Bill Text: FL S0844 | 2010 | Regular Session | Engrossed

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Bill Title: Insurance [CPSC]

Spectrum: Partisan Bill (Republican 2-0)

Status: (Failed) 2010-04-30 - Died in Messages, companion bill(s) passed, see CS/CS/HB 885 (Ch. 2010-61), CS/CS/SB 2176 (Ch. 2010-175) [S0844 Detail]

Download: Florida-2010-S0844-Engrossed.html

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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.