Florida Statutes, rules, and Regulations Common to all lines

Department of Financial Services

- regulates agents Division of Accounting and auditing (Bureau of unclaimed property) - Division of insurance Agents and agency services -Division of insurance fraud -Division of consumer services -Office of the Insurance Consumer advocate

Reinsurance

A contract under which one insurance company (the reinsurer) indemnifies another insurance company for part or all of its liabilities. The purpose of reinsurance is to protect insurers against catastrophic losses. When on specific policy its known as facultative reinsurance. When its an automatic reinsurance agreement between itself and the reinsurer its called a reinsurance treaty

Temporary license

A license to operate for up to six months

Excess or Rejected Risks

A licensed Life agent may place these with another insurer, without being appointed by that insurer

Unaffiliated insurance agent

A licensed insurance agent, except a limited lines agent, who is self-appointed

nonparticipating policy

A nonparticipating insurance policy, typically issued by stock companies, do not allow policyowners to participate in dividends or electing the board of directors.

Guaranty Association

A state mandated association of all insurance companies designed to protect consumers from impaired or insolvent companies. Funded by their members, authorized insurers Life insurance account Annuity account Health insurance account

Agent Licensing Requirements

Age 18 years of age or older A resident of the state of Florida Successfully complete the 40-hour (single line) or 60-hour (health and life combination) pre-licensing education requirements Complete a set of electronic fingerprints at one of the department's fingerprinting sites Pay the nonrefundable $111 license application fee Pass the state licensing exam Not committed an act that is a ground for denial, suspension, or revocation of an insurance license

continue education

Agents licensed for less than 6 years must complete a minimum of 24 hours of continuing education every 2 years in courses approved by the department. Out of 24 hours , agents are required to complete a 4 hour Law and ethics update course. Excess hours accumulated during any 2 year period may be carried forward to the next compliance period

Market Conduct Examination

An analysis of an insurer's practices in four operational areas: sales and advertising, underwriting, ratemaking, and claim handling. Must be conducted at least once every 5 years, or as frequently as deemed appropriate by the office

Appointed agent

An insurance agent or producer cannot legally act as an agent of an insurer unless he or she becomes an _______ of that insurer

Foreign Insurer

An insurance company that is incorporated in another state.

Domestic Insurer

An insurance company that is incorporated in the state.

Alien Insurer

An insurance company that is incorporated outside the United States.

Exemption from licensing

An insurance producer license is not required of any officer, director or employee of an insurer or organizations employed by insurers, provided they are not directly or indirectly involved with the actual sale of an insurance contract and do not receive any commission.

Fraternal Benefit Society

An organization formed to provide insurance benefits for members of an affiliated lodge, religious organization, or fraternal organization with a representative form of government. Fraternals sell only to their members and are considered charitable institutions, and not insurers. Can permit life insurance, health insurance, and annuities

Coercion

An unfair trade practice in which an insurer uses physical or mental force to persuade an applicant to buy insurance.

Agency Actions

In imposing any administrative action provided for in the finacial institutions codes, the office must take into account the appropriateness of the penalty with respect to the size of the financial resources and good faith of the person charged, the gravity of the violation, the history of previous violations, and any other matters as justice may require

Participating policies

Insurance that pays dividends to policyholders. In the case of mutual companies, are a return of excess premuims and are, therefore, nontaxable. Dividends are not guaranteed

deceptive sales

Any presentation that gives a prospect or client the wrong impression about any aspect of an insurance policy or plan is deceptive.

Agents

Are not allowed to sell insurance policies, contracts or certificates to any active duty military person or their families if the buyer or proposed insured is of a lower rank or pay grade

Office of Financial Regulation

is responsible for all activities of the Financial Services Commission relating to the regulation of banks, credit unions, finance companies, and the securities industry.

Office of Financial Regulations regulates the following

Banks, credit unions, finance companies, Securities industry

Certificate Authority

Before insurers may transact business in a specific state, they must apply for and be granted a license from the state department of insurance and meet any finacial (captial and surplus) requirements set by the state. Once requirements are met you are authorized or admitted as a legal insurer

Insurers

Cannot advertise protection by the Insurance Guaranty association

Financial Services Commission

Composed of the Governor, the CFO, the Attorney General, and the commissioner of Agriculture. Supervises the Office of Insurance Regulation and the Office of Financial Regulation.

Unauthorized Insurer

Not authorized to transact the business of insurance in a state Also non-admitted. Any person who, directly or indirectly, aids or represens an unauthorized insurer can lose his or her licenses, or face disciplinary sanctions.

Mutual Companies

Owned by the policy owners and issue participating policies.

Stock Companies

Owned by the stockholders who provide the capital necessary to establish and operate the insurance company and who share in any profits or losses.

Insurer Anti-Fraud Plans

Report possible fraudulent insurance acts

Investigation of insurers

Suspected violators of any prison of the Insurance Code or upon written complaint the Department will conduct an investigation as deemed necessary of the: 1. Accounts 2. Records 3. Documents 4. Transactions pertaining to or affecting the insurance affairs of any agent, adjuster, customer, or service representative or any other person.

General lines

The agent in charge of an agency must hold which of the following licenses?

Ethical responsibilities to the insurer

The duties of an insurance agent to his or her insurer are established by the concept of agency

Unfair Claims Settlement Practices

The following are improper claims practices if committed in conscious disregard to the law or is committed with such frequency as to indicate a general business practice to engage in that type of conduct: Misrepresenting to insured pertinent facts or policy provisions relating to coverage at issue Failing to acknowledge and act reasonably and promptly upon communications with respect to an insurance claim Failing to adopt and implement reasonable standards for prompt investigation and processing of insured's claims Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements are completed and submitted by insureds Not attempting in good faith to effect prompt, fair and equitable claims on which liability has become reasonably clear or compelling insured to initiate suits to recover amounts due under an insurance policy by offering substantially less than the amount ultimately recovered in those suits

Record keeping

The law requires agents to maintain records of transactions for 3 years if the transaction pertains to premium payments

Fiduciary responsibility

The legal duty of a representative to manage property in the interest of the owner

Policy approvals, rates and forms

The purpose of rate regulation is to promote the public welfare by regulating insurance rates in order to assure taht they are not excessive, inadequate, or unfairly discriminatory, and authorize and regulate cooperative action among insurers in rate-making

Transacting Insurance

The transaction of any of the following, in addition to other acts included under applicable provisions of the state code: solicitation or inducement, preliminary negotiations, affecting a con- tract of insurance, and transacting matters subsequent to effecting a contract of insurance and arising out of it.

Life Agent

This means a person representing an insurer as to life insurance and annuity contracts or acting as a viatical settlement broker, including agents appointed to transact life insurance etc...

Insurance agency license

What must any business entity obtain prior to transacting insurance or acting in its own name as an insurance agency

Defamation

When an oral or written statement is made that is intended to injure a person engaged in the insurance business.

conflict of interest

a conflict between self-interest and professional obligation

code of ethics

a guideline to help marketing managers and other employees make better decisions

Twisting

a misrepresentation, or incomplete or fraudulent comparison of insurance policies that persuades an insured/owner, to his or her detriment, to cancel, lapse, switch policies, or take out policy with another insurer

Discrimination

in rates, premium, or policy benefits for persons within the same class or with the same life expectancy is illegal.

Fraud

intentional misrepresentation of an existing, important fact

Chief Financial Officer

is independently elected and serves as the head of the Department of Financial Services and as a member of the Financial Services Commission. The CFO oversees all 15 divisions and offices of the department. Has the authority to issue subpoenas, administer oaths, and examine witnesses.

Office of Insurance Regulation

is responsible for all activities concerning insurers. Including licensing and certificates of authority, rates, policy forms, premium financing, claims, solvency, viatical settlements, administrative supervision, and any other related provisions of the insurance code.

Rebating

defined as any inducement offered to the insured in the sale of insurance products that is not specified in the policy. Must require a copy of all rebate schedules for the most recent 5 years

Churning

defined as replacing insurance policies for the sole purpose of making commissions.

Cease and Desist order

ruling requiring a company to stop an unfair business practice that reduces or limits competition

Sliding

the illegal practice of falsely leading an applicant to believe that a specified additional coverage or product is required by law (when it is not required)

Unfair trade practice

trading practices that derive a gain at the expense of competition