Stop the annuity scammers
Palm Beach Post Editorial
Sunday, April 12, 2009
Last year, Chief Financial Officer Alex Sink urged the Legislature to crack down on the financial scamming of older Floridians. She had no luck. So in October, Ms. Sink formed a task force in hopes of making a case that even bought-and-paid-for legislators couldn’t ignore.
The task force’s target was annuity fraud. Annuities are insurance investments that many retirees favor because they guarantee a regular amount of income after purchasing the principal. Among other things, the task force found that annuity fraud has increased by 400 percent over the past three years. The bad deals carry high withdrawal penalties and unreasonably restrict access to the principal, even for emergencies. Also, unscrupulous agents "churn" customers from annuity to annuity, leaving the investor worse off but the agent with hefty fees.
Jana McConnaughhy and Ellen Morris, who belong to the Elder Law section of the Florida Bar, cite cases where 85-year-olds had assets tied up for 10 years. Most reputable annuity policies, they say, allow access to the money after just 90 days and require no more than a 5 percent surrender fee, and nothing after five years.
Senate Bill 2520 and House Bill 141 seek to protect Floridians 65 and over from annuity scam artists by easing access to the assets and decreasing excessive withdrawal payments. Among other things, the legislation says that "senior consumers diagnosed as having a terminal illness that will result in death within two years after the diagnosis" could "withdraw all purchase payments from an annuity contract prior to the expiration of the surrender charge period without penalty."
Who could be against that? According to supporters of the legislation, the problem is House Insurance Committee Chairman Pat Patterson, R-DeLand. He hasn’t even scheduled HB 141 for a committee vote. Committee meetings are over, and the session ends May 1. Rep. Patterson is an insurance agent. The legislation passed the Senate Banking and Insurance Committee unanimously.
Before and after the task force met, Ms. Sink reported heartbreaking stories of fleeced Floridians, one of them an 81-year-old Army veteran. It’s always been disgustingly difficult to get anti-fraud bills through the Legislature. It took a Navy commander to shame legislators into confronting payday-loan companies ripping off his sailors. If these new scam artists have their way, it will be one more sad sign of the anti-consumer Legislature’s priorities.