(Unit 6) Miscellaneous Basic FL Insurance Laws

The statutory definition states that the indemnification or payment is based upon

"determinable contingencies"

The HO-6 Condo policy is required to have a minimum of $2,000 for Loss Assessment Coverage and the coverage is statutorily ______ over any other insurance.

"excess"

Typical Fungi limits are:

$10,000 for each covered loss and $20,000 for the annual policy period.

n Florida the HO-6 Condo policy is required to have a minimum of

$2,000 for the Coverage of Loss Assessment.

FIGA covers up to __________,

$300,00

Hurricane Deductibles:

$500 minimum applies.

624.10 Transacting insurance Transact" with respect to insurance includes any of the following

- solicitation or inducement - preliminary negotiations - effectuation of a contract of insurance - transaction of matters subsequent to effectuation of a contract of insurance

The three type of Reinsurance

1. Proportional Reinsurance 2. Non-proportional Reinsurance 3. facultative reinsurance

Possible consequences for aiding and abetting an unauthorized insurer include

1. a third degree felony. 2. responsibility to pay for all unpaid claims. 3. suspension and/or revocation of insurance licenses.

Which FL statute defines insurance?

624.02 Insurance

Which FL statute defines Insurer?

624.03

Which FL statute defines Domestic," "foreign," "alien?

624.06 "Domestic," "foreign," "alien" insurer defined.-

Which FL statute defines Authorized," "unauthorized" insurer?

624.09 "Authorized," "unauthorized" insurer defined

Which FL statute Transact with respect to insurance?

624.10 Transacting insurance

Which FL statute prohibits any one person or entity from transacting insurance unless they are authorized to do so by the state as evidenced by a Certificate of Authority issued by the office?

F.S. 624.401 Certificate of authority required

What is FIGA?

Florida Insurance Guaranty Association

624.03 "Insurer" defined

Insurer" includes every person engaged as indemnitor, surety, or contractor in the business of entering into contracts of insurance or of annuity.

(NWS)

National Weather Service

Which party are not a member companies of FIGA?

Surplus lines insurers

September 11, 2001 the Federal Reserve Board created?

Terrorism Risk Insurance Act (TRIA)

FCRA

The federal Fair Credit Reporting Act

An "_______" insurer is one which does not have a certificate of authority issued by the department to transact insurance in this state.

Unauthorized

624.02 Insurance" defined -"Insurance

a contract whereby one undertakes to indemnify another or pay or allow a specified amount or a determinable benefit upon determinable contingencies.

The Florida Insurance Guaranty Association establishes and maintains:

a service-oriented operation for processing covered claims of insolvent members.

FIGA's membership is composed of :

all Florida licensed direct writers of property or casualty insurance.

Hurricane deductible applies on an

annual basis

If an insurer is one duly authorized by a subsisting certificate of authority issued by the department to transact insurance in this state, then they are _______.

authorized

Property Insurance policies with hurricane deductibles: a. the deductibles are on a per occurrence basis not a calendar year basis b. the deductibles are on a calendar year bases and not a per occurrence basis

b. the deductibles are on a calendar year bases and not a per occurrence basis

Liquidation is similar to

bankruptcy

Your insured has a Homeowners insurance policy and has filed a mold claim. It has been determined by the insurance company that she has $8,000 in mold damage. How much of this will be paid under a standard Homeowners insurance policy? a. $1,000 will be paid, as this is the typical fungi limit in a Homeowners policy b. $5,000 will be paid, as this is the typical fungi limit in a Homeowners policy c. $8,000 will be paid, as the $8,000 in damages is less than the typical fungi limit of $10,000 in a standard Homeowners policy d. $0 as mold is typically no covered in a Homeowners insurance policy (Review)

c. $8,000 will be paid, as the $8,000 in damages is less than the typical fungi limit of $10,000 in a standard Homeowners policy

An insurance company owned by stockholders is a.... a. Mutual Insurer b. Reciprocal Exchange c. Stock Insurance Company d. Lloyds of London

c. Stock Insurance Company

What is the key distinction between an insurer and a reinsurer? a. insurance companies protect against fortuitous events and reinsurers do not b. insurance companies are domestic and reinsurers are alien c. insurers primarily engage in the direct protection of individuals and business; reinsurers insure insurers d. insurers are organized as mutuals and reinsurers are organized as stock companies (Review)

c. insurers primarily engage in the direct protection of individuals and business; reinsurers insure insurers

You have been advised by your agency manager that your agency will now be using a premium finance company for your large Homeowners Insurance policies. The premium finance company you are using charges 15% simple interest to the insured. Is the charge of 15% simple interest lawful? a. there are no laws which constrain a stated maximum interest rate by a premium finance company b. no, 15% simple interest is unlawful as it exceeds the 8% legal maximum c. yes, 15% simple interest is lawful as it did not exceed the 18% legal maximum d. any percent of simple interest is acceptable but there is a 12% maximum on compound interest (Review)

c. yes, 15% simple interest is lawful as it did not exceed the 18% legal maximum

You are at a baseball game with an insured and initiate a conversation about a Personal Umbrella policy you believe the customer needs. a. you are not transacting business unless you complete an application b. you are not transacting business unless you tell the customer that he is covered c. you are transacting insurance d. you are not transacting business unless you collect a premium

c. you are transacting insurance

Catastrophic Ground Cover Collapse is the geological activity resulting in ALL of the following EXCEPT? a. abrupt collapse of the ground cover b. depression in the ground cover clearly visible to the naked eye c. structural damage to the building/dwelling d. condemnation of the building/dwelling by the insurance company (Review)

d. condemnation of the building/dwelling by the insurance company

A _________ insurer is one formed under the laws of this state.

domestic

The Gramm-Leach-Bliley Act requires

financial institutions like insurance companies to explain their information-sharing practices to their customers and to safeguard sensitive data.

FIGA covers up to an additional __________ if:

if the damage is to a structure and contents on a homeowner's claim

624.06 "alien defined"

insurer is an insurer other than a domestic or foreign insurer

624.06 "foreign defined"

insurer is one formed under the laws of any state, district, territory, or commonwealth of the United States other than this state.

624.06 "Domestic defined"

insurer is one formed under the laws of this state.

facultative reinsurance,

is also used but is much more limited in scope. With facultative reinsurance, the insurer negotiates on a risk by risk basis for each exposure and the reinsurer is not obligated to accept any/all of the offered risk.

What does F.S. 626.112(8) explicitly prohibits for a licensed person?

no referral fee or commission can be paid to a licensed entity if the offer of referral is conditioned upon a sale.

Stock Insurance Companies

owned by shareholders who elect a board of directors which oversees the management of the company.

Mutual Insurance Companies

owned by the policyholders; the policyholders are in effect "shareholders".

F.S. 624.401 Certificate of authority required First degree felony if

premium in transaction is over $100,000

F.S. 624.401 Certificate of authority required Second degree felony if

premium in transaction is under $100,000

F.S. 624.401 Certificate of authority required Third degree felony if

premium in transaction is under $20,000

F.S. 624.401 Certificate of authority required

prohibits any one person or entity from transacting insurance unless they are authorized to do so by the state as evidenced by a Certificate of Authority issued by the office

What does F.S. 626.112(8) address?

referral fees that are conditioned upon an actual sale

Loss assessment coverage is

statutorily excess over any other insurance.

What do The federal Fair Credit Reporting Act (FCRA) promote?

the accuracy, fairness, and privacy of information in the files of consumer reporting agencies.

Proportional Reinsurance

the insurer and reinsurer establish a percentage of premium and loss exposure to be borne by each; a pro-rata distribution of the premium and the loss exposure.

Non-proportional Reinsurance:

the insurer and reinsurer establish a price for the reinsurance contract and the exposure to loss is based upon a threshold to loss incurred by the insurer; the reinsurer pays all loss amounts after the threshold has been pierced.

Reinsurance

the method by which insurers transfer loss exposure they have taken on in their selling and underwriting of insurance policies to business and individuals to: other insurers (reinsurers). product purchased by insurance companies to transfer portions of their risk exposure thus making their exposure to loss more manageable and predictable;

What does F.S. 626.112(8) explicitly prohibits for an unlicensed person?

the statute explicitly prohibits payment to any unlicensed person any fee or compensation for a referral

What provides stability to the insurance company in the event of either large aggregated losses over a period of time (per year) or specific losses due to catastrophic losses?

transfer of exposure and loss

true or false? Windstorm coverage can be completely rejected.

true

You are at a friend's party when you are introduced as "an insurance guru" to a couple you have never met before. The couple starts asking questions about insurance in general and the husband goes out to their car and brings to you a copy of their auto insurance declarations page. The couple wants to know if they are adequately insured. You tell them that they are under-insured and schedule an appointment with them for next Tuesday. Is this considered "transacting insurance"?

yes