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On October 25, 2022, the Supreme Courtroom of Georgia answered a licensed query from the Eleventh Circuit Courtroom of Appeals regarding Georgia\u2019s insurable curiosity statute, OCGA \u00a7 33-24-3 (1995).<\/strong><\/p>\n In Crum v. Jackson Nationwide Life Insurance coverage Firm<\/em>, No. S22Q0649 (Ga. 2022), the principle query, as reframed by the Georgia excessive courtroom, was \u201cis a life-insurance coverage an unlawful wagering contract if the insured takes out the coverage on his personal life with the intent to promote the coverage to a 3rd occasion with no insurable curiosity, however with no third occasion\u2019s involvement in inflicting the coverage to be procured?\u201d The federal district courtroom, following a bench trial, had beforehand concluded that, below Georgia regulation, an insured couldn’t take out a life insurance coverage coverage with the intent to switch it to somebody who lacked insurable curiosity within the insured\u2019s life. On attraction, the Eleventh Circuit opined that Georgia case regulation didn’t definitively tackle the problem. The Georgia Supreme Courtroom disagreed with the federal district courtroom\u2019s ruling.<\/p>\n In Crum<\/em>, Kelly Sofa, the insured, utilized in 1999 for a $500,000 life insurance coverage coverage from Jackson Nationwide Life Insurance coverage Firm. When he utilized for the coverage, Sofa advised Jackson that he was wholesome, however that was not true. Certainly, Sofa knew that he was HIV-positive, which, when he utilized for the coverage, meant that he had a vastly diminished life expectancy. He purchased the coverage with the intent to promote it on the secondary viatical settlement market. Eight months after buying the coverage, Sofa did simply that: a brokerage company that specialised in viatical settlements related Sofa with Sterling Crum, who purchased Sofa\u2019s coverage realizing that Sofa was HIV-positive and sure had just a few years left to reside. Sofa died in 2005; Crum later made a declare for the dying profit; and Jackson denied the declare and filed a declaratory judgment motion within the U.S. District Courtroom for the Northern District of Georgia, primarily searching for a declaration that the coverage was void ab initio<\/em> below Georgia regulation as an unlawful human-life wagering contract. The federal district courtroom discovered that Sofa had purchased the coverage with out Crum\u2019s involvement, however with the intent to promote it within the close to future to somebody with out an insurable curiosity. Jackson Nat\u2019l Life Ins. Co. v. Crum<\/em>, No. 1:17-cv-03587, 2020 WL 12968089, at *9 (N.D. Ga. Mar. 2, 2020). The federal district courtroom acknowledged that Georgia\u2019s statute addressing insurable pursuits within the context of life insurance coverage didn’t seem to ban such a coverage with out the involvement of a 3rd occasion on the time the coverage was issued, however concluded that Georgia case regulation handled such insurance policies as unlawful wagering contracts, thus rendering the topic coverage void.<\/p>\n The Georgia Supreme Courtroom first concluded that the query of whether or not a life insurance coverage coverage is an unlawful wagering contract should be answered by Georgia\u2019s statutes that govern life insurance coverage insurance policies particularly, to wit: OCGA \u00a7 33-24-3 (1995). The Georgia statute that bars wagering contracts typically, OCGA \u00a7 13-8-2(a)(4), wouldn’t information the evaluation.<\/p>\n Subsequent, in making use of Georgia\u2019s present insurable curiosity statute, there was no dispute that the language of the statute didn’t prohibit Sofa from taking out the coverage on his personal life with the intent to promote it to an investor. Relatively, Jackson relied on Georgia case regulation that pre-dated Georgia\u2019s present insurable curiosity statute\u2014referring to the instances as \u201clongstanding widespread regulation\u201d\u2014which Jackson contended independently prohibited, as unlawful wagering contracts, insurance policies taken out by somebody on his personal life with the intent to promote them to a 3rd occasion who has no insurable curiosity within the lifetime of the insured. However the Georgia Supreme Courtroom stated that \u201cJackson is mistaken in regards to the nature and import of this case regulation.\u201d The case regulation that Jackson relied upon pre-dated 1960, when the Georgia legislature considerably and materially re-wrote the Georgia Insurance coverage Code. Georgia\u2019s prior insurance coverage statutes, and the case regulation deciphering them, said that an individual could in good religion, and with out fraud, collusion, or intent to enter right into a wagering contract<\/em>, lawfully take out a coverage of insurance coverage on his personal life and make the identical payable to whomever he pleases, together with an individual who lacked insurable curiosity in his life. However the emphasised language was not included within the new Georgia Insurance coverage Code in 1960, or in any subsequent revisions of that Insurance coverage Code, together with the model that exists as we speak, OCGA \u00a7 33-24-3 (1995). The Georgia Supreme Courtroom thus concluded that the Georgia legislature determined to not embody the prior statutory limitations in an insured\u2019s capability to alienate his personal life insurance coverage coverage. Therefore, the prior case regulation that Jackson relied upon was not controlling.<\/p>\n In dicta, the Georgia Supreme Courtroom additionally said that it might typically be true that, below the plain language of OCGA \u00a7 33-24-3(e) (1995), if a 3rd occasion has \u201cbrought about\u201d the insured to acquire a coverage on his personal life and title because the beneficiary somebody with out an insurable curiosity, the coverage would violate Georgia\u2019s insurable curiosity statute. However the Courtroom additional said: \u201cIt isn’t clear, nevertheless, whether or not a coverage could be void if a 3rd occasion \u2018causes\u2019 an insured to acquire a coverage on his personal life that names the insured himself as beneficiary, and the insured then turns round and instantly sells it to the third occasion or another person with out an insurable curiosity.\u201d The Courtroom left this challenge to be addressed one other day.<\/p>\n ArentFox Schiff\u2019s insurance coverage attorneys will proceed to observe and report on developments on this enviornment.<\/p>\n