Florida Senate - 2009 SB 1372
By Senator Bennett
21-01163-09 20091372__
1 A bill to be entitled
2 An act relating to insurance; amending s. 624.310,
3 F.S.; expanding the definition of “affiliated party”
4 to include certain third-party marketers; amending s.
5 626.025, F.S.; including family members of insurance
6 agents in a prohibition related to the transaction of
7 life insurance; amending s. 626.621, F.S.; expanding
8 grounds for discretionary refusal, suspension, or
9 revocation of certain licenses; amending s. 626.641,
10 F.S.; prohibiting the Office of Insurance Regulation
11 or Department of Financial Services from issuing
12 certain 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.; providing
16 criminal and administrative penalties for the offenses
17 of “twisting” and “churning” when a victim is 65 years
18 of age or older, if such offense involves fraudulent
19 conduct; limiting the amount of such administrative
20 penalties; providing that the failure to ascertain a
21 customer's age at the time of an insurance application
22 does not constitute a defense to certain violations of
23 state law; authorizing the use of video depositions in
24 certain circumstances; amending s. 626.99, F.S.;
25 extending the unconditional refund period for
26 customers 65 years of age or older; requiring that an
27 insurer provide a prospective purchaser of an annuity
28 policy with a buyer's guide to annuities; requiring
29 that such buyer's guide contain certain information;
30 requiring that an insurer attach a cover page to an
31 annuity policy informing the purchaser of the
32 unconditional refund period; requiring that the cover
33 page provide other specified information; amending s.
34 627.4554, F.S.; authorizing the department to order
35 monetary restitution in certain circumstances;
36 prohibiting an annuity contract issued to a person 65
37 years of age or older from containing a deferred sales
38 charge in excess of a specified percentage; requiring
39 that such charge be reduced to zero within a specified
40 period; providing an effective date.
41
42 Be It Enacted by the Legislature of the State of Florida:
43
44 Section 1. Paragraph (a) of subsection (1) of section
45 624.310, Florida Statutes, is amended to read:
46 624.310 Enforcement; cease and desist orders; removal of
47 certain persons; fines.—
48 (1) DEFINITIONS.—For the purposes of this section, the
49 term:
50 (a) “Affiliated party” means any person who directs or
51 participates in the conduct of the affairs of a licensee and who
52 is:
53 1. A director, officer, employee, trustee, committee
54 member, or controlling stockholder of a licensee or a subsidiary
55 or service corporation of the licensee, other than a controlling
56 stockholder which is a holding company, or an agent of a
57 licensee or a subsidiary or service corporation of the licensee;
58 2. A person who has filed or is required to file a
59 statement or any other information required to be filed under s.
60 628.461 or s. 628.4615;
61 3. A stockholder, other than a stockholder that is a
62 holding company of the licensee, who participates in the conduct
63 of the affairs of the licensee; or
64 4. An independent contractor who:
65 a. Renders a written opinion required by the laws of this
66 state under her or his professional credentials on behalf of the
67 licensee, which opinion is reasonably relied on by the
68 department or office in the performance of its duties; or
69 b. Affirmatively and knowingly conceals facts, through a
70 written misrepresentation to the department or office, with
71 knowledge that such misrepresentation:
72 (I) Constitutes a violation of the insurance code or a
73 lawful rule or order of the department, commission, or office;
74 and
75 (II) Directly and materially endangers the ability of the
76 licensee to meet its obligations to policyholders; or.
77 5. A third-party marketer who aids or abets a licensee in a
78 violation of the insurance code relating to the sale of an
79 annuity to a person 65 years of age or older.
80 For the purposes of this subparagraph, any representation of
81 fact made by an independent contractor on behalf of a licensee,
82 affirmatively communicated as a representation of the licensee
83 to the independent contractor, shall not be considered a
84 misrepresentation by the independent contractor.
85 Section 2. Subsection (13) of section 626.025, Florida
86 Statutes, is amended to read:
87 626.025 Consumer protections.—To transact insurance, agents
88 shall comply with consumer protection laws, including the
89 following, as applicable:
90 (13) The prohibition against the designation of a life
91 insurance agent or his or her family member as the beneficiary
92 of life insurance policy sold to an individual other than a
93 family member under s. 626.798.
94 Section 3. Subsection (13) is added to section 626.621,
95 Florida Statutes, to read:
96 626.621 Grounds for discretionary refusal, suspension, or
97 revocation of agent's, adjuster's, customer representative's,
98 service representative's, or managing general agent's license or
99 appointment.—The department may, in its discretion, deny an
100 application for, suspend, revoke, or refuse to renew or continue
101 the license or appointment of any applicant, agent, adjuster,
102 customer representative, service representative, or managing
103 general agent, and it may suspend or revoke the eligibility to
104 hold a license or appointment of any such person, if it finds
105 that as to the applicant, licensee, or appointee any one or more
106 of the following applicable grounds exist under circumstances
107 for which such denial, suspension, revocation, or refusal is not
108 mandatory under s. 626.611:
109 (13) Has been the subject of or has had a license, permit,
110 appointment, registration, or other authority to conduct
111 business subject to any decision, finding, injunction,
112 suspension, prohibition, revocation, denial, judgment, final
113 agency action, or administrative order by any court of competent
114 jurisdiction, administrative law proceeding, state agency,
115 federal agency, national securities, commodities, or option
116 exchange, or national securities, commodities, or option
117 association involving fraud, breach of trust, dishonest dealing,
118 fiduciary misconduct, a violation of any federal or state
119 securities or commodities law or any rule or regulation
120 promulgated thereunder, a violation of any rule or regulation of
121 any national securities, commodities, or options exchange or
122 national securities, commodities, or options association, or any
123 other act of moral turpitude.
124 Section 4. Subsection (3) of section 626.641, Florida
125 Statutes, is amended to read:
126 626.641 Duration of suspension or revocation.—
127 (3)(a) If any of an individual's licenses as an agent or
128 customer representative, or the eligibility to hold such license
129 or licenses has same, as to the same individual have been
130 revoked at two separate times, the department or office may
131 shall not thereafter grant or issue any license under this code
132 as to such individual.
133 (b) If a license as an agent or customer representative or
134 the eligibility to hold such a license has been revoked
135 resulting from the solicitation or sale of an insurance product
136 to a person 65 years of age or older, the department or office
137 may not thereafter grant or issue any license under this code to
138 such individual.
139 Section 5. Section 626.798, Florida Statutes, is amended to
140 read:
141 626.798 Life agent as beneficiary; prohibition.—No life
142 agent shall, with respect to the placement of life insurance
143 coverage with a life insurer covering the life of a person who
144 is not a family member of the agent, handle in his or her
145 capacity as a life agent the placement of such coverage when the
146 agent placing the coverage or a family member of such agent
147 receives a commission therefor and is the named beneficiary
148 under the life insurance policy, unless the life agent or family
149 member has an insurable interest in the life of such person. For
150 the purposes of this section, the phrase “not a family member,”
151 with respect to a life agent, means an individual who is not
152 related to the life agent as father, mother, son, daughter,
153 brother, sister, grandfather, grandmother, uncle, aunt, first
154 cousin, nephew, niece, husband, wife, father-in-law, mother-in
155 law, brother-in-law, sister-in-law, stepfather, stepmother,
156 stepson, stepdaughter, stepbrother, stepsister, half brother, or
157 half sister. For the purposes of this section, the term
158 “insurable interest” means that the life agent has an actual,
159 lawful, and substantial economic interest in the safety and
160 preservation of the life of the insured or a reasonable
161 expectation of benefit or advantage from the continued life of
162 the insured.
163 Section 6. Paragraphs (a) and (b) of subsection (3) of
164 section 626.9521, Florida Statutes, are amended, and subsections
165 (4) and (5) are added to that section, to read:
166 626.9521 Unfair methods of competition and unfair or
167 deceptive acts or practices prohibited; penalties.—
168 (3)(a)1. If a natural person violates s. 626.9541(1)(l),
169 the offense known as “twisting,” or violates s. 626.9541(1)(aa),
170 the offense known as “churning,” the person commits a
171 misdemeanor of the first degree, punishable as provided in s.
172 775.082, and an administrative fine not greater than $5,000
173 shall be imposed for each nonwillful violation or an
174 administrative fine not greater than $40,000 shall be imposed
175 for each willful violation. To impose criminal penalties under
176 this subparagraph paragraph, the practice of “churning” or
177 “twisting” must involve fraudulent conduct.
178 2. If a natural person violates s. 626.9541(1)(l), the
179 offense known as “twisting,” or violates s. 626.9541(1)(aa), the
180 offense known as “churning,” and the victim is 65 years of age
181 or older, such person commits a felony of the third degree,
182 punishable as provided in s. 775.082, and an administrative fine
183 not greater than $5,000 shall be imposed for each nonwillful
184 violation or an administrative fine not greater than $40,000
185 shall be imposed for each willful violation. To impose criminal
186 penalties under this sub-paragraph, the practice of “churning”
187 or “twisting” must involve fraudulent conduct.
188 (b) If a natural person violates s. 626.9541(1)(ee) by
189 willfully submitting fraudulent signatures on an application or
190 policy-related document, the person commits a felony of the
191 third degree, punishable as provided in s. 775.082, and an
192 administrative fine not greater than $5,000 shall be imposed for
193 each nonwillful violation or an administrative fine not greater
194 than $40,000 shall be imposed for each willful violation.
195 (4) The failure of a licensee to make all reasonable
196 efforts to ascertain the consumer’s age at the time an insurance
197 application is completed does not constitute a defense to a
198 violation of this section.
199 (5) If a consumer who is a senior citizen is a victim, a
200 video deposition of the victim may be used for any purpose in
201 any administrative proceeding conducted pursuant to chapter 120.
202 Section 7. Paragraph (a) of subsection (4) of section
203 626.99, Florida Statutes, is amended, and paragraphs (c) and (d)
204 are added to that subsection, to read:
205 626.99 Life insurance solicitation.—
206 (4) DISCLOSURE REQUIREMENTS.—
207 (a) The insurer shall provide to each prospective purchaser
208 a buyer's guide and a policy summary prior to accepting the
209 applicant's initial premium or premium deposit, unless the
210 policy for which application is made provides an unconditional
211 refund for a period of at least 14 days, or unless the policy
212 summary contains an offer of such an unconditional refund, in
213 which event the buyer's guide and policy summary must be
214 delivered with the policy or prior to delivery of the policy.
215 With respect to annuities, the insurer shall provide to each
216 prospective purchaser a buyer's guide to annuities and a
217 contract summary as provided in the National Association of
218 Insurance Commissioners (NAIC) Model Annuity and Deposit Fund
219 Regulation and the policy must provide an unconditional refund
220 for a period of at least 14 days. If the prospective purchaser
221 of an annuity is 65 years of age or older, the unconditional
222 refund period must be at least 60 days.
223 (c) The insurer shall provide a buyer’s guide to annuities,
224 developed by the department, which informs the prospective
225 purchaser of an annuity how to contact the department or office
226 if he or she has questions regarding the annuity offered for
227 sale.
228 (d) The insurer shall attach a cover page to an annuity
229 policy informing the purchaser of the unconditional refund
230 period prescribed in paragraph (a). The cover page shall also
231 provide contact information for the issuing company, the
232 department’s toll-free help line number, and any other
233 information required by the department by rule.
234 Section 8. Paragraph (b) of subsection (5) of section
235 627.4554, Florida Statutes, as amended by section 9 of chapter
236 2008-237, Laws of Florida, is amended, and subsection (10) is
237 added to that section, to read:
238 627.4554 Annuity investments by seniors.—
239 (5) MITIGATION OF RESPONSIBILITY.—
240 (b) The department may order:
241 1. An insurance agent to take reasonably appropriate
242 corrective action for any senior consumer harmed by a violation
243 of this section by the insurance agent, including, but not
244 limited to, monetary restitution.
245 2. A managing general agency or insurance agency that
246 employs or contracts with an insurance agent to sell or solicit
247 the sale of annuities to senior consumers to take reasonably
248 appropriate corrective action for any senior consumer harmed by
249 a violation of this section by the insurance agent.
250 (10) An annuity contract issued to an annuitant 65 years of
251 age or older may not contain a deferred sales charge exceeding 5
252 percent, and such charge shall be reduced to zero percent by the
253 end of the fifth policy year.
254 Section 9. This act shall take effect July 1, 2009.