GOV. CRIST HAS SIGNED THE BILL TO INCREASE GUARANTY LIMITS FOR ANNUITIES

We have heard from a few members who asked if Gov. Crist signed House Bill 159 which was pushed through the Legislature by our lobbyist Tim Meenan, and we are happy to report the bill has been signed in to law effective July 1st. NAIFA-Florida initiated legislation to increase the limits of the Florida Life & Health Insurance Guaranty Association (FLHIGA) from $100,000 to $250,000 in cash values of annuity contracts paid on behalf of insolvent annuity carriers. FLHIGA is the state mechanism to pay life, health, or annuity claims of insolvent insurers.

Currently, under Florida law, FLHIGA may only pay up to $100,000 in cash values, $300,000 in death benefit claims, or a combination of cash value and death benefit claims not to exceed $300,000 for all types of life, health, or annuity contracts. Recently, the Federal Deposit Insurance Company (FDIC) raised the limits that it would pay for bank deposits held by insolvent banks and savings and loans from $100,000 to $250,000. This legislation parallels that increase and levels the playing field for investors who want alternatives to putting their money in the bank.

Additionally, this legislation will allow agents to discuss the existence of FLHIGA with consumers who inquire about the protection of their assets. Current law prohibits any entity from advertising or discussing FLHIGA or its limits. The 2009 Legislature allowed agents selling property insurance to discuss with their insureds the existence, purpose, and limits of the Florida Insurance Guaranty Association (FIGA). The bill will allow life agents to furnish written information provided by the FLHIGA Board to customers regarding the FLHIGA limits. NAIFA opposes advertising guaranty fund limits, but agents must be in a position to discuss this issue with their customers. The key issue is that the applicant or insured must first inquire about what guaranties exist regarding funds invested in an annuity, after which the agent may provide the FLHIGA information.