Life Settlement Database

The Life Settlement Institute (LSI) will explore the creation of a national viatical settlement database similar to the one used by life and health insurers to prevent fraud, but critics wonder whether such a database will catch crooks or compromise privacy.

The database will house information that will aid viatical companies and "support professionals as well as government regulators in tracking fraudulent or suspicious behavior" in viatical-related transactions, according to LSI, a nonprofit association made up of six privately-held viatical settlement companies.

LSI contends that such a database will also identify policy sellers or insureds who have fraudulently represented their medical conditions, brokers who have engaged in questionable conduct, and other professionals (such as doctors or financial advisers) who have engaged in questionable conduct.

But privacy advocates are not entirely sold on the idea. "The concern is that the information contained in the database may be used for purposes other than preventing fraud, such as to sell you insurance or a loan" says Sue Blevins, president of Institute for Health Freedom, a nonprofit Washington, D.C., think tank. "There would have to be some kind of disclosure and consent involving all the parties."

But LSI President David M. Lewis says law-abiding citizens have nothing to worry about and the "ultimate" database will comply with all applicable federal and state laws, compliment other government anti-fraud initiatives, and "be created in such a way as to safeguard the dissemination of personal and private information."

Preliminary research will be conducted, he says, to explore "potential exposures to liability, issues of immunity, privacy, and defamation lawsuits in connection with developing such a database."

HIPAA compliance

What worries privacy advocates most is that such a database will be designed to be compliant under the "administrative simplification rules" of the federal Health Insurance Portability and Accountability Act (HIPAA). The Bush Administration is currently proposing to eliminate HIPAA's requirement to get your consent to release your medical records to "key players" in order to "facilitate" your treatment.

Patient advocates fear that the government's definition of "key players" includes not only your doctor and your health plan, but also your employer, insurer, bank, and pharmacy, as well as drug marketers and medical data warehouses. There is also concern that insurance or viatical companies may sign up to access such a database to find out information about your past claims or applications and use that information to either deny you products, or to charge you higher premiums

A life or viatical settlement is the sale of a life insurance policy to a third party. The owner of the policy sells it for a percentage of the death benefit. The buyer becomes the new owner and/or beneficiary of the life insurance policy, pays all future premiums, and collects the entire death benefit when the insured dies.


Source: Insure.com