Florida’s senior citizens to get more protection from fraud
May 5, 2010 by Nirvi Shah
BY NIRVI SHAH
After three years of trying, a law that would better protect older Floridians from several types of insurance and annuities fraud was passed by the Florida Legislature.
In the past year, state Chief Financial Officer Alex Sink has opened nearly 500 investigations into possible cases of financial fraud that affect Florida seniors and received more than 2,400 complaints. Although the proposals have had support in the state Senate, this was the first year the bill she has been pushing got a serious look in the House.
The “Safeguard Our Seniors” bill, if signed into law by Gov. Charlie Crist, would, among other provisions:
• Increase penalties for twisting or churning of annuities from $40,000 to $75,000. Annuities are a type of investment in which customers pay a lump sum up front to guarantee income down the road.
Twisting happens when an existing life insurance policy or annuity contract from one insurance company is surrendered and the money is used to buy another annuity from a different company. Churning is when an annuity is switched within the same insurance company. In either case, the insurance agent earns a commission and there is no guaranteed benefit to the consumer.
• Limit the period of a surrender charge for an annuity sold to consumers 65 or older to 10 years and limit the surrender charge to 10 percent.
• Extend the period of time seniors have to review — and cancel at no cost — the purchase of an annuity from 14 to 21 days.
• Require an insurer to provide a cover sheet attached to the policy when an annuity is issued informing the purchaser about the period of review, how to contact the insurer and the department if they have questions about the annuity.
• Allow the state Department of Financial Services to require an agent to repay a senior consumer harmed by a violation of the insurance code in some cases.
• Give the department the ability to act against the license of an agent who has been disciplined under his or her securities broker-dealer license or a related license.
• Ban new licenses for people whose license was revoked because of the solicitation or sale of an insurance product to a senior consumer.
• Extend the prohibition on a life insurance agent being the beneficiary of a life insurance policy by including the agent’s family members within the prohibition and by prohibiting the agent from serving as a guardian, trustee or having power of attorney over the insured.
• Allow the use of video depositions in administrative hearings involving a senior consumer.
To learn more about what to consider when purchasing annuities or to read the stories of senior victims, go to www.flseniors.net.
Victims of annuity fraud can call 850-413-3089 or 877-693-5236 or go to www.myfloridacfo.com to file a complaint.