Florida State Insurance Law with Definitions
DFS PENALTIES: Selling, acts as in Insurer, or even engages in activities for Insurers without Certificate of Authority.
1st degree FELONY, a term not exceeding 30 imprisonment years, if total premiums are over $100k. 2nd degree FELONY, up to 15 years imprisonment if total premiums between $20k and $100k. 3rd degree FELONY, fines up to $5k, 5 years imprisonment if total premiums are less than $20k.
DFS PENALTIES: Fraudulent conduct in committing TWISTING, or CHURNING
1st degree MISDEMEANOR and imprisonment up to one year. NON-willful violation $5k fine per violation, WILLFUL $75k fine
DFS PENALTIES: Willful violation of Insurance Code
2nd degree MISDEMEANOR and imprisonment up to 60 days
DFS PENALTIES: Misstatements
2nd degree misdemeanor
DFS PENALTIES: Willfully submitting Fraudulent Signatures
3rd degree FELONY and imprisonment up to 5 years. NON-willful violation $5k fine per violation, WILLFUL $75k fine
PENALTIES: Selling Non-Admitted Carriers
3rd degree felony, personal liability for unpaid claims, and may have license revoked.
Agency
A business location with at least one appointed full time agent, engages or employs individuals to engage in any activity that may be performed only by a licensed agent. Must have completed Agency license renewed every 3 years. Penalty of up to $10k without a license.
Fiduciary
A position of special trust and confidence.
Financial Services Regulation
Administered by Florida CFO, FSC and Director of OIR.
DFS (Department of Financial Services) duties and powers
Agent and Adjuster licensing and investigations (BFI-Bureau of Financial Investigations), finger printing, background and fitness for appointments, protects the public as (DCS-Division of Consumer Services), (DRL-Division of Rehab and Liquidation of insolvent companies), Oversees industry by CODE, Regulates Insurance Companies, Protects Consumers by organizing licensure of Insurance Companies. The CFO can impose PENALTIES on agents for violations of Insurance Code.
Insurance Contract
Agreement, enforceable by law in which the ensurer agrees to pay face amount upon death of the insured, and the policyholder agrees to pay the premium.
Commissioner of OIR
Appointed by FSC
FSC (Financial Services Commission) Responsibilities.
Appointing Commissioner of OIR, Director of OFR which includes the Bureau of Financial Investigations (BFI) which: functions as a criminal justice agency, conducting investigations to protect consumers from financial entities that break state laws and rules.
Admitted
Authorized carriers that have been issued a certificate of authority by conforming to Florida standards for transacting business.
Unfair Marketing Practice
Boycott, Coercion, and Intimidation
Non-admitted Carriers
Carriers that are not state licensed, and not regulated by Florida. They may not solicit through the mail. Companies operating without a certificate are subject to 1st degree felony, and liable for unpaid claims and may lose all licenses.
Unfair Marketing Practice
Churning; when cash values of same company are used to replace with similar policy of same company. It must be demonstrated as a definite benefit for policy owner for it not to be churning.
Members of FSC
Composed of: Governor, CFO, Attorney General and Commissioner of Agriculture.
New Agent Maintaining a License
Continuing Education 24 every 2 years, including a 5 hour law and ethics course specific to the license held. Address change within 30 days after a move must be communicated to DFS, maintain books, records, and accounts for up to three years of business inception.
Unfair Marketing Practice
Defamation; promoting any statement designed to maliciously criticize another company, it is unethical.
Three requirements of CPCU designation
Education, Experience, and Ethics.
OFR Office of Financial Regulation duties and powers
Enforcement of Insurance Code, protects public from unauthorized behavior, conducts audits of carriers every 3 years, monitors marketing activity to avoid unfair trade practices like: twisting, rebating, unsupported replacement, limiting insolvencies, taking over insolvent companies for liquidation.
Insurer
Every person engaged as indemnity, surety, or contractor in the business of entering into contracts of insurance or of annuity, and carriers.
Unfair Marketing Practice
Excess charges, false claims, unfair rate increases for persons in the military, unfair claims settlements, fraud, controlled business
Premium Accountability
Fiduciary responsibility is to turn premiums in immediately to the Insurer. No commingling of premiums with personal funds, or to use for personal reasons.
FSC
Financial Services Commission
Marketing Methods and Practices
Florida Life Insurance Law requirements for agents soliciting life insurance to an applicant must be upheld along with adhering to Ethics, and avoid any Unfair Marketing Practice.
Unauthorized Insurers Process Law
Florida courts have jurisdiction to deal with insurers and their representatives, providing a process for residents of Florida to assert their legal rights, along with Public Law no.15, which declares that the business of insurance, and all associated is subject to the laws of several states.
BFI (Bureau of Financial Investigations)
Functions as a criminal justice agency, conducting investigations to protect consumers from financial entities that break state laws and rules. Can reach outside of State and submit findings for criminal actions to State or Federal law enforcement.
CFO (Chief Financial Officer)
Is elected and part of the Governor's cabinet, head of DFS, member of FSC, oversees Divisions of Insurance Agents (DIA), Insurance Fraud, Consumer Services, and Office of Consumer Advocate.
Certificates of Authority
Issued to the insurer by the Office of Insurance Regulation (OIR) to conduct business. Fines and penalties await all involved when soliciting in the state without it.
OIR (Office of Insurance Regulation) Regulates.
Licensing, rates, policy forms, market conduct, claims, certificates of authority.
Unfair Marketing Practice
Misrepresentation; Misstatements of material fact regarding coverage which may void a contract.
DRL (Division of Rehabilitation and Liquidation of DFS)
Monitors the financial condition of Insurers and Rehabilitates or Liquidates Insurers as needed.
License
Must be obtained for Appointment of an agent with an Insurer. Purpose for it is to become familiar with the Florida Agency laws.
Continuing Education
Must include 3 hours of ETHICS every 2 years. Golden rule.
Insurance Guaranty Fund
NPO whose purpose is to protect policy owners, insureds, beneficiaries, annuitants, payees, and assignees from insolvent Insurers.
OIR
Office of Insurance Regulation
Unfair Marketing Practice
Rebating; offering or extending anything of value to a client that is not already a part of the contract, as an incentive or inducement to purchase.
OFR (Office of Financial Regulation) Responsibilities.
Regulates: financial service companies, securities industry.
State Laws
Set the standards for companies, agents, and policy holder rights, and necessary to maintain the public trust.
Unfair Marketing Practice
Sliding; representing that coverage is required by law, provided free when it is indeed charged, charging a client without informed consent on application.
Insurance Transaction
Solicitation or inducement, preliminary negotiations, effectuation of a contract of insurance, transaction of matters related to delivery.
State of Florida Insurance is regulated by:
State Legislature (laws), DFS, OIR (implements rules for enforcement with quasi powers) State Judicial System (enforces Insurance Code by administering criminal penalties, and reviewing constitutionality of new laws being passed).
OFR agency actions
To protect insurance consumers from unlawful or harmful business practices, promotes additional insurers into FL marketplace.
License Requirements
Trustworthy and competent, at least 18, US Citizen or legal alien with work authorization from the US Bureau of Citizenship and Immigration Services, and a bona fide resident of the state, qualified by knowledge, experience or instruction completing: study course, background check, and examination, up to 5 attempts in one year.
Unfair Trade and Marketing Practices
Twisting, Rebating, Defamation of another company, Misrepresentation.
Unfair Marketing Practice
Twisting; knowingly making any misleading representations of fraudulent comparisons, or omissions to induce a person to lapse a policy. A valid replacement based on accurate data is not twisting.
Unfair Marketing Practice
Unfair discrimination
DFS PENALTIES: Violation of Cease and Desist order
Up to $50,000 fine
OIR duties and powers
insurers' policy approvals, rates, Market conduct examinations to ensure compliance with State laws as 4 sections with unique duties. Life and Health is one of them. Investigations and Market analysis are two others.
