Insurance Commissioner Jones Applauds Governor For Signing Landmark Annuity Suitability Reform Bill
News: 2011 Press Release
Insurance Commissioner Dave Jones today announced that Governor Jerry Brown signed AB 689, which will establish landmark consumer protections in the annuities marketplace. This sweeping legislation will protect the public, particularly seniors, from fraudulent activities involving these investment-related insurance products. AB 689 was sponsored by the California Department of Insurance and authored by Assembly Budget Committee Chair Bob Blumenfield (D-San Fernando Valley).
"For far too long, seniors have been victimized by insurance agents who aggressively market and sell annuity products that are simply unsuitable for them," said Commissioner Jones. "Many people unwittingly buy these products not realizing that their invested funds won't be available to them or they're terribly expensive to recover if they want to withdraw their money to pay for immediate expenses. It can be financially devastating to seniors on a fixed income. I want to thank Assembly Member Blumenfield for authoring this vital piece of legislation and the Governor for signing it into law."
"This breakthrough will help protect the hard-earned financial security of Californians, especially seniors, and end an alarming breeding ground for fraud," said Assembly Member Blumenfield. "Consumers are frequently sold annuities without understanding that their money will be unavailable for years and prohibitively expensive to recover in the short term. We now have stronger tools to go after scam artists who sell consumers financial products they don't need."
AB 689 requires insurers to verify that an annuity purchase is appropriate for the consumer based on an evaluation of his or her age, income, financial objectives, and other factors. It also authorizes the Insurance Commissioner to revoke an insurance agent's license, impose fines, and restore money lost to the consumer when suitability standards are violated.
AB 689 goes into effect on January 1, 2012.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.