NAIC of the ongoing regulation of life insurers and their agents.

17. First Deputy Iowa Insurance Commissioner, 1976-1978. As First Deputy Insurance Commissioner, I had oversight responsibility of all facets of insurance regulation, including oversight of the property and casualty division, the life insurance division, agent licensing, consumer complaints, and premium finance companies. As First Deputy Commissioner, the functions of overseeing all aspects of life insurers belonged to me.Furthermore, in this position, I had extensive exposure to and direct responsibility for all facets of life insurers’ activity, including oversight of insurers’ relationships.

Regulatory Oversight: Life Insurance Agent Practices. As First Deputy Insurance Commissioner, I also had day-to-day responsibility to assure that all relationships carried out by insurance companies doing business in the state met all of their duties, obligations and statutory and regulatory responsibilities as they conducted business with their agents. This included oversight over (i) character and competency screening on a pre-licensure basis, (ii) licensing, (iii) revocation of licenses, (iv) continuing education and its administration and enforcement, (v) accounting and (vi) agent relationships with their insurers. I am very familiar with the responsibilities and applicable duty of care that come to bear upon insurance companies in their relationships with their agents.

Regulatory Oversight—Life Insurer Practices. In addition to expertise as to policy forms and coverage issues, as First Deputy Insurance Commissioner, my responsibilities included oversight of the education, licensing, discipline and general supervision of all life insurance companies and their agents in the state of Iowa. I am very familiar with the responsibilities and applicable duty of care that come to bear upon life insurance companies.

Financial Examination of Life Insurance Companies. As First Deputy Insurance Commissioner, I supervised (along with the Chief Examiner) the examination of all insurance companies authorized to do business in the state of Iowa. Those examinations included a focus on both financial matters (so-called triennial examinations of insurers–more than 100 such examinations were conducted while I was First Deputy Commissioner) and examinations of specific complaints about insurers (so-called Market Conduct Examinations–more than 50 such exams were conducted while I was First Deputy Commissioner).

Prosecution of Life Insurance Companies and Their Agents for Violations of Standard of Care. As First Deputy Insurance Commissioner, I employed a full-time team of lawyers who fielded consumer complaints relating to all areas of life insurers as well as premium finance companies. Indeed, many of these complaints, as well as results of Market Conduct Examinations, resulted in formal action under the state’s Administrative Procedures Act with the life insurer’s or agent’s license to conduct business in the state at risk for failing to adhere to their duties. At times, I served as the ALJ on such matters.

18. Iowa Assistant Attorney General Assigned to the Insurance Department, 1975-1976. As Assistant Attorney General, I had departmental prosecutorial responsibilities for violations of the Insurance Code under the state’s APA, including those violations committed by life insurance companies and their agents and brokers. The Attorney General responsibility also included issuing Attorney General Opinions as to the construction of insurance laws and regulations. In short, I served as the Insurance Department’s General Counsel.

19. Legal Counsel to Iowa House of Representatives. As legal counsel to the Iowa House of Representatives in the 1975 session, I provided counsel on all relevant caucus issues as well as the following support:

  • Researched pending legislation;
  • Prepared memorandums in support of proposed legislation;
  • Provided legal advice; and
  • Participated in bill drafting, including that relating to life insurance and life insurance agents.

20. Lecturer at the Iowa Bar Review School, 1985-1990. I was invited to provide the insurance content review material and lecture for the insurance section of the bar review course in Iowa. Included in this lecture was extensive law applicable to the interpretation and construction of laws and regulations affecting life insurance companies, including practices relating to their agents. I authored this material and provided this lecture to students studying to pass the Iowa bar for approximately five years, until accepting the position of CEO of NCCI in Florida.

21. Chief of Staff at the U.S. Congress. I served as an Chief of Staff at the U.S. Congress in Washington D.C. to an Iowa Congressman for approximately one year. Among other activities, I participated in legislative drafting of insurance and reinsurance legislation.

22. Elected Member of the Florida House of Representatives: Vice Chairman and Member of the Insurance Committee. I am also currently serving as an elected member of the Florida House of Representatives for House District 89 (Boca Raton and Delray Beach north to Palm Beach). Among others, I serve on the House Insurance Committee, which has oversight of all insurance activities in the state of Florida, including that of oversight of life insurers, their agents and brokers and their relationships with their insureds and those related to their insureds.

Contact Bill Hager at 561-306-5072 or via email to discuss your case.