Page 8 - Life Assurance

- Second, the type of agreements made by
firms is a value in determining whether or not
the firm should be classed as an insurance
company and thus whether or not it is
conforming to all of the regulations under which
insurance companies must operate.

Issuing insurance policies may be outside
the authority of the corporate charter, thus
subjecting the officers to liability for ultra vires
acts. Such acts are considered beyond the
scope of or in excess of legal power or authority.

The Supreme Court of the United States of
America has held that the variable annuity contract
is sufficiently differentiated from insurance as to
require regulation of issuing companies by the
Securities and Exchange Commission as well as by
insurance commissions in the various states in
which they operate.

Finally, whether or not an agreement is
indeed an insurance contract affects the way in
which it may be enforced in legal actions. A
separate body of law and decisions affect the
enforcement of contracts classified as
insurance, as compared with contracts that are
classed as ordinary commercial transactions.
The question arises as to whether a given
contract is in conformity with state insurance
law.

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