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State CFO wants tougher rules on annuities

Sink

Sink

TALLAHASSEE —Florida Chief Financial Officer Alex Sink wants to get tough on a few bad insurance agents who prey upon the elderly.

Sink is pushing lawmakers to make it a felony for insurance agents to mislead elderly or mentally disabled people into buying life insurance policies or annuity contracts that they don't need or want.

"We've got to have something more than a just a little measly fine and slap on the wrist, and maybe lose your license for a little while," Sink said.

But her effort, while supported in the state Senate, has run aground in the House.

Rep. Clay Ford, R-Pensacola, the bill sponsor, said he doesn't want any criminal penalties in the bill but he's willing to keep the penalty a misdemeanor.

"My concern is that we already have prisons filled with people who commit white-collar crimes," Ford said. "We're now in a financial crisis and we spend a lot of money building more prison beds."

Annuities are insurance contracts that offer a guaranteed series of payments over a period of time. They're sort of like retirement investment accounts, but with higher fees. Agents who sell annuities collect commissions that run around 10 percent or $10,000 on a $100,000 annuity.

Sen. Mike Bennett, R-Bradenton, named the bill after a Venice couple John and Patricia Seibel who, while in their 80s, were sold about $600,000 worth of annuities. But the contract included a big penalty fine, called a "surrender charge," if the couple had tried to cash out the annuity before 15 years was up.

"When you're 80 years-old you don't need something with a 15-year surrender charge," Bennett said. His chamber passed the measure unanimously two weeks ago.

It's already a misdemeanor to "twist" or mislead the elderly into buying such products, but the cases are so complicated that prosecutors rarely pursue them. Sink wants to deter such deceptive practices with tougher civil and criminal penalties.

Sink said one company has successfully lobbied the House against the criminal penalties. She's accusing one of the nation's largest life insurers, Metropolitan Life Insurance Company, of scheming against her.

"They're doing something to hold this legislation up, which is going to protect seniors and protect consumers," Sink said.

When asked their opinion on strengthening criminal penalties for misleading the elderly, Met Life spokeswoman Holly Sheffer issued a written statement:

"The company worked with both state legislators in Florida to assure that senior citizens and others are protected against such practices," the statement said. "We will continue to work with Senator Bennett and Representative Ford as appropriate."

The bill also strengthens the civil penalties that Sink's agency can charge those who "twist" the elderly, to $30,000 from $20,000 for a willful violation but no more than $150,000 for multiple violations (up from $100,000).

State CFO wants tougher rules on annuities 04/17/08 [Last modified: Monday, April 21, 2008 4:54pm]
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