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LEGISLATIVE AND REGULATORY REPORT
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8-Hour Long Term Care Partnership CE Classes -- Four
Locations
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Optional Federal Charter Legislation Reintroduced in
U.S. Senate
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SALES IDEA OF THE MONTH -- Your Most Important Assets
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Register NOW for FAIFA 75th Anniversary Career Conf.
-- July 9-11
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by
Timothy J. Meenan
FAIFA Lobbyist
JUNE SPECIAL SESSION ON PROPERTY TAX REFORM: LEGISLATURE NOT
LIKELY TO TAKE UP PIP REFORM
The Legislature is meeting in Special Session from June 12 through
June 22 to implement far-reaching property tax reform. Proposals
will likely include a portability of existing tax levels for
homeowners selling or buying a new home and spending caps and
rollbacks for local governments.
A lot of lobbying has been taking place in Tallahassee to add
Personal Injury Protection (PIP) to the Call of the Special
Session. The Legislature in Regular Session allowed PIP to Sunset,
beginning October 1, 2007, meaning there will no
longer be mandatory personal injury protection coverage required.
Property damage coverage will still be mandatory for automobiles,
but not for the people inside them!
FAIFA supported the elimination of PIP, but wants the Legislature
to replace it with either mandatory bodily injury or mandatory
hospitalization coverage for all drivers. We are concerned with the
impending rate increases voluntary market insurers will make to
subsidize the legitimate auto accident claims paid by auto insurers
before October 1, 2007.
It is possible that a special session on auto insurance reform will
be called apart from the Property Tax Special Session this month.
FAIFA will keep members apprised as this issue unfolds in
Tallahassee this summer.
TRAVEL PLANS RULE REVISED
The Office of Insurance Regulation (OIR) adopted an administrative
rule, Rule 69O-125.003, prohibiting unfair discrimination because
of travel plans in July 2006. The original rule, adopted in July
2006, prohibited insurers from refusing to “issue any policy,
contract or certificate of life insurance, annuity contract,
accident, disability or health insurance, because of the intent of
the applicant to engage in future lawful foreign travel or based
upon past lawful foreign travel, unless the insurer can demonstrate
that insureds who have traveled or intend to travel are a separate
actuarially supportable class whose risk of loss is different from
those insureds who have not traveled and do not intend to travel.”
Likewise, an insurer or persons authorized to engage in insurance
business were prohibited from setting rates charged for such
products based on an applicants past travels or plans to travel.
Violation of these two bans was designated as unfair
discrimination, generally, that is prohibited by Florida statute.
Prior to the adoption of Rule 69O-125.003 and following widespread
protests and complaints, the Florida Legislature passed House Bill
299, the “Freedom to Travel Act” that imposed restrictions on
insurers providing products that based issuance or rates on an
applicant’s past or future travel plans. The Act did not become a
law until approved by the Governor on June 22, 2006.
To address the new requirements of the Act, OIR announced in
November 2006 its intentions to implement the provisions of the
legislation; specifically, its limitations on when an insurer may
refuse to issue, renew, or have a different rate for an individual
who has previously, or plans, to travel. Along with that
announcement, OIR announced it would conduct a rule development
workshop on December 1, 2006.
In February 2007, OIR released a draft revised rule based on input
received at the December 2006 workshop that is designed to
implement s. 626.9541(1)(dd), Florida Statutes, the Freedom to
Travel Act, and created a specific ban on insurers imposing life
insurance limitations based on past foreign travel experiences or
future foreign travel plans.
A hearing is scheduled on the draft revised rule for July 25, 2007,
in Tallahassee. The draft revised rule substantially amends the
adopted rule to make the following changes:
• Removes all references to annuity contracts.
• Separates the bans on unfair discrimination relating to life
insurance policies, contracts, or certificates from the bans
relating to an accident, disability, or health insurance policy or
certificate.
• Adds a ban against an insurer’s refusal to continue any policy,
contract, or certificate of insurance of any individual, or an
insurer’s limiting the amount, extent or kind of insurance coverage
offered an individual.
• Adds provisions banning insurer refusal to continue or insurer
limiting life insurance coverage based solely on the individual’s
past or future lawful foreign travel.
• The ban relating to future lawful foreign travel is removed if
“the insurer can demonstrate that individuals who travel are a
separate actuarially supportable class whose mortality risk is
different from that of individuals who do not travel, and that such
risk classification is based on sound actuarial principles and
actual or reasonably anticipated experience that correlates to the
risk of travel to a specific destination.”
• Insurers must file information that supports their conclusions
that individuals who travel to a specific destination constitute a
separate actuarially supportable class, but may not use such
information for underwriting purposes of refusing to issue or
continue or of limiting the amount, extent or kind of life
insurance coverage available to an individual until OIR approves
the filing and determines the insurer has demonstrated that such
underwriting meets the standards of the Insurance Code’s Unfair
Methods of Competition and Unfair or Deceptive Acts law. Clarifying
language permits insurers to ask questions about foreign travel on
applications for data collection purposes and may only use such
information for underwriting if OIR has given its prior approval to
do so.
• Provides a procedure for determining whether individuals who
travel are a separate actuarially supportable class whose risk of
loss is different from those individuals who do not travel that
requires or provides for, in part—(1) a sound actuarial analysis,
(2) use of statistically credible data, (3) disclosure of the range
of underwriting and rating options and how each is supported by the
analysis, (4) maintaining a report prepared by the actuary
providing the information used and relied upon by the actuary, (5)
insurer petitioning OIR for a variance or waiver for a limited
exception from the statute and rule, and (6) maintaining certain
specified data.
• Adds penalties (restitution; issuance of denied coverage
effective, at applicant’s option, retroactive to date of
application or current date; and payment of valid claim of an
applicant subsequent to the initial application date) for insurers
that use past travel or future lawful travel in underwriting
decisions without having first filed and received OIR approval.
• Deems that travel does not include residency or relocation for
employment.
• Deems that an individual absent from the United States for more
than 180 consecutive days who has established a residence in a
foreign country during that period is considered to reside in that
country. Residency in a foreign country is not considered foreign
travel for purposes of the Rule.
MAPPING PLAN ELECTRONIC DATABASE
Committee Substitute for House Bill 1-A, adopted during the first
Special Session of 2007, amended s. 627.3515, Florida Statutes (F.S.),
relating to property and casualty insurer risk market assistance
plans, by adding a new subsection (3). Section 627.3515, F.S.,
requires OIR to establish a Market Assistance Plan to help
applicants for property and casualty insurance who are unable to
procure insurance coverage in the voluntary market when it is
otherwise available.
The Plan, through its Board of Governors, is also required to
remove any risk from Citizens Property Insurance Corporation
(Citizens) that can be placed in the voluntary market. The new
subsection (3) requires the Plan and Citizens to develop a business
plan, to provide for implementation of an electronic database for
confirming eligibility for coverage by Citizens, and to present it
to the Financial Services Commission for approval by September 1,
2007. Authorized insurers and their agents and employees are
exempted from liability for complying with their duties or
responsibilities relating to development of the business plan.
During the 2007 Regular Session, Committee Substitute for Senate
Bill 2498 amended paragraph (3)(a) to allow for the business plan
to permit either authorized insurers or agents of authorized
insurers to submit in electronic format information necessary for
the Plan or Citizens to deny coverage to applicants ineligible for
coverage by Citizens. However, the insurer submitting such
information, resulting in an applicant’s denial of coverage by
Citizens, must be required to provide coverage at its approved
rates, for the coverage and premium quoted, for at least 1 year.
This idea of a database to exclude from Citizens a property owner
with a pending offer from a voluntary insurer was presented to the
2006 Legislature by FAIFA, and ultimately adopted in 2007. Thanks
to FAIFA member Skip Boylan for his contribution in developing this
concept.
AGENT LICENSE REVOKED AND PERMANENTLY BANNED FROM INSURANCE
BUSINESS FOR EXPLOITING CONSUMERS
Chief Financial Officer Alex Sink revoked the license of a South
Florida agent and permanently banned him from the insurance
business in Florida for using his insurance license to exploit
elderly Jewish Floridians.
Leighton David Applefeld, 66, owned and operated Focus Financial
Services, Inc. in Delray Beach. In February, the Department of
Financial Services filed an 18-count administrative complaint
against Applefeld alleging, among other things, that he preyed on
elderly Jewish consumers, through religious affinity, to engender
their trust and sell them inappropriate insurance products that
paid high commissions.
In lieu of fighting the administrative charges against him,
Applefeld agreed to the revocation of his insurance license, and
further agreed to be permanently banned from the insurance business
in Florida.
“It is morally reprehensible to use religion to prey upon
Floridians who are merely looking for a safe place to keep their
finances,” said CFO Sink. “I will use every measure under the law
to protect our citizens from financial harm.”
Applefeld conducted seminars at local restaurants, Jewish centers,
and various other locations throughout Broward and Palm Beach and
misrepresented the annuity products he sold. In many cases,
Applefeld was able to convince clients to surrender or withdraw
from their in-force annuities or investments to fund new deferred
annuity contracts, resulting in thousands of dollars of unnecessary
surrender charges and additional penalties that he didn’t explain
to his elderly clients.
In most cases, Applefeld’s clients didn’t realize the financial
harm they suffered until it was too late. In one instance,
Applefeld convinced an elderly Jewish couple to give him checks
totaling $180,000 to invest. Applefeld instructed the couple to
make the checks payable to his Delray Beach business name rather
than an insurance company, but he never invested the funds on
behalf of his clients once the money was deposited into his
business account.
OIR SUSPENDS CERTIFICATE OF AUTHORITY FOR PENNSYLVANIA INSURER
PENN TREATY NETWORK AMERICA INSURANCE COMPANY
For failure on three consecutive occasions (June 1, 2005, June 1,
2006, and June 1, 2007) to timely comply with financial reporting
requirements, the Office of Insurance Regulation has suspended the
Certificate of Authority (COA) for Penn Treaty Network America
Insurance Company (“Penn Treaty”), a life and health insurer.
The suspension is for a minimum of 12 months beginning June 4,
2007. If Penn Treaty has fully complied with all required Florida
filings and is otherwise in compliance with Florida law, OIR will
reinstate its COA. However, if Penn Treaty has not fully complied
with all Florida filings requirements, in particular the financial
reporting requirements of s. 624.424(8)(a), F.S., its COA will be
deemed expired as of the end of the suspension period, June 5,
2008.
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(This item excerpted from NAIFA Frontline
newsletter.)
U.S. Senators John Sununu (R-NH) and Tim Johnson (D-SD)
reintroduced the National Insurance Act of 2007 (S.40) on May 24.
The legislation would create an option for both insurance companies
and agents to choose to remain regulated by the states or move to a
single federal regulator that the bill would establish.
The bill is a slightly tweaked version of the bill the two senators
introduced last year during the 109th Congress. The new version
clarifies which lines of insurance are included in the optional
federal charter. Previously, the National Insurance Act of 2006
applied to life insurance and property/casualty insurance, but was
unclear about the issue of health insurance inclusion.
The new bill retains the provision that allows insurance agents the
flexibility to choose to be regulated at the federal or state level
for all lines of their business, but makes clear that health
products will remain regulated by the states. The other major
change in S.40 stipulates that any agent-related regulations must
not conflict with any SEC self-regulatory organization (SRO) rules
(including but not limited to NASD rules).
NAIFA’s Position:
NAIFA remains neutral on the creation of an OFC. NAIFA wants ease
of licensing for agents and speed-to-market for life insurance,
long-term care, annuity and disability income products. At the
state level, there have been dramatic improvements in the
streamlining of laws across state lines, most notably with the
Interstate Compact, but there is still much work to be done.
Therefore, NAIFA is open to consider any proposal, federal or
state, that will improve the insurance regulatory environment for
NAIFA members.
For more information on how the optional federal charter would
work, please visit NAIFA’s Insurance Regulatory Reform website at
www.naifa.org/advocacy/irr.
Bill Status:
Sens. Sununu and Johnson are both members of the Senate Banking
Committee, which has jurisdiction over insurance regulation. They
are calling on Senate Banking Committee Chairman Chris Dodd (D-CT)
to hold hearings on S.40 this year, but so far they have not
received a firm commitment that those hearings will take place in
the near future. In the House, companion legislation to S.40 is
expected to be introduced before the end of the year. NAIFA will
continue to keep you informed as developments arise.
For more information, contact NAIFA's Jill Edwards at jilledwards@naifa.org,
(703) 770-8158.
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Register
now and help celebrate FAIFA's 75th anniversary at the FAIFA Career
Advancement Conference, “Connecting Great Ideas with Great People”,
July 9-11, 2007 at the gorgeous Marriott Doral Golf Resort and Spa
in Miami.
What a party it will be, too! Be inspired as you surround yourself
with great ideas and great people who can help you transform your
business. Connect with a community of people who have similar
interests and goals – professionally, personally, and on a business
level.
Conference highlights:
--- Top-notch general session speakers: Howard Wight, CLU, ChFC
(“Super Simple Sales Solutions”); Van Mueller, LUTCF (“The Greatest
Time Ever”); John Curry, CLU, ChFC, LUTCF (“Prospecting 101”).
--- CE breakout sessions facilitated by industry experts who will
sharpen your skills and increase your knowledge base.
--- FAIFA’s new 8-hour CE course, “Long Term Care Partnership and
the Florida Agent” (Fla. DFS Course ID #59590 – authority line 240,
intermediate level, Fla. DFS provider #654 -- FAIFA) will be
Wednesday, July 11. (Fee for the class is included in registration
for Conference attendees. Fee is also included with the One-Day
Pass. All others need to register separately -- see next item
below.) (Class runs from 8:00 a.m. to 5:00 p.m. (includes a
one-hour break for lunch).
--- Gala 75th Anniversary celebration with a Welcome Reception in
the Expo Hall honoring our history and all past FAIFA Presidents,
on Sunday evening.
--- Speed Learning returns!. One on the most popular events last
year – learn in one of the most fast-paced and engaging experiences
you will ever have.
--- Meet and hear from Florida’s new CFO, Alex Sink
--- Sparkling President’s Banquet where the winner of the annual
Snead/Bryan “Advisor of the Year” will be annuounced.
--- FAIFA Annual Meeting and Delegate Assembly includes a report
from NAIFA President John Davidson, CLU, ChFC, LUTCF, and the
election of new FAIFA officers and directors.
--- FAIFAPAC Golf Tournament on Sunday.
--- Special One Day Pass for only $80 on Monday, July 9 (Includes
full-day of general sessions, CE breakouts, and entrance to the
Expo!).
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Four
dates remain for the FAIFA’s new 8-hour CE course, “Long Term Care
Partnership and the Florida Agent” (Fla. DFS Course ID #59590 –
authority line 240, intermediate level, Fla. DFS provider #654 --
FAIFA).
The course meets the NAIC guideline that health agents need to have
training on the new “Partnership” Long Term Care policies to be
sold in Florida.
Each class runs from 8:00 a.m. to 5:00 p.m. (includes a one-hour
break for lunch).
The four remaining Florida locations include:
• Ft. Lauderdale – June 14th (Courtyard by Marriott – Cypress
Creek)
• West Palm Beach (Lake Worth) – June 15th (Holiday Inn Turnpike –
Lake Worth)
• Orlando – June 22nd (Hilton Garden Inn – Orlando Airport)
• Miami – July 11th (Marriott Doral Golf Resort and Spa) ***
(Classes have been held prviously in Tallahassee, Jacksonville, and
Tampa.)
Clients will want the new “Partnership” Long Term Care policies,
once approved, which allows policyholders to avoid some or all of
the Medicaid spend-down requirements. Agents need to be trained on
this new product in anticipation of client demand. Learn the
essentials: tax qualified, inflation requirements, exchange program
with traditional LTC policies, reciprocity, and more.
This course offers a comprehensive review of Long Term Care insurance
AND the new “Partnership” LTC plans (as required by the NAIC
guidelines). FAIFA’s course has been approved for Florida DFS
continuing education credit – so register now.
SEATING IS LIMITED TO THE FIRST 40 WHO REGISTER (except Miami --
larger classroom in that location). The class is open to members
and non-members alike, with FAIFA members receiving a reduction in
registration fees. Early registration deadline is 7 days advance of
each class.
To download the info/registration form, click the link below, or
visit the FAIFA website (www.faifa.org) to register online
(secure). For additional information, please call FAIFA at (850)
422-1701.
*** (NOTE: The Miami class is free to those registered for the
FAIFA’s 75th Annual Career Advancement Conference -- either full
registration or One-Day Pass. Priority seating will go to them,
however. Class will be open to “outside” registrants on a
space-available basis only.
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Your
Most Important Assets
When meeting a prospect, give them a note card with the numbers 1
thru 5 going down the side. Ask them to list the five assets which
are most important to them (this could include anything from their
house to their family.)
After they have listed all five assets, ask them to cross off
anything on their list that they would lose or that would be
negatively impacted if they became disabled.
Close the sale!
(From "Great Sales Ideas" from the Million Dollar
Round Table")
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FLORIDA ASSOCIATION OF INSURANCE AND FINANCIAL
ADVISORS
1836 Hermitage Boulevard, Suite 200 * Tallahassee, FL 32308 *
E-mail: ashley@faifa.org
Phone (850) 422-1701 * FAX (850) 422-2762.
FAIFA Advisor -- Tom Ashley, Editor. FAIFA Wesite
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