FDS Licensing Chapter 8

No notice of cancellation will be effective UNLESS:

- Delivered at least 45 days prior to the effective date of cancellation, except when cancellation is for nonpayment of premium, in which case no less than 10 days' notice of cancellation may be given - The reason or reasons for cancellation accompany the notice of cancellation

Examples of Unfair Trade and Marketing Practices include:

- Twisting - Rebating - Defamation - Misrepresentation - Churning

If the policy provides for periodic payment for a continuing loss, written proof of loss must be given to the insurer within

90 days after the end of each period for which the insurer is liable.

Examination Testimony

A person may ask to be excused from testifying or producing records involving an examination, hearing, or investigation conducted by the DFS or Office of Insurance Regulation, for fear that it might incriminate the person who will then be prosecuted.

Insurance Fraud

If, during an investigation, the office has reason to believe any criminal law has or may have been violated, the office will refer any records to show such violation to state or federal law enforcement or prosecutorial agencies and provide investigative assistance to those agencies as required.

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.

Diligent Effort

Seeking coverage from and having been rejected by authorized insurers currently writing this type of coverage and documenting these rejections. For a residential structure with a dwelling replacement cost of: - Less than $1 million, rejections from 3 authorized insurers are required - $1 million or more, rejection from at least 1 authorized insurer is required

Unauthorized Insurers Process Law

The purpose of the Unauthorized Insurers Process Law is to 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.

Grace Period - Time period after a premium due date during which the insured can pay the premium if unpaid by the due date.

- 7 days - Weekly premium policies - 10 days - Monthly premium policies - 31 days - All other policies

The minimum financial responsibility limits of liability for automobile insurance in Florida for the owner of a motor vehicle are as follows:

- $10,000 for bodily injury to, or death of, one person in any one crash - $20,000 for bodily injury to, or death of, 2 or more persons in any one crash - $10,000 for injury to, or destruction of, property of others in any one crash

Financial Responsibility after a Conviction of Driving under the Influence - An owner or operator of a motor vehicle who has been found guilty of driving under the influence must maintain the following minimum limits:

- $100,000 for bodily injury to, or death of, 1 person in any one crash and, subject to such limits for 1 person - $300,000 for bodily injury to, or death of, 2 or more persons in any 1 crash - $50,000 for property damage in any 1 crash

Florida Insurance Guaranty Association's liability for the contractual obligations of the insolvent insurer is in excess of $100 and does not exceed:

- $300,000 per policy per claim - $200,000 for the portion of a covered homeowner's insurance claim which relates only to damage to the structure and content

Any person who acts as an insurer, transacts insurance, or otherwise engages in insurance activities in this state without a Certificate of Authority commits a

- 3rd degree felony, punishable by fines up to $5,000 and up to 5 years imprisonment, only if the total premiums collected in the unauthorized transaction(s) are less than $20,000 - 2nd degree felony, up to 15 years imprisonment, if the total premiums collected are between $20,000 and $100,000 - 1st degree felony, a term not exceeding 30 years, if the total premiums collected are over $100,000

Florida Insurance Guaranty Associationis divided into 2 separate accounts:

- Auto liability and auto physical damage account - All other eligible insurance account

CPCU: Canons of the Code of Professional Ethics for CPCU

- Clearly communicates the minimum standards of conduct expected for CPCUs and for those who are candidates for this designation - Disciplinary process includes investigation of violations of the Code - The 3 requirements of the CPCU designation are education, experience, and ethics

Insurance Code Violations Penalties

- Failure to answer a subpoena or order - $1,000 fine - Violation of cease and desist order - Up to $50,000 fine - Willful violation of the Insurance Code - Misdemeanor of the 2nd degree (imprisonment up to 60 days) - Fraudulent conduct in committing twisting or churning - 1st degree misdemeanor (imprisonment up to one year) *Non-willful violation - $5,000 fine per violation *Willful violation - $75,000 fine per violation - Willfully submit fraudulent signatures - 3rd degree felony (imprisonment up to 5 years) *Non-willful violation - $5,000 fine per violation *Willful violation - $75,000 fine per violation

The following types of insurers are not eligible for guarantee payments:

- Life, annuity, health, disability - Protection against investment risks - Fidelity and surety bonds - Creditor-debtor transactions - Warranty - Ambulance service, health care, funeral merchandise or service - Optometric, pharmaceutical, or dental service - Legal expense - Ocean marine or wet marine - Self-insurance - Title - Surplus lines - Workers' Compensation and employer liability - Transfer of investment or credit risk - Government guaranteed

The Florida Motorcycle Safety Education Program establishes and administers motorcycle safety courses. The following requirements apply:

- Minimum of 12 hours of instruction with at least 6 hours of actual motorcycle operation - Organizations must be approved in order to conduct a safety program - A register fee must not be more than $20 per student, and refunded upon completion of the course - Every first-time applicant for a license to operate a motorcycle who is under age 21 must complete a motorcycle education course. Proof of completion must be presented to the driver licensing examining office prior to licensing to operate a motorcycle

An agency must:

- Must complete an application for an agency license, which must be renewed every 3 years - Must have a licensed and appointed full-time agent in charge of each agency location - That fails to file an application for licensure may be levied an administrative penalty of up to $10,000

After the first 60 days a policy is in force, notice of cancellation will be effective only if it is based on one or more of the following grounds:

- Nonpayment of premium - Material misrepresentation or fraud - Suspension or revocation of the license or registration of the named insured or other operator covered by the policy

Other Powers

- 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

Office of Insurance Regulation (OIR)

- Policy Approval Authority - Rates - Forms - Market Conduct Examinations

Unfair Methods of Competition:

- Sliding - Boycott, Coercion, and Intimidation - Misrepresentation - Defamation - False Advertising - Unfair Discrimination - Other Unfair Practices - Unfair Claims Settlements - Fraud - Controlled Business - Twisting - Churning - Rebating

However, an insurer may then cancel or nonrenew a policy prior to the repair of the dwelling/residential property:

- Upon 10 days' notice for nonpayment of premium - Upon 45 days' notice: - For a material misstatement or fraud related to the claim - If the insurer determines that the insured has unreasonably caused a delay in the repair of the dwelling - If the insurer has paid policy limits

817.234 775.082 775.083 775.084

817.234 - False and Fraudulent Insurance Claims 775.082 - Imprisonment not exceeding 5 years 775.083 - Fine up to $5,000 775.084 - Imprisonment not exceeding 10 years as a habitual felony offender as of the third felony conviction

Fiduciary Capacity

A fiduciary holds a position of special trust and confidence.

Rebating

An agent may not offer or extend anything of value to a client that is not already a part of the contract, as an incentive to purchase insurance.

Sharing of Commissions

An agent may not share a commission or any valuable consideration with anyone who does not have a license and appointment for the type of insurance sold.

Premium Accountability

An agent, as a fiduciary, accepts premiums, return premiums, or other funds on behalf of the insurer and offers advice about financial security.

Separate Account Requirements

An agent/agency must keep funds belonging to each insurer in a separate account so it can be properly audited. An agent must not commingle the insurer's premium with personal funds, or otherwise use it for personal purposes.

Surplus Lines Agent

An individual licensed and appointed as provided in the Surplus Lines Law to handle the placement of insurance coverages with unauthorized insurers and to place such coverage with authorized insurers as to which the licensee is not appointed as an agent.

Nonrenewal Notice:

An insurer must give the named insured at least 45 days' advance written notice of nonrenewal.

Eligible Surplus Lines Insurer

An unauthorized insurer that has been made eligible by the Department to issue insurance coverage under the Surplus Lines Law.

Nonpayment of Premium

At least 10 days' written notice of cancellation must be given for nonpayment of premium.

Churning

Churning is the practice whereby policy values (such as cash value) in an existing life insurance policy, annuity contract, and/or any riders, are used to purchase another insurance policy or annuity contract with that same insurer for the purpose of earning additional premiums, fees, commissions, or other compensation.

Pure Comparative Fault

Each party to the action will be evaluated and determined to be a certain percent at fault.

Department of Financial Services (DFS)

General Duties and Powers: - Agent and Adjuster Licensing and Investigations - Division of Consumer Services - Insurance Fraud - Receivership - Unclaimed Property - Other Powers

Market Analysis Section

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

Rates

Insurers must include rates, rating schedules, rating manuals, premium credits or discount schedules, and surcharge schedules with noted changes.

Investigations - Special Investigation Unit

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

Market Conduct Examinations

Market Investigations is a division of the Office of Insurance Regulation that conducts examinations and investigations of insurers (as often as it believes necessary) to ensure compliance with the statutes and rules. There are 4 sections with unique duties: - Property and Casualty Section - Life and Health Section - Investigations - Special Investigation Unit - Market Analysis Section

Certificate of Authority

No person can act as an insurer and no insurer or its agents, attorneys, subscribers, or representatives can directly or indirectly transact insurance in Florida unless authorized by a Certificate of Authority, issued to the insurer by the Office of Insurance Regulation.

Chief Financial Officer (CFO)

The Chief Financial Officer (CFO) is an elected official and is the head of the Department of Financial Services (DFS). The CFO as the head of the Department, is directly responsible for the regulation of insurance agents. The CFO is a member of the Financial Services Commission, also known as the Governor's Cabinet.

Agent and Adjuster Licensing and Investigations

The DFS supervises methods of obtaining business, including agent licensing and control of unfair trade practices. The CFO can impose the following penalties upon an agent for Insurance Code violations: - Failure to answer a subpoena or order - $1,000 fine - Violation of cease and desist order - Up to $50,000 fine - Willful violation of the Insurance Code - Misdemeanor of the 2nd degree (imprisonment up to 60 days) - Fraudulent conduct in committing twisting or churning 1st degree misdemeanor (imprisonment up to one year) - Non-willful violation - $5,000 fine per violation - Willful violation - $75,000 fine per violation - Willfully submit fraudulent signatures - 3rd degree felony (imprisonment up to 5 years) - Non-willful violation - $5,000 fine per violation - Willful violation - $75,000 fine per violation

Unclaimed Property

The Department of Commerce Division of Unclaimed Funds handles unclaimed property. - Property abandoned for 3-5 years has to be turned over to the state

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.

Financial Services Commission

The Financial Services Commission is composed of the Governor, CFO, Attorney General, and Commissioner of Agriculture.

Florida Insurance Guaranty Association

The Florida Insurance Guaranty Association is a nonprofit legal entity. All insurers authorized to conduct business in Florida must be members of the association.

Policy approval authority

The Office of Insurance Regulation (OIR) supervises insurers via approval of new rates and forms, which must be approved by the OIR. Prior approval exists when insurers are not allowed to implement a rate or rate change until it has been approved by the insurance department.

Financial Services Regulations

The administration of state insurance law is the responsibility of the Chief Financial Officer (CFO), Financial Services Commission and Director, or Commissioner, of the Office of Insurance Regulation.

Forms

The following forms require approval: - Insurance policy or annuity contract form - Printed application - Group policy certificates - Printed rider, endorsement, renewal certificate

Civil Immunity

Unless the person acted with knowledge that the information was false or with reckless disregard for the truth or falsity of the information, he or she is immune from civil liability arising out of the provision of the information.

Export

To place, in an unauthorized insurer under the Surplus Lines Law, insurance covering a subject of residential insurance located in Florida.

An insurer must give the named insured written notice of cancellation other than nonrenewal at least 45 days prior to the effective date of the cancellation, except:

When cancellation occurs during the first 90 days for reasons other than nonpayment of premium, at least 20 days' written notice, except: - There has been a material misstatement or misrepresentation - Failure to comply with the underwriting requirements established by the insurer After the policy has been in effect for 90 days, no policy may be canceled by the insurer, except for: - A material misstatement - Nonpayment of premium - Failure to comply with underwriting requirements established by the insurer within 90 days of the effective date of coverage - A substantial change in the covered risk - The cancellation is for all insureds under the policies for a given class of insureds

Office of Financial Regulation (OFR)

Which is responsible for: Regulating the following: - Banks, credit unions, savings association, international bank agencies - Financial service companies - Securities industry Includes the Bureau of Financial Investigations: - Functions as a criminal justice agency - Conducts investigations to protect consumers from financial entities that violate state laws and rules

Commissioner of the Office of Insurance Regulation (OIR)

Which is responsible for: Regulating the following areas of insurance industry: - Licensing - Rates - Policy forms - Market conduct - Claims - Certificates of Authority - Protecting the public through oversight of insurance company solvency - Maintaining expertise related to life and health, property and casualty, specialty lines, and other insurance entities

New agents licensed within the past 5 years must complete...

a must take a 4-hour law and ethics course specific to the license held every 2 years. In addition, the licensee must complete 20 hours of elective continuing education courses every 2 years. The total amount of CE required is 24 hours every 2 years.

Upon a declaration of an emergency and the filing of an order by the Commissioner of Insurance Regulation

an insurer may not cancel or nonrenew a personal/commercial residential property policy covering a dwelling/residential property in Florida damaged by hurricane or wind loss and subject to the declaration of emergency for a period of 90 days after the property has been repaired (this means it has restored to the extent that it is insurable).

With respect to any personal lines or commercial residential property insurance policy, the insurer must give the named insured written notice of nonrenewal, cancellation, or termination:

at least 100 days prior to the effective date of the nonrenewal, cancellation, or termination.

An agent who has been licensed for at least 25 years and a CLU or CPCU, or has a B.S. in risk management or insurance with 18 or more semester hours in upper-level insurance courses....

must complete 10 hours of CE every 2 years

An agent licensed for 6 years or more must....

the 4-hour ethics requirement with only 16 hours of elective continuing education courses every 2 years. The total amount of CE required is 20 hours.