215 -Licensing

Appointments

An individual who fails to maintain an appointment with an appointing entity writing the class of business listed on his or her license during any 48-month period will not be granted an appointment for that class of insurance until he or she qualifies as a first-time applicant. When a licensee's last appointment for a particular class of insurance has been terminated or not renewed, the department must notify the licensee that his or her eligibility for appointment as such an appointee will expire, unless he or she is appointed prior to expiration during the stated 48-month period.

Maximum Fair Credit Reporting Act Fine

An individual who willfully violates this Act enough to constitute a general pattern or business practice, will be subject to a penalty of up to $2,500.

Payment of Fees

Appointment fees are nonrefundable. However, if the applicant submits a written request within 60 days after the denial or disapproval of an appointment, the department will refund any state or county taxes received in connection with the application for the appointment

Number of Appointments Permitted

At any one time, the same individual agent may hold any or all categories of appointments for which he or she is qualified and licensed. However, an agent must have a separate appointment for each insurer.

Suspension, Termination, Revocation of License and Other Penalties

Dependent on the decision of the Department, a violator may be both fined and lose their license to transact insurance.

Continuing Education

Each person must complete a minimum of 24 hours of continuing education every 2 years in courses approved by the Department. Out of the 24 hours, 3 hours must be completed in courses related to ethics. Excess classroom hours accumulated during any 2-year period may be carried forward to the next compliance period. If good cause is shown, the Department may grant an extension for up to 1 year.

Misrepresentation

It is illegal to issue, publish or circulate any illustration or sales material that is false, misleading or deceptive as to policy benefits or terms, the payment of dividends, etc. This also refers to oral statements

Backdating

Sometimes it is possible to effect a lower premium rate by backdating an application for insurance (this practice also refers to as "ante-dating"). If the applicant chooses to do this, the policy may be backdated for no more than 6 months before the date of the application or the medical examination - whichever is later. All premiums must be paid from the effective date of the policy. The only reason that an application may be backdated is to effect a lower premium. It does not shorten the period of contestability.

Consumer Reports

The consumer has the right to request the information on the report, the reasons for turn down and any adverse underwriting decisions. The reporting agency is required to respond to the consumer's complaint, and if necessary to reinvestigate the report.

Substandard (High Exposure) Risk

applicants are not acceptable at standard rates because of physical condition, personal or family history of disease, occupation, or dangerous habits. These policies are also referred to as "rated" because they could be issued with the premium rated-up, resulting in a higher premium.

Standard risks

are persons who, according to a company's underwriting standards, are entitled to insurance protection without extra rating or special restrictions. Standard risks are representative of the majority of people in their age and with similar lifestyles. They are the average risk.

Preferred Risks

are those individuals who meet certain requirements and qualify for lower premiums than the standard risk. These applicants have a superior physical condition, lifestyle, and habits.

Discrimination

in rates, premiums, policy benefits, etc. for persons within the same class or with the same life expectancy is illegal. No discrimination may be made on the basis of marital status of an individual, race, color, national origin, creed, or ancestry unless the distinction is made for a business purpose or required by law.

The Application

is the starting point and basic source of information used by the company in the risk selection process. Although applications differ by insurance company, there are generally three basic sections: Part 1 - General Information, Part 2 - Medical Information, and The Agent's Report.

The agent's (producer's) report

is used by the agent to discuss his or her personal observations concerning the proposed insured. Since the agent/producer can be considered the most important source of information available to the underwriter, it is important that the agent include all pertinent facts concerning the applicant truthfully and honestly. This section of the application will also include a question as to whether the proposed insurance will replace an existing policy. If the answer is yes, most states require compliance with regulation on policy replacement. The agent's report does not become a part of the entire contract, although it is a part of the application process.

Defamation

occurs when an oral or written statement is made that is intended to injure a person engaged in the insurance business. This also applies to statements that are maliciously critical of the financial condition of any person or a company.

Part 2

of the application includes information on the prospective insured's medical background, present health, any medical visits in recent years, medical status of living relatives, and causes of death of deceased relatives. If the amount of insurance is relatively nominal, the agent and the proposed insured will complete all of the medical information. That would be considered a non-medical application. For larger amounts, the insurer will usually require some sort of medical examination by a professional

Part 1

of the application includes the general questions about the applicant, including name, age, address, birth date, gender, income, marital status, and occupation. This section identifies the type of policy applied for and the amount of coverage. It will also inquire about the existing policies and if the proposed insurance will replace them. Part I usually contains information concerning the beneficiary and other insurance the applicant may own.

Consequences of Incomplete Applications

Any unanswered questions need to be answered before the policy is issued. If the insurer receives incomplete applications, they need to be returned to the applicants for completion. If a policy is issued with questions left unanswered, the contract will be interpreted as if the insurer waived its right to have an answer to the question. They would be later barred from any right of denying coverage based on any information that the unanswered question might have developed.

Investigative Consumer Reports

Investigative Consumer Reports are similar to consumer reports in that they also provide information on the consumer's character, reputation, and habits. The primary difference is that the information is obtained through an investigation and interviews with associates, friends and neighbors of the consumer. Unlike consumer reports, these reports cannot be made unless the consumer is advised in writing about the report within 3 days of the date the report was requested. The consumers must be advised that they have a right to request additional information concerning the report, and the insurer or reporting agency has 5 days to provide the consumer with the additional information.

Medical Information Bureau

The MIB is a membership corporation owned by hundreds of member insurance companies. In other words, insurers are members of the MIB. It is a nonprofit trade organization which receives adverse medical information from insurance companies and maintains confidential medical impairment information on individuals. It is a systematic method for companies to compare the information they have collected on a potential insured with information other insurers may have discovered. The MIB is to be used only as an aid in helping insurers know what areas of impairment they might need to investigate further. A client cannot be refused simply because of some adverse information discovered through the MIB. The insurer can only use the information obtained through the MIB to conduct further investigation as to the applicant's current insurability.

Controlled business

is any coverage written on a producer's own life, health or property, and/or that of the producer's immediate family or business associates. A licensee is not allowed to collect more commissions on controlled business than other business conducted. Most states will not issue a license to a person if they determine that the primary purpose of the license is to write controlled business. In Florida, licensee's commissions from controlled business cannot exceed 50% of the aggregate amount of commissions and compensation accruing in his or her favor during the same period as to all insurance coverages procured through him/her.