The Ohio General Assembly has approved legislation designed to deter stranger-originated life insurance (STOLI) transactions in Ohio. Governor Strickland signed the bill on June 11, 2008 and it will take effect September 11, 2008. House Bill 404 strengthens Ohio's existing Viatical Settlements Law, and establishes new restrictions intended to prevent STOLI.

The anti-STOLI provisions in H.B. 404 include a prohibition on marketing or issuing STOLI, and a five-year "waiting period" before settlement of policies with STOLI characteristics. These central provisions of the new Ohio legislation are based on concepts developed by the National Association of Insurance Commissioners (NAIC) and the National Conference of Insurance Legislators (NCOIL). But Ohio legislators developed their own legislative language implementing these concepts, and added some provisions that are unique to Ohio's anti-STOLI bill. Summary of the Ohio law.

Ohio will become the twelfth state to adopt an anti-STOLI law. In Ohio and across the county, litigation continues regarding alleged STOLI transactions.

A "Stranger-Originated Life Insurance", or "STOLI", transaction occurs when a speculator induces an unrelated person to purchase a life insurance policy that they otherwise wouldn't buy, for the sole purpose of transferring the policy or policy benefits to the speculator. The speculator profits when the insured dies.

Bricker & Eckler represents the Association of Ohio Life Insurance Companies, and was actively involved in the development of Ohio H.B. 404. For more information about STOLI, Ohio H.B. 404, and related issues, contact:
Faith Williams
Kurt Tunnell
Oyango Snell