Before the viatical settlement bond market was virtually shut down by then-unforeseen developments in drug therapies for AIDS patients, the National Association of Insurance Commissioners, or the NAIC, protected its own interests by enacting professional guidelines for setting up the policies.

Now that the NAIC is looking to draft a set of guidelines that will hem in a burgeoning practice that some call premium financing, securitization professionals wonder how hard it will hit the asset class known as senior settlement bonds. In early May, the group held a hearing on the practice called premium financing, a portion of which ends up feeding into the life settlement securitization market. The call for regulation was clear.

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