Chief Financial Officer Alex Sink says the number of complaints that the Department of Financial Services receives from seniors about unscrupulous financial advisers and insurance agents who steer them into unsuitable annuities has nearly quadrupled in the past three years.

Some cases involve a practice known as “twisting” — agents use deceptive practices to induce a customer to surrender or terminate an annuity product and take out a replacement annuity with a second company for the sole purpose of generating a commission for the agent. That’s what happened to Bonnie Madden, an 81-year-old Port Richey woman who purchased two annuities from insurance agent Randolph Kahl-Winter in 2006. A year later, Kahl-Winter fraudulently inflated Madden’s net worth to convert her annuities into one policy with a different insurer — a move that generated a $52,000 commission for himself but almost cost Madden nearly $300,000 of her life savings had state regulators not intervened.

While a 2008 law strengthened regulations and increased penalties for insurance agents convicted of “unfair or deceptive acts or practices,” they did not go far enough, says Sink. The CFO has teamed up with Rep. Keith Fitzgerald (D-Sarasota) and Sen. Mike Bennett (R-Bradenton) to push for tougher penalties for dishonest agents and establish better disclosures and protections upfront for consumers who invest in such products. The legislation would make “twisting” a third-degree felony, bringing the violation in line with the penalty applied to securities broker-dealers under Florida law, and it authorizes the Department of Financial Services to require agents to repay senior customers they’ve harmed.

The bill would also:

• Limit the surrender charge period for an annuity sold to a senior consumer to five years and the surrender charge to 5%.
  
• Extend the “free look” period for the purchase of an annuity by a senior consumer from 14 to 60 days.
  
• Prohibit the Department of Financial Services from issuing another license to a former licensee who has had his or her license revoked resulting from the solicitation or sale of an insurance product to a senior consumer.
  
• Require an insurer to provide a cover sheet attached to the policy when an annuity is issued informing the purchaser about the free-look period and about how to contact the insurer and the Department of Financial Services if he or she has questions about the annuity.