CS for SB 844 First Engrossed
2010844e1
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; creating s. 624.46223, F.S.; prohibiting a
6 self-insurance association, fund, or pool from
7 requiring its members to provide more than a specified
8 maximum period of notice of any member’s intent to
9 withdraw; amending s. 626.221, F.S.; expanding the
10 list of individuals who are exempt from the
11 requirement to pass an examination before being issued
12 a license as an agent, customer representative, or
13 adjuster; amending s. 626.025, F.S.; including family
14 members of insurance agents in a prohibition related
15 to the transaction of life insurance; amending s.
16 626.2815, F.S.; providing an exemption from certain
17 continuing education requirements to certain agents;
18 authorizing the department to take certain action in
19 applying such exemption; amending s. 626.621, F.S.;
20 expanding grounds for discretionary refusal,
21 suspension, or revocation of certain licenses;
22 amending s. 626.641, F.S.; prohibiting the Department
23 of Financial Services from issuing certain licenses in
24 certain circumstances; amending s. 626.798, F.S.;
25 prohibiting a family member of a life insurance agent
26 from being a beneficiary of certain policies;
27 prohibiting an agent or a family member of such agent
28 from being designated as a trustee or guardian or
29 being granted power of attorney unless he or she is a
30 family member of the policy owner; amending s.
31 626.9521, F.S.; increasing the administrative fine
32 that may be imposed for each willful violation of the
33 offenses of twisting and churning; increasing the
34 administrative fine that may be imposed for each
35 willful violation of the offense of submitting
36 fraudulent signatures on an application or policy
37 related document; requiring that a licensee make a
38 reasonable effort to ascertain a customer’s age at the
39 time of completion of an insurance application;
40 authorizing the use of video depositions in certain
41 circumstances; amending s. 626.99, F.S.; requiring
42 that the buyer’s guide for fixed annuities be in the
43 form provided by the National Association of Insurance
44 Commissioners Annuity Disclosure Model Regulation;
45 authorizing the use of a policy summary for variable
46 annuities until the NAIC or the department develops a
47 buyer’s guide; extending the unconditional refund
48 period for fixed annuity contracts and variable or
49 market value annuity contracts for customers 65 years
50 of age or older; requiring that the unconditional
51 refund amount for a variable or market value annuity
52 contract be equal to the cash surrender value provided
53 in the contract, plus any fees or charges deducted
54 from the premiums or imposed under the contract;
55 providing for applicability of certain provisions;
56 requiring that an insurer provide a prospective
57 purchaser of an annuity policy with a buyer’s guide to
58 annuities; requiring that such buyer’s guide contain
59 certain information; requiring that an insurer attach
60 a cover page to an annuity policy informing the
61 purchaser of the unconditional refund period;
62 requiring that the cover page provide other specified
63 information; amending s. 627.4554, F.S.; defining the
64 term “accredited investor”; authorizing the Department
65 of Financial Services to order an insurance agent to
66 pay monetary restitution to a senior consumer under
67 certain circumstances; limiting the amount of such
68 restitution; prohibiting an annuity contract issued to
69 a senior consumer from containing a surrender or
70 deferred sales charge for withdrawal of funds from an
71 annuity in excess of a specified maximum amount;
72 providing for the periodic reduction of such charge;
73 providing an effective date.
74
75 Be It Enacted by the Legislature of the State of Florida:
76
77 Section 1. This act may be cited as the “Safeguard Our
78 Seniors Act.”
79 Section 2. Paragraph (a) of subsection (1) of section
80 624.310, Florida Statutes, is amended to read:
81 624.310 Enforcement; cease and desist orders; removal of
82 certain persons; fines.—
83 (1) DEFINITIONS.—For the purposes of this section, the
84 term:
85 (a) “Affiliated party” means any person who directs or
86 participates in the conduct of the affairs of a licensee and who
87 is:
88 1. A director, officer, employee, trustee, committee
89 member, or controlling stockholder of a licensee or a subsidiary
90 or service corporation of the licensee, other than a controlling
91 stockholder which is a holding company, or an agent of a
92 licensee or a subsidiary or service corporation of the licensee;
93 2. A person who has filed or is required to file a
94 statement or any other information required to be filed under s.
95 628.461 or s. 628.4615;
96 3. A stockholder, other than a stockholder that is a
97 holding company of the licensee, who participates in the conduct
98 of the affairs of the licensee; or
99 4. An independent contractor who:
100 a. Renders a written opinion required by the laws of this
101 state under her or his professional credentials on behalf of the
102 licensee, which opinion is reasonably relied on by the
103 department or office in the performance of its duties; or
104 b. Affirmatively and knowingly conceals facts, through a
105 written misrepresentation to the department or office, with
106 knowledge that such misrepresentation:
107 (I) Constitutes a violation of the insurance code or a
108 lawful rule or order of the department, commission, or office;
109 and
110 (II) Directly and materially endangers the ability of the
111 licensee to meet its obligations to policyholders; or.
112 5. A third-party marketer who aids or abets a licensee in a
113 violation of the insurance code relating to the sale of an
114 annuity to a person 65 years of age or older.
115
116 For the purposes of this subparagraph, any representation of
117 fact made by an independent contractor on behalf of a licensee,
118 affirmatively communicated as a representation of the licensee
119 to the independent contractor, shall not be considered a
120 misrepresentation by the independent contractor.
121 Section 3. Section 624.46223, Florida Statutes, is created
122 to read:
123 624.46223 Notice of intent to withdraw.—Any association,
124 fund, or pool authorized by state law and created for the
125 purpose of forming a risk-management mechanism or providing self
126 insurance for public entities in this state may not require its
127 members to provide more than 45 days’ notice of the member’s
128 intention to withdraw as a prerequisite for withdrawing from the
129 association, fund, or pool.
130 Section 4. Paragraph (j) of subsection (2) of section
131 626.221, Florida Statutes, is amended to read:
132 626.221 Examination requirement; exemptions.—
133 (2) However, no such examination shall be necessary in any
134 of the following cases:
135 (j) An applicant for license as a customer representative
136 who has earned the designation of Accredited Advisor in
137 Insurance (AAI) from the Insurance Institute of America, the
138 designation of Certified Insurance Counselor (CIC) from the
139 Society of Certified Insurance Service Counselors, the
140 designation of Accredited Customer Service Representative (ACSR)
141 from the Independent Insurance Agents of America, the
142 designation of Certified Professional Service Representative
143 (CPSR) from the National Foundation for Certified Professional
144 Service Representatives, the designation of Certified Insurance
145 Service Representative (CISR) from the Society of Certified
146 Insurance Service Representatives, or the designation of
147 Certified Insurance Representative (CIR) from the National
148 Association of Christian Catastrophe Insurance Adjusters. Also,
149 an applicant for license as a customer representative who has
150 earned an associate degree or bachelor’s degree from an
151 accredited college or university with at least 9 academic hours
152 of property and casualty insurance curriculum, or the
153 equivalent, or has earned the designation of Certified Customer
154 Service Representative (CCSR) from the Florida Association of
155 Insurance Agents, or the designation of Registered Customer
156 Service Representative (RCSR) from a regionally accredited
157 postsecondary institution in this state, or the designation of
158 Professional Customer Service Representative (PCSR) from the
159 Professional Career Institute, whose curriculum has been
160 approved by the department and whose curriculum includes
161 comprehensive analysis of basic property and casualty lines of
162 insurance and testing at least equal to that of standard
163 department testing for the customer representative license. The
164 department shall adopt rules establishing standards for the
165 approval of curriculum.
166 Section 5. Subsection (13) of section 626.025, Florida
167 Statutes, is amended to read:
168 626.025 Consumer protections.—To transact insurance, agents
169 shall comply with consumer protection laws, including the
170 following, as applicable:
171 (13) The prohibition against the designation of a life
172 insurance agent or his or her family member as the beneficiary
173 of life insurance policy sold to an individual other than a
174 family member under s. 626.798.
175 Section 6. Paragraph (k) of subsection (3) of section
176 626.2815, Florida Statutes, is amended to read:
177 626.2815 Continuing education required; application;
178 exceptions; requirements; penalties.—
179 (3)
180 (k) Any person who holds a license to solicit or sell life
181 insurance in this state must complete a minimum of 3 hours in
182 continuing education, approved by the department, on the subject
183 of suitability in annuity and life insurance transactions. This
184 requirement does not apply to an agent who does not have any
185 active life insurance or annuity contracts. In applying this
186 exemption, the department may require the filing of a
187 certification attesting that the agent has not sold life
188 insurance or annuities during the continuing education
189 compliance cycle in question and does not have any active life
190 insurance or annuity contracts. A licensee may use the hours
191 obtained under this paragraph to satisfy the requirement for
192 continuing education in ethics under paragraph (a).
193 Section 7. Subsection (13) is added to section 626.621,
194 Florida Statutes, to read:
195 626.621 Grounds for discretionary refusal, suspension, or
196 revocation of agent’s, adjuster’s, customer representative’s,
197 service representative’s, or managing general agent’s license or
198 appointment.—The department may, in its discretion, deny an
199 application for, suspend, revoke, or refuse to renew or continue
200 the license or appointment of any applicant, agent, adjuster,
201 customer representative, service representative, or managing
202 general agent, and it may suspend or revoke the eligibility to
203 hold a license or appointment of any such person, if it finds
204 that as to the applicant, licensee, or appointee any one or more
205 of the following applicable grounds exist under circumstances
206 for which such denial, suspension, revocation, or refusal is not
207 mandatory under s. 626.611:
208 (13) Has been the subject of or has had a license, permit,
209 appointment, registration, or other authority to conduct
210 business subject to any decision, finding, injunction,
211 suspension, prohibition, revocation, denial, judgment, final
212 agency action, or administrative order by any court of competent
213 jurisdiction, administrative law proceeding, state agency,
214 federal agency, national securities, commodities, or option
215 exchange, or national securities, commodities, or option
216 association involving a violation of any federal or state
217 securities or commodities law or any rule or regulation adopted
218 thereunder, or a violation of any rule or regulation of any
219 national securities, commodities, or options exchange or
220 national securities, commodities, or options association.
221 Section 8. Subsection (3) of section 626.641, Florida
222 Statutes, is amended to read:
223 626.641 Duration of suspension or revocation.—
224 (3)(a) If any of an individual’s licenses as an agent or
225 customer representative, or the eligibility to hold such license
226 or licenses has same, as to the same individual have been
227 revoked at two separate times, the department may shall not
228 thereafter grant or issue any license under this code as to such
229 individual.
230 (b) If a license as an agent or customer representative or
231 the eligibility to hold such a license has been revoked
232 resulting from the solicitation or sale of an insurance product
233 to a person 65 years of age or older, the department may not
234 thereafter grant or issue any license under this code to such
235 individual.
236 Section 9. Section 626.798, Florida Statutes, is amended to
237 read:
238 626.798 Life agent as beneficiary; prohibition.—No life
239 agent shall, with respect to the placement of life insurance
240 coverage with a life insurer covering the life of a person who
241 is not a family member of the agent, handle in his or her
242 capacity as a life agent the placement of such coverage when the
243 agent placing the coverage or a family member of such agent
244 receives a commission therefor and is the named beneficiary
245 under the life insurance policy, unless the life agent or family
246 member has an insurable interest in the life of such person.
247 However, the agent or a family member of such agent may not be
248 designated as a trustee or guardian or be granted power of
249 attorney unless he or she is a family member of the policy
250 owner. For the purposes of this section, the phrase “not a
251 family member,” with respect to a life agent, means an
252 individual who is not related to the life agent as father,
253 mother, son, daughter, brother, sister, grandfather,
254 grandmother, uncle, aunt, first cousin, nephew, niece, husband,
255 wife, father-in-law, mother-in-law, brother-in-law, sister-in
256 law, stepfather, stepmother, stepson, stepdaughter, stepbrother,
257 stepsister, half brother, or half sister. For the purposes of
258 this section, the term “insurable interest” means that the life
259 agent has an actual, lawful, and substantial economic interest
260 in the safety and preservation of the life of the insured or a
261 reasonable expectation of benefit or advantage from the
262 continued life of the insured.
263 Section 10. Paragraphs (a) and (b) of subsection (3) of
264 section 626.9521, Florida Statutes, are amended, and subsections
265 (4) and (5) are added to that section, to read:
266 626.9521 Unfair methods of competition and unfair or
267 deceptive acts or practices prohibited; penalties.—
268 (3)(a) If a person violates s. 626.9541(1)(l), the offense
269 known as “twisting,” or violates s. 626.9541(1)(aa), the offense
270 known as “churning,” the person commits a misdemeanor of the
271 first degree, punishable as provided in s. 775.082, and an
272 administrative fine not greater than $5,000 shall be imposed for
273 each nonwillful violation or an administrative fine not greater
274 than $75,000 $40,000 shall be imposed for each willful
275 violation. To impose an administrative fine for a willful
276 violation criminal penalties under this paragraph, the practice
277 of “churning” or “twisting” must involve fraudulent conduct.
278 (b) If a person violates s. 626.9541(1)(ee) by willfully
279 submitting fraudulent signatures on an application or policy
280 related document, the person commits a felony of the third
281 degree, punishable as provided in s. 775.082, and an
282 administrative fine not greater than $5,000 shall be imposed for
283 each nonwillful violation or an administrative fine not greater
284 than $75,000 $40,000 shall be imposed for each willful
285 violation.
286 (4) A licensee must make all reasonable efforts to
287 ascertain the consumer’s age at the time an insurance
288 application is completed.
289 (5) If a consumer who is a senior citizen is a victim, a
290 video deposition of the victim may be used for any purpose in
291 any administrative proceeding conducted pursuant to chapter 120
292 if all parties are given proper notice of the deposition in
293 accordance with the Florida Rules of Civil Procedure.
294 Section 11. Subsection (4) of section 626.99, Florida
295 Statutes, is amended to read:
296 626.99 Life insurance solicitation.—
297 (4) DISCLOSURE REQUIREMENTS.—
298 (a) The insurer shall provide to each prospective purchaser
299 a buyer’s guide and a policy summary prior to accepting the
300 applicant’s initial premium or premium deposit, unless the
301 policy for which application is made provides an unconditional
302 refund for a period of at least 14 days, or unless the policy
303 summary contains an offer of such an unconditional refund., In
304 these instances, which event the buyer’s guide and policy
305 summary must be delivered with the policy or prior to delivery
306 of the policy.
307 (b) With respect to fixed and variable annuities, the
308 insurer shall provide to each prospective purchaser a buyer’s
309 guide to annuities and a contract summary as provided in the
310 National Association of Insurance Commissioners (NAIC) Model
311 Annuity and Deposit Fund Regulation and the policy must provide
312 an unconditional refund for a period of at least 14 days. For
313 fixed annuities, the buyer’s guide shall be in the form as
314 provided by the National Association of Insurance Commissioners
315 (NAIC) Annuity Disclosure Model Regulation, until such time as a
316 buyer’s guide is developed by the department, at which time the
317 department guide must be used. For variable annuities, a policy
318 summary may be used, which may be contained in a prospectus,
319 until such time as a buyer’s guide is developed by NAIC or the
320 department, at which time one of those guides must be used. If
321 the prospective owner of an annuity contract is 65 years of age
322 or older:
323 1. An unconditional refund of premiums paid for a fixed
324 annuity contract, including any contract fees or charges, must
325 be available for a period of 21 days; and
326 2. An unconditional refund for variable or market value
327 annuity contracts must be available for a period of 21 days. The
328 unconditional refund shall be equal to the cash surrender value
329 provided in the annuity contract, plus any fees or charges
330 deducted from the premiums or imposed under the contract. This
331 subparagraph does not apply if the prospective owner is an
332 accredited investor, as defined in Regulation D as adopted by
333 the United States Securities and Exchange Commission.
334 (c) The insurer shall attach a cover page to any annuity
335 policy informing the purchaser of the unconditional refund
336 period prescribed in paragraph (b). The cover page must also
337 provide contact information for the issuing company and the
338 selling agent, the department’s toll-free help line, and any
339 other information required by the department by rule. The cover
340 page is part of the policy and is subject to review by the
341 office pursuant to s. 627.410.
342 (d)(b) The insurer shall provide a buyer’s guide and a
343 policy summary to any prospective purchaser upon request.
344 Section 12. Subsections (3) and (5) of section 627.4554,
345 Florida Statutes, as amended by section 9 of chapter 2008-237,
346 Laws of Florida, are amended, present subsection (9) of that
347 section is renumbered as subsection (10), and a new subsection
348 (9) is added to that section, to read:
349 627.4554 Annuity investments by seniors.—
350 (3) DEFINITIONS.—For purposes of this section, the term:
351 (a) “Annuity contract” means a fixed annuity, equity
352 indexed annuity, fixed equity indexed annuity, or variable
353 annuity that is individually solicited, whether the product is
354 classified as an individual annuity or a group annuity.
355 (b) “Accredited investor” means any person who comes within
356 any of the following categories, or who the issuer reasonably
357 believes comes within any of the following categories, at the
358 time of the sale of an annuity to that person:
359 1. The person’s net worth or joint net worth with his or
360 her spouse, at the time of the purchase, exceeds $1 million; or
361 2. The person had an individual income in excess of
362 $200,000 in each of the 2 most recent years, or joint income
363 with his or her spouse in excess of $300,000 in each of those
364 years, and has a reasonable expectation of reaching the same
365 income level in the current year.
366 (c)(b) “Recommendation” means advice provided by an
367 insurance agent, or an insurer if no insurance agent is
368 involved, to an individual senior consumer which results in a
369 purchase or exchange of an annuity in accordance with that
370 advice.
371 (d)(c) “Senior consumer” means a person 65 years of age or
372 older. In the event of a joint purchase by more than one party,
373 a purchaser is considered to be a senior consumer if any of the
374 parties is age 65 or older.
375 (5) MITIGATION OF RESPONSIBILITY.—
376 (a) The office may order an insurer to take reasonably
377 appropriate corrective action, including rescission of the
378 policy or contract and a full refund of the premiums paid or the
379 accumulation value, whichever is greater, for any senior
380 consumer harmed by a violation of this section by the insurer or
381 the insurer’s insurance agent.
382 (b) The department may order:
383 1. An insurance agent to take reasonably appropriate
384 corrective action, including monetary restitution of penalties
385 or fees incurred by the senior consumer, for any senior consumer
386 harmed by a violation of this section by the insurance agent.
387 2. A managing general agency or insurance agency that
388 employs or contracts with an insurance agent to sell or solicit
389 the sale of annuities to senior consumers to take reasonably
390 appropriate corrective action for any senior consumer harmed by
391 a violation of this section by the insurance agent.
392 (c) The department shall, in addition to any other penalty
393 authorized under chapter 626, order an insurance agent to pay
394 restitution to any senior consumer who has been deprived of
395 money by the agent’s misappropriation, conversion, or unlawful
396 withholding of monies belonging to the senior consumer in the
397 course of a transaction involving annuities. The amount of
398 restitution required to be paid pursuant to this paragraph may
399 not exceed the amount misappropriated, converted, or unlawfully
400 withheld. This paragraph does not limit or restrict a person’s
401 right to seek other remedies as provided by law.
402 (d)(c) Any applicable penalty under the Florida Insurance
403 Code for a violation of paragraph (4)(a), paragraph (4)(b), or
404 subparagraph (4)(c)2. may be reduced or eliminated, according to
405 a schedule adopted by the office or the department, as
406 appropriate, if corrective action for the senior consumer was
407 taken promptly after a violation was discovered.
408 (9) PROHIBITED CHARGES.—An annuity contract issued to a
409 senior consumer may not contain a surrender or deferred sales
410 charge for a withdrawal of money from an annuity exceeding 10
411 percent of the amount withdrawn. The charge shall be reduced so
412 that no surrender or deferred sales charge exists after the end
413 of the 10th policy year or 10 years after the premium is paid,
414 whichever is later. This subsection does not apply to annuities
415 purchased by an accredited investor or to those annuities
416 specified in paragraph (7)(b).
417 Section 13. This act shall take effect January 1, 2011.