A report by a Securities and Exchange Commission task force issued today said the commission should consider recommending that Congress amend its definition of securities to include life settlements.

The SEC task force also recommended that commission staff should continue monitoring life settlement brokers and providers to ensure that they're meeting legal standards of conduct, and that SEC staff should monitor the development of a securitization market for life settlements.

Also, Congress and state legislators should consider "more significant and consistent regulation of life expectancy underwriters," the report said.

In addition to the task force report, the SEC issued a statement warning investors about the risks of life settlements.

The U.S. Government Accountability Office also released a report today on the life settlement market. It found that the market is inconsistently regulated and poses risks to insureds who sell their policies. The GAO said 12 states and Washington, D.C., have not passed laws regulating the market. That means that policyholders may not know how much they are paying in fees or if they are receiving market value for their policies, the GAO report said.

SEC Chairman Mary Schapiro, who established the commission's task force last August, also pointed to lack of consistent oversight in her statement today.

"The life settlements market calls out for enhanced and coordinated regulatory oversight to protect the emerging class of investors interested in this market, as well as the many seniors who consider selling their life insurance policies," Schapiro said in a statement. "Standards can be improved to ensure that those participating in this market are given a fair deal and are provided the information they need to evaluate such a consequential decision."

Last year, the U.S. Senate Special Committee on Aging held a hearing examining the market following a nine-month investigation, concluding that life settlements could have unintended consequences for seniors.

Sen. Herb Kohl, chairman of the Senate committee, asked the GAO to conduct a review of the market, including its size and scope and the potential need for further regulation.

Source: GAO, SEC Reports