Florida Senate - 2010 CS for SB 844
By the Committee on Criminal Justice; and Senators Bennett and
Fasano
591-02484-10 2010844c1
1 A bill to be entitled
2 An act relating to insurance; providing a short title;
3 amending s. 624.310, F.S.; expanding the definition of
4 “affiliated party” to include certain third-party
5 marketers; amending s. 626.025, F.S.; including family
6 members of insurance agents in a prohibition related
7 to the transaction of life insurance; amending s.
8 626.621, F.S.; expanding grounds for discretionary
9 refusal, suspension, or revocation of certain
10 licenses; amending s. 626.641, F.S.; prohibiting the
11 Department of Financial Services from issuing certain
12 licenses in certain circumstances; amending s.
13 626.798, F.S.; prohibiting a family member of a life
14 insurance agent from being a beneficiary of certain
15 policies; amending s. 626.9521, F.S.; increasing the
16 administrative fine that may be imposed for each
17 willful violation of the offenses of twisting and
18 churning; increasing the administrative fine that may
19 be imposed for each willful violation of the offense
20 of submitting fraudulent signatures on an application
21 or policy-related document; providing that the fact
22 that a licensee made a reasonable effort to ascertain
23 a customer’s age at the time of an insurance
24 application does not constitute a defense to certain
25 violations of state law; authorizing the use of video
26 depositions in certain circumstances; amending s.
27 626.99, F.S.; extending the unconditional refund
28 period for fixed annuity contracts and variable or
29 market value annuity contracts for customers 65 years
30 of age or older; requiring that the unconditional
31 refund amount for a variable or market value annuity
32 contract be equal to the cash surrender value provided
33 in the contract, plus any fees or charges deducted
34 from the premiums or imposed under the contract;
35 providing for applicability of certain provisions;
36 requiring that an insurer provide a prospective
37 purchaser of an annuity policy with a buyer’s guide to
38 annuities; requiring that such buyer’s guide contain
39 certain information; requiring that an insurer attach
40 a cover page to an annuity policy informing the
41 purchaser of the unconditional refund period;
42 requiring that the cover page provide other specified
43 information; amending s. 627.4554, F.S.; defining the
44 term “accredited investor”; authorizing the Department
45 of Financial Services to order an insurance agent to
46 pay monetary restitution to a senior consumer under
47 certain circumstances; limiting the amount of such
48 restitution; prohibiting an annuity contract issued to
49 a senior consumer from containing a surrender or
50 deferred sales charge for withdrawal of funds from an
51 annuity in excess of a specified maximum amount;
52 providing for the periodic reduction of such charge;
53 providing an effective date.
54
55 Be It Enacted by the Legislature of the State of Florida:
56
57 Section 1. This act may be cited as the “Safeguard Our
58 Seniors Act.”
59 Section 2. Paragraph (a) of subsection (1) of section
60 624.310, Florida Statutes, is amended to read:
61 624.310 Enforcement; cease and desist orders; removal of
62 certain persons; fines.—
63 (1) DEFINITIONS.—For the purposes of this section, the
64 term:
65 (a) “Affiliated party” means any person who directs or
66 participates in the conduct of the affairs of a licensee and who
67 is:
68 1. A director, officer, employee, trustee, committee
69 member, or controlling stockholder of a licensee or a subsidiary
70 or service corporation of the licensee, other than a controlling
71 stockholder which is a holding company, or an agent of a
72 licensee or a subsidiary or service corporation of the licensee;
73 2. A person who has filed or is required to file a
74 statement or any other information required to be filed under s.
75 628.461 or s. 628.4615;
76 3. A stockholder, other than a stockholder that is a
77 holding company of the licensee, who participates in the conduct
78 of the affairs of the licensee; or
79 4. An independent contractor who:
80 a. Renders a written opinion required by the laws of this
81 state under her or his professional credentials on behalf of the
82 licensee, which opinion is reasonably relied on by the
83 department or office in the performance of its duties; or
84 b. Affirmatively and knowingly conceals facts, through a
85 written misrepresentation to the department or office, with
86 knowledge that such misrepresentation:
87 (I) Constitutes a violation of the insurance code or a
88 lawful rule or order of the department, commission, or office;
89 and
90 (II) Directly and materially endangers the ability of the
91 licensee to meet its obligations to policyholders; or.
92 5. A third-party marketer who aids or abets a licensee in a
93 violation of the insurance code relating to the sale of an
94 annuity to a person 65 years of age or older.
95
96 For the purposes of this subparagraph, any representation of
97 fact made by an independent contractor on behalf of a licensee,
98 affirmatively communicated as a representation of the licensee
99 to the independent contractor, shall not be considered a
100 misrepresentation by the independent contractor.
101 Section 3. Subsection (13) of section 626.025, Florida
102 Statutes, is amended to read:
103 626.025 Consumer protections.—To transact insurance, agents
104 shall comply with consumer protection laws, including the
105 following, as applicable:
106 (13) The prohibition against the designation of a life
107 insurance agent or his or her family member as the beneficiary
108 of life insurance policy sold to an individual other than a
109 family member under s. 626.798.
110 Section 4. Subsection (13) is added to section 626.621,
111 Florida Statutes, to read:
112 626.621 Grounds for discretionary refusal, suspension, or
113 revocation of agent’s, adjuster’s, customer representative’s,
114 service representative’s, or managing general agent’s license or
115 appointment.—The department may, in its discretion, deny an
116 application for, suspend, revoke, or refuse to renew or continue
117 the license or appointment of any applicant, agent, adjuster,
118 customer representative, service representative, or managing
119 general agent, and it may suspend or revoke the eligibility to
120 hold a license or appointment of any such person, if it finds
121 that as to the applicant, licensee, or appointee any one or more
122 of the following applicable grounds exist under circumstances
123 for which such denial, suspension, revocation, or refusal is not
124 mandatory under s. 626.611:
125 (13) Has been the subject of or has had a license, permit,
126 appointment, registration, or other authority to conduct
127 business subject to any decision, finding, injunction,
128 suspension, prohibition, revocation, denial, judgment, final
129 agency action, or administrative order by any court of competent
130 jurisdiction, administrative law proceeding, state agency,
131 federal agency, national securities, commodities, or option
132 exchange, or national securities, commodities, or option
133 association involving a violation of any federal or state
134 securities or commodities law or any rule or regulation adopted
135 thereunder, or a violation of any rule or regulation of any
136 national securities, commodities, or options exchange or
137 national securities, commodities, or options association.
138 Section 5. Subsection (3) of section 626.641, Florida
139 Statutes, is amended to read:
140 626.641 Duration of suspension or revocation.—
141 (3)(a) If any of an individual’s licenses as an agent or
142 customer representative, or the eligibility to hold such license
143 or licenses has same, as to the same individual have been
144 revoked at two separate times, the department may shall not
145 thereafter grant or issue any license under this code as to such
146 individual.
147 (b) If a license as an agent or customer representative or
148 the eligibility to hold such a license has been revoked
149 resulting from the solicitation or sale of an insurance product
150 to a person 65 years of age or older, the department may not
151 thereafter grant or issue any license under this code to such
152 individual.
153 Section 6. Section 626.798, Florida Statutes, is amended to
154 read:
155 626.798 Life agent as beneficiary; prohibition.—No life
156 agent shall, with respect to the placement of life insurance
157 coverage with a life insurer covering the life of a person who
158 is not a family member of the agent, handle in his or her
159 capacity as a life agent the placement of such coverage when the
160 agent placing the coverage or a family member of such agent
161 receives a commission therefor and is the named beneficiary
162 under the life insurance policy, unless the life agent or family
163 member has an insurable interest in the life of such person. For
164 the purposes of this section, the phrase “not a family member,”
165 with respect to a life agent, means an individual who is not
166 related to the life agent as father, mother, son, daughter,
167 brother, sister, grandfather, grandmother, uncle, aunt, first
168 cousin, nephew, niece, husband, wife, father-in-law, mother-in
169 law, brother-in-law, sister-in-law, stepfather, stepmother,
170 stepson, stepdaughter, stepbrother, stepsister, half brother, or
171 half sister. For the purposes of this section, the term
172 “insurable interest” means that the life agent has an actual,
173 lawful, and substantial economic interest in the safety and
174 preservation of the life of the insured or a reasonable
175 expectation of benefit or advantage from the continued life of
176 the insured.
177 Section 7. Paragraphs (a) and (b) of subsection (3) of
178 section 626.9521, Florida Statutes, are amended, and subsections
179 (4) and (5) are added to that section, to read:
180 626.9521 Unfair methods of competition and unfair or
181 deceptive acts or practices prohibited; penalties.—
182 (3)(a) If a person violates s. 626.9541(1)(l), the offense
183 known as “twisting,” or violates s. 626.9541(1)(aa), the offense
184 known as “churning,” the person commits a misdemeanor of the
185 first degree, punishable as provided in s. 775.082, and an
186 administrative fine not greater than $5,000 shall be imposed for
187 each nonwillful violation or an administrative fine not greater
188 than $75,000 $40,000 shall be imposed for each willful
189 violation. To impose criminal penalties under this paragraph,
190 the practice of “churning” or “twisting” must involve fraudulent
191 conduct.
192 (b) If a person violates s. 626.9541(1)(ee) by willfully
193 submitting fraudulent signatures on an application or policy
194 related document, the person commits a felony of the third
195 degree, punishable as provided in s. 775.082, and an
196 administrative fine not greater than $5,000 shall be imposed for
197 each nonwillful violation or an administrative fine not greater
198 than $75,000 $40,000 shall be imposed for each willful
199 violation.
200 (4) The fact that the licensee made a reasonable effort to
201 ascertain the consumer’s age at the time an insurance
202 application is completed does not constitute a defense to a
203 violation of this section.
204 (5) If a consumer who is a senior citizen is a victim, a
205 video deposition of the victim may be used for any purpose in
206 any administrative proceeding conducted pursuant to chapter 120
207 if all parties are given proper notice of the deposition in
208 accordance with the Florida Rules of Civil Procedure.
209 Section 8. Subsection (4) of section 626.99, Florida
210 Statutes, is amended to read:
211 626.99 Life insurance solicitation.—
212 (4) DISCLOSURE REQUIREMENTS.—
213 (a) The insurer shall provide to each prospective purchaser
214 a buyer’s guide and a policy summary prior to accepting the
215 applicant’s initial premium or premium deposit, unless the
216 policy for which application is made provides an unconditional
217 refund for a period of at least 14 days, or unless the policy
218 summary contains an offer of such an unconditional refund., In
219 these instances, which event the buyer’s guide and policy
220 summary must be delivered with the policy or prior to delivery
221 of the policy.
222 (b) With respect to annuities, the insurer shall provide to
223 each prospective purchaser a buyer’s guide to annuities
224 developed by the department and a contract summary before
225 accepting any payment for the contract. as provided in the
226 National Association of Insurance Commissioners (NAIC) Model
227 Annuity and Deposit Fund Regulation and The policy must provide
228 an unconditional refund for a period of at least 14 days. If the
229 prospective owner of an annuity contract is 65 years of age or
230 older:
231 1. An unconditional refund of premiums paid for a fixed
232 annuity contract, including any contract fees or charges, must
233 be available for a period of 30 days; and
234 2. An unconditional refund for variable or market value
235 annuity contracts must be available for a period of 30 days. The
236 unconditional refund shall be equal to the cash surrender value
237 provided in the annuity contract, plus any fees or charges
238 deducted from the premiums or imposed under the contract. This
239 subparagraph does not apply if the prospective owner is an
240 accredited investor, as defined in Regulation D as adopted by
241 the United States Securities and Exchange Commission.
242 (c) The insurer shall attach a cover page to any annuity
243 policy informing the purchaser of the unconditional refund
244 period prescribed in paragraph (b). The cover page must also
245 provide contact information for the issuing company and the
246 selling agent, the department’s toll-free help line, and any
247 other information required by the department by rule. The cover
248 page is part of the contract and is subject to review by the
249 office pursuant to s. 627.410.
250 (d)(b) The insurer shall provide a buyer’s guide and a
251 policy summary to any prospective purchaser upon request.
252 Section 9. Subsections (3) and (5) of section 627.4554,
253 Florida Statutes, as amended by section 9 of chapter 2008-237,
254 Laws of Florida, are amended, present subsection (9) of that
255 section is renumbered as subsection (10), and a new subsection
256 (9) is added to that section, to read:
257 627.4554 Annuity investments by seniors.—
258 (3) DEFINITIONS.—For purposes of this section, the term:
259 (a) “Annuity contract” means a fixed annuity, equity
260 indexed annuity, fixed equity indexed annuity, or variable
261 annuity that is individually solicited, whether the product is
262 classified as an individual annuity or a group annuity.
263 (b) “Accredited investor” means any person who comes within
264 any of the following categories, or who the issuer reasonably
265 believes comes within any of the following categories, at the
266 time of the sale of an annuity to that person:
267 1. The person’s net worth or joint net worth with his or
268 her spouse, at the time of the purchase, exceeds $1 million; or
269 2. The person had an individual income in excess of
270 $200,000 in each of the 2 most recent years, or joint income
271 with his or her spouse in excess of $300,000 in each of those
272 years, and has a reasonable expectation of reaching the same
273 income level in the current year.
274 (c)(b) “Recommendation” means advice provided by an
275 insurance agent, or an insurer if no insurance agent is
276 involved, to an individual senior consumer which results in a
277 purchase or exchange of an annuity in accordance with that
278 advice.
279 (d)(c) “Senior consumer” means a person 65 years of age or
280 older. In the event of a joint purchase by more than one party,
281 a purchaser is considered to be a senior consumer if any of the
282 parties is age 65 or older.
283 (5) MITIGATION OF RESPONSIBILITY.—
284 (a) The office may order an insurer to take reasonably
285 appropriate corrective action, including rescission of the
286 policy or contract and a full refund of the premiums paid or the
287 accumulation value, whichever is greater, for any senior
288 consumer harmed by a violation of this section by the insurer or
289 the insurer’s insurance agent.
290 (b) The department may order:
291 1. An insurance agent to take reasonably appropriate
292 corrective action, including monetary restitution of penalties
293 or fees incurred by the senior consumer, for any senior consumer
294 harmed by a violation of this section by the insurance agent.
295 2. A managing general agency or insurance agency that
296 employs or contracts with an insurance agent to sell or solicit
297 the sale of annuities to senior consumers to take reasonably
298 appropriate corrective action for any senior consumer harmed by
299 a violation of this section by the insurance agent.
300 (c) The department shall, in addition to any other penalty
301 authorized under chapter 626, order an insurance agent to pay
302 restitution to any senior consumer who has been deprived of
303 money by the agent’s misappropriation, conversion, or unlawful
304 withholding of moneys belonging to the senior consumer in the
305 course of a transaction involving annuities. The amount of
306 restitution required to be paid pursuant to this paragraph may
307 not exceed the amount misappropriated, converted, or unlawfully
308 withheld. This paragraph does not limit or restrict a person’s
309 right to seek other remedies as provided by law.
310 (d)(c) Any applicable penalty under the Florida Insurance
311 Code for a violation of paragraph (4)(a), paragraph (4)(b), or
312 subparagraph (4)(c)2. may be reduced or eliminated, according to
313 a schedule adopted by the office or the department, as
314 appropriate, if corrective action for the senior consumer was
315 taken promptly after a violation was discovered.
316 (9) PROHIBITED CHARGES.—An annuity contract issued to a
317 senior consumer may not contain a surrender or deferred sales
318 charge for a withdrawal of money from an annuity exceeding 10
319 percent of the amount withdrawn. The charge shall be reduced
320 annually by 1 percent so that no surrender or deferred sales
321 charge exists after the end of the 10th policy year or at any
322 time thereafter. This subsection does not apply to annuities
323 purchased by an accredited investor or to those annuities
324 specified in paragraph (7)(b).
325 Section 10. This act shall take effect July 1, 2010.