The proposed rule is amended to conform with revisions to s. 627.4554, F.S., as enacted by SB 166 (Chapter 2013-163, Laws of Florida). SB 166 substantially revised Florida consumer protection laws relating to the sales of annuities by incorporating ...

 

DEPARTMENT OF FINANCIAL SERVICES

Division of Insurance Agents and Agency Services

RULE NO.:RULE TITLE:

69B-162.011Suitability and Disclosure in Annuity Contracts-Forms Required.

PURPOSE AND EFFECT: The proposed rule is amended to conform with revisions to Section 627.4554, F.S., as enacted by SB 166 (Chapter 2013-163, Laws of Florida). SB 166 substantially revised Florida consumer protection laws relating to the sales of annuities by incorporating the 2010 National Association of Insurance Commissioners (“NAIC”) Suitability in Annuity Transactions Model Regulation. The proposed rule extends protections previously afforded only to senior consumers involved in annuity transactions, to consumers of any age. Forms DFS-H1-1980 and DFS-H1-1981 are revised to reflect the standards, procedures and guidelines of the 2010 NAIC Annuity Suitability Model Regulation, and Section 627.4554, F.S.

SUMMARY: Pursuant to Section 627.4554, F.S., the proposed rule is revised to substantially adopt the standards relating to the sale of annuities as established in the 2010 NAIC Suitability in Annuity Transactions Model Regulation; incorporated forms, accordingly, are also revised. The proposed rule’s title is revised to better reflect its scope of regulation; the proposed rule’s website address is also revised.

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.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: Agency personnel familiar with the subject matter of the proposed rule have performed an economic review and, based on that review, have concluded that the proposed rule is unlikely to result in an adverse economic impact in excess of the criteria established in paragraph 120.54(2)(a), F.S.

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(1), 627.4554(9) FS.

LAW IMPLEMENTED: 627.4554 FS.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW (IF NOT REQUESTED, THIS HEARING WILL NOT BE HELD):

DATE AND TIME: Tuesday, June 17, 2014, 10:30 a.m.

PLACE: Room 116 Larson Building, 200 East Gaines Street, Tallahassee, Florida

Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 5 days before the workshop/meeting by contacting: Susan Jordan, [phone] or [e-mail]. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Susan Jordan, Special Investigator, Bureau of Investigation, Division of Agent & Agency Services, Florida Department of Financial Services, 200 E. Gaines Street, Tallahassee, Florida 32399-0320, [phone] or [e-mail]

 

THE FULL TEXT OF THE PROPOSED RULE IS:

 

69B-162.011 Suitability and Disclosure in Annuity Contracts – Forms Required.

(1) Forms Adopted.

Forms DFS-H1-1980, “Annuity Suitability Questionnaire,” (Revised 04-2014 12-25-09) and DFS-H1-1981, “Disclosure and Comparison of Annuity Contracts” (Revised 04-2014 12-25-09), are adopted pursuant to paragraphs Sections 627.4554(4)(b) and (d), F.S., and are hereby incorporated by reference. Copies of each form adopted and incorporated by reference in this rule are available from the Division of Agents and Agency Services, Department of Financial Services, Larson Building, Tallahassee, Florida 32399-0318 or http://www.myfloridacfo.com/Division/Agents/default.htm http:/www.myfloridacfo.com/Agents/Licensure/Forms/ index.htm.

(2) Application.

This rule applies exclusively to any recommendation to purchase or exchange an annuity contract as defined in subsection Section 627.4554(2)(3), F.S., made to a senior consumer by an insurance agent or an insurer, which results in the purchase or exchange recommended. A senior consumer is a person 65 years of age or older. In a joint purchase or exchange, if any party is 65 or older the joint purchasers are considered to be senior consumers.

(3) Duties of Insurers and Insurance Agents.

(a) Before executing a purchase or exchange of an annuity to a senior consumer, an insurance agent or an insurer, unless exempted by paragraph Section 627.4554(5)(i)(8), F.S., and required by the Financial Industry Regulatory Authority to perform an alternative suitability analysis, must use form DFS-H1-1980, Annuity Suitability Questionnaire incorporated in subsection (1) above, to obtain information in order to determine the suitability of the recommendation.

(b) In addition to obtaining the information required by paragraph (a), before executing a replacement or exchange of an annuity contract to a senior consumer, the insurance agent or insurer must also provide contract comparison information to the senior consumer utilizing form DFS-H1-1981, Disclosure and Comparison of Annuity Contracts, incorporated in subsection (1) above.

(c) The type face for all printed questions or requests for information that will be directly received or answered by the consumer, and all portions of the referenced forms relating to the disclosure requirements pursuant to paragraphs (3)(a) and (b) above, must be of least 12-point type.

(d) Nothing in this rule shall prevent an insurer from adapting the forms adopted in subsection (1) for its use, upon written approval of any modifications by the Department. The Department shall approve an insurer’s modification to the forms provided:

1. The forms still contain all of the same information as the Department forms referenced above;

2. The type size requirement of paragraph (3)(c) above is met;

3. Additional material added to the form does not obscure the information required, or rearrange the required information in such a way as to make it more difficult to find or understand;

4. The revised form does not contain misrepresentations or misleading statements, and is not in any other way in violation of Section 626.9541, F.S.

(e) Insurers are permitted to modify the form to use check-off boxes for indication of investment experience and risk tolerance, but shall not substitute check-off boxes for any other items on the form.

(f) The addition of an insurer’s name, contact information, or trademark; the addition of borders; or changes in font which do not alter type size, do not require prior written approval by the Department.

(g) Approval by the Department does not preclude disapproval by the Florida Office of Insurance Regulation pursuant to any provision of the Florida Insurance Code, and rules adopted there under.

Rulemaking Authority 624.308(1), 627.4554(9) FS. Law Implemented 627.4554 FS. History–New 12-25-09, Amended__________.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Susan Jordan, Special Investigator, Bureau of Investigation, Division of Agent & Agency Services, Florida Department of Financial Services

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Jeff Atwater, Chief Financial Officer, Department of Financial Services

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: May 14, 2014

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: February 3, 2014