The November 4th, 2011 Florida Administrative Weekly will publish a Notice of Change ("Notice") to amend proposed Rule 69B-162.011 (the "Proposed Rule"). The Proposed Rule sets forth requirements for annuity cover pages, which was previously published on July 13, 2011 ("Original Rule Proposal") (discussed here ). Changes reflected in the Notice appear to be based on comments raised at a Florida Department of Financial Services ("DFS"), Division of Agent & Agency Services, public hearing on August 16, 2011 and subsequent written comments.  

Cover Page Required Disclosures:

As amended by the Notice, the Proposed Rule proposes that the annuity cover page contain:

  • A heading stating:

Important Time Sensitive Information - Read Immediately (in 18-point bold type horizontally centered)

Deadline: Right to Cancel and Receive Unconditional Refund (in 16-point bold type justified)

  • Free-Look disclosure stating:

For purchasers age 64 and under, as well as for "accredited investors" of any age: you may return your contract for up to 14 days after you receive it. The term "accredited investor" is defined in Section 627.4554(3)(b), F.S.  

For purchasers age 65 and over, except for "accredited investors": you may return your contract for up to 21 days after you receive it. "Accredited investors," as defined in Section 627.4554(3)(b), F.S., are limited to a 14 day unconditional refund period.  

The Free-Look disclosure must also state either:  

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 on the long term characteristic of an annuity contract stating:  

Please be aware that the purchase of an annuity is a long term commitment and may restrict access to your funds.  

  • Disclosure on interest rates to the effect that:  

Interest rates may have certain limitations. Please refer to your policy for further details.  

  • Disclosure for bonus annuities, stating:  

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

  • Disclosure that the purchaser should also receive specific information, stating:  

For fixed annuities  

A Buyers Guide is required to be given to you.  

For variable annuities  

A prospectus, which may include a policy summary, must be given to you.  

  • Disclosure of the contact information for the issuer, the selling agent and the DFS, Division of Consumer Services. The insurer's contact information must also state:  

This information is for policy owners to present inquiries or obtain information about coverage and to provide assistance in resolving complaints.  

While the changes in the Notice addressed certain comments, it did not address what is meant by "as applicable" contained in the lead-in language of Proposed Rule section setting forth the required disclosures. Accordingly, there remains a question as to how much flexibility insurers have when complying with the requirements set forth in Section 2(d). In addition, the Notice did not change the required contract information for the selling agent despite concerns raised in comments that the selling agent may no longer be under contract with the insurer at the time the consumer has a question.  

Effective Date and Implementation:

The Proposed Rule requires legislative ratification before it becomes effective. In addition, under Florida's Administrative Procedures Act, any substantially affected person may submit within 21 days of the Notice's November 4th publication, a good faith written proposal for a lower cost regulatory alternative to the Proposed Rule.

Because under F.S. 626.99(4)(c) the annuity cover pages are required to be filed and approved, the Notice includes a 120 day implementation period. It states insurers "shall have up to 120 days from the effective date of this rule, as amended, to bring documents related to new sales into compliance with the provisions of this rule."