Tighter Regulation of Life Settlement Industry Needed in Texas

The concept of buying life insurance policies from the elderly for a price based on their life expectancy has been around since the 1990s when it was marketed to AIDS patients. Regulation of the life settlement industry varies from state to state, and the business has grown in Texas due to a lack of meaningful oversight.

Unlike most states, Texas does not recognize life settlement investments as investments subject to regulation. Over the past two years, 2,200 Texans have put $220 million into policies for life settlement cashouts. Partially due to underestimated life expectancies, many investors are losing substantial amounts of money, if not all of it.

State Insurance Commissioner Mike Geeslin urged Texas lawmakers to consider stricter regulation of the life settlement business. However, no such legislation has been introduced yet, and the regular session of the Legislature will be out in less than a month.

See State Looks to Clamp Down on Life Settlements, Lubbock Avalanche-Journal, May 2, 2011.