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Bill 219, Life Settlements and Loans Act, 2020

Cuzzetto, Rudy

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Status

Debates

Original

Bill 219 Original (PDF)

EXPLANATORY

NOTE

Currently,

section 115 of the Insurance Act prohibits any

person, other than an insurer or its duly authorized agent, from trafficking or

trading in life insurance policies. The Bill amends the prohibition so that it

does not apply if the life insurance policy is sold or assigned by the original

policyholder or a transferee, used as collateral security or donated to a

charity.

The

Bill provides for a 10-day cooling-off period, during which time an agreement

to sell, assign, use as collateral security or donate a life insurance policy may

be cancelled. The Financial Services Regulatory Authority of Ontario is

required to provide oversight in respect of the transactions.

Bill 219 2020

Act to amend the Insurance Act

Preamble

Ontario

has a large and growing population of seniors on fixed incomes. They are currently

prohibited from surrendering their policies to anyone other than their insurer,

and as a result receive significantly less value than they would receive in a

well-regulated secondary market.

Secondary

markets operate successfully in the United States, United Kingdom, Europe,

Japan and Quebec. Modernizing the Insurance Act to

allow life settlements and life loans would provide Ontario seniors with an

alternative financial resource, and allow them to access the fair market value

of their life insurance policies.

Therefore,

Her Majesty, by and with the advice and consent of the Legislative Assembly of

the Province of Ontario, enacts as follows:

Section 115 of the Insurance Act is amended by

adding the following subsections:

Exception

(2) Subsection

(1) does not apply if the following conditions are satisfied:

1. The

life insurance policy,

i. is

sold or assigned by the original policy holder or transferee,

ii. is

used as collateral security by the original policyholder or transferee, or

iii. is

donated to a charity registered under the Income Tax Act

(Canada).

2. The

original policy holder or transferee held the policy for at least 24 months prior

to selling or assigning it, using it as collateral security, or donating it to

a charity.

3. The

person or entity to whom the life insurance policy is sold or assigned, or who

receives it as collateral security or as a donation, is prescribed by the

regulations.

4. The

agreement to sell or assign the life insurance policy, to use it as collateral

security, or to donate it, is presented to the original policy holder or

transferee in a manner that ensures full, true, and plain disclosure.

Cooling-off

period

(3) The

original policy holder or transferee may, without any reason, cancel an

agreement to sell or assign a life insurance policy, use it as collateral

security, or donate it at any time during the period starting on the date of

entering into a binding agreement and ending on the date that is 10 days later.

Consumer

protection

(4) The

Authority shall, in accordance with the regulations, provide oversight in

respect of transactions described in subsection (2) in order to ensure consumer

protection.

Priority

(5) If

the conditions of subsection (2) are met, the life insurance policy shall not

be subject to any competing claim pursuant to any other Act.

Definition

(6) In

this section,

“transferee”

means a person or entity to whom a life insurance policy is validly transferred

by the original policy holder.

Subsection 121 (1) of the Act is amended by adding the following paragraphs:

13.1 prescribing

persons or entities for the purposes of paragraph 3 of subsection 115 (2);

13.2 governing

the Authority’s oversight under subsection 115 (4);

Commencement

This Act comes into force on a day to be named by proclamation of the

Lieutenant Governor.

Short

title

The

short title of this Act is the Life Settlements and

Loans Act, 2020 .

Date Bill stage Event Outcome Committee

October 29, 2020

Second Reading

Ordered referred to Standing Committee

Standing Committee on Finance and Economic Affairs

October 29, 2020

Second Reading

Vote

Carried on division

October 29, 2020

Second Reading

Debated

October 20, 2020

First Reading

Vote

Carried

Debates and Progress

First Reading

October 20, 2020

Committee

Second Reading

October 29, 2020

Mr. Rudy Cuzzetto, Mr. Tom Rakocevic, Mr. Lorne Coe, Ms. Marit Stiles, Ms. Donna Skelly, Ms. Suze Morrison, Mr. Michael Parsa

Carried on division. Referred to the Standing Committee on Finance and Economic Affairs.

Committee

Standing Committee on Finance and Economic Affairs

Third Reading

Royal Assent

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