January 21, 2020
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Amendment CaShTmL-835440.HTM
                                                  SENATE AMENDMENT
    Bill No. CS for CS for SB 2994, 1st Eng.
    Amendment No. ___   Barcode 835440
                            CHAMBER ACTION
              Senate                               House
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 1                  3/AD/3R        .                    
       04/27/2004 01:13 PM         .                    
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11  Senator Atwater moved the following amendment:
12  
13         Senate Amendment (with title amendment) 
14         On page 166, between lines 14 and 15,
15  
16  insert:  
17         Section 146.  Section 627.4554, Florida Statutes, is
18  created to read:
19         627.4554  Annuity investments by seniors.--
20         (1)  PURPOSE; CONSTRUCTION.--
21         (a)  The purpose of this section is to set forth
22  standards and procedures for recommendations to senior
23  consumers which result in a transaction involving annuity
24  products to appropriately address the insurance needs and
25  financial objectives of senior consumers at the time of the
26  transaction.
27         (b)  Nothing in this section shall be construed to
28  create or imply a private cause of action for a violation of
29  this section.
30         (2)  APPLICATION.--This section applies to any
31  recommendation to purchase or exchange an annuity made to a
                                  1
    9:43 AM   04/27/04                              s2994c2c-25c3t

SENATE AMENDMENT Bill No. CS for CS for SB 2994, 1st Eng. Amendment No. ___ Barcode 835440 1 senior consumer by an insurance agent, or an insurer where no 2 agent is involved, that results in the purchase or exchange 3 recommended. 4 (3) DEFINITIONS.--For purposes of this section: 5 (a) "Annuity" means a fixed annuity or variable 6 annuity that is individually solicited, whether the product is 7 classified as an individual annuity or a group annuity. 8 (b) "Recommendation" means advice provided by an 9 insurance agent, or an insurer if no insurance agent is 10 involved, to an individual senior consumer which results in a 11 purchase or exchange of an annuity in accordance with that 12 advice. 13 (c) "Senior consumer" means a person 65 years of age 14 or older. In the event of a joint purchase by more than one 15 party, a purchaser is considered to be a senior consumer if 16 any of the parties is age 65 or older. 17 (4) DUTIES OF INSURERS AND INSURANCE AGENTS.-- 18 (a) In recommending to a senior consumer the purchase 19 of an annuity or the exchange of an annuity that results in 20 another insurance transaction or series of insurance 21 transactions, an insurance agent, or an insurer if no 22 insurance agent is involved, shall have reasonable grounds for 23 believing that the recommendation is suitable for the senior 24 consumer on the basis of the facts disclosed by the senior 25 consumer as to his or her investments and other insurance 26 products and as to his or her financial situation and needs. 27 (b) Before executing a purchase or exchange of an 28 annuity resulting from a recommendation to a senior consumer, 29 an insurance agent, or an insurer if no insurance agent is 30 involved, shall make reasonable efforts to obtain information 31 concerning the senior consumer's financial status, tax status, 2 9:43 AM 04/27/04 s2994c2c-25c3t
SENATE AMENDMENT Bill No. CS for CS for SB 2994, 1st Eng. Amendment No. ___ Barcode 835440 1 and investment objectives and such other information used or 2 considered to be reasonable by the insurance agent, or the 3 insurer if no agent is involved, in making the recommendation. 4 (c)1. Except as provided under subparagraph 2., an 5 insurance agent, or an insurer if no insurance agent is 6 involved, shall not have any obligation to a senior consumer 7 under paragraph (a) related to any recommendation if the 8 senior consumer: 9 a. Refuses to provide relevant information requested 10 by the insurer or insurance agent; 11 b. Decides to enter into an insurance transaction that 12 is not based on a recommendation of the insurer or insurance 13 agent; or 14 c. Fails to provide complete or accurate information. 15 2. An insurer or insurance agent's recommendation 16 subject to subparagraph 1. shall be reasonable under all the 17 circumstances actually known to the insurer or insurance agent 18 at the time of the recommendation. 19 (d)1. An insurer or insurance agent shall ensure that 20 a system to supervise recommendations which is reasonably 21 designed to achieve compliance with this section is 22 established and maintained by complying with subparagraphs 3., 23 4., and 5., or shall establish and maintain such a system, 24 including, but not limited to: 25 a. Maintaining written procedures. 26 b. Conducting periodic reviews of its records that are 27 reasonably designed to assist in detecting and preventing 28 violations of this section. 29 2. A managing general agent and an insurance agency 30 shall adopt a system established by an insurer to supervise 31 recommendations of its insurance agents which is reasonably 3 9:43 AM 04/27/04 s2994c2c-25c3t
SENATE AMENDMENT Bill No. CS for CS for SB 2994, 1st Eng. Amendment No. ___ Barcode 835440 1 designed to achieve compliance with this section or shall 2 establish and maintain such a system, including, but not 3 limited to: 4 a. Maintaining written procedures. 5 b. Conducting periodic reviews of records that are 6 reasonably designed to assist in detecting and preventing 7 violations of this section. 8 3. An insurer may contract with a third party, 9 including a managing general agent or an insurance agency, to 10 establish and maintain a system of supervision as required by 11 subparagraph 1. with respect to insurance agents under 12 contract with or employed by the third party. 13 4. An insurer shall make reasonable inquiry to ensure 14 that such third party contracting under subparagraph 3. is 15 performing the functions required under subparagraph 1. and 16 shall take such action as is reasonable under the 17 circumstances to enforce the contractual obligation to perform 18 the functions. An insurer may comply with its obligation to 19 make reasonable inquiry by: 20 a. Annually obtaining a certification from a third 21 party senior manager who has responsibility for the delegated 22 functions that the manager has a reasonable basis to 23 represent, and does represent, that the third party is 24 performing the required functions. 25 b. Based on reasonable selection criteria, 26 periodically selecting third parties contracting under 27 subparagraph 3. for a review to determine whether the third 28 parties are performing the required functions. The insurer 29 shall perform any procedures necessary to conduct the review 30 which are reasonable under the circumstances. 31 5. An insurer that contracts with a third party 4 9:43 AM 04/27/04 s2994c2c-25c3t
SENATE AMENDMENT Bill No. CS for CS for SB 2994, 1st Eng. Amendment No. ___ Barcode 835440 1 pursuant to subparagraph 3. and complies with the requirements 2 specified in subparagraph 4. is deemed to have fulfilled its 3 responsibilities under subparagraph 1. 4 6. An insurer, managing general agent, or insurance 5 agency is not required by subparagraph 1. or subparagraph 2. 6 to: 7 a. Review or provide for review of all transactions 8 solicited by an insurance agent; or 9 b. Include in its system of supervision an insurance 10 agent's recommendations to senior consumers of products other 11 than the annuities offered by the insurer, managing general 12 agent, or insurance agency. 13 7. A managing general agent or insurance agency 14 contracting with an insurer pursuant to subparagraph 3. shall 15 promptly, when requested by the insurer pursuant to 16 subparagraph 4., provide a certification as described in 17 subparagraph 4. or provide a clear statement that the managing 18 general agent or insurance agency is unable to meet the 19 certification criteria. 20 8. A person may not provide a certification under 21 sub-subparagraph 4.a. unless the person is a senior manager 22 with responsibility for the delegated functions and has a 23 reasonable basis for making the certification. 24 (5) MITIGATION OF RESPONSIBILITY.-- 25 (a) The office may order an insurer to take reasonably 26 appropriate corrective action for any senior consumer harmed 27 by a violation of this section by the insurer or the insurer's 28 insurance agent. 29 (b) The department may order: 30 1. An insurance agent to take reasonably appropriate 31 corrective action for any senior consumer harmed by a 5 9:43 AM 04/27/04 s2994c2c-25c3t
SENATE AMENDMENT Bill No. CS for CS for SB 2994, 1st Eng. Amendment No. ___ Barcode 835440 1 violation of this section by the insurance agent. 2 2. A managing general agency or insurance agency that 3 employs or contracts with an insurance agent to sell or 4 solicit the sale of annuities to senior consumers to take 5 reasonably appropriate corrective action for any senior 6 consumer harmed by a violation of this section by the 7 insurance agent. 8 (c) Any applicable penalty under the Florida Insurance 9 Code for a violation of paragraph (4)(a), paragraph (4)(b), or 10 subparagraph (4)(c)2. may be reduced or eliminated, according 11 to a schedule adopted by the office or the department, as 12 appropriate, if corrective action for the senior consumer was 13 taken promptly after a violation was discovered. 14 (6) RECORDKEEPING.-- 15 (a) Insurers, managing general agents, insurance 16 agencies, and insurance agents shall maintain or be able to 17 make available to the department or office, as appropriate, 18 records of the information collected from the senior consumer 19 and other information used in making the recommendations that 20 were the basis for insurance transactions for 5 years after 21 the insurance transaction is completed by the insurer. An 22 insurer is permitted, but shall not be required, to maintain 23 documentation on behalf of an insurance agent. 24 (b) Records required to be maintained by this 25 regulation may be maintained in paper, photographic, 26 microprocess, magnetic, mechanical, or electronic media, or by 27 any process that accurately reproduces the actual document. 28 (7) EXEMPTIONS.--Unless otherwise specifically 29 included, this section does not apply to recommendations 30 involving: 31 (a) Direct-response solicitations where there is no 6 9:43 AM 04/27/04 s2994c2c-25c3t
SENATE AMENDMENT Bill No. CS for CS for SB 2994, 1st Eng. Amendment No. ___ Barcode 835440 1 recommendation based on information collected from the senior 2 consumer pursuant to this section. 3 (b) Contracts used to fund: 4 1. An employee pension or welfare benefit plan that is 5 covered by the Employee Retirement and Income Security Act; 6 2. A plan described by Sections 401(a), 401(k), 7 403(b), 408(k), or 408(p) of the Internal Revenue Code of 8 1986, as amended, if established or maintained by an employer; 9 3. A government or church plan defined in Section 414 10 of the Internal Revenue Code of 1986, as amended, a government 11 or church welfare benefit plan, or a deferred compensation 12 plan of a state or local government or tax-exempt organization 13 under Section 457 of the Internal Revenue Code of 1986, as 14 amended; 15 4. A nonqualified deferred compensation arrangement 16 established or maintained by an employer or plan sponsor; 17 5. Settlements of or assumptions of liabilities 18 associated with personal injury litigation or any dispute or 19 claim resolution process; or 20 6. Prepaid funeral contracts. 21 (8) APPLICATION TO VARIABLE ANNUITIES.--Compliance 22 with the National Association of Securities Dealers Conduct 23 Rules in effect on January 1, 2004, shall satisfy the 24 requirements under this section for the recommendation of 25 variable annuities. This section does not limit the 26 department's ability to enforce the provisions of this section 27 with respect to insurance agents, insurance agencies, and 28 managing general agents, or the office's ability to enforce 29 the provisions of this section with respect to insurers. 30 31 7 9:43 AM 04/27/04 s2994c2c-25c3t
SENATE AMENDMENT Bill No. CS for CS for SB 2994, 1st Eng. Amendment No. ___ Barcode 835440 1 ================ T I T L E A M E N D M E N T =============== 2 And the title is amended as follows: 3 On page 13, line 10, after the semicolon, 4 5 insert: 6 creating s. 627.4554, F.S.; providing a 7 purpose; providing application; providing 8 definitions; specifying duties of insurers and 9 insurance agents relating to making annuity 10 investment recommendations to senior consumers; 11 providing requirements; limiting responsibility 12 of insurers or insurance agents under certain 13 circumstances; requiring a system of compliance 14 and supervision; providing for enforcement by 15 the Office of Insurance Regulation and the 16 Department of Financial Services; authorizing 17 the office and the department to issue orders 18 to mitigate certain responsibilities of 19 insurers or insurance agents; providing for 20 reduction or elimination of certain penalties 21 under certain circumstances; providing 22 recordkeeping requirements; providing an 23 exemption from application for variable 24 annuities; 25 26 27 28 29 30 31 8 9:43 AM 04/27/04 s2994c2c-25c3t
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