Chapter 5.2

License Transfer

A license in good standing can be transferred from another state as long as it is in the same line of authority and has been active for at least one year prior to relocation The agent must become a resident of Florida and submit an application and the appropriate fees within 90 days

Maintenance and Duration

License is perpetual and remains in effect unless revoked or suspended as long as fees are paid and continuing education requirements are met Continuing education - must be completed every reporting period: - 24 hours of CE every 2 years, including a 4-hour Law and Ethics update course - Excess hours can be carried over to the next compliance period - A nonresident agent may use the hours earned in home state to meet the Florida CE requirement if the home state has reciprocity with Florida - If multiple licenses are held, the agent must complete an update course in at least one of the lines held Report changes of name or address (including residence, business, email) within 30 days Report administrative action taken by any government or other regulatory agency that relates to insurance, securities, or activities involving fraud, dishonesty, untrustworthiness, or breach of fiduciary duty within 30 days Report any instances of being found guilty, or pleading guilty, or nolo contendere ("no contest") to a felony or a crime punishable by imprisonment of 1 year or more in any jurisdiction within 30 days License is not required if a person does not receive commissions Disciplinary actions: Suspension, revocation or refusal to renew a license Cease and desist order Monetary fines Imprisonment

Admitted/Authorized

Licensed and authorized to transact business in Florida Obtains a Certificate of Authority from the Office of Insurance Regulation

Appointments

Licensee must be properly appointed by an insurer to transact insurance Agent has 48 months (4 years) to have a license appointed; if not appointed within 48 months of license application, license terminates Appointment remains in effect until revoked, suspended, or terminated, but must be renewed every 2 years Insurer is responsible for renewals and paying the fee - Late renewal requests must be accompanied by a late filing fee paid by the insurer, not the licensee Appointments are not transferable

Defamation

Making false statements in writing (libel) or verbally (slander) with the intent of injuring any person engaged in the business of life insurance

Churning

Replacing policies within the same company, often by the same producer in order to generate commissions Using policy values in an existing policy to purchase another policy or contract with the same insurer

Sliding

Representing to an applicant that a specific ancillary coverage or product is either: - Required by law when it is not; or - Included in the policy at no charge when there is a charge

Financial Services Commission

Responsible for administration and regulation of insurance 2 offices: Office of Financial Regulation and Office of Insurance Regulation

Commissions and Fees

Agents are compensated by a commission which is a percentage of the initial (first year) and subsequent premiums Commissions may only be shared with another Licensed and Appointed Agent

Unfair Claims Settlement

Any form of misrepresentation of pertinent facts Agent and insurer must acknowledge claim promptly Insurer must process the claim in a timely manner Insurer cannot delay the benefit payment Insure must provide a reasonable explanation in writing if there is a reason for denial

False Advertising

Circulating any material that is untrue, deceptive, or misleading Misrepresenting policy terms, benefits, dividends, or advantages Representing an insurance policy as a share of stock Using names or titles that may misrepresent the true nature of a policy

Office of Financial Regulation (OFR)

Commissioner of Financial Regulations Regulates activities of banks, finance companies, and securities industry

Office of Insurance Regulation (OIR)

Commissioner of the OIR, appointed by the Financial Services Commission Regulates activities of insurers: licensing, certificates of authority, rates, policy forms, claims, solvency "69O" Rules - adopted by the OIR; regulate insurers

Unfair Discrimination

Knowingly making or permitting any unfair discrimination between individuals with regards to the business of insurance

Solicitation

Describing insurance benefits or terms Distributing an invitation to contract to prospective purchasers Making general or specific recommendations Completing orders or applications Comparing insurance products Offering or attempting to negotiate a viatical settlement contract on behalf of another person

Nonadmitted/Unauthorized

Does not come under the jurisdiction of the CFO & Office of Insurance Regulation with regard to examination of its financial soundness, and/or approval of types of coverages offered If an agent is found guilty of aiding and abetting a nonadmitted insurer, 3rd degree felony; liability for all unpaid claims; and suspension or revocation of all insurance licenses

Domicile

Domestic - home office is incorporated or chartered in the same state where policies are being sold Foreign - home office is located in a different state than the one where policies are being sold Alien - home office is chartered in any country other than the United States; considered an alien insurer in ALL U.S. states and territories

Licensing Process

Florida law requires any individual who solicits insurance to hold a valid license issued by the Department of Financial Services Minimum age requirement (18 years old) Pass examination - The license exam may not be taken by an applicant more than 5 times in a 12-month period Submit application and fees Be of good character Have not committed any violations that are grounds for license denial

Chief Financial Officer (CFO)

Head of the Department of Financial Services Independently elected Member of the Governor's cabinet Member of the Financial Services Commission Duties: - Administer regulation of insurance agents and insurers; - Investigate insurance fraud and unfair trade practices; - Enforce the Insurance Code and carry out those duties set forth by the Code "69B" Rules - adopted by the Department; regulate agents

Twisting

Illegally inducing any person to lapse, forfeit, surrender, convert an existing policy to replace it with another insurer's policy

Coercion

Imposing one's will on another; falsely stating that a client must buy one product in order to qualify for another A prime example of coercion is a loan officer who claims that a client must buy mortgage life insurance in order to qualify for the loan

Code of Ethics

Incorporated into Florida State Laws under Rule 69B-215 NAIFA has its own Code of Ethics Standards of agents' behavior in dealing with the public (including allowable and prohibited practices) Business of insurance is a public trust in which all agents have a common obligation to work together in serving the best interests of the insuring public Violation of Ethics Laws can result in license suspension or revocation Willful offenses of twisting or churning subject to a fine up to $75,000 per violation

Types of Licenses

Individuals - resident and nonresident Temporary license - valid for 6 months; issued to maintain the existing business Agency - a business location at which an individual, firm, partnership corporation, association or other entity engages in any activity that by law can only be performed by a licensed insurance agent; does not include an insurer or adjuster - A licensed agent must be designated to be in full-time charge of each licensed agency location and is deemed the Agent in Charge Unaffiliated agent - a licensed agent not appointed by any insurer, but is self-appointed; acts as an independent consultant for a fee that must be established through a written contract with the parties involved

Rebating

Kickbacks - giving anything of value in exchange for purchasing a policy Florida allows rebating under STRICT guidelines Most insurers do not allow rebating

Controlled Business

Selling insurance on an agent's own life or property, or on that of the agent's family members or business associates Illegal if commissions from controlled business exceed 50% of all commissions

Transacting Insurance

Solicitation or inducement to purchase insurance (presenting) Preliminary negotiations toward the sale of insurance (take app) Effectuation of a contract of insurance (issue & deliver policy) Transaction of matters subsequent to effectuation of a contract of insurance or arising out of it (servicing the client after the sale)

Suspension, Termination, Revocation of License

Unlawful rebating Twisting Misrepresentation of a policy, agent or insurer Excessive Controlled Business Fraud Violating any ruling of the CFO Violating any provision of Florida Insurance Law Incompetence or untrustworthiness Violating the Code of Ethics Sale of an unregistered security Representing an unauthorized insurer Sliding Felony conviction

Misrepresentation

Untrue, deceptive or misleading information in regard to the terms of an insurance contract, insurance company, insurance agent including the financial standing of any insurer Omission of a material fact - Innocent misrepresentation of a material fact is grounds to void a contract; misrepresentations of immaterial facts may also make contract voidable

Ownership

Stock: - Owned and controlled by stockholders - Sell participating and nonparticipating policies - Stockholders have voting rights (elect Board of Directors) - Dividends are a share of profits and are taxable Mutual: - Owned and controlled by its policyowners - Sell ONLY participating policies - Policyowners have voting rights (elect Board of Directors) - Dividends are a return of premium and are NOT taxable Fraternal Life Insurance Organizations/Fraternal Benefit Society: - Operates as a Corporation, Society or Association - Is for the benefit of its members and beneficiaries - Not for profit; lodge system - Life Insurance is in the form of a Certificate of Membership instead of a policy (Group Insurance)

Administration of Insurance Laws

The Chief Financial Officer (CFO) The Financial Services Commission The Commissioner of the Office of Insurance Regulation