Florida Statutes, Rules, & Regulations Common to All Lines

Investigations

OIR entrusted with the duty of carefully monitoring statewide industry markets. Accomplished through market conduct exams, will investigate and prosecute violations involving certain business practices.

Policy approval authority

OIR required to immediately notify the Legislature of new standard or amendment.

Office of Insurance Regulation

Office means OIR of the Financial Services Commission, Commissioner of OIR appointed by the Financial Services Commission. Administers insurance company regulation, including licensing, rates, policy forms, market conduct, claims, certificate of authority and insolvency.

Financial Services Regulation

The Florida Legislature created the FDS, OIR, and OFR to oversee insurance & financial regulation in this state.

Regulatory Premise

The McCarran-Ferguson Act determined state regulation of insurance is in the public interest. This act has been federal law since 1945.

Continuing education

5 hour course update every 2 year specific to license; plus 19 hours of elective CE's every 2 years; reduced to 15 hours if Licensed 6 years or more. Licensed 25 years or CPCU/CLU or Bachelor of Science in Risk Manage or Insurance with 80 semester hours of insurance related courses reduced to 5 hours of elective CEs every 2 years. The Dept. may immediately terminate or refuse to renew appoints if CEs have not been met, you may request a waiver or extension.

Fraud

A deliberate misrepresentation that causes harm. An all-out effort by one party to deceive and cheat the other. Suspect Fraud? The state of Florida will pay up to $25,000 for information leading to an arrest.

License types

A document issued by the department or office authorizing a person to be appointed to transact insurance or adjust claims. Includes a general lines agent, personal lines agent, limited customer rep (auto only); customer rep; adjuster; public adjuster; Life & Health. Must stay within lines of authority agent is authorized to transact.

Agent

A licensed person authorized to transact insurance. Sells insurance, issues & countersigns policies, collects premium & is the link between the insured & the insurer. An unaffiliated insurance agent is the only licensed agent who is self-appointed & practices as an independent consultant.

Active Participant

A member in good standing of an association who attends 4 or more hours of association meetings every year, not including any department approved CE course.

Definition of Fiduciary

A person who stands in a special relationship of trust to another person.

Agency

A relationship which exists when one party is authorized to act on behalf of another. For example an agent acts on behalf of the insurance company. The insurance company is the principal. Since the agent acts on behalf of the principal, the principal is now responsible for the actions of the agent.

Insurance contract

A written contract in which an insurance company indemnifies an insured. The technical definition is: A contract whereby one undertakes to indemnify another or pay or allow a specified amount or a determinable benefit upon determinable contingencies. Translated, you buy insurance, a loss occurs, the insurance company makes you whole.

Record keeping

Agent must keep records in office or accessible by electronic or photographic means for 5 years after policy expiration.

Separate account requirements

Agents will keep funds belonging to each insurer for which agent is NOT appointed, unless surplus lines, in one separate fiduciary account to allow Department or office to properly audit funds. Agent may not co-mingle personal funds with business funds.

Company Appointments

An insurance company must have a certificate of authority and appoint agents who are licensed by the Department. Insurers are governed by state regulations which include rules surrounding a Certificate of Authority; Insolvency; Policy Forms/Rates/Exceptions; and Financial Requirements.

Authorized or Admitted Insurer

Authorized to do business in a state-meets the insurance department's standards.

Florida Definition of Adjuster

Can be a public adjuster (for money, commission, or any other thing of value directly or indirectly settles claims for an insured or 3rd party claimant) or an all-lines adjuster. An all-lines adjuster handles all lines of insurance except life and health.

Financial Services Commission

Commission means the Financial Services Commission; composed of the Governor; the Attorney General; the Chief Financial Officer; and the Commissioner of Agriculture. Members serve as agency head. Exempt from legislative oversight. Majority vote/3 affirmative votes. Exempt from control by the DFS including purchasing, transactions involving real (house) personal (car) property, personnel, or budgetary.

Market Practices

Committing or performing with such frequency as to indicate a general business practice any of the following: Failing to adopt/implement standards to properly investigate claims; misrepresenting coverage issues; failing to communicate with claimant regarding a claim; denying claim without investigation based on available information; failing to affirm/deny coverage must give written statement if claim is investigated or full/partial coverage of claim & dollar amount upon written request from insured within 30 days after completion of proof of loss statement; failing to provide reasonable explanation in writing in relation to facts or applicable law for denial of claim or offer of a compromise settlement; failing to notify additional information needed to process claim; failing to clearly explain nature of requested information and why it is necessary; failing to pay PIP within allotted time frame, insurer may owe restitution, including interest.

Market Conduct Examinations

Conducted for the purpose of confirming compliance with state statute. Cost of exam is paid by person examined. If exam shows practice of willful violations of insurance trade practice related to claims handing which caused harm to policyholders, may order insurer to publish claims-handling practices and procedures for review and inspection, they are NOT considered trade secrets.

Criminal and administrative actions

Criminal obligated to inform DFS, If discovered by the Division of Investigative & Forensic Services they will report; Administrative Actions must be reported within 30 days of final disposition along with copy of order, consent to order, or other relevant legal documents.

Insurer

Definition includes every person engaged as indemnitor, surety, or contractor in the business of entering into contracts of insurance or of annuity. Translated, the insurance company that undertakes to indemnify for losses and perform other insurance-related operations.

Department of Financial Services

Department means DFS, it does not mean Financial Services Commission or any other of the Financial Services Commission. Appoints the Commissioner of the OIR, and the Director of the OFR.

Domestic company

Domiciled in Florida and formed under the laws of this state.

Alien company

Domiciled in another country. Canadians are aliens. Our laws work there but they are not us. New Mexico is us; they are one of the 50 United States. New Mexico would be a foreign company in Florida. Guam is us too! If you have to choose between Guam and Canada and the question pertains to domestic/foreign and alien, Canadians are still aliens.

Foreign company

Domiciled in another state. Formed under the laws of any state, district, territory, or commonwealth of the United States other than Florida.

Licensing

It is in the public interest for general lines agents, personal lines agents and customer service representatives to be licensed and authorized in good faith to engage in the insurance business.

Insurance Guaranty Fund

FIGA covers claims of insolvent P&C insurance carriers. funded by industry assessments; capped at 2% of a company's net direct premium for regular assessments; additional 2% for emergency assessment for hurricanes. Maximum $300,000 HO Claim, if structure & contents an additional $200,000. A $100 deductible applies. DFS has oversight. Reviews & audits associations operations. FIGA administered by a board made up of association members. Association members are insurers licensed to transact insurance in Florida, the association elects the board.

Purpose

It is in the public interest for general lines agents, personal lines agents and customer service representatives to be licensed and authorized in good faith to engage in the insurance business.

Other unfair practices

Failing to make all reasonable efforts to ascertain the consumer's age at the time an insurance application is completed. If consumer is a senior citizen, a video deposition of the victim may be used for any purpose in any administrative proceeding if all parties are given proper notice of the deposition. Willfully submit fraudulent signatures on an application or policy-related document, the person commits a felony of the 3rd degree. Administrative fine not greater than $5,000 imposed for each nonwillful violation and not greater than $75,000 for each willful violation.

Background Check

Fingerprints are taken by a law enforcement agency or other entity approved by the Department. Must pass the background check to be eligible for licensure.

Rates and forms

Florida is a prior approval state. Insurers must receive prior approval before using any new forms or rates. Must file 30 days in advance of any such use or delivery; at the expiration of 30 days forms filed will be deemed approved. The OIR may extend approval period for up to 15 days by giving notice during the initial 30-day period.

Stock

For profit, sells stock to stockholders to raise money to operate the business. Stockholders receive any profits via dividends.

General duties and powers of the DFS

Has a duty to investigate unethical conduct, supervise claim activity to assure fair treatment and prompt settlement.

Association

Includes the FAIA, NAIFA, FAHU, LAAIA, FAPIA, FBAA or the PBUS. Read the question well, could pertain to an association plan. Association plans are not exempt from state regulation because there is no employer-employee relationship and they must be fully insured which makes them subject to state regulation.

Reply to DFS and/or Office of Insurance Regulation

Insurance companies, by statute, have 20 days to respond to the Department once a complaint has been filed.

Adjuster

Involved in the investigation, adjustment, negotiation and/or trail preparation of claims arising under policies of insurance.

Chief Financial Officer

Jimmy Patronis, an elected official, the head of the DFS, may also be known as the treasurer. Directly regulates insurance agents; insurance fraud; insolvent & impaired insurers; and insurance consumer protection.

Mispreprentation

Knowingly making a false or fraudulent written or oral statement on or relative to an insurance application. (You lied). If you are an agent and you knowingly make a material omission in the comparison of a life, health or Medicare supplement policy with a policy you are trying to sell, for the purpose of receiving a fee, commission, money or other benefit from an insurer, agent, broker or individual, you are guilty of misrepresentation. Material omission includes failure to advise the insured of the existence and operation of a preexisting condition clause in the replacement policy.

Twisting

Knowingly making misleading representations or incomplete or fraudulent comparisons or fraudulent material omissions of or with respect to any insurance policy or insurer for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance in another insurer. For Example: a life insurance sales agent attempts to get a policyholder to drop an existing policy and take out another policy that is exactly the same but the agent lies to the buyer and convinces insured the new policy is sooooo much better.

Unfair Discrimination

Knowingly making or permitting unfair discrimination between individuals of the same actuarially supportable class, as determined at the time of initial issuance of the coverage, and essentially the same hazard, in the amount of premium, policy fees, or rates charged for a policy or contract of accident, disability, or health insurance, in the benefits payable thereunder, in the terms or conditions of such contract, or in any other manner. However, it is NOT unfair discrimination to charge a youthful unmarried male a higher rate for insurance, statistics prove they are more likely to have an accident with BI and PD.

False Advertising

Knowingly making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public: 1. In a newspaper, magazine, or other publication, 2. In the form of a notice, circular, pamphlet, letter, or poster, 3. Over any radio or television station, or 4. In any other way, an advertisement, announcement, or statement containing any assertion, representation, or statement with respect to the business of insurance, which is untrue, deceptive, or misleading.

Defamation

Knowingly making, publishing, disseminating, or circulating, directly or indirectly, or aiding, abetting, or encouraging the making, publishing, disseminating or circulating of any oral or written statement or pamphlet, circular, article, or literature which is false or maliciously critical of or derogatory to any person and which is calculated to injure such person.

Penalty for twisting or churning

Misdemeanor of the 1st degree, administrative fine not to exceed $5,000 each nonwillful; $75,000 each willful. For willful, must involve fraudulent conduct. The aggregate penalty is $50,000 nonwillful/$250,000 willful arising out of same action.

License Requirements

Must be at least 18 years old; a bona fide resident of (not Betty Crocker, real person) or who has a business in Florida; not seeking to write controlled business (more than 50% of income from family & friends);

Rebating

Must be available to all insured's in the same actuarial class. Agent must file a rebating schedule with the insurer. Cannot rebate if insurer prohibits its agents from rebating commissions. Rebate schedule must be prominently displayed in public view in place of business. Copy must be made available to insureds if requested at no charge. Cannot use age, sex, place of residence, race, nationality, ethnic origin, marital status or occupation to determine availability or % of rebate. Agent must keep on file 5 years and show effective date of rebate. Cannot give rebate outside of rebate schedule. Cannot refuse a rebate just because the insured will not buy additional lines of business. Cannot withhold or limit a rebate on factors which are unfairly discriminatory.

Unlicensed entities

No person may be, act as, or advertise or hold themselves out to be an insurance agent, customer representative or adjuster unless currently licensed and appointed. May not pay fee or other consideration to an unlicensed person other than an insurance agency for the referral of prospective purchasers. The fee or consideration cannot be dependent upon purchase of an insurance product.

Churning

Once again, we have life insurance to thank for laws against churning. Churning is taking the money out of one insurance policy and rolling it over into a new insurance policy just to earn commissions but without any betterment for the insured. With life insurance all of the commissions are up front, once you've sold it you will not receive residuals on the policy. You're an agent you're looking at all those policies and thinking about how much you could make if you churned your book-don't do it!

Agency Appointments

Once licensed, you have 48 months to obtain an appointment. An appointment is the authority given by an insurer or employer to transact insurance or adjust claims. After 48 months, must qualify as a first-time applicant.

Certificate of authority

One duly authorized by a subsisting certificate of authority issued by the office to transact insurance in this state. An unauthorized insurer is one not so authorized.

Mutual companies

Owned by and profits are returned to the insured in the form of a dividend or reduction in future premiums. Insured's elect management. Required to set money aside to pay claims. A small percentage are assessment companies which charge members a pro rata share of losses at the end of each policy period.

Unfair Methods of Competition

Penalties vary based on nonwillful vs willful violations, Fines range from $5,000 each nonwillful to aggregate of $40,000 willful. May not exceed aggregate of $20,000 all nonwillful/$200,000 all willful violations for same action. Fines are imposed in addition to any other applicable penalty.

Coercion

Persuading someone to do something by using force or threats. Coercion is an unfair method of competition.

Office of Financial Regulation

Protects the citizens of Florida by carrying out the banking, securities, and financial laws of the state. Head appointed by Financial Services Commission. administers banking & securities. Responsible for oversight of banks, credit unions, finance companies, and the securities industry.

Fraternals

Provides insurance for members, most only write life and health. Business is conducted solely for the benefit of its members and their beneficiaries and not for profit.

Consumer services

Receives inquiries and complaints from consumers. Prepares & disseminates information deemed appropriate. Provides direct assistance to & advocacy for consumers who request assistance or advocacy. Designates an employee as primary contact for consumers. Licensed/cert of authority, 20 days to respond in writing to written request from division. Failure to comply up to $2,500 per violation. $250 first/$500 2nd/up to $1,000 third or subsequent violation.

Insurance Fraud

all proof of loss statements must prominently display a fraud statement which informs insured filing a fraudulent claim is a 3rd degree felony.

General duties and powers of the OIR

Responsible for the activities of all insurers and risk bearing entities including licensing; rates; policy forms; market conduct; claims; issuance of certificates of authority; solvency; viatical settlements; premium financing and administrative supervision. Head is the Director of the Office of Insurance Regulation also known as the Commissioner of Insurance Regulation.

Education

Successfully complete an insurance course (min 60 hours) approved by the Department. Qualify by experience (6 mos out of last 4 years) through responsible insurance duties as a CSR; limited CSR or service rep; covering P&C to be sold to individuals & families for non commercial purposes. Requires a state exam. Exam waived if: earned a degree & 9 semester hours of college credit in P&C and Inland Marine from accredited college or university, transcript required; resident of another state and in good standing can transfer license to Florida with equivalent line of authority. Must be licensed in prior state at least one year; Original letter from the Institute certifying you have a CPCU.

Fiduciary capacity

Takes care of the money or other assets for a person. One party acts in a fiduciary capacity to another person. For example: it is illegal for an agent or producer to commingle premiums collected from the applicant with their own personal funds.

Sliding

Telling an applicant coverage is required by law when it is not; or telling an applicant optional coverage is free when it is not. Uses the term "specific ancillary coverage" Ancillary = extra; supplementary; additional. For Example: You're sliding coverage on to get that premium up and increase the amount of your commission. Sliding is an unfair method of competition and an unfair or deceptive act or practice.

Agency Actions

The Director (Commissioner of Insurance Regulation is considered the agency head for purposes of final agency action for all areas within the regulatory authority delegated to the Office.

Insurance Marketing Systems

There are four. Exclusive, you are under contract to only represent one insurer. Direct Writer, the company's agents are really employees. Direct Response, Company sells directly over the phone. Independent, nonexclusive agents who can be authorized to sell insurance for several different insurance companies.

Insurance transaction

Transact includes solicitation or inducement; preliminary negotiations; effectuation of a contract of insurance and transaction of matters subsequent to effectuation of a contract of insurance and arising out of it. Huh! Here's what this really says. If you attempt to make a sale or talk someone in to buying an insurance policy, you are transacting the business of insurance. If you bind coverage you are transacting the business of insurance. If you work on a policy once it is sold, you are transacting insurance.

Unauthorized companies or non-admitted companies

Unauthorized, does not have a certificate of authority. A non-admitted company is unauthorized and may only do business in a state under special circumstances. If you aid an unauthorized insurer, the state will go after you (the agent) and the insurance company (insurer).

Insurer Appointments

Who can appoint licensees? Insurance Companies Licensed and appointed General Lines agents appoint customer reps and crop hail. Adjusting firms appoint independent and public adjusters. Who can cancel appointments? Even though only insurers and certain approved entities can appoint....licensees can cancel any or all of their appointments.

Concealment

Willful withholding of material fact when negotiating an insurance contract or claim with the insurer. If material, may void the policy.

Controlled Business

Writing more than 50% of your income (book of business) for family and friends or associates. Department will NOT renew your license if it finds you will be writing controlled business.

Communicating with the Department

You must update and/or verify your addresses including email and other information (SSN; DOB; Name) through your MyProfile account within 30 days of any change. This is considered updating "in writing" and the requirement includes your contact phone numbers both personal and business. Change your name, forget to notify $250 for first offense. Change your cell phone, forget to notify a 2nd time $500 or suspension or revocation of your license.

Unclaimed Property

a division within the Department of Financial Services. Unclaimed money (no statute of limitations) and unclaimed property (5 years). Citizens have the right to claim their property at any time and at no cost.

Examination

a passing score on an insurance examination is valid for a period of 1 year. If applicant receives a passing score, within 30 days the Department or its designee will notify the applicant, issue and transmit the license. Fail exam, fail to appear or fail to complete the exam, file with the Department or its designee an application for reexamination together with applicable fees. Failure to pass an exam; appear for an exam or to complete the exam does NOT preclude the applicant from taking subsequent examinations.

Unfair claims practices

auto claims: may not advise 3rd party claimant to file claim under own policy to avoid paying a claim; may not return damaged vehicle before restoring to same condition prior to loss and must be equivalent in kind and quality as prior to loss i.e. fit, appearance & performance; failing to include sales tax in ACV if vehicle is total loss; failing to use the cost of two or more comparable motor vehicles available in local market within preceding 90 days to determine settlement. Must use recognized motor vehicle industry source to determine retail cost. Property claims: may not require insured to pay for betterment required by ordinance or code except for deductible. Insurer may not refuse to make reasonable repairs or replacement of items in adjoining areas, however; insurer can consider cost; remaining useful life; and the degree of uniformity which can be achieved without such cost.

Application

contains pertinent information needed by the state to determine eligibility for obtaining a license. Including a social security number to determine if applicant is in compliance with child support.

Florida Definition of Agent

general lines agent, life agent, health agent, or title agent, or all such agents as indicated by context. Includes insurance producer: or producer, but does not include a customer service rep; limited customer rep; or service representative.

Premium Accountability

if an agent collects a premium or other payment from an insured, the payment to the agent shall be deemed to constitute payment to the insurer.

Maintaining a License

must be in compliance with CEs. : 5 hour course update every 2 year specific to license; plus 19 hours of elective CE's every 2 years; reduced to 15 hours if Licensed 6 years or more. Licensed 25 years or more and is a CPCU/CLU or Bachelor of Science in Risk Manage or Insurance with 80 semester hours of insurance related courses reduced to 5 hours of elective CEs every 2 years. The Dept. may immediately terminate or refuse to renew appointments if CEs have not been met, you may request a waiver or extension. Must notify Dept in writing within 30 days after change of address, name , principle street address, mailing address or email address. Must be appointed to legally act as an agent of an insurer.

Receivership

liquidation, rehabilitation, or conservation of an insurance company due to insolvency. (Can't pay claims)

Commissions and compensation/ charges for extra services

may only share commissions with agents appointed and licensed to write same kind or kinds of insurance, or may divide commissions with a CSR. No corporations unless an insurance agency. May share crop hail or multiple-peril crop commissions with production credit association or federal land bank if association approved insurance activity by employees. Amount decided by general agent and company paying the commission. Cannot charge for application fees, photo fees, replacing ID cards, Certificate of Insurance, binder fees, phone, fax or email fees.

Ethics

obedience to a higher standard. Encompassed by loyalty, being honest while keeping one's commitments. Highest form is Altruism. Doing the right thing because it is the right thing to do and not for the notoriety or recognition.

Other powers

only apply to insurance agents; agencies; MGAs; adjusters; reinsurance intermediaries; viatical settlement brokers; customer service reps; service reps and agencies. Dept has the jurisdiction to enforce provisions which apply to persons engage in actions for which a license or certificate of authority is legally required. Does not limit the authority of the Division of Investigative & Forensic Services.

Agent responsibilities

sell insurance; issue and countersign policies (sign policy before delivering to the insured-canNOT be blank); collect premiums; provide a link between the insured and the insurance company. Field underwrites each risk. Once coverage is bound responsible for reviewing clients coverage and evaluating adequacy of coverage prior to renewal. Florida statute states the absence of a countersignature does not affect the validity of the policy or contract of insurance.

Self Appointments

surplus lines, reinsurance intermediaries, bails bond agent, viatical settlement brokers, independent and public adjusters, unaffilliated agent all appoint themselves.

Penalty for submitting fraudulent signature

willfully submitting fraudulent signatures on an application or policy related document is a 3rd degree felony. Administrative fine $5,000 each nonwillful/$75,000 each willful. The aggregate penalty is $50,000 nonwillful/$250,000 willful arising out of same action.

Agent and adjuster licensing and investigations

written application, filed with the department, meet qualifications for license, payment in advance of all applicable fees. Requires oath and signature. 3rd party may submit but applicant responsible for accuracy of information. Submit fingerprints used for investigation, complete prelicensing class and successfully pass state exam or qualify by experience.

Malfeasance

wrongdoing, especially by a public official. Looks great as a potential answer on the state exam, but only choose malfeasance if the question is about wrongdoing by a public official, don't be fooled.