Florida Insurance Laws

Insolvency

All the statutory assets of the health maintenance organization, if made immediately available, would not be sufficient to discharge all of its liabilities or that the health maintenance organization is unable to pay its debts as they become due in the usual course of business.

Free-Look Provision (Life Policies)

A life policy owner has the right to review a new life insurance policy for a period of 14 days with the option to an unconditional refund if not fully satisfied.

Legal Reserve

A company's legal reserve appears as a liability on its balance sheet and must hold a specific, minimum amount in its reserve account.

Medicare Supplement Insurance (Medigap)

A health insurance policy or health benefit plan offered by a private entity to individuals who are entitled to have payments for health care costs made under Medicare

Non-Participating Policy (Non-Par Policy)

A policy issued by a company that does not share in its divisible surplus with its policyowners. These are commonly stock insurers.

Participating Policy (Par Policy)

A policy issued through a mutual insurer in which policyowners share in the company's ownership and receive dividends of the divisible surplus of the company's profits.

Rule for Conversion

If an insured has multiple industrial life insurance policies issued by the same insurer with a combined face amount that exceeds $3,000, the owner has the option to merge and convert such policies into one ordinary (whole) life insurance policy through the same insurer, with no further evidence of insurability.

Suicide Clause

In the event the insured commits suicide after the policy becomes incontestable, policy proceeds are paid to the named beneficiary of the policy.

Alien Insurer

Any insurance company incorporated outside of the United States is considered an 'alien' insurer while conducting business within the U.S. and must follow federal and state insurance laws and regulations.

Foreign Insurer

Conducting insurance business in all states outside the state in which the insurance company is incorporated. If an insurance company that is incorporated in Texas and is conducting business in Florida, they are considered a foreign insurer in the state of Florida.

Domestic Insurer

Conducting insurance business in the same state in which the insurance company is incorporated such as an insurance company that is incorporated in Florida and is conducting business within Florida.

Prospectus

Considered as the primary source of information for a prospect, a prospectus contains information regarding the characteristics and purpose of the annuity plan, such as the separate account and risks involved

Unauthorized Entities

Does not hold a Certificate of Authority in the state in which it conducts business.

Defamation

Creating or circulating false, derogatory or malicious information regarding an insurer, whether oral, written or print.

Duplication of Benefits

Florida law prevents a private insurer from having to pay for any illness or injury already paid for by another insurer, thus preventing any duplication of benefits to the insured.

Free-Look Provision

Florida law requires a policyholder's right to examine his or her health policy for a period of 10 days from the date of delivery with the ability to return the policy for a full refund, if he or she is not satisfied. Medicare and long-term care policies must provide a period of 30 days from the date of delivery.

Florida Health Insurance Coverage Continuation Act (Mini-COBRA)

The purpose of this Act is to ensure continued access to affordable health insurance coverage for employees of small employers (20 employees or less) and their dependents, as well as other qualified beneficiaries not currently protected by the Consolidated Omnibus Budget Reconciliation Act of 1985

Assignment of Policies

This stipulation allows the policyowner to transfer their policy to another party, whether it is an individual, company, organization, etc. An assignment is filed with the insurance company, and all rights are transferred to the assignee named in the assignment.

Continuation of Coverage for Handicapped Children

When a handicapped child is covered under a group family health insurance plan or an individual family health plan, the insurer must provide coverage even after he or she becomes an adult.

Florida Viatical Settlement Act

Regulates viatical settlement contracts and providers and prohibits any future viatical settlement licenses to be issued after 2005. As a result, only licensed life insurance agents may offer or attempt to negotiate on behalf of another individual in a viatical settlement contract.

Health Insurance Portability and Accountability Act (HIPAA)

Requires that anyone with 18 months of creditable coverage, and who does not have access to other health insurance, must be given access to an insurance policy.

Chief Financial Officer (CFO)

Serves as head of the Florida Department of Financial Services (FLDFS)

Churning

The practice whereby policy values in an existing life insurance policy or annuity contract, including, but not limited to, cash, loan values, or dividend values, and in any riders to that policy or contract, are directly or indirectly 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:

Protecting Policy Proceeds from Creditors

The purpose of life insurance is to protect against the financial loss of an individual in the event of the insured's death and to pay policy proceeds to the beneficiary named in the policy.

Outline of Coverage

A brief description of the principal benefits and coverage provided in the policy with a summary statement of the principal exclusions and limitations or reductions contained in the policy, including, but not limited to, preexisting conditions, probationary periods, elimination periods, deductibles, coinsurance, and any age limitations or reductions.

Bonds

A debt investment in which an investor loans money to a company or governmental entity that borrows the funds for a specific period of time, and provides a fixed interest rate in return, usually semi-annually. Upon a bond's maturation date (varies depending on bond), the principal amount paid on the bond is returned to the investor.

Common Stock

A security (equity) that represents ownership in the company from which it was issued. When a company thrives, it stock value increases. When a company is in decline, its stock decreases.

Copayment

A specific dollar amount that the subscriber must pay upon receipt of covered health care services.

Universal Life Insurance Plans

A type of permanent insurance that offers more flexibility, including more control over the cost of premiums as well as the ability to invest and earn interest on the policy's cash value.

Accumulation Units

Accumulation units consist of premiums paid and credited to the account after a deduction for expenses incurred.

Financial Services Commission

Administers banking and securities regulation through the appointment of the Director of the Office of Financial Regulation and Securities Regulation.

Commissioner of the Office of Insurance Regulation

Administers insurance company regulation which includes licensing, rates, policy forms, market claims, conduct and Certificates of Authority and Solvency

Leeway Provision

Also known as a Basket Provision, due to the investment limitations that are placed on an insurer to maintain the company's solvency, the Insurance Code allows for flexibility in the investment of the company's funds.

Maternity Benefits

Although group medical expense policies are required to provide maternity benefits, Florida law does not have a requirement for such benefits under individual health insurance.

Commission

An agent's compensation for the transaction of an insurance policy is based on a certain percentage of an insured's premium.

Free-Look Provision (Fixed and Variable Annuities)

An annuity contract owner has the right to review a new fixed or variable annuity for a period of 21 days with the option to an unconditional refund if not fully satisfied.

Subscriber

An entity or individual who has contracted, or on whose behalf a contract has been entered into, with a health maintenance organization for health care coverage or other persons who also receive health care coverage as a result of the contract. In short, the person or entity being insured by an HMO.

Contributory Group Health Insurance Plan

An group insurance plan where premiums are jointly paid by the employer and participating employees.

Non-admitted

An insurance company that is not licensed in a state for which it conducts business.

Insurance Agencies

Any business location at which an individual, firm, partnership, corporation, association, or other entity engages in any activity or employs individuals to engage in any activity which by law may be performed only by a licensed insurance agent.

Grace Period for Individuals Age 64 and Older

Any life insurance company that covers a natural person who is 64 years of age or older and whose policy has been in force for over 1 year, must provide a notification of impending lapse in coverage after the specified grace period, which allows at least 21 days beyond this grace period for payment of premiums before a policy can lapse for nonpayment.

Provider

Any physician, hospital, or other institution, organization, or person that furnishes health care services and is licensed or otherwise authorized to practice in the state.

Replacement

Any transaction in which new life insurance is to be purchased, and it is known or should be known to the proposing agent or to the proposing insurer that by reason of such transaction,

Entire Contract Provision

Constitutes the entire contract of the policy, including its endorsements and any attached material, such as the application. This provision also prevents an entity from referring to any outside documents in an attempt to deny claims or coverage. Only items included with the insurance policy on its delivery date may be used in a legal proceeding under the policy.

Newborn Child Requirements

Coverage for injury or sickness, including the necessary care or treatment of medically diagnosed congenital defects, birth abnormalities or prematurity, including costs associated with any appropriate transportation.

Policy Loan Interest Rate

Florida Insurance Code allows an insurer to charge a fixed rate up to 10% annual interest on any loan taken against the policy's cash values.

Grace Period

Florida law mandates a grace period for missed premiums based on the premium mode of the policy.

Non-Contributory Group Health Insurance Plan

Group insurance plan where premium is paid entirely (100%) by the employer. The advantage of a noncontributory group health plan is that employer provides health insurance to their employees without any assistance in premium.

Annual Renewable Term (ART) or Yearly Renewable Term (YRT)

Group life insurance is usually written as a one year renewable term plan that does not require medical examinations. In the event a group life insurance policy expires or is cancelled, the insurer is required to notify each certificate holder.

Holocaust Victims Insurance Act

Holocaust victims and their families receive appropriate assistance in the filing and payment of their rightful claims.

Uniform Simultaneous Death Act of Florida

If a common disaster clause is included in the policy and the primary beneficiary outlives the insured for a period of time specified in the contract, policy proceeds are then paid to any contingent beneficiaries named in the policy.

Reinstatement Provision

If a policy were to lapse either by accident or purposefully, policyowners have the right to reinstate their plan as long any missed premiums are paid and evidence of insurability is provided.

Written notice of claim

If reasonable, notice of claim must be provided to the insurance company or to the policyowner's insurance agent within 20 days, giving the name of the policyowner, nature of the loss and other pertinent information to identify the claimant to the insurer. In the event the insured notifies his or her insurance agent instead of the insurance company, it is the agent's responsibility to immediately report the claim to the insurance company.

Group Participation Requirement

In the state of Florida, there is no minimum number of members required for a group life insurance policy, as long as the organization is eligible for group life insurance.

Misrepresentation

Lying to a customer regarding covered benefits or the terms of the policy, or guaranteeing insurance, including false or deceptive advertising as well as defamation of an insurer is grounds for license revocation. Promising dividend returns or company profits as an inducement to a sale is also prohibited.

Rejected Business (Excess Business)

Occurs when an insurer with whom an agent is appointed rejects an individual application for insurance due to underwriting reasons, or if the amount of insurance is in excess of what the company is willing to write, the agent can then place the business with a company with whom he or she is not appointed.

Employee Retirement Income Security Act of 1974 (ERISA)

Protects employee retirement plans by establishing rules that qualified plans must follow to ensure that plan fiduciaries do not misuse plan funds. The Act mandates plans to provide participating employees with important plan information regarding features and benefits, as well as funding.

Consumer Privacy

Pursuant to the Florida Insurance Code and in coordination with Gramm-Leach-Bliley Act of 1999 (GLBA), the treatment of non-public personal health information and nonpublic personal financial information about an individual must kept private by any agent, insurance company and financial institution that solicits and transacts insurance

Sliding

The act of:Charging an applicant for a specific ancillary coverage or product, in addition to the cost of the insurance coverage applied for, without the informed consent of the applicant.

Advertising Insurance Policies

The Florida Office of Insurance Regulation states that an insurance company must control the content, form and dissemination of all advertisements pertaining to the sales of insurance, with an emphasis on advertisement regulation for Medicare.

Churning

The act of depleting the funds of one insurance policy to purchase another policy within the same company for no purpose other than to generate new commission for an agent or agency from an existing customer.

Variable Universal Life Insurance

The combination of universal life and variable life policies, which contains a varying degree of death benefits, cash values and premium payments. Because it is a variable product, it also includes a separate account for investments as just mentioned.

Coercion

The entering into any agreement to commit, or by any concerted action committing, any act of boycott, coercion, or intimidation resulting in, or tending to result in, unreasonable restraint of, or monopoly in, the business of insurance.

Capitation

The fixed amount paid by an HMO to a health care provider under contract with the health maintenance organization in exchange for the rendering of covered medical services.

Exclusion Ratio

The formula that determines the ratio of taxable to nontaxable proceeds in an annuity payment.

Variable Life Insurance Plans

The main purpose of variable life insurance is to help offset, or hedge, the effects of inflation on a policy's death proceeds.

Twisting

The misrepresentation made by an insurance agent to induce a policyowner to forfeit or change insurance from one company to another in order to gain commission for an agent or agency.

Controlled Business

The selling life or health insurance contracts covering the agent him or herself or family members, officers, directors, stockholders, partners, or employees of a business in which he or she or a family member is engaged; or the debtors of a firm, association, or corporation of which he or she is an officer, director, stockholder, partner, or employee

Annuity Units

The shares an annuitant owns in the variable annuity subaccounts. Although the number of annuity units will remain constant in the account, the value of an annuity unit will vary depending on the investment results on which the annuity is based.

Dollar Cost Averaging

The systematic purchase of securities at regular intervals and at a fixed amount.

Policy Lapse

The termination of an insurance policy due to unpaid premiums.

Certificate of Insurance

This certificate, received by each covered employee in a group policy, defines the employee's coverage.

Spendthrift Clause

This clause, found in most life insurance and annuity contracts, protects against a creditor's claims on any unpaid proceeds to a beneficiary.

Time Limit on Certain Defenses Provision

This provision prevents from a policy's contestability after a specific time (usually 2 years). However, unlike life insurance, if fraudulent statements are made on a health insurance application, the contract can be contestable at any time unless the policy is guaranteed renewable.

Unfair Discrimination

Unlawfully discriminating between individuals of the same class or insurance risk by charging different rates of premium, offering different benefits, or charging extra fees based on residence, race, religion, or national origin.

Insurer receives notice of claim

Upon receiving a notice of claim from an insured, a proof of loss form must be provided to the claimant within 15 days of notice.

Investigation of loss

Upon receiving a proof of loss statement, the insurance company will confirm that the claim is valid and that the medical treatment was usual and customary. During this time, the insurance company can demand an independent medical examination to assist in determining whether a claim is valid.

Claim is Paid or Contested

Upon the insurers evaluation of the claim, the claim is paid or contested. If the claim is valid, and depending upon the policy type, the insurance company reimburses the insured for his or her loss or pays the medical provider directly for services rendered.

Vesting

Vesting is defined as an employee's ownership in benefits or contributions accrued on behalf of the employee in a pension plan. Employees are always 100% vested in their own contributions, while vesting in employer-funded benefits are defined in the policy's contract.

Fraud

Wrongful or criminal deception intended to result in financial or personal gain. An example would be falsifying a proof of loss to an insurer in order to receive policy benefits.

Incontestable Clause

if an insurer finds that fraud or misrepresentation has occurred, they may demand the policy be returned and any premiums paid by the policyowner be refunded.

Admitted.

life and health insurance companies conducting business in the state of Florida must be licensed or

Coordination of Benefits

refers to insurance companies coordinating the payment of benefits in the event an insured has more than one group health insurance policy, ensuring prevention from a duplication of benefits.

Proof of loss

simply a written statement that outlines the accident or illness and the extent of loss that occurred.

Florida Healthy Kids Corporation

was established by the Florida Legislature in 1990 as a dual effort between both the public and private sectors to improve healthcare access for Florida's uninsured children. helped provide health insurance for over a million of Florida's youth since it began providing coverage; however, Florida Healthy Kids Corporation is not a state agency.