| 1 | A bill to be entitled |
| 2 | An act relating to annuity contracts for seniors; amending |
| 3 | s. 624.310, F.S.; revising the definition of the term |
| 4 | "affiliated party"; amending s. 626.025, F.S.; revising a |
| 5 | consumer protection requirement relating to designation of |
| 6 | beneficiaries of a life insurance policy; amending s. |
| 7 | 626.621, F.S.; providing an additional ground for taking |
| 8 | adverse action against the license or appointment of |
| 9 | certain persons; amending s. 626.641, F.S.; expanding a |
| 10 | prohibition against the Department of Financial Services |
| 11 | issuing a license to certain persons for certain |
| 12 | activities; amending s. 626.798, F.S.; revising a |
| 13 | prohibition against life agents handling the placement of |
| 14 | coverage under life insurance policies under certain |
| 15 | circumstances; amending s. 626.9521, F.S.; providing for |
| 16 | limitation to natural persons of certain criminal |
| 17 | penalties relating to the offenses of twisting or |
| 18 | churning; providing an increased criminal penalty for |
| 19 | natural persons committing the offenses of twisting or |
| 20 | churning with respect to seniors; providing for limitation |
| 21 | to natural persons of certain criminal penalties relating |
| 22 | to willfully submitting fraudulent signatures on an |
| 23 | application or policy-related document; specifying that |
| 24 | failure to ascertain a consumer's age is not a defense to |
| 25 | certain violations; authorizing use of video depositions |
| 26 | in administrative proceedings involving seniors as |
| 27 | victims; amending s. 626.99, F.S.; extending an |
| 28 | unconditional refund period for annuities purchased by |
| 29 | seniors; providing additional life insurance solicitation |
| 30 | disclosure requirements; amending s. 627.4554, F.S.; |
| 31 | revising requirements for annuity investments by seniors; |
| 32 | authorizing the department to order monetary restitution |
| 33 | as a corrective action; prohibiting annuity contracts |
| 34 | issued to a senior from containing a deferred sales charge |
| 35 | in excess of a certain percentage and requires a reduction |
| 36 | in the percentage to zero by a certain time; providing an |
| 37 | effective date. |
| 38 |
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| 39 | Be It Enacted by the Legislature of the State of Florida: |
| 40 |
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| 41 | Section 1. Subsection (1) of section 624.310, Florida |
| 42 | Statutes, is amended to read: |
| 43 | 624.310 Enforcement; cease and desist orders; removal of |
| 44 | certain persons; fines.-- |
| 45 | (1) DEFINITIONS.--For the purposes of this section, the |
| 46 | term: |
| 47 | (a) "Affiliated party" means any person who directs or |
| 48 | participates in the conduct of the affairs of a licensee and who |
| 49 | is: |
| 50 | 1. A director, officer, employee, trustee, committee |
| 51 | member, or controlling stockholder of a licensee or a subsidiary |
| 52 | or service corporation of the licensee, other than a controlling |
| 53 | stockholder which is a holding company, or an agent of a |
| 54 | licensee or a subsidiary or service corporation of the licensee; |
| 55 | 2. A person who has filed or is required to file a |
| 56 | statement or any other information required to be filed under s. |
| 57 | 628.461 or s. 628.4615; |
| 58 | 3. A stockholder, other than a stockholder that is a |
| 59 | holding company of the licensee, who participates in the conduct |
| 60 | of the affairs of the licensee; or |
| 61 | 4. An independent contractor who: |
| 62 | a. Renders a written opinion required by the laws of this |
| 63 | state under her or his professional credentials on behalf of the |
| 64 | licensee, which opinion is reasonably relied on by the |
| 65 | department or office in the performance of its duties; or |
| 66 | b. Affirmatively and knowingly conceals facts, through a |
| 67 | written misrepresentation to the department or office, with |
| 68 | knowledge that such misrepresentation: |
| 69 | (I) Constitutes a violation of the insurance code or a |
| 70 | lawful rule or order of the department, commission, or office; |
| 71 | and |
| 72 | (II) Directly and materially endangers the ability of the |
| 73 | licensee to meet its obligations to policyholders. |
| 74 |
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| 75 | For the purposes of this subparagraph, any representation of |
| 76 | fact made by an independent contractor on behalf of a licensee, |
| 77 | affirmatively communicated as a representation of the licensee |
| 78 | to the independent contractor, shall not be considered a |
| 79 | misrepresentation by the independent contractor; or |
| 80 | 5. A third-party marketer that aids and abets a licensee |
| 81 | in a violation of the insurance code relating to the sale of an |
| 82 | annuity to a person 65 years of age or older. |
| 83 | (b) "Licensee" means a person issued a license or |
| 84 | certificate of authority or approval under this code or a person |
| 85 | registered under a provision of this code. |
| 86 | Section 2. Subsection (13) of section 626.025, Florida |
| 87 | Statutes, is amended to read: |
| 88 | 626.025 Consumer protections.--To transact insurance, |
| 89 | agents shall comply with consumer protection laws, including the |
| 90 | following, as applicable: |
| 91 | (13) The prohibition against the designation of a life |
| 92 | insurance agent or his or her family member as the beneficiary |
| 93 | of a life insurance policy sold to an individual other than a |
| 94 | family member under s. 626.798. |
| 95 | Section 3. Subsection (13) is added to section 626.621, |
| 96 | Florida Statutes, to read: |
| 97 | 626.621 Grounds for discretionary refusal, suspension, or |
| 98 | revocation of agent's, adjuster's, customer representative's, |
| 99 | service representative's, or managing general agent's license or |
| 100 | appointment.--The department may, in its discretion, deny an |
| 101 | application for, suspend, revoke, or refuse to renew or continue |
| 102 | the license or appointment of any applicant, agent, adjuster, |
| 103 | customer representative, service representative, or managing |
| 104 | general agent, and it may suspend or revoke the eligibility to |
| 105 | hold a license or appointment of any such person, if it finds |
| 106 | that as to the applicant, licensee, or appointee any one or more |
| 107 | of the following applicable grounds exist under circumstances |
| 108 | for which such denial, suspension, revocation, or refusal is not |
| 109 | mandatory under s. 626.611: |
| 110 | (13) Has been the subject of or has had a license, permit, |
| 111 | appointment, registration, or other authority to conduct |
| 112 | business subject to any decision, finding, injunction, |
| 113 | suspension, prohibition, revocation, denial, judgment, final |
| 114 | agency action, or administrative order by any court of competent |
| 115 | jurisdiction, administrative law proceeding, state agency, |
| 116 | federal agency, national securities, commodities, or option |
| 117 | exchange, or national securities, commodities, or option |
| 118 | association, involving fraud, breach of trust, dishonest |
| 119 | dealing, fiduciary misconduct, a violation of any federal or |
| 120 | state securities or commodities law or any rule or regulation |
| 121 | adopted under such law, rule, or regulation, a violation of any |
| 122 | rule or regulation of any national securities, commodities, or |
| 123 | options exchange or national securities, commodities, or options |
| 124 | association, or any other act of moral turpitude. |
| 125 | Section 4. Subsection (3) of section 626.641, Florida |
| 126 | Statutes, is amended to read: |
| 127 | 626.641 Duration of suspension or revocation.-- |
| 128 | (3)(a) If licenses as agent or customer representative, or |
| 129 | the eligibility to hold same, as to the same individual have |
| 130 | been revoked at two separate times, the department may shall not |
| 131 | thereafter grant or issue any license under this code as to such |
| 132 | individual. |
| 133 | (b) If licenses as agent or customer representative, or |
| 134 | the eligibility to hold such licenses, as to the same individual |
| 135 | have been revoked resulting from the solicitation or sale of an |
| 136 | insurance product to a person 65 years of age or older, the |
| 137 | department may not thereafter grant or issue any license under |
| 138 | this code as to such individual. |
| 139 | Section 5. Section 626.798, Florida Statutes, is amended |
| 140 | to read: |
| 141 | 626.798 Life agent as beneficiary; prohibition.--A No life |
| 142 | agent may not shall, with respect to the placement of life |
| 143 | insurance coverage with a life insurer covering the life of a |
| 144 | person who is not a family member of the agent, handle in his or |
| 145 | her capacity as a life agent the placement of such coverage when |
| 146 | the agent placing the coverage or a family member of the 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. Subsection (3) of section 626.9521, Florida |
| 164 | Statutes, is amended, and subsections (4) and (5) are added to |
| 165 | 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) by |
| 179 | committing the offense of twisting, or violates s. |
| 180 | 626.9541(1)(aa) by committing the offense of churning, and the |
| 181 | victim is 65 years of age or older, the person commits a felony |
| 182 | of the third degree, punishable as provided in s. 775.082, and |
| 183 | an administrative fine not greater than $5,000 shall be imposed |
| 184 | for each nonwillful violation or an administrative fine not |
| 185 | greater than $40,000 shall be imposed for each willful |
| 186 | violation. To impose criminal penalties under this sub- |
| 187 | paragraph, the practice of churning or twisting must involve |
| 188 | fraudulent conduct. |
| 189 | (b) If a natural person violates s. 626.9541(1)(ee) by |
| 190 | willfully submitting fraudulent signatures on an application or |
| 191 | policy-related document, the person commits a felony of the |
| 192 | third degree, punishable as provided in s. 775.082, and an |
| 193 | administrative fine not greater than $5,000 shall be imposed for |
| 194 | each nonwillful violation or an administrative fine not greater |
| 195 | than $40,000 shall be imposed for each willful violation. |
| 196 | (c) Administrative fines under this subsection may not |
| 197 | exceed an aggregate amount of $50,000 for all nonwillful |
| 198 | violations arising out of the same action or an aggregate amount |
| 199 | of $250,000 for all willful violations arising out of the same |
| 200 | action. |
| 201 | (4) The failure of a licensee to make all reasonable |
| 202 | efforts to ascertain the consumer's age at the time an insurance |
| 203 | application is completed shall not constitute a defense to a |
| 204 | violation of this chapter. |
| 205 | (5) When a senior consumer is a victim, a video deposition |
| 206 | of the victim may be used for any purpose in any administrative |
| 207 | proceeding conducted under chapter 120. |
| 208 | Section 7. Subsection (4) of section 626.99, Florida |
| 209 | Statutes, is amended to read: |
| 210 | 626.99 Life insurance solicitation.-- |
| 211 | (4) DISCLOSURE REQUIREMENTS.-- |
| 212 | (a) The insurer shall provide to each prospective |
| 213 | purchaser a buyer's guide and a policy summary prior to |
| 214 | accepting the applicant's initial premium or premium deposit, |
| 215 | unless the policy for which application is made provides an |
| 216 | unconditional refund for a period of at least 14 days, or unless |
| 217 | the policy summary contains an offer of such an unconditional |
| 218 | refund, in which event the buyer's guide and policy summary must |
| 219 | be delivered with the policy or prior to delivery of the policy. |
| 220 | With respect to annuities, the insurer shall provide to each |
| 221 | prospective purchaser a buyer's guide to annuities and a |
| 222 | contract summary as provided in the National Association of |
| 223 | Insurance Commissioners (NAIC) Model Annuity and Deposit Fund |
| 224 | Regulation and the policy must provide an unconditional refund |
| 225 | for a period of at least 14 days. If the prospective purchaser |
| 226 | of an annuity is 65 years of age or older, the unconditional |
| 227 | refund period must be at least 60 days. |
| 228 | (b) The insurer shall provide a buyer's guide and a policy |
| 229 | summary to any prospective purchaser upon request. |
| 230 | (c) The insurer shall provide a buyer's guide to |
| 231 | annuities, which shall be developed by the department, that |
| 232 | informs the prospective purchaser of an annuity how to contact |
| 233 | the department or office if he or she has questions regarding |
| 234 | the annuity offered for sale. |
| 235 | (d) The insurer shall attach a cover page to an annuity |
| 236 | policy informing the purchaser of the unconditional refund |
| 237 | period in paragraph (a). The cover page shall also provide |
| 238 | contact information for the issuing company, the department's |
| 239 | toll-free help line number, and other information that may be |
| 240 | required by the department by rule. |
| 241 | Section 8. Subsection (5) of section 627.4554, Florida |
| 242 | Statutes, as amended by chapter 2008-237, Laws of Florida, is |
| 243 | amended, subsection (9) of that section is renumbered as |
| 244 | subsection (10), and a new subsection (9) is added to that |
| 245 | section, to read: |
| 246 | 627.4554 Annuity investments by seniors.-- |
| 247 | (5) MITIGATION OF RESPONSIBILITY.-- |
| 248 | (a) The office may order an insurer to take reasonably |
| 249 | appropriate corrective action, including rescission of the |
| 250 | policy or contract and a full refund of the premiums paid or the |
| 251 | accumulation value, whichever is greater, for any senior |
| 252 | consumer harmed by a violation of this section by the insurer or |
| 253 | the insurer's insurance agent. |
| 254 | (b) The department may order: |
| 255 | 1. An insurance agent to take reasonably appropriate |
| 256 | corrective action for any senior consumer harmed by a violation |
| 257 | of this section by the insurance agent, including, but not |
| 258 | limited to, monetary restitution. |
| 259 | 2. A managing general agency or insurance agency that |
| 260 | employs or contracts with an insurance agent to sell or solicit |
| 261 | the sale of annuities to senior consumers to take reasonably |
| 262 | appropriate corrective action for any senior consumer harmed by |
| 263 | a violation of this section by the insurance agent. |
| 264 | (c) Any applicable penalty under the Florida Insurance |
| 265 | Code for a violation of paragraph (4)(a), paragraph (4)(b), or |
| 266 | subparagraph (4)(c)2. may be reduced or eliminated, according to |
| 267 | a schedule adopted by the office or the department, as |
| 268 | appropriate, if corrective action for the senior consumer was |
| 269 | taken promptly after a violation was discovered. |
| 270 | (9) DEFERRED SALES CHARGES.--An annuity contract issued in |
| 271 | the name of an annuitant 65 years of age and older may not |
| 272 | contain a deferred sales charge exceeding 5 percent, and such |
| 273 | charge shall be reduced to zero percent by the end of the fifth |
| 274 | policy year. |
| 275 | Section 9. This act shall take effect July 1, 2009. |