U.S.-based trade association the Life Insurance Settlement Association (LISA) published its inaugural market data report earlier this year, a first for the organisation; 23 members contributed data anonymously and the results help market participants get a better sense of the size of the industry. Life Risk News spoke to LISA Vice Chair and Chairwoman-elect, Sherry Duarte, about the organisation’s achievements in 2022 and plans for next year.
LRN: Sherry, the market data report published by LISA earlier this year was a first for the organisation. What are some of the highlights from the report?
Earlier this year, LISA released findings from its 2021 Annual Market Data Collection Survey. The anonymous, aggregate data collected represents summary closing data from 2021 life settlement transactions. Twenty-three LISA provider members contributed data to this effort.
Highlights from the data include:
- Consumers were paid over $750 Million by LISA Members for the sale of their unwanted life insurance policies, instead of receiving only $96 Million had they chosen to lapse or surrender their policy.
- Consumers received an average of 7.8 times more than their Cash Surrender Value, translating into over $660 Million more in American seniors’ pockets than what they would have received from life insurance carriers.
- More than 3000 transactions were conducted by LISA members totalling over $4 Billion in Face Value. These figures represent just a tiny fraction of the 9 million plus policies & $642 Billion that are lapsed or surrendered annually by life insurance consumers.
- The average policy size, or amount of Net Death Benefit, per transaction was $1.33M.
In advancing this work, LISA’s goal is to deliver relevant and valuable life settlement industry data to its members, the investment community, and policy holders and their advisors.
LRN: Getting market data in the life settlement industry has been difficult historically. What – if anything – was the thing that really got the report done this year? Or was it a confluence of efforts from multiple people?
This was a truly collaborative effort. LISA’s has had internal discussions regarding the collection of industry data for over a decade, with our Chair John Welcom being a long-time champion of this effort. The representatives of LISA’s Member Affairs Committee (MAC) that were most closely engaged on the project worked to be transparent about internal processes related to the collection of the data and responsive to feedback from our provider members. LISA Members provided the transactional data anonymously.
LRN: Data exists to suggest that the life settlement market contracted in 2021, ending a run of six years of consecutive growth. Industry commentators attribute this to a variety of factors. What’s your view and are you hearing that activity is on the increase again?
Based on our experience this year and feedback from other LISA Members, we are excited to report that the industry is growing in all areas.
LRN: LISA has also been active this year in the lobbying space; the NCOIL resolution in the summer, which asked state insurance regulators to cease approving certain enhanced cash surrender value offers, being a notable one. That must have been one that pleased the team at LISA?
LISA’s Board of Directors and our membership are encouraged by the recent NCOIL resolution. We have an effective team engaged on this effort. We will continue to monitor these efforts and strive to ensure that long-standing state laws are enforced and that regulatory violations do not continue and negatively impact seniors evaluating life settlement as an alternative to policy lapse or surrender.
LRN: Lastly, Sherry, you’re LISA’s Chairwoman elect – you officially take up the role of Chair on January 1st next year. Do you have any specific goals for your time as Chair? What would make your tenure a success?
I am interested in continuing and building upon LISA’s efforts to grow the life settlement marketplace and advancing the highest standards of practice and professional development for the industry. This will involve further focus on our data collection efforts, engaging with institutional investors to educate them about the asset class, and supporting advocacy activities that protect industry stakeholders. Each of these activities are made more effective by robust engagement from LISA’s members.
Sherry Duarte is Vice Chair and Chairwoman elect of the Life Insurance Settlement Association
