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.