SB 354

                SPONSOR:
                Sen. Brown
        DELAWARE STATE SENATE
        153rd GENERAL ASSEMBLY
        SENATE BILL NO. 354
        AN ACT TO AMEND TITLE 18 OF THE DELAWARE CODE RELATING TO INSURANCE AND FINANCIAL INTERMEDIARIES
        BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
        Section 1. Amend Subchapter I, Chapter 27, Title 18 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows:
        § 2704. Insurable interest; personal insurance.
        (a) Any individual of competent legal capacity may procure or effect an insurance contract upon that individual's own life or body for the benefit of any person, but no person shall procure or cause to be procured any insurance contract upon the life or body of another individual unless the benefits under such contract are payable to the individual insured or that individual's personal representatives or to a person having, at the time when such contract was made, an insurable interest in the individual insured.
        (b)
        (1)
         If the beneficiary, assignee or other payee under any contract made in violation of this section receives from the insurer any benefits thereunder accruing upon the death, disablement or injury of the individual insured, the individual insured or the individual's executor or administrator, as the case may be, may maintain an action to recover such benefits from the person so receiving them.
        (2) To the extent that a beneficiary, assignee or other payee under any contract made in violation of 18 Del. C. § 2704(a) is both of the following:
        a. A securities intermediary under 6 Del. C. § 8-102(a)(14) or a bank under 6 Del. C. § 9-102(a)(8).
        b. Acting for another person on whose behalf the securities intermediary or bank receives a benefit from the insurer, it shall have no liability under this section; except that this subsection shall not affect the liability that may exist, if any, of the other person on whose behalf the securities intermediary or bank receives a benefit from the insurer.
        Section 2. Section 2704(b)(2) of this Act applies to any action brought on or after the date of enactment of this Act into law.
        SYNOPSIS
        This Act clarifies that a securities intermediary or bank acting solely in an administrative, trustee or custodial capacity shall not incur liability for receipt of policy proceeds. This Act also preserves recovery rights against investors and applies only to actions brought on or after the date of enactment of this Act into law.
        Author: Senator Brown