State CFO Sink seeks tougher laws on annuity fraud targeting seniors
By David DeCamp, Times/Herald Tallahassee Bureau
In Print: Thursday, March 12, 2009
TALLAHASSEE — Chief Financial Officer Alex Sink wants Florida lawmakers to grow "alligator teeth" to punish insurance agents who con seniors into risky deals for annuities.
Less than four months after tougher standards on agents took effect, Sink and several lawmakers want to make some fraudulent sales tactics a felony instead of a misdemeanor if someone 65 or older is a victim. That would mean up to five years in prison.
Bills in the Florida House and Senate also would give state regulators more leeway to take away licenses from agents. Customers would have up to 60 days instead of 14 to decide whether to keep a product.
"We have agents who have been preying on seniors in this way for years," Sink said Wednesday, adding that tougher penalties could deter wrongdoing.
The Senate’s banking and insurance panel passed a bill by Sen. Mike Bennett, R-Bradenton, 7-0 this week. But the House version, authored by Rep. Keith Fitzgerald, D-Sarasota, has yet to be heard by a committee.
The insurance lobby stymied Sink’s push for felony penalties last year, and some opposition remains. Lobbyists and Sen. Al Lawson, a Tallahassee Democrat and insurance agent, question whether new requirements by lawmakers that took effect Jan. 1 have been given enough time — and whether new requirements would amount to much improvement.
But Sink said a spike in investigations justifies more changes. Annuity investigations involving seniors went from 75 in 2005 to 299 in 2008.
The legislation would target two practices: "twisting" and "churning."
Twisting involves misleading people or making false comparisons to persuade a customer to change or take out a new policy. Churning means getting a customer to surrender a product to pay for another product. Often, there’s a steep charge to surrender the old investment — and a commission for the agent.
"They come in all shapes, sizes — what have you," said fraud victim Elizabeth Williams, 80, of the Villages, who spoke at a Sink event promoting the bills.
Industry officials, however, say they’re worried about the measures’ effects on their business. Annuities, which pay a steady stream of income, have become more popular with the falling values of stocks and other investments.
"Regulations to provide such oversight should not deprive suitable consumers of product choices that deliver maximum returns and limit potential losses," the National Association of Insurance and Financial Advisors for Florida said, while applauding Sink for targeting "the very few bad actors."
David DeCamp can be reached at email@example.com or (850) 224-7263.