(February 1 – 11:40 ET) – The Financial Services Commission of Ontario has issued a reminder that viatical settlements are not yet legal in Ontario.

Viatical settlement companies buy life insurance policies of terminally ill patients at a discounted rate. They make a lump-sum payment to the policyholder upon transferring the beneficiary of the policy to the company.

FSCO says although the Red Tape Reduction Act 2000 included amendments to the Insurance Act to provide regulation-making authority governing viatical settlements, and the provision received Royal Assent in the Legislature on Dec. 6, 2000, the provision has not yet been proclaimed.

This will happen after the Ontario government has developed the regulation to implement the rules and procedures to oversee the business of viatical settlements. Only then will the Ontario cabinet approve the regulation.

Until then, the viatical settlements remain illegal and FSCO says it, “will take whatever steps are appropriate in bringing compliance with the law”.

Companies that wish to begin viatical businesses in Ontario will have to meet operational standards established in Ontario and become licensed in Ontario before they will be allowed to operate. There is no Ontario provision to accept licensing status from other jurisdictions to enable a company to engage in viatical settlements in this province.

Before the regulation will be finalized, FSCO will conduct consultations with stakeholders interested in viatical settlements.
-IE Staff