The Office of Insurance Regulation is amending rules 69O-151.002, 69O-151.003, 69O-151.004, 69O-151.007, 69O-151.008, 69O-151.010, 69O-151.102, 69O-151.201, 69O-151.202, to update form references, remove duplicative language, ....

 

DEPARTMENT OF FINANCIAL SERVICES

OIR – Insurance Regulation

RULE NOS.:RULE TITLES:

69O-151.001Purpose

69O-151.002Definition of Replacement

69O-151.003Other Definitions

69O-151.004Exemptions

69O-151.005Duties of Agent

69O-151.006Duties of Replacing Agent

69O-151.007Duties of Replacing Insurers

69O-151.008Duties of the Existing Insurer

69O-151.009Penalties

69O-151.010Approved Forms

69O-151.012Separability

69O-151.101Purpose

69O-151.102Scope

69O-151.106Violation

69O-151.107Effective Date

69O-151.201Purpose and Scope

69O-151.202Requirements

69O-151.203Adoption of Form OIR-D0-1180

PURPOSE AND EFFECT: The Office of Insurance Regulation is amending rules 69O-151.002, 69O-151.003, 69O-151.004, 69O-151.007, 69O-151.008, 69O-151.010, 69O-151.102, 69O-151.201, 69O-151.202, to update form references, remove duplicative language, correct citations to the laws implemented and make grammatical and stylistic changes to improve readability. Rules 69O-151.001, 69O-151.005, 69O-151.006, 69O-151.009, 69O-151.012, 69O-151.101, 69O-151.106, 69O-151.107, and 69O-151.203, are being repealed in their entirety.

SUMMARY: Unnecessary provisions in these rules, including statements of purpose, duplicative rules, definitions of terms not used in the rules, and rules regarding effective dates and severability are being repealed. To accomplish this, the rule package repeals, in whole or in part, rules 69O-151.001, 690-151.003, 69O-151.009, 69O-151.012, 69O-151.101, 69O-151.106, 69O-151.107, and 69O-151.201. Rules 69O-151.005, 69O-151.006, F.A.C., are being repealed because they are duplicative of rules 69B-151.005, and 69B-151.006.

References to forms are being updated to refer to them by the proper form names and form numbers, and to remove references to the forms as “Exhibits A and B.” These changes can be found in sections 69O-151.007, 69O-151.008, 69O-151.010, 69O-151.202. In addition, forms OIR-B2-312, OIR-B2-313, and OIR-B2-1180 are being amended to remove the term “exhibit” and update the footnotes which includes the form number, authorizing rule, and adoption date.

Third, the laws implemented sections are being updated. Section 627.4554, F.S., is being added to the list of laws implemented in rules 69O-151.004, 69O-151.202, and 69O-151.203, and references to 95-219, L.O.F., are being removed as redundant.

Minor changes are being made to rules 69O-151.004, 69O-151.102, 69O-151.201, and 69O-151.202, to remove outdated language, provide consistent references to rule numbers, and eliminate references to the “F.A.C.”

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:

The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the Agency.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.

RULEMAKING AUTHORITY: 624.308, 626.9611, 626.9521, 626.9541, 626.9641, FS.

LAW IMPLEMENTED: 624.307, 626.9521, 626.9541, 626.9641, 626.99, 627.4554, FS.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE SCHEDULED AND ANNOUNCED IN THE FAR.

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Kama Monroe, Assistant General Counsel, Office of Insurance Regulation, [e-mail], [phone].

 

THE FULL TEXT OF THE PROPOSED RULE IS:

 

69O-151.001 Purpose.

Rulemaking Authority 624.308, 626.9611, 626.9641 FS. Law Implemented 624.307(1), 626.9521, 626.9541 FS. History–New 7-9-81, Formerly 4-24.01, 4-24.10, 4-24.010, 4-151.001, Repealed _____.

 

69O-151.002 Definition of Replacement.

“Replacement” means any transaction in which new life insurance is to be purchased, and it is known or should be known to the proposing agent or to the proposing insurer that by reason of such transaction existing life insurance has been or is to be:

(1) Lapsed, forfeited, surrendered, or otherwise terminated;

(2) Converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values;

(3) Amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid;

(4) Reissued with any reduction in cash value; or

(5) Pledged as collateral or subjected to borrowing, whether in a single loan or under a schedule of borrowing over a period of time, for amounts in aggregate exceeding twenty-five (25%) of the loan value set forth in the policy.

Rulemaking Authority 624.308, 626.9611, 626.9641 FS. Law Implemented 624.307(1), 626.9521, 626.9541, 626.9641 FS. History–New 7-9-81, Formerly 4-24.02, 4-24.11, 4-24.011, 4-151.002, Amended _______.

 

69O-151.003 Other Definitions.

(1) “Cash Dividend” means the current illustrated dividend which can be applied toward payment of the gross premium.(2) “Existing Insurer” means the insurance company whose policy is or will be changed or terminated in such a manner as described within the definition of “replacement.”

(2)(3) “Existing Life Insurance” means any life insurance in force including life insurance under a binding or conditional receipt or a life insurance policy that is within an unconditional refund period, but excluding life insurance obtained through the exercise of a dividend option.

(4) “Generic Name” means a short title which is descriptive of the premium and benefit patterns of a policy or a rider.

(3)(5) “Replacing Insurer” means the insurance company that issues a new policy which is a replacement of existing life insurance.

(4)(6) “Sales Proposal” means individualized, written sales aids of all kinds, which are used by an insurer or agent in comparing existing life insurance to proposed life insurance in order to recommend the replacement or conservation of existing life insurance. Sales aids of a generally descriptive nature, which are maintained in the insurer’s advertising compliance file, shall not be considered a Sales Proposal within the meaning of this definition.

(5)(7) “Life Insurance” shall include annuities, tax sheltered annuities or life insurance policies which qualify under the definition of tax sheltered annuities.

Rulemaking Authority 624.308, 626.9611, 626.9641 FS. Law Implemented 624.307(1), 626.9521, 626.9541, 626.9641 FS. History–New 7-9-81, Amended 2-2-83, Formerly 4-24.12, 4-24.012, 4-151.003, Amended ______.

 

69O-151.004 Exemptions.

Unless otherwise specifically included, paragraph Rules 69O-151.007(3)(b) and subsection 69O-151.008(1), F.A.C., shall not apply to:

(1) Industrial Insurance;

(2) Group, franchise, and individual credit life insurance;

(3) Group life insurance and life insurance policies issued in connection with a pension, profit sharing or other benefit plan qualifying for tax deductibility of premiums;

(4) An application to the existing insurer that issued the existing life insurance where a contractual change or conversion privilege is being exercised;

(5) Existing life insurance that is a non-convertible term life insurance policy which will expire in five years or less and cannot be renewed, unless such policy has tabular cash values; or

(6) Proposed life insurance that is to replace existing life insurance issued under a binding or conditional receipt delivered by the same company;

(7) Variable life insurance or annuities under which the death benefits and cash values vary in accordance with unit values of investments held in a separate account,

(8) Transactions involving annuity contracts which are governed by Rule 69B-162.011.

Rulemaking Authority 624.308, 626.9611, 626.9641 FS. Law Implemented 624.307(1), 626.9521, 626.9541, 626.9641, 627.4554 FS. History–New 7-9-81, Formerly 4-24.03, Amended 2-2-83, Formerly 4-24.13, 4-24.013, 4-151.004, Amended ______.

 

69O-151.005 Duties of Agent.

Rulemaking Authority 624.308, 626.9611, 626.9641 FS. Law Implemented 624.307(1), 626.9521, 626.9541, 626.9641 FS. History–New 7-8-81, Formerly 4-24.04, 4-24.14, 4-24.014, 4-151.005, Repealed _______.

 

69O-151.006 Duties of Replacing Agent.

Rulemaking Authority 624.308, 626.9611, 626.9641 FS. Law Implemented 624.307(1), 626.9521, 626.9541, 626.9641 FS. History–New 7-9-81, Formerly 4-24.04, Amended 2-2-83, Formerly 4-24.15, 4-24.015, 4-151.006, Repealed ________.

 

69O-151.007 Duties of Replacing Insurers.

Each replacing insurer shall:

(1) Inform its field representatives of the requirements of these rules.

(2) Require with or as part of each completed application for life insurance:

(a) A statement signed by the applicant as to whether or not such insurance will replace existing life insurance; and,

(b) A statement signed by the agent as to whether or not he or she knows replacement is or may be involved in the transaction.

(3) Where a replacement is involved:

(a) Require from the agent with the application for life insurance a completed copy of Form OIR-B2-312 rev. 07/23, as adopted in Rule 69B-151.010, the “Notice to Applicant Regarding Replacement of Life Insurance”  (Exhibit A) and a copy of all Sales Proposals used for presentation to the applicant.

(b) Send to the applicant when requested, in the “Notice to the Applicant Regarding Replacement of Life Insurance” (Exhibit A), a completed Form OIR-B2-313, rev. 07/23 as adopted in Rule 69B-151.010, “Comparative Information Form,” (Exhibit B) containing complete information required by the Form regarding the proposed insurance. This must be done within five (5) working days of the date the application and the Form OIR-B2-312, rev. 07/23 “Notice to the Applicant Regarding Replacement of Life Insurance” (Exhibit A) are received at its Home or Regional Office, or the date its policy is issued, whichever is sooner. Exemptions from compliance with the provisions of this paragraph are set forth in Rule 69O-151.004, F.A.C.

(c) Send to the existing insurer a copy of the Form OIR-B2-312 rev. 07/23 “Notice to the Applicant Regarding the Replacement of Life Insurance” (Exhibit A) immediately upon receipt at its Home or Regional Office. The mailing address to be used for the existing insurer is the address under which that insurer is registered with the Office of Insurance Regulation.

(d) Provide to each prospective purchaser a buyer’s guide and a policy summary prior to accepting any applicant’s initial premium or premium deposit, unless the policy for which application is made contains a provision for an unconditional refund for a period of at least 10 days, or unless the policy summary contains an offer of such an unconditional refund, in which event the buyer’s guide and policy summary must be delivered with the policy or prior to delivery of the policy.

(e) Maintain copies of the Form OIR-B2-312 rev. 07/23, and Form OIR-B2-313 rev. 07/23, if requested by the applicant, “Notice to Applicant Regarding Replacement of Life Insurance,” requested Comparative Information Forms and all Sales Proposals used, and a replacement register, cross indexed, by replacing agent and existing insurer to be replaced, for at least three (3) years or until the conclusion of the next succeeding regular examination by the Insurance Department of its state of domicile, whichever is later.

Rulemaking Authority 624.308, 626.9611, 626.9641 FS. Law Implemented 624.307(1), 626.9521, 626.9541, 626.9641, 626.99, FS. History–New 7-9-81, Formerly 4-24.05, Amended 2-2-83, Formerly 4-24.16, 4-24.016, 4-151.007, Amended ______.

 

69O-151.008 Duties of the Existing Insurer.

Each existing insurer shall inform its responsible personnel of the requirements of these rules. Each existing insurer shall:

(1) Within ten (10) days from the date it receives the Form OIR-B2-312, rev. 07/23, “Notice to the Applicant Regarding Replacement of Life Insurance,” (Exhibit A), furnish the policyowner, when requested, a Form OIR-B2-313, rev. 07/23, in the Notice (Exhibit A) with a “Comparative Information Form” (Exhibit B concerning the existing life insurance. The values shown on Form OIR-B2-313 rev. 07/23, in this Form (Exhibit B) shall be computed from the current policy year of the existing life insurance. Exemptions from compliance with the provisions of this section are set forth in Rule 69O-151.004, F.A.C.

(2) Maintain a file containing the following:

(a) Copies of the Form OIR- B2-312, rev. 07/23 “Notice to the Applicant Regarding Replacement of Life Insurance,” (Exhibit A) received from replacing insurers; and,

(b) Copies of the fully completed Form OIR-B2-313, rev. 07/23, Comparative Information Forms prepared pursuant to Rule subsection 69O-151.008(1), F.A.C.

(3) This material shall be indexed by replacing insurer and held for three (3) years or until the conclusion of the next regular examination conducted by the Insurance Department of its domicile, whichever is later.

Rulemaking Authority 624.308, 626.9611, 626.9641 FS. Law Implemented 624.307(1), 626.9521, 626.9541, 626.9641, FS. History–New 7-9-81, Formerly 4-24.05, Amended 2-2-83, Formerly 4-24.17, 4-24.017, 4-151.008, Amended _______.

 

69O-151.009 Penalties.

Rulemaking Authority 624.308, 626.9611, 626.9641 FS. Law Implemented 624.307(1), 626.9521, 626.9541, 626.9641 FS. History–New 7-9-81, Formerly 4-24.06, 4-24.19, 4-24.019, 4-151.009, Repealed _______.

 

69O-151.010 Approved Forms.

The forms OIR-B2-312 “Notice to Applicant Regarding Replacement of Life Insurance”, rev. 1-91, and OIR-B2-313 “Comparative Information Form”, rev. 1-91 set forth respectively in Exhibits A and B are hereby approved and shall be used as specified in these rules. Copies of the above-mentioned forms are available to the public through the Office of Insurance Regulation, Bureau of Life and Health Forms and Market Conduct Review, Division of Insurer Services, 335 Larson Building, Tallahassee, Florida.

(1) Form OIR-B2-312, “Notice to Applicant Regarding Replacement of Life Insurance,” rev. 07/23, hereby incorporated by reference and available at www.flrules.org/XXXXX.  The form may be obtained from https://www.floir.com.  

(2) Form OIR-B2-313, “Comparative Information Form for Proposed Insurance,” rev. 07/23, hereby incorporated by reference and available at www.flrules.org/XXXXX.  The form may be obtained from https://www.floir.com. 

Rulemaking Authority 624.308, 626.9611, 626.9641 FS. Law Implemented 624.307(1), 626.9521, 626.9541, 626.99 FS. History–New 7-9-81, Amended 11-5-82, 2-2-83, Formerly 4-24.21, Amended 3-11-91, Formerly 4-24.021, 4-151.010, Amended _____.

 

69O-151.012 Separability.

Rulemaking Authority 624.308, 626.9611, 626.9641 FS. Law Implemented 624.307(1), 626.9521, 626.9541, 626.9641 FS. History–New 7-9-81, Formerly 4-24.20, 4-24.020, 4-151.012, Repealed ______.

 

69O-151.101 Purpose.

Rulemaking Authority 624.308(1), 626.9611, 626.9641 FS. Law Implemented 624.307(1), 626.9521, 626.9541, 626.9641 FS. History–New 2-1-79, Formerly 4-44.01, 4-44.001, 4-151.101, Repealed _______.

 

69O-151.102 Scope.

These rules Rules 69O-151.102 through 69O-151.104 apply to the solicitation of accident and health insurance covering residents of this state. They do not apply to the solicitation of the following accident and health insurance:

(1) Group, blanket or franchise;

(2) Accident only;

(3) Single premium nonrenewable;

(4) Conversion to another individual or family policy issued by the same insurer with continuous coverage;

(5) Conversion to an individual or family policy from a group, blanket or group type policy; and,

(6) Conversion to a Medicare Supplement policy to replace a basic or major-medical accident and health policy.

Rulemaking Authority 624.308(1), 626.9611, 626.9641 FS. Law Implemented 624.307(1), 626.9521, 626.9541, 626.9641 FS. History–New 2-1-79, Formerly 4-44.02, 4-44.002, 4-151.102, Amended ______.

 

69O-151.106 Violation.

Rulemaking Authority 624.308(1), 626.9611, 626.9641 FS. Law Implemented 624.307(1), 626.9521, 626.9541, 626.9641 FS. History–New 2-1-79, Formerly 4-44.06, 4-44.006, 4-151.106, Repealed _______.

 

69O-151.107 Effective Date.

Rulemaking Authority 624.308(1), 626.9611, 626.9641 FS. Law Implemented 624.307(1), 626.9521, 626.9541, 626.9641 FS. History–New 2-1-79, Formerly 4-44.07, 4-44.007, 4-151.107, Repealed _______.

 

69O-151.201 Purpose and Scope.

(1) The purpose of this rule chapter is to implement the provisions of Section 626.9541(1)(aa), F.S., with respect to churning and to adopt Form OIR-D0-1180. This rule and its accompanying disclosure form and instructions (Form OIR-D0-1180) Rules 69O-151.201, and 69O-151.202, apply to any and all types of policies which include a policy value feature, irrespective of the marketing method by which such policies or contracts are sold.

(2) Rules 69O-151.201, and 69O-151.202, This Part, Part III of Chapter 69O-151, F.A.C., shall not apply to:

(a) Conversions of group or individual term policies; or

(b) Group permanent life, group variable life, group fixed annuities and group variable annuities wherein the group master policyholder retains ownership of the contract.

(3) When exercising the following policy provisions, for a purpose other than as a funding source for the purchase of additional insurance contract(s), Rule paragraph 69O-151.202(2)(a), F.A.C, shall not apply to:

(a) Reduced paid-up or extended term insurance options in group life, group variable life, individual life or variable life policies;

(b) Early annuity options of group fixed, group variable, individual fixed or individual variable annuity products; or

(c) A living benefit settlement option of a group permanent life, group variable life, individual life or individual variable life insurance policy.

Rulemaking Authority 624.308(1), 626.9641(1)(aa)2. FS., Chapter 95-219, Laws of Florida. Law Implemented 624.307(1), 626.9541(1)(aa) FS., Chapter 95-219, Laws of Florida, History–New 2-19-96, Formerly 4-151.201, Amended ______.

 

69O-151.202 Requirements.

(1) Effective October 1, 1995, each Each insurer shall adopt written procedures to reasonably avoid and discourage the practice of churning, as defined in Section 626.9541(1)(aa), F.S.

(2)(a) Form OIR-D0-1180, “Policy Disclosure Form and Instructions,” rev. 07/23, hereby incorporated by reference and available at www.flrules.org/XXXXX, shall be completed by the insurer or its licensed and appointed agent and provided to the applicant prior to or contemporaneous with the time the applicant signs any application for the purchase of an additional life insurance policy or annuity contract to be funded through the use of values accessed in an existing and in-force policy with that same insurer. Form OIR-D0-1180, rev. 07/23 shall be completed for each existing and in-force policy to be utilized as a funding source for the purchase of additional insurance contract(s). Any required replacement and sales forms must also be completed. One copy of Form OIR-D0-1180, rev. 07/23 is to be delivered to the policyowner and one copy must be maintained by the insurer.

(b) If there is a material change in the information originally disclosed to the policyowner on Form OIR-D0-1180, rev. 07/23 as a result of the underwriting and policy issuance process, an insurer may cause an amended Form OIR-D0-1180, rev. 07/23 to be reissued, delivered and executed by the agent or corporate officer and the policyowner, and such amended Form OIR-D0-1180, rev. 07/23 shall constitute the required disclosure under this rule. An insurer must maintain any and all amended versions of Form OIR-D0-1180 in accordance with this rule.

(3) Insurers may reprint Form OIR-D0-1180, rev. 07/23 in its adopted format; however, reprints shall not be in a typesize smaller than the format adopted by the Office.

(4) Insurers may affix their name, address and company logo or insignia on the form in a manner not prohibited by Chapter 69B-150, F.A.C, or other applicable laws and rules.

(5) In accordance with Sections 624.316 and 624.3161, F.S., insurers shall maintain executed forms in active policy files for examination purposes. Accordingly, insurers shall maintain executed forms for at least five (5) years or from examination to examination, whichever is longer. In lieu of retaining original, executed forms, Form OIR-D0-1180, rev. 07/23 may be maintained in a manner retrievable for compliance examination and investigation review purposes.

(6) Policy loan request forms, surrender value request forms, dividend withdrawal request forms or any other applicable service forms that are necessary to access the funds to be used as a funding source for the payment of premiums for the additional insurance policy shall be completed and executed in their entirety at the time of new policy application and after presentation of the completed Form OIR-D0-1180, rev. 07/23.

(7) Form OIR-DO-1180, rev. 07/23 form may be obtained from https://www.floir.com.  

Rulemaking Authority 624.308(1), 626.9541(1)(aa)2. FS., Chapter 95-219, Laws of Florida. Law Implemented 624.307(1), 624.316, 624.3161, 626.9541(1)(aa), 627.4554, FS., Chapter 95-219, Laws of Florida. History–New 2-19-96, Formerly 4-151.202, Amended ______.

 

69O-151.203 Adoption of Form OIR-D0-1180.

Rulemaking Authority 624.308(1), 626.9541(1)(aa)2. FS., Chapter 95-219, Laws of Florida. Law Implemented 624.307(1), 626.9541(1)(aa), 627.4554 FS., Chapter 95-219, Laws of Florida, History–New 2-19-96, Formerly 4-151.203, Repealed ________.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Kama Monroe, Assistant General Counsel

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Financial Services Commission

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: September 18, 2023

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: July 24, 2023