Florida Statutes, Rules, and Regulations Common to all Lines Life & Health 24%
Agent Responsibilities
Agents Responsibilities: • Fiduciary Capacity • Separate Account requirements • Record keeping • Reply to DFS or Office of Insurance Regulation • Ethics
Appointment fees
Are non-refundable
Trade Practices
The Business of Life Insurance has even declared to be a public trust in which service of all agents of all companies have a common obligation and duty to work together in serving the best interests of the insuring public.
Market Conduct Eaxminations
The CFO and Office of Insurance Regulations Have the right to examine or investigate the affairs of every person, entity authorized to tracks act insurance in this state. 1. Examinations must be done at least once every 5years 2. Cost is responsibility of the insurance company being examined
Background Check
Submission of fingerprints for background check are mandatory for investigation.
Domestic Insurer
Company incorporated in this State.
Ceding Insurer
The originating company that procures insurance on itself from another insurer.
Record Keeping
Agents are required to keep records of transactions for 3 years if the transaction pertains to premium payments.
Producer Regulations: # of hours CE required every 2 years
24 hours
Producer Regulations: # of CE hours required in ethics
3 hours
Producer Regulations: Length of time to maintain records
3 years
Notice to the Department of termination of agent appointment
30 days
Producer Regulations: Must notify dept. Of change of address within
30 days
Notice to appointee of termination of appointment
60 days
Insurance Agency License
A business entity's acting in it's own name as an insurance agency must apply for an Agency license by submitting the following information: Insurance Agency License A business entity's acting in it's own name as an insurance agency must apply for an Agency license by submitting the following information: • Name of each majority owner, partner, officer and director • The residence address of each person required to be listed on the app • The agency name and principal address • Location of agency office and name under which business will be conducted • Name of each agent in full-time charge of agency office Licenses issued for 3 years until called or suspended. Renewed by submitting a renewal request to the Department on a form on adopted by Dept rule.
Agents License
A person authorized by an insurer, fraternal benefit society or health maintenance organization to solicit, negotiate and obtain insurance contracts. The Agent represents the Insurer.
Independent Adjuster
A person, firm or Assoc. who acts on behalf of an insurer by investigating and adjusting claims for a commission.
Chief Financial Officer
Administers insurance laws. Independently elected and services as the head of the Department of Financial Services, oversees all 15 divisions and offices of the Department.
Defamation
An oral or written statement made intended to injure a person engaged in the insurance business. Includes maliciously critical statements about financial condition of any person or company.
Churning
Defined as replacing insurance policies for the sole purpose of making commissions. It is illegal for a producer to replace a life or health insurance plan already in place for another one that the producer cannot demonstrate will benefit the insured.
Department of Financial Services: Investigative Punitive Actions
Department of Financial Services Investigation Actions: • Issue a cease and desist order • Assess an administration fine • Suspend or revoke the license or certificate of authority • Hold a hearing
Market Conduct
Describes the way the companies and producers should conduct their business.
Adjusters License
Direct investigations, negotiations, and settlements of claims under an insurance policy. Adjusters engage: 1. The insurer 2. Policyholder 3. Claimant
Licensing: Purpose
Ensures that the producer meets educational, and ethical standards required to fulfill producer's responsibilities. To the insurer and to the public.
Ethical Rebates
Ethical Rebates: • Are available to all insured's in the same class • Must be in accordance with the rebating schedule files by the agent with the insurer issuing the policy • Must be uniformly applied to all insured's who purchase the same policy through the agent for the same amount of insurance, and receive the same % of the rebate • Rebate schedule must be prominently displayed in public view in the agents place of business, with copies available to the insured at no charge • Age, sex, residence, race, nationality, ethnic origin, marital status, occupation of the insured cannot be used in determining the % of the rebate or whether it is available. AGENTS ARE REQUIRED TO KEEP RECORD OF ALL REBATE SCHEDULES FOR THEMOST RECENT 5 YEARS.
Authorized Insurers are examined
Every 5 years
Communicating with the Dept.
Every licensee must notify the Dept. In writing within 30 days after a Change of address, name, principal street address or mailing address or email address. If not notified punitive measures include: 1. Termination by dept. 2. Fine of $250.00 3. License suspension or revocation
Agent appointments are valid
For only 2 years
Transacting Insurance
Includes any of them following: • Solicitation • Negotiations • Sale (effectuation of a contract of insurance) • Advertising an individual concerning coverage or claims
Unclaimed Property
In order to file as a Claimant Representative to acquire ownership etc of unclaimed property, must be registered with the Dept's Bureau of Unclaimed Property.
Reply to DFS
In the event or allegation of misconduct the Dept or Office may require the licensee to make books and records available for inspection for the purpose of the inquiry. Agents MUST REPLY
Alien Insurer
Incoprpated in another country.
Foreign Insurer
Incorporated in another State.
Rebating
Inducement offered to the insured in the sale of insurance products that is not specified in the policy. Rebates include: 1. Rebates of premiums payable on the policy 2. Special Favors or services 3. Advantages in the dividends or other benefits 4. Stocks, bonds, securities and their dividends or profits
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, or the payment of dividends. Pertain as to oral statements as well.
Risk Retention Group
Liability insurance company owned by members. The risk and liability is spread to all of its group members.
Authorized Insurers
Must apply for and be granted a license or Certificate of Authority for the state department of insurance and meet any financial requirements set by the state.
Commissions
NO life insurer or agent will pay any commission or other valuable consideration to anyone for services as a life insurance agent within Florida unless they hold a currently valid license and appointment to act as an agent in Florida.
Facultative Reinsurance
Reinsurance purchased on a specific policy.
Division of Consumer Services
Responds to complaints by consumers. This division is under direct supervision of the CFO
Office of Insurance Regulation
Sets forth the Market Conduct, Examinations, and Investigation of insurers. Anyone impeding, obstructing the Dept, the Office, or the Examiner in an authorized investigation or examination is guilty of a Misdemeanor. If convicted may be subject to the following: • Denial, suspension or revocation of a license • Revocation of certificate of authority • Other fines and penalties as provided by the Insurance Code
The Code of Ethics Strictly Forbids:
The Code of Ethics Strictly Forbids: • Any act of Twisting • Rebating • Defamation • Misrepresentation
The Code of Ethics
The Code of Ethics: • Maintain Trade Practices by 1. Understanding and observing the laws governing life insurance 2. Presenting accurately and completely every facet of essential to a clients decision. 3. By being fair in a relations with colleagues and competitors 4. Always placing the policyholders interests first.
Financial Services Regulation
The Department of Financial Services enforces the provisions of the Insurance Code and to execute the duties imposed upon it by the CODE. Financial Services Regulation: State of Florida Consists of 15 divisions and offices 5 of which relate to insurance. • State Treasurer • Department of Insurance • State Fire Marshall • Comptroller • Department of Banking and Finances
License Requirements
The Department will not grant or issue a license to anyone who is untrustworthy or incompetent and who does not meet the requirements: License Requirements: • Natural person of at least 18 years of age • Legal US citizen • Resident of Florida • Is not an employee of the US Dept. Of Veterans Affairs of state service Dept • Is not a funeral a funeral director • Have not completed the required pre-licensing education requirements
Criminal Actions
The Dept must be notified within 30 days after being found guilty of or pleaded guilty or Nolo contendere to a felony or a crime punishable by imprisonment of 1 year in FLorida.
Forms
The Office of Insurance Regulations has the right to approve all policy forms prior to the use of any policy or contract form, rider, or endorsement. Insurers must submit the forms and all changes to the Office. All forms must be submitted 30 days in advance of their use or delivery. The forms are deemed approved unless disapproved by the Office at the end of 30th day.
Receivership
The act of exercising due diligence within lawful powers to secure full payment of all accounts receivable and other claims due THE STATE.
Insurer (or principal)
The company or organization that issues a policy of insurance. Can be classified by: Insurer Classification: • Ownership • Authority to transact business • Location of incorporation • Marketing and distribution of systems • Rating (financial strength) Classifications are not mutually exclusive, and can be described based on forts such as location, ability to transact business, ownership and types of agents it appoints.
Sliding
The illegal practice of Farley leading an applicant to believe that a specified additional coverage or product is required by law or that it's included in the policy at no charge when there is a charge. Also includes charging an applicant for a specified additional coverage or product, in addition to the cost of the coverage applied for, without the applicants knowledge or consent.
Fraud
The intentional misrepresentation or concealment of material fact used to induce another party to make or refrain from making a contract, or to deceive or cheat a party. If discovered in the 1st 2 years can void a contract.
Twisting
The misrepresentation, incomplete or fraudulent comparison of insurance policies that persuades an insured/owner to their detriment to cancel, lapse, or switch policies.
Assuming Insurer
The reinsurer.
Rate Regulation
To promote the public welfare by regulating insurance rates in order to assure they're not excessive, inadequate, or unfairly discriminatory. Insurers are required to file their premium rates with the Office of Insurance Regulation with accompanying support information used to establish the rate.
Coercion
When an agent uses physical or mental force with the intent of inducing the applicant to purchase insurance.
Reinsurance Treaty
When an insurer has an automatic reinsurance agreement between itself and the reinsurer where the reinsurer is bound to accept all risks ceded to it. Usually negotiated for a period of year or longer.
Guaranty Associations
Will pay covered claims up to certain limits set by state law. Is funded by its members (through assessment). All authorized insurers contribute to a fund to provide for the payment of claims for insolvent insurers.
Office of Insurance Regulation: General Duties
• Concerned with the regulation of insurers and their agents. • Organizing and licensing of companies • Policing against unauthorized insurance companies • Continuing regulation of insurance company activities I.E policy forms, provisions and rates etc. • Supervising methods of obtaining business, licensing of agents, control of unfair trade and adviser practices • Monitor financial condition of insurers, INCL. specifications of appropriate investment categories and Appr. Methodology for developing liabilities. • Rehabilitation or liquidating insurers where necessary
License qualifications
• Successful completion of 40 hours of pre-license classroom courses in insurance approved by the Dept. Or equivalent correspondence course. • Employment by then depot for at least one year, full time in life or life and health insurance regulatory matters and who was not terminated by the dept.
Market Conduct Regulations
1. Conflict of Interest 2. A request of a gift or loan as a condition to complete business 3. Supplying confidential information
Producer Regulations: Maximum commissions received from old rolled business in a 12 month priosd
50%
Reinsurance
A contract under which one insurance company indemnified another insurance company for part or all of its liabilities. The purpose is to protect insurers against catastrophic losses.
Separate Account Requirements
An agent must keep the funds belonging to each insurer for which an agent is not appointed in a SEPARATE ACCOUNT. This allows the Dept. To properly audit such funds. The licensee just account for and pay the same to the insurer, insured or other person entitled to the funds.
Continuing Education
Continuing education rules are established to protect the public by maintaining high standards of professional competence. This maintains and improves the insurance skills and knowledge of licensed producers. Each producer must complete: 1. Minimum of 24 hours of CE every two years in intermediate or advanced level courses approved by the Dept. 2. Complete 3 hours in CE related to suitability in annuity and life insurance transactions. 3. A 5 hours update course every 2 years specific to license held.
Department of Financial Services Powers and Duties
Department of Financial Services not only enforces the Code and Insurance Provisions set forth by Florida Office of Insurance they also do the following: • Conduct investigations of insurance matters. • Collect, propose, publish and disseminate info relating to its duties imposed by law. • Employ actuaries and be-at-will employees seeing at the pleasure of the Chief Financial Officer, • Adopt rules to implement provisions of law conferring the Departments Duties.
Unfair Discrimination
Discriminations made on the basis of marital status, race, nationality, ethnicity, national origin, sexual orientation, creed, or ancestry UNLESS the distinction is made for business purpose or required by law.
Non-participating policies
Does not pay dividends to policy owners, taxable dividends are paid to stockholders.
Agent Ethics
Each Agent must SUBMIT APPLICATIONS to an Insurer with ALL OF THE FOLLOWING: 1. Furnish a copy of the application to the prospective insured 2. The name of the insurer must be legibly typed or printed on the first page of the application form at the time coverage is bound or the premium is quoted. 3. Application must also disclose the name and license identification number of the agent as shown on the agents license. 4. Information must be legibly typed, printed, stamped, or written 5. A copy of the completed application must be provided to the prospective insured.
Code of Ethics: For Producers
Producers must adhere to certain standards and established procedures and failure to do so will result in penalties. Producers are required to: 1. Perform in a professional manner at all times. 2. Place the public's interest above one's own in ALL situations. 3. Display Professionalism: means that a person is engaged in an occupation requiring an advance level of training, knowledge and skill.
Office of Financial Regulation
Responsible for all activities concerning insurers. Office of Financial Regulation: • Regulation of banks • Credit unions • Finance companies • Security industry • Includes the Bureau of Financial Investigations - ruination a as a criminal justice agency • The Office of Financial Regulations
Financial Services Commission (DFS or Department)
Responsible for the administration and regulation of insurance. Divided into two offices: 1. Office of Financial Regulation 2. Office of Insurance Regulation - spherically regulates the business of insurance in the State of Florida.
Fiduciary
Someone in a position of trust. It's illegal for an agent or producer to commingle the premiums collected from the applicant with their own Personal funds.
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.
Unauthorized insurers
insurers who have not been approved.
Unlicensed Entities
Any entity that is operating without the proper authorization. Authorized agents and entities are required to be LICENSED OR REGISTERED with the FLORIDA OFFICE OF INSURANCE REGULATION.
False Advertising
Advertisements cannot include any untrue, deceptive, or misleading statements that apply to the business of insurance or anyone who conducts it.
Appointments
An agent or producer cannot legally act as an agent of an insurer unless that are appointed. Agent must pay the applicable appointment fees and taxes. A certified statement made by an officer of the entity appointing, which states the background of the person as well as the officers judgement of the person moral character, fitness and reputation. The insurer will also certify that it is willing to be bound by the acts of the agent or rep within the scope of their employment.
Insurance Contract
An agreement between an insured and an insurer where the insurer agrees for a consideration, to indemnify the insured for loss caused by specified events.
Agent Appointments
An individual agent m,ay hold any or all categories of appointments for which they're qualified and licensed but a separate appointments must be made for each licensed held.
Controlled Business
Coverage written on a producers own life, health, or property, and that o the producers immediate family or business associates. A licensee is not allowed to collect commissions on controlled business above the state specified limit. Commission's from controlled business cannot exceed 50% of the aggregate amount of commissions and compensation in a 12 month. Period.
Unfair Claims Settlement
Insurer must either affirm or deny coverage of claims within reasonable time (unusually not to exceed 30 days) after proof of loss statements are completed and submitted by insured's.
Unfair Marketing Practices
Insurers and insurance producers may not engage in any trade practice that is defined as or determined to be an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.
Department of Financial Services
Main purpose is to enforce the provisions of the INSURANCE CODE. They execute the duties imposed by the Code. They're also responsible for agent and adjuster licensing and investigations. Department of Financial Services • 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
Fraternal Benefit Society
Organization formed to provide insurance benefits for its affiliate members. I.E. Lodge, religious organizations, fraternal organizations with a representative form of government.
Mutual Companies
Owned by policy owners and issue Participating Policies where policy owners are entitled to dividends. Return of dividends are non-taxable.
Stock Companies
Owned by stockholders who provide capital for business, Share in profits and losses.
Public Adjuster
Person, firm or assoc. acts on behalf of the insured in negotiating a settlement of a claim for loss or damage of property.
Insurance Guaranty Fund
Protect policy owners, insured's, beneficiaries, and anyone entitled to a payment under an insurance policy from the incompetence and insolvency of insurers.