Florida Senate Banking and Insurance Committee members voted unanimously to approve the “Safeguard Our Seniors Act,” a bill that limits the surrender-charge period for certain annuities.
The bill, S.B. 1372, would limit the surrender-charge period to five years for an annuity sold to consumers ages 65 and older. It would also cap surrender charges at 5 percent of the annuity’s premium. Additionally, the bill would extend the “free look” period to 60 days for seniors buying annuities, up from 14 days. During the free look period, consumers can terminate their contract without penalty.
The bill also re-classifies cases of “churning” or “twisting.” Churning takes place when an agent convinces a consumer to replace an existing product for the sole purpose of generating commission revenue. Under the terms of the legislation, churning would be treated as a felony; currently, it is a misdemeanor. Agents who participate in churning will face an administrative fine of up to $5,000 for “nonwillful violations” or a fine of up to $40,000 for “willful violations.” However, criminal penalties will only be enforced if the churning involves fraudulent conduct.
Other provisions include requiring the revocation of the license of any agents who has fraudulently sold an insurance or annuity product to a senior, and requiring insurers to provide information to consumers about the free-look period. If an agent’s license has been revoked for defrauding senior clients, the license may never be reinstated. If a producer’s license is revoked for non-senior-related offenses, their license cannot be reinstated if it has been revoked twice.
Sen. Michael Bennett, R-Bradenton, FL, introduced S.B. 1372. A House version of the bill, H.B. 141, was introduced by Rep. Keith Fitzgerald, D-Sarasota, FL. Both bills have the support of Florida Chief Financial Officer Alex Sink.