On April 30, 2010, the Florida Legislature passed the “Safeguard Our Seniors Act,” which modifies a number of provisions of Florida insurance law relating to the sale of annuity products and, to a lesser extent, life insurance to persons aged 65 and over. The Act has since been signed into law by Florida’s Governor, and its effective date will be January 1, 2011.

Leading up to this Legislative action, Florida’s Department of Financial Services had been holding workshops and seminars to draw seniors’ and legislators’ attention to the need for “tougher senior investor fraud laws.” The Act will affect insurers’ sales of annuities to seniors by: (i) limiting surrender charges to 10% and the surrender charge period to 10 years (subject to certain exemptions, including sales to accredited investors); and (ii) lengthening free look periods to 21 days. The Act also requires insurers selling annuities, whether to seniors or non‑seniors: (i) to provide a policy cover sheet, which will be part of the policy form and thus required to be filed for approval, informing the purchaser about the free look period, and providing contact information for the insurer, producer, and the Department together with any other information the Department may require by rule; and (ii) to deliver “Buyer’s Guides” at or prior to policy delivery in the form required by the NAIC Annuity Disclosure Model Regulation until the Department promulgates its own Buyer’s Guide (or for variable annuities, a policy summary until the NAIC or the Department promulgates a Buyer’s Guide). The Act will impact producers by, among other things, providing for enhanced penalties for wrongful conduct, empowering the Department to require producers to make restitution, and enhancing the Department’s license suspension and revocation powers.  

Various provisions of the Act will impose administrative burdens on insurers and necessitate action before the law takes effect, such as the filing for approval of the cover sheet forms and modifications of policy administration systems to accommodate printing of the producer’s contact information on each contract’s cover sheet. Likewise, if contract forms do not currently comply with the Act’s free look and/or surrender charge percentage and period requirements, insurers will need to file for approval new forms as well as decide whether those new forms will apply to all sales or only senior sales. Having different forms and/ or contract terms, depending on whether the purchaser is a senior, may also give rise to practical administrative difficulties.