Close Menu
    What's Hot

    Global Equity Release/Reverse Mortgage Primary Market on Track To Hit $56bn by 2035

    18 June 2025

    Church Mission Society Pension Scheme Joins Consolidator Clara Pensions

    17 June 2025

    The McGregor Construction (Highlands) Limited Pension Plan Completes Bulk Purchase Annuity Buy-In With Just Group

    16 June 2025
    Facebook X (Twitter) Instagram
    Instagram LinkedIn X (Twitter)
    Life Risk News
    • Home
    • Features

      Both Demand and Supply Factors Contribute to Rare Secondary Market Pullback in 2024

      12 June 2025

      Funded Reinsurance Under Scrutiny But Should Remain a Feature of the UK Pension risk Transfer Market

      12 June 2025

      Plenty of Guardrails for US Life Insurers Backing Group Annuities With Private Assets

      12 June 2025

      Liver Disease Mortality in England Continues to Worsen but General Mortality Still on a Post-Covid Downward Trend

      12 June 2025

      Q&A: Matthew Sheridan, Health Data Analytics

      12 June 2025
    • Commentary

      Life Expectancy in Breast Cancer

      12 June 2025

      The Healthy Wealthy Population of the Life Settlement Market

      12 June 2025

      UK Life Insurers to Benefit from Robust Bulk Annuity Market in 2025

      14 May 2025

      The Power of Uncorrelated Diversification During Market Volatility

      14 May 2025

      Overseeing BPA Growth Safely

      14 May 2025
    • Events
    • Magazine
    • News

      Global Equity Release/Reverse Mortgage Primary Market on Track To Hit $56bn by 2035

      18 June 2025

      Church Mission Society Pension Scheme Joins Consolidator Clara Pensions

      17 June 2025

      The McGregor Construction (Highlands) Limited Pension Plan Completes Bulk Purchase Annuity Buy-In With Just Group

      16 June 2025

      The London Waste Limited Pension Scheme Completes Bulk Purchase Annuity Buy-In with Royal London

      2 June 2025

      Morrisons Retirement Saver Plan Completes Bulk Purchase Annuity Buy-In With Aviva

      28 May 2025
    Subscribe
    Life Risk News
    Home » The Development of the European Life Settlement Association’s Code of Practice

    The Development of the European Life Settlement Association’s Code of Practice

    Commentary 12 October 2022Simon ErrittBy Simon Erritt
    Twitter LinkedIn Email
    Code of Practice
    Share
    Twitter LinkedIn Email

    The European Life Settlement Association (“ELSA”) was established in May 2009 to set standards for the European life settlement industry and to promote transparency by providing accurate, authoritative information to its investors.

    ELSA’s founding members recognised that the consistent application of best practice was fundamental to the continued prosperity of the industry and the protection of its investors, and quickly sought to collate, refine, document and highlight this best practice.

    Work began on the first edition of its code of practice (the “Code”) in October of that year and it was completed nine months later in July 2010. As Patrick McAdams, then ELSA’s chair, said at the time, “Our Code is a living framework, intended both to encourage and reflect the development of the European life settlement industry in the years ahead. As the market continues to mature, the Code will be updated to ensure that it continues to best serve the needs of the life settlement investor.”

    Twelve years and six editions later, that message still rings true. The current edition of the Code, which ELSA expects to update again this year, is available at https://www.elsa-sls.org/code-of-practice/.

    Development

    The development of the Code is perhaps best summarised by the edition history presented in the Code itself:

    Edition Date Key Features
    1.0 Oct 2009 First draft.  Organised into general provisions and sections on education, transparency, policy origination, competition, consumer choices, suitability, conflicts of interest and priority of clients’ interest.
    1.1 May 2010 Second draft.  Reorganised into asset management and disclosure, risk mitigation, suitability, and transparency.
    1.2 Jun 2010 Third draft.  Reorganised into asset origination, asset and risk management, and managing the investor relationship.
    1.3 Jul 2010 First published edition.  Page of contents added.  Minor textual changes.
    2.0 Sep 2012 Reorganised into product design, disclosure and reporting, and sales and marketing.
    3.0 May 2013 Separated into requirements and guidance.  Additional standards added reflecting “Big 4” auditing practice.
    4.0 Nov 2016 Introductory sections revised.  Additional standards added relating to COI increases, valuation, performance attribution, performance fees, data security, medical record updates, external data sources, and overhead and leverage disclosure.
    5.0 May 2018 Performance attribution and loan/(re)insurance disclosure reworded.  Key portfolio information and portfolio breakdown reporting revised.
    6.0 Jan 2021 Extensive textual changes based on committee members’ comments.  Member conduct section added.  Guide and “Comply or Explain” procedure created.

    Usage and Reception

    ELSA members that are product designers, managers or distributors must comply with the required elements of the Code and are expected to comply with its guidance. ELSA members that are not product designers, managers or distributors are expected to encourage the Code’s use in the products with which they are associated.

    ELSA members certify their compliance with the Code when they apply for membership and annually thereafter. Failure to comply with the Code may ultimately result in the member being asked to resign from the association.

    Members typically reference their membership of ELSA and, by extension, their compliance with the Code in marketing materials, and may use the Code as a basis of discussions with prospective investors; the Code has also been presented and favourably received in ELSA’s meetings with European regulators, including the UK’s FCA, Luxembourg’s CSSF, and Ireland’s CBI.

    Challenges

    Spreading awareness of the existence and content of the Code is a key challenge. Membership in ELSA, and therefore compliance with the Code, remains voluntary. Opportunities to promote the Code, such as this article, are always very welcome.

    As the industry has grown so has the Code, and the current edition runs to fourteen pages of densely worded text. To make it more accessible, particularly to investors looking at the market for the first time, ELSA created a shorter, three-page summary of the principles guiding the formation of the Code, which is available alongside the Code itself at https://www.elsa-sls.org/code-of-practice/.

    To avoid stifling innovation and to bring the Code in line with other international standards, ELSA also introduced a new “Comply or Explain” procedure with the current edition. This allows members, in exceptional circumstances, to request from ELSA’s membership committee an exemption from one or more practices required by the Code. If granted, the member must prepare a disclosure statement, which must be made available to all its existing and prospective investors on request and presented alongside the Code when shared. Viewed by some commentators as potentially weakening the Code, the opposite has been ELSA’s experience: The limited number of exceptions requested to date have highlighted unclear or unqualified wording in the Code that can be refined in the next edition.

    Refinement

    As noted above, ELSA expects to update the Code again this year. One area it is currently looking into is that of performance fees, making sure that the existing wording is clear as it relates to open-ended as well as closed-ended structures.

    A second relates to how regularly life expectancy estimates should be updated. A number of products in the market are less reliant or wholly non-reliant on life expectancy estimates, and the existing wording may benefit from qualification.

    Conclusion

    ELSA believes the Code is among the most comprehensive documents of its type in the life settlement industry. It is detailed throughout and complex in places, reflecting the relative complexity of the market. For over a decade, it has provided prospective investors with a framework for their due diligence, highlighting the questions they need to ask of product designers, managers, and distributors. It reflects the thinking and philosophy of ELSA’s members and is a key reason the association was established. ELSA looks forward to refining it further in the months and years ahead.

    Simon Erritt is a Managing Director of Coventry Capital


    Any views expressed in this article are those of the author(s) and do not necessarily reflect the views of Life Risk News or its publisher, the European Life Settlement Association

    2022 - October Life Settlements Longevity Risk Secondary Life Markets Volume 1 Issue 6 - October 2022
    Share. Twitter LinkedIn Email

    Related Posts

    Life Expectancy in Breast Cancer

    12 June 2025

    The Healthy Wealthy Population of the Life Settlement Market

    12 June 2025

    UK Life Insurers to Benefit from Robust Bulk Annuity Market in 2025

    14 May 2025

    The Power of Uncorrelated Diversification During Market Volatility

    14 May 2025

    Comments are closed.

    Most Popular

    Both Demand and Supply Factors Contribute to Rare Secondary Market Pullback in 2024

    12 June 2025

    Funded Reinsurance Under Scrutiny But Should Remain a Feature of the UK Pension risk Transfer Market

    12 June 2025

    Plenty of Guardrails for US Life Insurers Backing Group Annuities With Private Assets

    12 June 2025

    Liver Disease Mortality in England Continues to Worsen but General Mortality Still on a Post-Covid Downward Trend

    12 June 2025
    Ad

    Your trusted source for capital markets participation in Life Risk

    X (Twitter) Instagram LinkedIn
    Life Risk
    • About Life Risk News
    • Get In Touch
    • Our Team
    • Copyright Notice
    • Terms and Conditions
    • Privacy Policy
    • Sitemap
    Coverage
    • Home
    • Features
    • Events
    • Commentary
    Subscribe

    Type above and press Enter to search. Press Esc to cancel.

    We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept All”, you consent to the use of ALL the cookies. However, you may visit "Cookie Settings" to provide a controlled consent.
    Cookie SettingsAccept All
    Manage consent

    Privacy Overview

    This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
    Necessary
    Always Enabled
    Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
    CookieDurationDescription
    cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
    cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
    cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
    cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
    cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
    viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
    Functional
    Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
    Performance
    Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
    Analytics
    Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
    Advertisement
    Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
    Others
    Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
    SAVE & ACCEPT