Florida Statutes Section 626.99 requires insurers to deliver Buyer's Guides and Policy Summaries for certain life insurance products. In June 2010, it was amended to require, effective January 1, 2011, a cover page for every fixed and variable annuity contract:

  • Informing the purchaser of the applicable unconditional refund period (the "Free-Look"), and  
  • Providing contact information for the issuing company, the selling agent, and the Florida Department of Financial Services ("DFS") as well as "any other information required by the department by rule."

Under Section 626.99, the cover page is part of the policy and will be subject to review by Florida's Office of Insurance Regulation ("OIR") pursuant to Section 627.410, Florida's form filing statute.

On November 8, 2010, DFS announced a Notice of Proposed Rule Development to amend Rule 69B-162.011 (the "Proposed Rule Amendment"), which would impose additional annuity cover page requirements pursuant to DFS' statutory authority. The text of the Proposed Rule Amendment is available here.

Under the Proposed Rule Amendment, fixed and variable annuity contract cover pages must meet certain formatting standards and include the following information:

  • A two line heading stating:

Important Time Sensitive Information - Read Immediately. Deadline: Right to Cancel and Receive Full Refund  

  • Free-Look disclosure using the following language:

For purchasers age 64 and under you may return your contract for up to 14 days after you receive it. For purchasers age 65 and over you may return your contract for up to 21 days after you receive it, except for accredited investors. The term "Accredited investor" is defined in Section 627.4554(3)(b), F.S.  

The Free-Look disclosure must also state:

For fixed annuities

An unconditional refund of all premiums paid, including any contract fees or charges.  

For variable annuities

An unconditional refund equal to the cash surrender value provided in the annuity contract, plus any fees or charges deducted from the premiums or imposed under the contract.

  • Disclosure of the information the purchaser is required to receive, as follows:  

For fixed annuities

A Buyer's Guide is required to be given to you.  

For variable annuities

A prospectus and policy summary must be given to you.  

  • Contact information for the insurer, the selling agent, and the DFS. The insurer's contact information must also state that this information "is for policy owners to present inquiries or obtain information about coverage and to provide assistance in resolving complaints."  
  • In addition, as applicable, the cover page must include:
    • A statement regarding interest rates to the effect that: Interest rates may have certain limitations. Please refer to your policy for further details.  
    • For fixed annuities with a bonus, a statement to the effect that:  

It is important that you understand how the bonus feature of your contract works. Please refer to your policy for further details.

The Cover Page may not include anything else, except for the insurer's logo.

If requested, DFS will hold a Rule Development Workshop on December 13, 2010 at 10:00 A.M. in Tallahassee, Florida. Based on informal discussions with DFS personnel, we understand that if a Workshop is not held, DFS will immediately finalize the Proposed Rule Amendment. We have been informally advised that DFS hopes to do so by January 1, 2011 to coincide with the effective date of Section 626.99's cover page requirement.

The Proposed Rule Amendment poses potential logistical challenges for insurers. Even though the Proposed Rule Amendment is not yet effective, insurers are faced with the prospect of having to file cover pages with OIR by December 1, 2010 to rely on Florida's form filing statute's "30-day deemer" provision to ensure that its cover pages can be used commencing January 1, 2011.

If a Workshop is requested, we expect the logistical issue to be a topic of discussion at the Workshop. In addition, insurers may wish to address some of the disclosure language required by the Proposed Rule Amendment. For example, insurers may wish to raise whether the language regarding accredited investors is consumer friendly and confirm what free-look period applies to accredited investors.