In 2009, New York State passed much anticipated life settlement legislation, which brought life settlement brokers, life settlement providers and life settlement intermediaries under the regulatory authority of the New York Insurance Department.

This regulatory body is in the process of administering licensing requirements for industry participants conducting business in New York state.

Last week Amrita Financial released the February data for the Amrita Life Settlement Index. It showed a dramatic decline of 13% from January. Some have wondered how the index could be so volatile and have asked for more information about the way it works. In this blog post I will examine some of the factors that contributed to the volatility and resulting decline expressed in the latest life settlement index results.

A life settlement occurs when some sells their unwanted or unneeded life insurance policy for an immediate payment. What happens when the life insurance policy was unwanted or unneeded to begin with? By now, most are familiar with STOLI transactions which have come under immense public, regulatory and statutory scrutiny. However, policy flipping in which someone with an insurable interest buys unneeded life insurance for themselves or loved ones with the intent of selling it in a life settlement has garnered much less attention.

As evidenced by the 13% decline in the Amrita Life Settlement IndexÔÇÖs February results, the life settlement industry still maintains a precarious posture. While a number of life settlement industry insiders have gone on record saying there will be a recovery in 2010, most agree it isnÔÇÖt here yet. WeÔÇÖve seen the industry recently shudder with the news of Goldman SachsÔÇÖ departure from life settlements.

Do I have an attractive policy?

I'm going to start a series of posts to give people an idea about how attractive their life insurance policy would be in a life settlement transaction. If you aren't interested in all the gory details, you can cut to the chase and go straight to our life settlement appraisal tool. It's free, anonymous, and you get a response instantly.

Let's start out with the things that have the biggest affect on valuation.

The Amrita Life Settlement Index has garnered more attention than anyone here at Amrita Financial ever imagined it would. Our goal was to create a tool that could be used by all market participants, such as policy sellers, financial advisors, life settlement brokers, life settlement providers, investors, etc., to more effectively understand the life settlement marketplaceÔÇÖs posture. It has certainly provoked thought and stirred conversation thus far.

Extreme Measures

How many of you have had to abandon use of an e-mail account, because your e-mail address fell into the wrong hands? It starts out innocently enough, "Fill out this form and we'll send you the info you need." Next thing you know, you're address has been sold to God knows how many "3rd parties", and you're being bombarded with solicitations for all manner of crapola. One source sites spam/junk e-mail constituting 78% of all e-mail sent.

The life settlement industry is off to an interesting and somewhat surprising start in 2010. Mixed signals make it difficult to get a clear indication of the direction the life settlement industry will take in 2010. The recent exit of Goldman Sachs Group Inc. from the life settlement arena gave the entire industry reason for pause. Goldman Sachs has long been an influential player in the industry and its departure leaves more questions than answers.

The life settlement industry has long been admonished for its lack of transparency. Since the industry lacks a true centralized exchange transactional reporting and accurate data for the overall life settlement industry is anecdotal at best. Obviously some states such as Montana and Texas have reporting requirements for life settlement brokers and life settlement providers.

2010 will hopefully bring a healthier and more robust year than 2009. We are frequently asked from consumers, life settlement providers and financial services insiders what we are seeing in the life settlement marketplace. "What is the color of the market?" seems to be a frequent chorus. To illustrate the observations we've made and prognosticate a bit, we are listing our top ten life settlement predictions for 2010. In no particular order, they are: