Florida Gov. Charlie Christ has signed a new law increasing penalties on annuity salespeople who pressure elderly clients to buy annuities they don’t need or want.

The new law, SB 2082, increases maximum fines from $100,000 to as much as $150,000 for certain “unfair or deceptive” annuity sales activities, including the practices known as “twisting” and “churning.”

The law also strengthens state standards for advisors making recommendations to senior consumers about annuities and expands the standards to apply to life insurance contracts.

As defined by the legislation, twisting refers to an agent intentionally making misleading statements or significant omissions to persuade a consumer to sell a current annuity and buy one from another insurer. Churning involves convincing a client to surrender an annuity to buy another one from the same company.

The new law classifies twisting and churning as a second degree felony if the victim is at least 65 years old or mentally disabled and as a third degree felony if committed against other victims.

The fines for these practices are increased to $5,000 for each non-willful violation, from $2,500. It set a maximum total fine of $20,000, from $10,000.

For willful violations, fines were increased to $30,000, from $20,000, up to a maximum total of $150,000, from $100,000

The new law also sets objective standards for deciding on the suitability of an annuity for a senior, including income sources; net worth and debt; other in-force insurance and annuities; retirement or savings plans; health concerns; and savings and investment goals. Producers must submit the information on a state-approved form and keep it on file for 5 years.

The new suitability requirements replace a set of less objective standards that had been in effect in Florida. According to a legislative analysis provided by members of the state Senate, the older standards were considered subjective in that they required the state’s Department of Financial Services to prove, “by clear and convincing evidence,” that an agent did not believe a particular transaction was suitable.

The new law mandates that insurers and producers give objective financial information to seniors about annuities they propose to sell them, and it requires agents to use a state-approved form in performing a suitability analysis.

The law also bars agents from submitting an insurance application or related document with a falsified signature.

In addition, it bans the use of professional designations or titles that might mislead senior consumers into thinking the producer has special financial expertise. It does permit mention of such titles as certified financial planner, chartered life underwriter, chartered financial consultant, life underwriter, training council fellow, or to mention a license to sell securities from the Financial Industry Regulatory Authority, if the producer actually holds such credentials.

The Florida Association of Insurance and Financial Advisors, Tallahassee, applauded the legislation, noting that the law also requires agents in the state to take at least 3 hours of training on annuity suitability.

An earlier version of the act had a section that would have given investors 75 or older up to a year to cancel an annuity contract. The final act, however, eliminated that proposal, says Bob Lotane, a spokesman for FAIFA.

Instead, it provides an annuity rescission period of 14 days for any buyer, regardless of age. Previously, state law had provided a 10-day rescission period, Lotane notes.

“Florida now will be a national leader in the effort to protect seniors when they purchase costly and complex annuity products,” said Florida Insurance Commissioner Kevin McCarty.

The suitability standards go into effect immediately, while most other provisions of the law take effect Jan. 1.