Key Takeaways
- Florida adopted the NAIC Suitability in Annuity Transactions Model Regulation requiring a best interest standard
- Producers must gather complete financial information before recommending an annuity including income, assets, and risk tolerance
- Documentation of the suitability analysis must be maintained for at least 5 years
- Florida requires enhanced disclosures for annuity transactions including fees, surrender charges, and material limitations
- Insurers must establish supervision systems to review annuity transactions for compliance
Florida Annuity Suitability Requirements
Florida has adopted comprehensive annuity suitability regulations based on the NAIC Suitability in Annuity Transactions Model Regulation to protect consumers from unsuitable annuity sales.
Best Interest Standard
Florida requires annuity recommendations to meet a best interest standard:
Core Obligations
| Obligation | Requirement |
|---|---|
| Best Interest | Recommendation must be in consumer's best interest |
| Care Duty | Exercise reasonable diligence, care, and skill |
| Disclosure Duty | Disclose material conflicts of interest |
| Documentation Duty | Document basis for recommendation |
What "Best Interest" Means
The producer must:
- Have reasonable basis for the recommendation
- Believe recommendation is in consumer's best interest
- Consider the consumer's financial situation and needs
- Not prioritize compensation over consumer needs
Exam Tip: Florida's best interest standard is higher than the older "suitability" standard. The recommendation must genuinely serve the consumer's interests.
Required Consumer Information
Before recommending an annuity, the producer must gather:
Consumer Profile
| Category | Information Required |
|---|---|
| Age | Current age and retirement status |
| Annual Income | All sources of income |
| Financial Situation | Assets, savings, investments |
| Tax Status | Tax bracket, qualified/non-qualified |
| Financial Experience | Investment knowledge |
| Financial Objectives | Goals for the annuity |
| Intended Use | Purpose of the funds |
| Time Horizon | When funds will be needed |
| Liquidity Needs | Need for access to funds |
| Risk Tolerance | Willingness to accept risk |
| Existing Coverage | Current insurance/annuities |
Documentation Requirements
Florida requires thorough documentation:
What Must Be Documented
- Consumer profile information gathered
- Products considered
- Why the recommendation was made
- How the product meets consumer's needs
- Any concerns addressed
Records Retention
| Record Type | Retention Period |
|---|---|
| Suitability analysis | 5 years |
| Consumer disclosures | 5 years |
| Transaction records | 5 years |
| Recommendation basis | 5 years |
Consumer Refusal to Provide Information
If a consumer refuses to provide required information:
Required Steps
- Document which information was refused
- Inform consumer recommendation may not be suitable
- Obtain signed acknowledgment
- May proceed if consumer signs
Acknowledgment Must State
- Consumer was advised of importance of information
- Consumer chose not to provide it
- Recommendation may not be in best interest
- Consumer takes responsibility
Insurer Supervision Requirements
Florida insurers must establish supervision systems:
Supervision Duties
| Duty | Requirement |
|---|---|
| Written Procedures | Policies for suitability |
| Training | Train producers |
| Review System | Review transactions |
| Corrective Action | Address violations |
| Record Keeping | Maintain records |
Transaction Review
Insurers must review for:
- Completeness of documentation
- Appropriateness of recommendation
- Red flags (churning, unsuitable products)
- Producer compliance patterns
Florida-Specific Annuity Rules
Florida Free Look Period
Florida provides a 21-day free look period for annuities:
| Product | Free Look Period |
|---|---|
| Annuities | 21 days |
| Life Insurance | 14 days |
| LTC Insurance | 30 days |
Exam Tip: Florida's 21-day free look for annuities is longer than many states. This is a frequently tested Florida-specific rule.
Variable Annuity Requirements
For variable annuities in Florida:
- Life insurance license required
- FINRA Series 6 or 7 required
- Prospectus must be delivered
- Enhanced suitability analysis
Penalties for Violations
OIR and DFS can impose penalties:
| Violation | Potential Penalty |
|---|---|
| First offense | Warning, fine |
| Repeat offense | Suspension or revocation |
| Pattern of violations | License revocation |
| Consumer harm | Required restitution |
| Per violation | Up to $5,000 |
Aggravating Factors
Regulators consider:
- Whether violation was intentional
- Consumer harm caused
- Producer's disciplinary history
- Whether producer cooperated
Safe Harbor Provisions
Fiduciary Standards
Producers subject to fiduciary standards under SEC or DOL may satisfy Florida requirements by meeting those standards if:
- Fiduciary standard meets or exceeds Florida's
- Producer complies fully
- Documentation is maintained
Exam Tip: Insurance-only producers (not SEC or DOL registered) must fully comply with Florida's suitability requirements.
What is the free look period for annuities in Florida?
Under Florida annuity suitability rules, what standard must producers meet?
How long must Florida producers retain annuity suitability documentation?
Which of the following is NOT required consumer information under Florida suitability rules?
What must a producer do if a consumer refuses to provide required information in Florida?