State Laws

Insurance Contract

An agreement enforceable by law in which the insurer agrees to pay a certain amount of money upon the death of the insured, and the policyholder agrees to pay the premium.

The Market Investigation division includes 4 sections. Which of the following is not one of the 4 sections? A) Market Analysis B) Property and Casualty C) Approval D) Special Investigation Unit

C) Approval

The Department of Financial Services can impose what penalty? A) $100,000 fine for a willful violation for submitting fraudulent signatures. B) $10,000 fine for failure to answer a subpoena. C) Fine for violation of a cease and desist order up to $50,000. D) Imprisonment up to 2 years for churning.

C) Fine for violation of a cease and desist order up to $50,000.

What is the fine for Failure to Answer a Subpoena or Order

$1000

Which of the following is not true of a nonadmitted carrier? A) A nonadmitted carrier is also unauthorized. B) An agent may not do business with a nonadmitted carrier. C) The Florida Guaranty Association protects residents who buy from a nonadmitted carrier. D) A nonadmitted carrier is not licensed in Florida.

C) The Florida Guaranty Association protects residents who buy from a nonadmitted carrier.

The administration of state insurance law is the responsibility of who?

Chief Financial Officer (CFO)

Financial Services Commission

Composed of the Governor, CFO, Attorney General, and Commissioner of Agriculture. It appoints the Commissioner of the Office of Insurance Regulation.

Life and Health Section

Conduct exams and investigate business practices of authorized life and health insurers.

Property and Casualty Section

Conduct exams and investigate business practices of authorized property and casualty insurers.

DFS Insurance Fraud

Conducts investigations within or outside Florida as the bureau deems necessary to aid in the enforcement of a suspected violation.

Which of the following forms does not require approval from the OIR? A) Group Certificate B) Application C) Renewal Certificate D) Agent Report

D) Agent Report

What is Prior Approval?

Exists when insurers are not allowed to implement a rate or rate change until it has been approved by the insurance department. The OIR has 30 days to approve or disapprove.

True or False? Under the State Insurance Fraud Department, the Bureau investigators are former police officers.

False

Market Analysis Section

Identifies trends and analyzes patterns of insurer's data related to industry or marketplace issues.

What forms require approval?

Insurance policy or annuity contract form, printed application, group policy certificates, printed rider, endorsement, and renewal certificate.

Investigations- Special Investigation Unit

Investigates allegations of unauthorized and illegal insurance activity and in-depth investigations of authorized insurers.

What is the penalty of Willful Violation of the Insurance Code?

Misdemeanor of the 2nd degree (imprisonment up to 60 days).

Certificate of Authority

No person can act as an insurer and no insurer or its agents, attorneys, subscribers, or representatives can directly

What state entity is responsible for approving a Certificate of Authority for an insurance company?

Office of Insurance Regulation

Other Powers of the DFS

Oversee the insurance industry based on the Insurance Code; organize and license insurance companies including establishing the initial financial requirements; guard against unauthorized insurance activities; regulate insurance company activities, policy forms, provisions and rates.

What are Rates?

Rates for all insurance classes must not be excessive, inadequate, or unfairly discriminatory. Insurers must include rates, rating schedules, rating manuals, premium credits or discount schedules, and surcharge schedules with noted changes.

Office of Financial Regulation

Regulates banks, credit unions, savings association, international bank agencies, financial service companies and securities industry.

Division of Consumer Services

Responsible for assisting consumers, answering general insurance and financial questions from its toll-free helpline, regional service centers, and website.

Which state entity decides conflicts between insurance companies and policyholders?

State judicial system.

Unauthorized Insurers Process Law

Subject certain insurers, their representatives or those aiding such insurers to the jurisdiction of Florida courts in lawsuits by or on behalf of insureds or beneficiaries under insurance contracts. Also provides a process for residents of this state to assert their legal rights on policies issued or delivered by insurers not authorized to do business in this state.

Agent and Adjuster Licensing and Investigations

Supervises methods of obtaining business, including agent licensing and control of unfair trade practices.

Receivership

The Division of Rehabilitation and Liquidation of the DFS monitors the financial condition of insurers and rehabilitates or liquidates insurers as needed. It has the responsibility of performing the duties as receiver of any insurer placed into receivership in Florida.

Unclaimed Property

The department of Commerce Division of Unclaimed Funds handles unclaimed property. Written notice must be sent to apparent owner of unclaimed property, which refers to abandoned and remains unclaimed for 3-5 years. All unclaimed property must be turned over to the state. There are filing and reporting requirements if property remains unclaimed.

What is the Policy Approval Authority?

The office of insurance regulation supervises insurers via approval of new rates and forms, which must be approved by the OIR.

Bureau of Financial Investigations

Functions as a criminal justice agency; conducts investigations to protect consumers from financial entitles that violate state laws and rules.

What are the approved investments to avoid high-risk transactions?

Government paper, first mortgages in secured real estate, policy loans, small amounts of blue chip stock, investment quality corporate bonds.

True or False? Under the State Insurance Fraud Department, the Bureau only conducts investigations within the borders of Florida.

False

True or False? The OFR enforces the Insurance Code and carrying out those duties.

True

Insurance Transaction

solicitation or inducement, preliminary negotiations, effectuation of a contract of insurance, transaction of matters subsequent to effectuation of insurance contract and arising out of it. SPET

What is the penalty for Fraudulent Conduct in Committing Twisting or Churning? Non- Willful penalty? Willful penalty?

1st degree misdemeanor (imprisonment up to 1 year). Non-Willful Violation: $5,000 fine per violation. Willful Violation: $75,000 fine per violation.

What is the penalty for Willfully Submit Fraudulent Signatures? Non-willful penalty? Willful penalty?

3rd degree felony (imprisonment up to 5 years). Non-willful: $5,000 per violation. Willful: $75,000 per violation.

Market Conduct Examinations

A division of the OIR that conducts examinations and investigations of insurers to insure compliance with the statutes and rules.

Which of the following is not a duty of the Department of Financial Services? A) Enforces the Insurance Code by administering criminal penalties. B) Investigate fraud. C) Liquidate Insurance Companies. D)Supervise methods of obtaining business.

A) Enforces the Insurance Code by administering criminal penalties.

What does the DFS provide?

Consumer education and outreach assistance. They receive and compile inquiries and complaints the DFS deems necessary to assist consumers; provide direct assistance and advocacy for customers who request such services and report alleged violations of law by persons licensed by the DFS, OIR or OFR to the appropriate regulator.

True or False? All carriers must be audited at least once ever 4 years. It can be more frequently if warranted.

False, carriers must be audited at least once ever 3 years.

True or False? Monitoring marketing activity to avoid unfair trade practices such as twisting, unsupported replacement and illegal rebating is done by the OIR.

False, the OFR is responsible for these duties.

True or False? The OIR collects, proposes, publishes or disseminates information regarding duties.

False, the OFR is responsible for this.

True or False? Under the State Insurance Fraud Department, The Bureau of Insurance Investigations is responsible for conducting investigations.

False.

An agent willfully violated a requirement in the Insurance code, what was the penalty?

Imprisonment up to 60 days

What is the Office of Insurance Regulation (OIR) responsible for?

Regulating Licensing, Rates, Policy forms, Market conduct, Claims and Certificates of Authority. They protect the public through oversight of insurance company solvency. Maintaining expertise related to life and health, property and casualty, specialty lines and other insurance entities.

True or False? Under the State Insurance Fraud Department, if a criminal law has been violated, the office will refer it to the appropriate law enforcement agency.

True

True or False? The OFR is responsible for protecting the public against unauthorized behavior.

True.

True or False? The OFR takes over insolvent companies and attempts to restore financial integrity.

True.

What is the fine for Violation of Cease and Desist Order?

Up to $50,000