CS for SB 844                                   Second Engrossed
       
       
       
       
       
       
       
       
       2010844e2
       
    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 or insured, or is a
   31         bank or trust company duly authorized to act as a
   32         fiduciary; amending s. 626.9521, F.S.; increasing the
   33         administrative fine that may be imposed for each
   34         willful violation of the offenses of twisting and
   35         churning; increasing the administrative fine that may
   36         be imposed for each willful violation of the offense
   37         of submitting fraudulent signatures on an application
   38         or policy-related document; requiring that a licensee
   39         make a reasonable effort to ascertain a customer’s age
   40         at the time of completion of an insurance application;
   41         authorizing the use of video depositions in certain
   42         circumstances; amending s. 626.99, F.S.; requiring
   43         that the buyer’s guide for fixed annuities be in the
   44         form provided by the National Association of Insurance
   45         Commissioners Annuity Disclosure Model Regulation;
   46         authorizing the use of a policy summary for variable
   47         annuities until the NAIC or the department develops a
   48         buyer’s guide; extending the unconditional refund
   49         period for fixed annuity contracts and variable or
   50         market value annuity contracts for customers 65 years
   51         of age or older; requiring that the unconditional
   52         refund amount for a variable or market value annuity
   53         contract be equal to the cash surrender value provided
   54         in the contract, plus any fees or charges deducted
   55         from the premiums or imposed under the contract;
   56         providing for applicability of certain provisions;
   57         requiring that an insurer provide a prospective
   58         purchaser of an annuity policy with a buyer’s guide to
   59         annuities; requiring that such buyer’s guide contain
   60         certain information; requiring that an insurer attach
   61         a cover page to an annuity policy informing the
   62         purchaser of the unconditional refund period;
   63         requiring that the cover page provide other specified
   64         information; amending s. 627.4554, F.S.; defining the
   65         term “accredited investor”; authorizing the Department
   66         of Financial Services to order an insurance agent to
   67         pay monetary restitution to a senior consumer under
   68         certain circumstances; limiting the amount of such
   69         restitution; prohibiting an annuity contract issued to
   70         a senior consumer from containing a surrender or
   71         deferred sales charge for withdrawal of funds from an
   72         annuity in excess of a specified maximum amount;
   73         providing for the periodic reduction of such charge;
   74         providing an effective date.
   75  
   76  Be It Enacted by the Legislature of the State of Florida:
   77  
   78         Section 1. This act may be cited as the “Safeguard Our
   79  Seniors Act.”
   80         Section 2. Paragraph (a) of subsection (1) of section
   81  624.310, Florida Statutes, is amended to read:
   82         624.310 Enforcement; cease and desist orders; removal of
   83  certain persons; fines.—
   84         (1) DEFINITIONS.—For the purposes of this section, the
   85  term:
   86         (a) “Affiliated party” means any person who directs or
   87  participates in the conduct of the affairs of a licensee and who
   88  is:
   89         1. A director, officer, employee, trustee, committee
   90  member, or controlling stockholder of a licensee or a subsidiary
   91  or service corporation of the licensee, other than a controlling
   92  stockholder which is a holding company, or an agent of a
   93  licensee or a subsidiary or service corporation of the licensee;
   94         2. A person who has filed or is required to file a
   95  statement or any other information required to be filed under s.
   96  628.461 or s. 628.4615;
   97         3. A stockholder, other than a stockholder that is a
   98  holding company of the licensee, who participates in the conduct
   99  of the affairs of the licensee; or
  100         4. An independent contractor who:
  101         a. Renders a written opinion required by the laws of this
  102  state under her or his professional credentials on behalf of the
  103  licensee, which opinion is reasonably relied on by the
  104  department or office in the performance of its duties; or
  105         b. Affirmatively and knowingly conceals facts, through a
  106  written misrepresentation to the department or office, with
  107  knowledge that such misrepresentation:
  108         (I) Constitutes a violation of the insurance code or a
  109  lawful rule or order of the department, commission, or office;
  110  and
  111         (II) Directly and materially endangers the ability of the
  112  licensee to meet its obligations to policyholders; or.
  113         5.A third-party marketer who aids or abets a licensee in a
  114  violation of the insurance code relating to the sale of an
  115  annuity to a person 65 years of age or older.
  116  
  117  For the purposes of this subparagraph, any representation of
  118  fact made by an independent contractor on behalf of a licensee,
  119  affirmatively communicated as a representation of the licensee
  120  to the independent contractor, shall not be considered a
  121  misrepresentation by the independent contractor.
  122         Section 3. Section 624.46223, Florida Statutes, is created
  123  to read:
  124         624.46223 Notice of intent to withdraw.—Any association,
  125  fund, or pool authorized by state law and created for the
  126  purpose of forming a risk-management mechanism or providing self
  127  insurance for public entities in this state may not require its
  128  members to provide more than 45 days’ notice of the member’s
  129  intention to withdraw as a prerequisite for withdrawing from the
  130  association, fund, or pool.
  131         Section 4. Paragraph (j) of subsection (2) of section
  132  626.221, Florida Statutes, is amended to read:
  133         626.221 Examination requirement; exemptions.—
  134         (2) However, no such examination shall be necessary in any
  135  of the following cases:
  136         (j) An applicant for license as a customer representative
  137  who has earned the designation of Accredited Advisor in
  138  Insurance (AAI) from the Insurance Institute of America, the
  139  designation of Certified Insurance Counselor (CIC) from the
  140  Society of Certified Insurance Service Counselors, the
  141  designation of Accredited Customer Service Representative (ACSR)
  142  from the Independent Insurance Agents of America, the
  143  designation of Certified Professional Service Representative
  144  (CPSR) from the National Foundation for Certified Professional
  145  Service Representatives, the designation of Certified Insurance
  146  Service Representative (CISR) from the Society of Certified
  147  Insurance Service Representatives, or the designation of
  148  Certified Insurance Representative (CIR) from the National
  149  Association of Christian Catastrophe Insurance Adjusters. Also,
  150  an applicant for license as a customer representative who has
  151  earned an associate degree or bachelor’s degree from an
  152  accredited college or university with at least 9 academic hours
  153  of property and casualty insurance curriculum, or the
  154  equivalent, or has earned the designation of Certified Customer
  155  Service Representative (CCSR) from the Florida Association of
  156  Insurance Agents, or the designation of Registered Customer
  157  Service Representative (RCSR) from a regionally accredited
  158  postsecondary institution in this state, or the designation of
  159  Professional Customer Service Representative (PCSR) from the
  160  Professional Career Institute, whose curriculum has been
  161  approved by the department and whose curriculum includes
  162  comprehensive analysis of basic property and casualty lines of
  163  insurance and testing at least equal to that of standard
  164  department testing for the customer representative license. The
  165  department shall adopt rules establishing standards for the
  166  approval of curriculum.
  167         Section 5. Subsection (13) of section 626.025, Florida
  168  Statutes, is amended to read:
  169         626.025 Consumer protections.—To transact insurance, agents
  170  shall comply with consumer protection laws, including the
  171  following, as applicable:
  172         (13) The prohibition against the designation of a life
  173  insurance agent or his or her family member as the beneficiary
  174  of life insurance policy sold to an individual other than a
  175  family member under s. 626.798.
  176         Section 6. Paragraph (k) of subsection (3) of section
  177  626.2815, Florida Statutes, is amended to read:
  178         626.2815 Continuing education required; application;
  179  exceptions; requirements; penalties.—
  180         (3)
  181         (k) Any person who holds a license to solicit or sell life
  182  insurance in this state must complete a minimum of 3 hours in
  183  continuing education, approved by the department, on the subject
  184  of suitability in annuity and life insurance transactions. This
  185  requirement does not apply to an agent who does not have any
  186  active life insurance or annuity contracts. In applying this
  187  exemption, the department may require the filing of a
  188  certification attesting that the agent has not sold life
  189  insurance or annuities during the continuing education
  190  compliance cycle in question and does not have any active life
  191  insurance or annuity contracts. A licensee may use the hours
  192  obtained under this paragraph to satisfy the requirement for
  193  continuing education in ethics under paragraph (a).
  194         Section 7. Subsection (13) is added to section 626.621,
  195  Florida Statutes, to read:
  196         626.621 Grounds for discretionary refusal, suspension, or
  197  revocation of agent’s, adjuster’s, customer representative’s,
  198  service representative’s, or managing general agent’s license or
  199  appointment.—The department may, in its discretion, deny an
  200  application for, suspend, revoke, or refuse to renew or continue
  201  the license or appointment of any applicant, agent, adjuster,
  202  customer representative, service representative, or managing
  203  general agent, and it may suspend or revoke the eligibility to
  204  hold a license or appointment of any such person, if it finds
  205  that as to the applicant, licensee, or appointee any one or more
  206  of the following applicable grounds exist under circumstances
  207  for which such denial, suspension, revocation, or refusal is not
  208  mandatory under s. 626.611:
  209         (13)Has been the subject of or has had a license, permit,
  210  appointment, registration, or other authority to conduct
  211  business subject to any decision, finding, injunction,
  212  suspension, prohibition, revocation, denial, judgment, final
  213  agency action, or administrative order by any court of competent
  214  jurisdiction, administrative law proceeding, state agency,
  215  federal agency, national securities, commodities, or option
  216  exchange, or national securities, commodities, or option
  217  association involving a violation of any federal or state
  218  securities or commodities law or any rule or regulation adopted
  219  thereunder, or a violation of any rule or regulation of any
  220  national securities, commodities, or options exchange or
  221  national securities, commodities, or options association.
  222         Section 8. Subsection (3) of section 626.641, Florida
  223  Statutes, is amended to read:
  224         626.641 Duration of suspension or revocation.—
  225         (3)(a) If any of an individual’s licenses as an agent or
  226  customer representative, or the eligibility to hold such license
  227  or licenses has same, as to the same individual have been
  228  revoked at two separate times, the department may shall not
  229  thereafter grant or issue any license under this code as to such
  230  individual.
  231         (b)If a license as an agent or customer representative or
  232  the eligibility to hold such a license has been revoked
  233  resulting from the solicitation or sale of an insurance product
  234  to a person 65 years of age or older, the department may not
  235  thereafter grant or issue any license under this code to such
  236  individual.
  237         Section 9. Section 626.798, Florida Statutes, is amended to
  238  read:
  239         626.798 Life agent as beneficiary; prohibition.—No life
  240  agent shall, with respect to the placement of life insurance
  241  coverage with a life insurer covering the life of a person who
  242  is not a family member of the agent, handle in his or her
  243  capacity as a life agent the placement of such coverage when the
  244  agent placing the coverage or a family member of such agent
  245  receives a commission therefor and is the named beneficiary
  246  under the life insurance policy, unless the life agent or family
  247  member has an insurable interest in the life of such person.
  248  However, the agent or a family member of such agent may not be
  249  designated as a trustee or guardian or be granted power of
  250  attorney unless he or she is a family member of the policy owner
  251  or insured, or is a bank or trust company duly authorized to act
  252  as a fiduciary. For the purposes of this section, the phrase
  253  “not a family member,” with respect to a life agent, means an
  254  individual who is not related to the life agent as father,
  255  mother, son, daughter, brother, sister, grandfather,
  256  grandmother, uncle, aunt, first cousin, nephew, niece, husband,
  257  wife, father-in-law, mother-in-law, brother-in-law, sister-in
  258  law, stepfather, stepmother, stepson, stepdaughter, stepbrother,
  259  stepsister, half brother, or half sister. For the purposes of
  260  this section, the term “insurable interest” means that the life
  261  agent has an actual, lawful, and substantial economic interest
  262  in the safety and preservation of the life of the insured or a
  263  reasonable expectation of benefit or advantage from the
  264  continued life of the insured.
  265         Section 10. Paragraphs (a) and (b) of subsection (3) of
  266  section 626.9521, Florida Statutes, are amended, and subsections
  267  (4) and (5) are added to that section, to read:
  268         626.9521 Unfair methods of competition and unfair or
  269  deceptive acts or practices prohibited; penalties.—
  270         (3)(a) If a person violates s. 626.9541(1)(l), the offense
  271  known as “twisting,” or violates s. 626.9541(1)(aa), the offense
  272  known as “churning,” the person commits a misdemeanor of the
  273  first degree, punishable as provided in s. 775.082, and an
  274  administrative fine not greater than $5,000 shall be imposed for
  275  each nonwillful violation or an administrative fine not greater
  276  than $75,000 $40,000 shall be imposed for each willful
  277  violation. To impose an administrative fine for a willful
  278  violation criminal penalties under this paragraph, the practice
  279  of “churning” or “twisting” must involve fraudulent conduct.
  280         (b) If a person violates s. 626.9541(1)(ee) by willfully
  281  submitting fraudulent signatures on an application or policy
  282  related document, the person commits a felony of the third
  283  degree, punishable as provided in s. 775.082, and an
  284  administrative fine not greater than $5,000 shall be imposed for
  285  each nonwillful violation or an administrative fine not greater
  286  than $75,000 $40,000 shall be imposed for each willful
  287  violation.
  288         (4) A licensee must make all reasonable efforts to
  289  ascertain the consumer’s age at the time an insurance
  290  application is completed.
  291         (5) If a consumer who is a senior citizen is a victim, a
  292  video deposition of the victim may be used for any purpose in
  293  any administrative proceeding conducted pursuant to chapter 120
  294  if all parties are given proper notice of the deposition in
  295  accordance with the Florida Rules of Civil Procedure.
  296         Section 11. Subsection (4) of section 626.99, Florida
  297  Statutes, is amended to read:
  298         626.99 Life insurance solicitation.—
  299         (4) DISCLOSURE REQUIREMENTS.—
  300         (a) The insurer shall provide to each prospective purchaser
  301  a buyer’s guide and a policy summary prior to accepting the
  302  applicant’s initial premium or premium deposit, unless the
  303  policy for which application is made provides an unconditional
  304  refund for a period of at least 14 days, or unless the policy
  305  summary contains an offer of such an unconditional refund., In
  306  these instances, which event the buyer’s guide and policy
  307  summary must be delivered with the policy or prior to delivery
  308  of the policy.
  309         (b) With respect to fixed and variable annuities, the
  310  insurer shall provide to each prospective purchaser a buyer’s
  311  guide to annuities and a contract summary as provided in the
  312  National Association of Insurance Commissioners (NAIC) Model
  313  Annuity and Deposit Fund Regulation and the policy must provide
  314  an unconditional refund for a period of at least 14 days. For
  315  fixed annuities, the buyer’s guide shall be in the form as
  316  provided by the National Association of Insurance Commissioners
  317  (NAIC) Annuity Disclosure Model Regulation, until such time as a
  318  buyer’s guide is developed by the department, at which time the
  319  department guide must be used. For variable annuities, a policy
  320  summary may be used, which may be contained in a prospectus,
  321  until such time as a buyer’s guide is developed by NAIC or the
  322  department, at which time one of those guides must be used. If
  323  the prospective owner of an annuity contract is 65 years of age
  324  or older:
  325         1. An unconditional refund of premiums paid for a fixed
  326  annuity contract, including any contract fees or charges, must
  327  be available for a period of 21 days; and
  328         2. An unconditional refund for variable or market value
  329  annuity contracts must be available for a period of 21 days. The
  330  unconditional refund shall be equal to the cash surrender value
  331  provided in the annuity contract, plus any fees or charges
  332  deducted from the premiums or imposed under the contract. This
  333  subparagraph does not apply if the prospective owner is an
  334  accredited investor, as defined in Regulation D as adopted by
  335  the United States Securities and Exchange Commission.
  336         (c) The insurer shall attach a cover page to any annuity
  337  policy informing the purchaser of the unconditional refund
  338  period prescribed in paragraph (b). The cover page must also
  339  provide contact information for the issuing company and the
  340  selling agent, the department’s toll-free help line, and any
  341  other information required by the department by rule. The cover
  342  page is part of the policy and is subject to review by the
  343  office pursuant to s. 627.410.
  344         (d)(b) The insurer shall provide a buyer’s guide and a
  345  policy summary to any prospective purchaser upon request.
  346         Section 12. Subsections (3) and (5) of section 627.4554,
  347  Florida Statutes, as amended by section 9 of chapter 2008-237,
  348  Laws of Florida, are amended, present subsection (9) of that
  349  section is renumbered as subsection (10), and a new subsection
  350  (9) is added to that section, to read:
  351         627.4554 Annuity investments by seniors.—
  352         (3) DEFINITIONS.—For purposes of this section, the term:
  353         (a) “Annuity contract” means a fixed annuity, equity
  354  indexed annuity, fixed equity indexed annuity, or variable
  355  annuity that is individually solicited, whether the product is
  356  classified as an individual annuity or a group annuity.
  357         (b) “Accredited investor” means any person who comes within
  358  any of the following categories, or who the issuer reasonably
  359  believes comes within any of the following categories, at the
  360  time of the sale of an annuity to that person:
  361         1. The person’s net worth or joint net worth with his or
  362  her spouse, at the time of the purchase, exceeds $1 million; or
  363         2. The person had an individual income in excess of
  364  $200,000 in each of the 2 most recent years, or joint income
  365  with his or her spouse in excess of $300,000 in each of those
  366  years, and has a reasonable expectation of reaching the same
  367  income level in the current year.
  368         (c)(b) “Recommendation” means advice provided by an
  369  insurance agent, or an insurer if no insurance agent is
  370  involved, to an individual senior consumer which results in a
  371  purchase or exchange of an annuity in accordance with that
  372  advice.
  373         (d)(c) “Senior consumer” means a person 65 years of age or
  374  older. In the event of a joint purchase by more than one party,
  375  a purchaser is considered to be a senior consumer if any of the
  376  parties is age 65 or older.
  377         (5) MITIGATION OF RESPONSIBILITY.—
  378         (a) The office may order an insurer to take reasonably
  379  appropriate corrective action, including rescission of the
  380  policy or contract and a full refund of the premiums paid or the
  381  accumulation value, whichever is greater, for any senior
  382  consumer harmed by a violation of this section by the insurer or
  383  the insurer’s insurance agent.
  384         (b) The department may order:
  385         1. An insurance agent to take reasonably appropriate
  386  corrective action, including monetary restitution of penalties
  387  or fees incurred by the senior consumer, for any senior consumer
  388  harmed by a violation of this section by the insurance agent.
  389         2. A managing general agency or insurance agency that
  390  employs or contracts with an insurance agent to sell or solicit
  391  the sale of annuities to senior consumers to take reasonably
  392  appropriate corrective action for any senior consumer harmed by
  393  a violation of this section by the insurance agent.
  394         (c) The department shall, in addition to any other penalty
  395  authorized under chapter 626, order an insurance agent to pay
  396  restitution to any senior consumer who has been deprived of
  397  money by the agent’s misappropriation, conversion, or unlawful
  398  withholding of monies belonging to the senior consumer in the
  399  course of a transaction involving annuities. The amount of
  400  restitution required to be paid pursuant to this paragraph may
  401  not exceed the amount misappropriated, converted, or unlawfully
  402  withheld. This paragraph does not limit or restrict a person’s
  403  right to seek other remedies as provided by law.
  404         (d)(c) Any applicable penalty under the Florida Insurance
  405  Code for a violation of paragraph (4)(a), paragraph (4)(b), or
  406  subparagraph (4)(c)2. may be reduced or eliminated, according to
  407  a schedule adopted by the office or the department, as
  408  appropriate, if corrective action for the senior consumer was
  409  taken promptly after a violation was discovered.
  410         (9) PROHIBITED CHARGES.—An annuity contract issued to a
  411  senior consumer may not contain a surrender or deferred sales
  412  charge for a withdrawal of money from an annuity exceeding 10
  413  percent of the amount withdrawn. The charge shall be reduced so
  414  that no surrender or deferred sales charge exists after the end
  415  of the 10th policy year or 10 years after the premium is paid,
  416  whichever is later. This subsection does not apply to annuities
  417  purchased by an accredited investor or to those annuities
  418  specified in paragraph (7)(b).
  419         Section 13. This act shall take effect January 1, 2011.