Florida Gov. Rick Scott signed into law Monday a bill that will require life insurance companies to advise policyholders to consult with a licensed insurance agent or financial advisor before making changes to their policies.
The Florida state legislature passed H.B. 1007, a bill designed to regulate how insurers help fight insurance fraud in the state, on May 5. State Sen. Jeff Brandes, R-St. Petersburg, Fla., introduced amendments to the bill that require insurers to advise consumers to consult with a professional before making changes to their life coverage. The amendments had the support of the Life Insurance Settlement Association.
Other provisions in the new law require every insurer in Florida to designate at least one primary anti-fraud employee, require every insurer to adopt an anti-fraud plan, and require the Florida Division of Investigative and Forensic Services to develop a report on best practices for insurance fraud prevention, detection and reporting.
The life settlement market gives holders of life insurance policies a chance to sell policies that are already in force to other parties.
The policy change notice provisions in H.B. 1007 took effect when Scott signed the bill into law.
“Consumers have scored a victory in Florida as they will now be in a position to be informed of a range of options available to them if they own a life insurance policy they no longer need or can afford,” Darwin Bayston, president of LISA, said in a statement about the new law.
“This is an important step forward nationwide because Florida has the highest percentage of seniors among its population of any state,” Bayston said. “Seniors are especially vulnerable to lapsing or surrendering a life insurance policy they otherwise may have been able to sell for five to seven times more than the cash surrender value of that policy offered by their insurance company.”
— Check out Sparks Fly as ACLI and LISA Square Off over STOLI on ThinkAdvisor.