2. General Insurance

Agent in Charge

- A full-time licensed general lines agent or life or health agent must be appointed to manage each branch agency. - If an agency has more than one branch, at least one licensed agent must represent the insurer at each location.

Legal Reserve Life Insurer vs. Assessment Life Insurer

- A legal reserve life insurance company is required by state law to maintain certain minimum amounts of reserves to ensure that it can pay its policy obligations at maturity; Part of each premium is paid into a reserve fund, which is used to pay living and death benefits to insureds. -An assessment life insurer, on the other hand, is not legally required to maintain reserves, although it may do so voluntarily. Premium payments are not fixed and can vary depending on the insurer's experience; Assessment life insurers are not allowed to operate in Florida, except for certain multiple employer welfare arrangements

Fiduciary Duties

- Agents must maintain records showing receipts and disbursements for each separate account for at least three years after payment. The Department or Office may examine these records at any time. - If they do not immediately remit funds they receive to the insured or insurer, they must deposit the funds in a separate account.

Authorized, Unauthorized, and Eligible Insurers

- An insurer may not transact insurance in Florida unless it has a certificate of authority - The Director issues certificates of authority, which specify the kinds of insurance that the insurer is authorized to transact, to qualified insurers

Continuing Education

- Every insurance agent licensed in Florida is required to complete at least 24 hours of continuing insurance education every two years in order to renew his or her license. - At least three hours must be in ethics.

Legal Reserve Requirement

- Florida requires insurers to maintain a minimum amount of legal reserves to guarantee the payment of life insurance claims and benefits - Insurers must maintain reserves equal to the present value of future guaranteed death benefits, less the present value of future premium payments

Administrator as Intermediary

- If an insurer uses the services of an administrator, the administrator must hold all funds received on behalf of an insurer in a fiduciary capacity - If funds are not immediately remitted to the insurer, the administrator must deposit the funds in a fiduciary account. An administrator's records must accurately reflect the deposits and withdrawals made for each insurer.

Review of Insurers' Finances

- Insurers are required to file an annual statement regarding their financial condition, transactions, and affairs with the Office by March 1 - Quarterly statements must also be filed - Each year, insurers are also required to file an audited financial report with the Office before June 1. Insurers with less than $1 million in premiums and fewer than 1,000 policyholders are exempt from this requirement.

Effect of Rules

- The Department of Financial Services and the Office of Insurance Regulation may adopt rules to carry out their statutory duties. - Anyone who willfully violates a rule will have his or her license or certificate of authority suspended or revoked, in addition to other penalties

Failure to notify the Department of any of these changes in a timely manner subjects the producer to:

- a fine of up to $250 for the first offense - a fine of at least $500 for subsequent offenses - license suspension or revocation

Excess and Rejected Business

- an agent may place business with another insurer if the agent's own insurer rejects the application or if the insurance exceeds the amount the agent's insurer will write - Within 15 days after the end of each month, an insurer accepting excess or rejected business from an agent must report to the Department the name, address, telephone number, and Social Security number of each agent from whom the insurer receives more than 24 risks during the year

(Holocaust Act) Each year, insurers must report the following to the Office:

- any legal relationship they have with an international insurer that issued a policy to a Holocaust victim between 1920 and 1945 - the number and total value of such policies - any claims filed by Holocaust victims and beneficiaries - attempts made to locate beneficiaries of such policies explanations of any claim denials or pending claims - A person or insurer who violates any provision of the act may be fined $1,000 per day.

Violation of Cease and Desist Orders

- fine up to $50,000 - suspend or revoke the person's license - impose a fine and suspend or revoke a license

Buyer's Guide

- helps prospective buyers determine what kind of insurance they need, how much insurance they should buy, and how they can find a policy that best suits their needs and objective - An insurer is required to provide one to all prospective buyers before accepting the initial premium, unless the buyer has a free-look period of at least 14 days. In that case, the guide must be delivered with the policy or before it. An insurer must also give a guide to any prospective buyer upon request

Duties of Replacing Insurer

- insurer is required to send a "Comparative Information Form" that gives information about the replacement policy to the insured upon request - The form must be sent within five business days after the insurer receives the application and the completed "Notice to Applicant Regarding Replacement of Life Insurance" from the producer, or on the date the replacement policy is issued, whichever is sooner - The replacing insurer must keep copies of the Notice, requested Comparative Information Forms, and sales proposals for at least three years or until it is next examined by the insurance department, whichever is later

A person must notify the Department within 30 days of a change in:

- name - residential address - principal business street address - mailing address - telephone number - email address

Mail Order Insurance Companies

- operates primarily by mail and does not use producers to solicit prospects - must designate a Florida resident agent to be their agent of record through whom insurance applications are taken and policies are delivered

when the insurer or agent discloses nonpublic personal financial information to any of the following, requirements do not apply:

- persons who have a legal or beneficial interest relating to the customer - persons who act as a customer's fiduciary or representative - the insurer's or agent's attorneys, accountants, and auditors - law enforcement agencies or the Office of Insurance Regulation

The requirements for the initial privacy notice and the right to opt out also do not apply when the insurer or agent discloses nonpublic personal financial information to

- prevent insurance fraud or unauthorized transactions; - resolve customer disputes or inquiries - comply with federal, state, or local laws, rules, or other legal requirements.

Florida law also prohibits:

- rejecting an insurance policy required in connection with a loan because an agent unaffiliated with the financial institution sold it - imposing an extra charge on insurance policies that are required in connection with a loan - disclosing insurance information to third parties without the customer's written consent.

An unauthorized insurer or person representing such an insurer must pay the following fines for violating the insurance code or order of the Office or Department:

- up to $1,000 for each nonwillful violation - up to $10,000 for each willful violation

A person who has been licensed for 25 years or more and is a CLU or a CPCU or has a Bachelor of Science degree in risk management or insurance with 18 or more semester hours in upper-level insurance-related courses must complete____ of continuing education every ___.

10 hours/ two years

a person who has been licensed for six or more years must complete ______ of continuing education every two years in intermediate or advanced-level courses

20 hours

how long is the free look period for fixed/variable/market value annuities

21 days

Merger or Consolidation

A domestic fraternal benefit society may consolidate or merge only with another fraternal benefit society.

Permitted Compensation Arrangements

A producer's commission for the sale of a Medicare supplement policy in the first year following its effective date cannot exceed 200 percent of the commission paid for selling or servicing the policy in the second year. Commissions for subsequent renewals must be the same as that for the second year and must be paid for at least five renewal years.

Fictitious Groups

Insurers may not offer life and health insurance to these, which are formed specifically to obtain insurance.

False or Fraudulent License Applications

All claims and application forms must contain the following statement: - "Any person who knowingly and with intent to injure, defraud, or deceive any insurer files a statement of claim or an application containing any false, incomplete, or misleading information is guilty of a felony of the third degree."

Insurer Appointment

An insurer can appoint any number of agents it wants to transact insurance business on its behalf. - The insurer appoints an agent by applying to the Department, which will approve an appointment after receiving the application and appointment taxes and fees - An agent may not transact insurance until he or she has been appointed by an insurer.

Real Estate

An insurer may own real property as an investment only if: - it does not exceed 5 percent of the insurer's admitted assets - the amount of any one property does not exceed more than 1 percent of the insurer's assets - the amount in unimproved land does not exceed 0.5 percent of the insurer's assets - and there is no time limit for disposing of the real estate - The amount of real property that an insurer holds may not exceed 15 percent of its assets (although the Office may permit a greater amount)

Notice of Right to Opt Out Required

An insurer or agent may also be required to notify its customers of the insurer's or agent's right to disclose nonpublic personal financial information about the customer to nonaffiliated third parties, and the customers' right to prevent this disclosure. When a customer chooses to prevent this disclosure, he or she "opts out" of the otherwise permissible disclosure.

Annual Notice Required

An insurer or agent must notify its current customers of its privacy policies or practices at least once every year

Exception for Certified Public Accountants

Certified public accountants (CPAs) are exempt from Florida's licensing requirements, if they simply advise clients regarding the need to obtain insurance, the amount of insurance needed, or the line of coverage suited for the client. - A CPA cannot directly or indirectly receive or share in any commission or referral fee for performing these activities.

Insurer Investments

Florida regulates the types of assets in which insurers may invest. Generally, insurers may invest in corporate bonds, cash equivalents, interest-bearing securities, mortgages, real estate, policy loans, and obligations of federal, state, and local governments

Limits on Investments

Insurers are also required to earn enough on their investments to maintain legally required reserves

Medicaid Fraud

If a Medicaid recipient receives benefits from a third party against which Medicaid has recovery rights, the person must either repay the third-party benefits to Medicaid within 60 days or place the benefits in a trust account for Medicaid's benefit

Failing to File an Application Penalty

If an agency must be licensed but fails to file an application for a license, the Department may impose a penalty of up to $10,000. An agency that fails to become registered may be fined up to $5,000.

Insurance Sales by Financial Institutions

In Florida, banks and other financial institutions may conduct insurance transactions only through Florida-licensed insurance agents representing insurers or surplus lines insurers that are authorized to transact insurance in the state

Right to Examine (Free Look)

Individual life insurance policies must contain a free-look period of at least 14 days during which the policyowner can examine the policy and return it for a full refund of premium if not satisfied for any reason. - Fixed annuities, variable annuities, and market value annuities must contain a free-look period of 21 days.

Life Insurer Classifications

Insurance companies are classified according to where they were incorporated or organized.

Prohibited Kickbacks and Rebates by Health-Care Providers and Facilities

It is unlawful for a person, including health-care providers and health-care facilities, to offer or pay a commission, rebate, kickback, or bribe, or engage in a split-fee arrangement, to induce a person to refer patients or patronage to or from a health-care provider or health-care facility

can administrators pay claims from a fiduciary account?

No

Advertising Life, Health, and Annuity Contracts

No one may misrepresent the terms, benefits, or advantages of an insurance policy. No one may make false or misleading statements about dividends paid on a policy or on similar policies, and no one may make false or misleading statements about the financial condition of an insurer.

Investigation of License Applicants

The Department of Financial Services or the Office of Insurance Regulation may investigate an applicant for an insurance license to determine the applicant's qualifications, residence, prospective business location, and any other matter related to the protection of the public

Cease and Desist Orders

The Department or Office may issue a complaint to a person who is or has engaged in conduct that - demonstrates lack of fitness or trustworthiness to transact insurance; - is hazardous to the public; - constitutes unsound business operations that are hazardous to policyholders, stockholders, creditors, or the public; - violates the insurance code; - violates a rule or order of the Department or Office; - breaches a written agreement with the Department or Office.

Penalties for Viatical Settlement Providers

The Office can suspend, revoke, deny, or refuse to renew for the following reasons: - making a misrepresentation in a license application - engaging in fraudulent or dishonest practices - exhibiting untrustworthiness or incompetence to act as a viatical settlement provider - demonstrating a pattern of unreasonable payments to viators - being found guilty of a felony or misdemeanor involving fraud or moral turpitude - issuing viatical settlement contracts that were not approved by the Office - failing to honor contractual obligations - dealing in bad faith with viators - violating the insurance code - failing to meet the initial requirements for licensing - using life expectancies from life expectancy providers that are not registered with the Office

Privacy of Consumer Financial and Health Information

The Privacy of Consumer Financial and Health Information Regulation governs how insurers and their agents treat personal health information and personal financial information from individuals

Holocaust Victims Insurance Act

The purpose of the Holocaust Victims Insurance Act is to promptly identify the potential and actual insurance claims of Holocaust victims and their heirs and beneficiaries and to ensure that such individuals receive help in filing and receiving payment of their claims

Scope of Regulation

The regulation applies to: - all nonpublic personal financial information about individuals who obtain products or services from insurers and producers for personal purposes - all nonpublic personal health information.

Fraternal Benefits

may offer the following benefits: - life insurance - endowment contracts - annuities temporary or permanent disability insurance - hospital, medical, or nursing benefits - monument or tombstone benefits to the memory of deceased members - other benefits that life insurers may provide

The ________ will list all life insurance policies that would be replaced by the new policy and will identify the name of the insurer, the insured, and the new policy

notice of replacement

Initial Notice

When collecting or using nonpublic personal financial or health information, an insurer or agent is required to: - notify individuals about the insurer's or agent's privacy policies and practices; describe conditions under which an insurer or agent may disclose this information to affiliated companies and nonaffiliated third parties - provide methods for individuals to prevent an insurer or agent from disclosing this information.

Notice of Replacement

When submitting an application to an insurer for a life insurance policy, the producer is required to provide a statement signed by the agent and the applicant that indicates whether the applicant already has any existing insurance. If the applicant does not have any of these, the producer is not required to do anything more.

Fraternal Life Insurance Organizations

a nonprofit entity that does the following: - operates on the lodge system - has a representative form of government - has no capital stock - sells insurance primarily to its members.

An unlicensed person who willfully violates an emergency rule or order of the Department, Office, or Commission commits

a third-degree felony

Mutual Insurers

an incorporated insurer but is owned by its policyholders, who hold policies as their evidence of ownership. A mutual company does not have permanent capital stock and has a governing body elected by its policyholders

Stock Insurers

an incorporated insurer owned by stockholders. Ownership is evidenced by shares of stock, and profits are distributed as stock dividends

Exceptions to Requirement for Opt Out Notice

an insurer or agent is not required to notify customers of their right to opt out when the nonpublic personal financial information will be disclosed to nonaffiliated third parties to perform services for the insurer or agent. However, the insurer or agent must give the initial notice about its privacy policies and practices and prohibits the third party from disclosing or using the information for other purposes.

Certificate of Authority

an insurer that has a _____ is described as an admitted or authorized insurer; A company that does not have a one is considered a nonadmitted or unauthorized insurer

Florida Life Insurance Solicitation Law requires insurers to provide certain information to life insurance purchasers that will help them:

annuities credit life insurance group life insurance life insurance policies subject to ERISA variable life insurance

Insurance Solicitation

attempting to persuade a person to purchase insurance by: - describing a policy's benefits, terms, premiums, or rates of return; - distributing an invitation to contract; - making product recommendations; - completing orders or applications for insurance; - comparing insurance products, giving advice about insurance, or interpreting policies; - offering to negotiate a viatical settlement contract for another person.

An appointment continues in force until suspended, revoked, or terminated. However, an insurer must renew an appointment during the agent's _____ every ____ and must pay a renewal appointment fee and taxes.

birth month/ 24 months

Agent Compensation

commission for selling insurance, which is a certain percentage of the initial premium for the first year and the renewal premium for subsequent years.

Examination of Records

he Office can examine the books and records of an insurer as often as necessary, but must examine a domestic insurer at least once every 5 years

Emergency Cease and Desist Order

licensee's conduct is likely to cause any of the following: insolvency dissipation or misevaluation of a licensee's assets or earnings the inability to pay claims on time substantial prejudice to insureds or the public

Replacement Defined

occurs when a new life insurance policy is purchased, and the agent or insurer knows or should know that with the purchase, an existing policy is going to be: - lapsed, forfeited, surrendered, or otherwise terminated; - converted to reduced paid-up insurance; - continued as extended term insurance; - reduced in value through the use of nonforfeiture benefits or other policy values; - changed to reduce the benefits or the term for which coverage remains in force or benefits are to be paid; - reissued with a reduced cash value; - or pledged as collateral in an amount exceeding 25 percent of the loan value.

Florida Life and Health Guaranty Association

protects policyowners, insureds, beneficiaries, annuitants, payees, and assignees of life insurance policies, health insurance policies, and annuity contracts if an insurer fails to perform its contractual obligations because it becomes impaired or insolvent

The Office of Insurance Regulation

regulates insurance company and producer licensing, premium rates, policy forms, market conduct, claims, and solvency

Chief Financial Officer

serves as head of the Department of Financial Services (the "Department") and oversees 13 divisions, several of which have a role in regulating insurance, including the Division of Insurance Agents and Agency Services, the Division of Insurance Fraud, the Division of Consumer Services, and the Division of Accounting and Auditing, which includes the Bureau of Unclaimed Property

Florida Life Insurance Solicitation Law

sets forth the information and procedures that agents and insurers must follow when marketing life insurance to prospective buyers

Insurance Transaction

solicitation, negotiations, or effectuation of a contract

Unauthorized Entities

subjects an unauthorized insurer to the jurisdiction of the Florida courts in any legal proceeding brought by insureds or beneficiaries who purchased insurance from the insurer

Hearings

the Department, Commission, and Office may hold hearings for any purpose within the scope of the insurance code, whenever a hearing is deemed necessary

Violation of Cease and Desist Order or Insurance Code

the Office or Department can: - impose a fine of up to $5,000 for each nonwillful violation (but not more than $20,000 total) - impose a fine of up to $40,000 for each willful violation (but not more than $200,000 total).

Penalties for Unfair Trade Practices

the Office or Department may: - impose a fine of up to $2,500 for each nonwillful violation (but not more than $10,000 total for all violations relating to the same act) - or impose a fine of up to $20,000 for each willful violation (but not more than $100,000 total for all violations relating to the same act). A person who engages in twisting or churning commits a misdemeanor of the first degree and may be fined up to $5,000 for each nonwillful violation or up to $75,000 for each willful violation. A person who willfully submits insurance applications or policies with fraudulent signatures commits a felony of the third degree and may be fined up to $5,000 for each nonwillful violation or up to $75,000 for each willful violation.

is it lawful or unlawful for an insurer to require a person, as a condition for receiving a loan, to obtain an insurance policy through a particular insurer, agent, or broker?

unlawful; Anyone selling insurance must disclose, when insurance is required in connection with a loan, that purchasing insurance from an unaffiliated agent will not affect the decision to issue a loan or the credit terms