Lawmaker: Four Term Elected Member of the Florida House of Representatives. I recently served as an Elected Member of the Florida House of Representatives. I was Elected to the Florida House from Palm Beach County in 2010, Re-elected in 2012 and in 2014 and in 2016 and served until January of 2109, when, under Florida law, I was term limited out.
During the entire eight years at the Florida House, I served as a Member of the Insurance Committee and served as well as Vice Chair of the Insurance Committee and served as well on the upstream parent of the Insurance Committee, namely the Commerce Committee. All insurance bills must ultimately pass through the Commerce Committee.
Florida is an insurance intensive state for all kinds of reasons, meaning most all key insurance issues were considered or addressed during my service and were handled either by me directly (along with the balance of the Committee, of course) or by other Members of the Committee or by the Insurance Committee operating as a whole. My work in this regard included sponsoring and co-sponsoring insurance and reinsurance legislation; presenting such legislation to the Insurance Committee and to the upstream parent committee, namely the Commerce Committee and presenting the bill before the entire House of Representatives. I also participated in hearings either as Vice Chair (and Chairing the hearings) or as a participating Member, inquiring of those proposing the legislation.
In all of this, I have become very familiar with and possess an clear understanding of legislation and of construing insurance legislation and have become as well, very familiar with the role of the legislature (regardless of the state) as to insurance matters and the role of Insurance Regulators as to legislation and as to the balance of the regulators’ obligations, based both on this Florida experience and based as well on having served previously as Iowa’s Commissioner of Insurance.
1. Expertise as to STOLI Life Insurance Matters.
STOLI. The term “STOLI” is an acronym for Stranger Originated Life Insurance.
The Issue. A series of issues can and often do arise in litigation in connection with so called STOLI transactions, such as the following: (i) the timing of the sale; (ii) appropriate understanding of the transaction by the insured and policyholder, (iii) the legitimacy of the sale; (iv) issues relating to insurable interest, (v) whether the transaction is simply the legitimate sale of the property interest in the life insurance policy and (vi) compliance with policy provisions as they may be applicable including the two year contestability clause.
The Key Issue. Often the key issue is whether the transaction at issue is a STOLI in the first instance. That is, whether the allegation that the transaction is a STOLI is in fact accurate. Furthermore issues arise as to whether the transaction in dispute, regardless of how it is characterized and regardless of whether or not it can be called a STOLI – whether the transaction by whatever name, is legal or not legal in the jurisdiction at issue. How a transaction is characterized by adjectives is seldom the issue; instead the question is whether the transaction, taken as a whole and evaluated against policy provisions and law – is legitimate. Of course all of these issues turn on the particular facts of the case at issue.
In any event, the pivotal knowledge from an expert’s standpoint is their understanding of the life insurance industry, life insurance policies and life insurers. My expertise as to these matters is set out immediately below. Along these lines, I have testified as an expert in a number of so called STOLI-like transactions.
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 among others as:
- Chair of the 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 applications and policy issuance;
- Chair of the Universal Life Insurance Task Force. The charge of this Committee was oversight over 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. These professionals 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 United States.
This means while CEO, NCCI was subject to the full authority of the various state departments of insurance (“DOIs”) and subject as well to each of those state’s Insurance Code as well as the jurisdiction of their 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. Expertise as to Duties of Life Insurance Companies.
A. Expertise as to Duties of Life Insurance Companies as Commissioner of Insurance. 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 such as those involved here. 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:
1. NAIC Market Regulation Handbook. 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 and (iii) 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.
2. Market Conduct Examinations. 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.
3. NAIC Financial Examiners Handbook. 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. 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.
4. Financial Examinations. 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 was likely to remain solvent. As with market conduct exams, financial examinations entailed physically going into the insurers’ operations and studying, among others, files to (i) assure compliance with agent and policyholder duties 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.
5. Complaints From the Public. 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.
6. Prosecution. To the extent insurer behavior required formal action (whether a result of complaints from the public or 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. 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 various DOIs as discussed above. I am very familiar with the duties of U.S. based insurers relating to their obligations and responsibilities and the regulatory scheme in place in various states 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.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. 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 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.
- STOLI Insurance expert witness
E. Expertise as to Insurance Agents: Industry CEO. As President and Chief Executive Officer of a major Florida domiciled entity (NCCI) doing business in some 40 states, I have had substantial working relationships with the U.S. insurance agent and agency community.
Click here to contact insurance expert Bill Hager for a confidential discussion of your case, or call him at 561-306-5072.