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Governor Jerry Brown signed AB 689 this past week, which will establish consumer protections in the annuities marketplace.
This legislation is aimed at protecting 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.
Insurance Commissioner Jones applauded the signature stating, "For far too long, seniors have been victimized by insurance agents who aggressively market and sell annuity products that are simply unsuitable for them. 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 author 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 is modeled after the most recent version of the NAIC model act on this topic. The insurance industry worked very hard over the years to convince the Legislature and the Insurance Commissioner to adopt an NAIC-type bill.
AB 689 goes into effect on January 1, 2012.