Chapter 8: Florida Laws and Rules Pertinent Part 1

the authority given to an agent to transact business on behalf of the insurer is called appointment. No person may act as an insurance agent unless currently licensed by the department and appointed to the insurer.

• New appointments will expire 24 months on the last day of the licensee’s birth month

• An appointing entity may terminate its appointment of any appointee at any time with at least 60 days’ notice

• Within 30 days after terminating the appointment, the entity must file written notice with the department including the reasons and facts involved with the termination

• An agent’s license will terminate if the agent allows 48 months to elapse without being appointed for the class or classes of insurance listed on the license

an agent needs to abide by the following guidelines every two years to maintain their license:

• 24 hours of continuing education every two years for agents licensed less than 6 year

• 20 hours of continuing education for every two years for agents licensed more than 6 years.

• Any continuing education must include minimum 5 hours in law and ethics

• Pay license fees, appointment and renewal fees

• Continue to be appointed with an insurance company.

any of various deceptive, fraudulent, or otherwise injurious (as to the consumer) practices or acts that are declared unlawful by statue (as a consumer protection act) or recognized as actionable at common law

the improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims practices an insurer tries to reduce its costs. However, this is illegal in many jurisdictions

insurance companies are classified according to the location of its corporation. Regardless of where the insurance company is incorporated, it still has to get a certificate of authority before transacting insurance within a state.
The following definitions apply:
-Domestic insurance company: a company that resides and is incorporated under the laws of the state in which its home office is located. For example, a company chartered in Florida would be a domestic company in Florida.
-Foreign insurance company: a company whose home office is located in another state. It is considered to be a foreign company in all states except for its home state. For example, a company chartered in Texas would be a foreign company in Florida
-Alien insurance company: is one that is chartered and organized in any country other than the united states. it is considered an alien insurance company in all states. For example, a company chartered in canada would be an alien company in florida.

also known as “right to examine”. health insurance policies must provide a minimum free-look period of 10 days upon policy delivery. This allows the policyowner time to decide whether or not to keep it. If the policyowner decides not to keep the policy within the 10 days allowed, a full refund will be given.

life insurance policies must provide a grace period of 31 days after the due date. If the insured dies during the grace period, the insurance company may deduct any premium due from the death benefit.

is strictly regulated and requires full disclosure by both the agent and the replacing insurance company. Replacement regulations exists to assure that purchasers receive specified information and it also reduces the opportunity for misrepresentation. Policy replacement is defined as a transaction in which a new policy or contract is to be purchased, and the agent is aware that an existing policy or contract has been, or will be:

• lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer or otherwise terminated.

• converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values

• Modified to cause a reduction in benefits or length of policy term

• Subjected to loans exceeding 25% of the cash value

• Reissued with a reduction in cash value

• Used in a financed purchase

a provision that the policy, application, and all attachments shall constitute the entire contract between the parties
-States that the agent does not have the authority to change the policy or waive any of its provisions

written notice of a claim must be given within 20 days after a covered loss starts or as soon as reasonably possible.

an insurance company that requires an application for reinstatement has style 45 days to reject the application before reinstatement is automatic. In other words, if the insurer takes no action within 45 days, the policy is considered reinstates automatically.

• if a health policy is reinstated after it had lapsed for nonpayment, there is a waiting period of 10 days before a claim covering sickness will be covered Injuries sustained from an accident, however, will be covered immediately.

• If the insurer takes no action within 45 days after receiving the reinstatement application, the policy is considered automatically reinstated

is any condition for which the patient has already received medical advice or treatment prior to enrollment in a new medical insurance plan.

the consolidated omnibus budget reconciliation Act (COBRA) is a federal law that requires employers with 20 former employees and their dependents. COBRA guarantees that the participant can continue the group coverage (at their own expense) at group rates if their participation in the group plan is terminated because of a qualifying event. Qualifying events: include the death of the employee, termination of employment (except for termination because of gross misconduct) or a reduction in work hours, which results in the participant no longer qualifying for group coverage. NOTE: it is important to remember that COBRA benefits apply only to group health insurance, not group life insurance.

long-term care insurance is designed to provide coverage for diagnostic, preventative, therapeutic, rehabilitative, maintenance, or personal care services in a setting other than an acute unit of a hospital.

• A health insurance agent license is required in order to solicit long-term care insurance in the state of florida

• Long-term care insurance is any policy designed to provide coverage for at least 12 consecutive months for each person or an expense-incurred, indemnity, prepaid, or other basis.

is the federal insurance program fro:

• People who are 65 or older

• Certain younger people with disabilities

• People with end-stage renal disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD)

1. Medicare Part A (hospital insurance)

2. Medicare Part B (medical insurance)

3. Medicare Part C (medicare advantage plans)

4. Medicare Part D (prescription drug coverage)

occasionally, dental insurance is part of a health benefits package with a single deductible called an integrated deductible, applying to both medical and dental coverages. More often, however, dental coverage and claims are handled separately with a separate deductible. There also may be a probationary period in group dental insurance to help hold down coverage for pre-existing conditions. Some dental policies are scheduled, meaning benefits are limited to specified maximums per procedure with first dollar coverage. Most, however, are comprehensive policies that work in much the same way as comprehensive medical expense coverage. In addition to deductibles, coinsurance and maximums may also affect the level of benefits payable under a dental plan.

the mission of the office of insurance regulation is to promote the public welfare by maintaining the solvency of insurance companies.
Note: the office of insurance regulations has primary responsibility for regulation, compliance and enforcement of statues related to the business of insurance and the monitoring of industry markets.
-The insurance policy rates & forms used in Florida are approved by the Office of insurance regulation (OIR). The OIR also oversees ‘market conduct examinations’ and investigations
-insurance laws in florida are administered by the chief financial officer, the financial services commission and the commissioner of the office of insurance regulation.
They are the The Chief Financial officer (CFO) is independently elected and serves as the head of the department of financial services. Although commissioners are sometimes elected, mainly appointed by the governor.

the CFO oversees the bureau of unclaimed property, which holds unclaimed property accounts valued at more than $1 billion, mostly from dormant accounts in financial institutions, insurance and utility companies, securities and trust holdings.

The financial services commission may hold hearings for any purpose within the scope of the insurance code deemed necessary, such as:

• Person engaging in unfair competition, or any unfair or deceptive act

• Person engaging in business of insurance without a license

• The best interest of the public would be served

the department of financial services is headed by the CFO and the commissioner of the office of insurance regulation, oversees the insurance industry in accordance with the provisions of the insurance code and offers a variety of information and resources to educate consumers regarding numerous insurance and financial topics. The division offers a toll-free insurance consumer helpline to assist insurance consumers with insurance questions and inquiries or to file complaints. the department of financial services also serves as the receiver of any insurer places into receivership in florida. The division of rehabilitation and liquidation plans, coordinates and directs the receivership processes on behalf of the department.

the florida office of financial regulation (OFR) provides regulatory oversight for Florida’s financial services industry. The OFR was created in 2003 as the result of the cabinet reorganization Act of 2002. The OFR reports to the financial services commission (made up of the governor and the members of the Florida cabinet: chief financial officer, attorney general and agriculture commissioner).

• Division of Consumer Finance: regulates non-depository financial service industries and individuals and conducts examinations and complain investigations for licensed entities to determine compliance with Florida law.

• Division of Financial institutions: conducts periodic risk-based examinations and ensures that each state-chartered financial institution meets state and federal requirements or safety and soundness.

• Division of securities: administers and enforces compliance with the Florida securities and investor protection act, designed to protect the investing public and promote economic growth. The division regulates the sales of securities in, to or from Florida to determine compliance with the state law.

• Bureau of Financial Investigations: this is the criminal justice arm of the agency. The bureau maintains investigative teams throughout the state who have expertise in financial records and analysis, forensic accounting, interviewing and legal case preparation. The bureau also participates in joint investigations with local, state and federal law enforcement agencies.

a licensee may not transact insurance business in Florida until the licensee is appointed by an insurer. the fundamental reason for regulation of insurance is to protect consumers. Individuals looking to acquire to insurance license must meet the following eligibility requirements:

• Must be at least 18 years old

• Must be a US citizen or legal alien

• Must be a Florida resident

• May not be an employee of the United States Department of Veterans Affairs

• May not be a funeral director or direct disposer

• Complete a 60-hour pre-licensing education course

• Pass the insurance state licensing education course

• Pass the insurance state licensing examination

• Must be trustworthy and competent.

any inquiry or investigation of the applicant's qualifications, character, experience, background, and fitness must include submission of the applicant's fingerprints to the department of law enforcement and the federal bureau of investigation and consideration of any local, state, or federal criminal records.

an agent needs to abide by the following guidelines every two years to maintain their license:

• 24 hours of continuing education every two year for agents licensed less than 6 years

• 20 hours of continuing education for every two years for agents licensed more than 6 years

• Any continuing education must include minimum 5 hours in law and ethics

• Pay license fees, appointment and renewal fees

• Continue to be appointed with an insurance company

the chief financial officer has the power to suspend or revoke the license of an insurance agent who violates the insurance code. In lieu of suspension or revocation, the CFO has the authority to issue fines or order probation. There are a number of situations where the chief financial officer (CFO) can impose penalties or suspend, terminate, or revoke a license:

• Failure to answer a subpoena or an order of the CFO can result in a $1,000 fine

• Violation of a cease and desist order can result in a fine up to $50,000

• Willful violation of the insurance code is a misdemeanor

• Willfully submitting fraudulent signatures on an application or policy-related document is a third degree felony and it subject to a $5,000 to $75,000 fine for each violation

• In the event someone breaks an insurance law fro which there is no definable penalty, one can be charged $5,000 for the first offense and $10,000 for every subsequent offense

• Provided incorrect, misleading, incomplete or untrue information in the license application.

• Violating any insurance laws, regulations, subpoena, or orders from the Commissioner

• Attempting to obtain a license through fraud or misrepresentation

• Obtaining a license through fraud or misrepresentation

• Intentionally misrepresent the terms of an insurance contract

• Been convicted of a felony

• Committed any unfair insurance trade practice

• Using fraudulent, coercive, or dishonest practices or demonstrating incompetence, untrustworthiness, or financial irresponsibility in this or any other state

• Having an insurance license denied, suspended, or revoked by another state

• Forging a name on an insurance document or application

• Cheating on an insurance license examination

• Knowingly accepting insurance business from an unlicensed individual

• failing to comply with a court order imposing child support

• Failing to pay state income tax

• Obtaining license for the purpose of writing controlled business

• An agent's license will terminate if the agent allows 48 months to elapse without being appointed.

an agent is a licensed individual who has been authorized by an insurer to be its representative and to perform all of the following acts:
-Solicit applications for insurance
-collect premiums from policyowners
-Render services to prospects and clients
-Field underwriting if necessary
The agent's primary responsibility in the application process is to the insurer.

an agent who has combined premiums collected with personal funds has engaged in commingling, which is a prohibited act. An agent must maintain premiums in a separate account.

is an individual or firm who is paid to investigate, negotiate, or settle claims on behalf of the insurer.

• An insurance agency is any business location where insurance transactions take place that can only be performed by licensed insurance agents.

• There must be an agent in charge at each licensed agency location where insurance transactions take place

• A licensed insurance agent may be the agent in charge of additional branch office locations of the agency as long as insurance activities do not occur at any location when the agent is not physically present.

before an insurance company can sell insurance in a specific state, they must apply for a license or certificate of authority from that state's department of insurance. Once approved and given a certificate of authority, they are eligible to transact insurance.

includes any of the following:

• solicitation or inducement to purchase insurance

• negotiations toward the sale of insurance

• executing a contract of insurance

• Issuing an insurance contract

• Advising on coverages and claims.

• A licensee may not transact insurance business in Florida until the licensee is appointed by an insurer.

occurs when an insurance agent convinces a policyowner to cancel their current policy so that hey can purchase new life insurance policy with another company. This would involve the agent using misrepresentations or incomplete comparisons of the advantages and disadvantages of the two policies. Twisting is a form of misrepresentation and is illegal.

occurs when an agent has a policyholder replace one policy for another with the same company for the sole purpose of making more commission. This can involve using the cash value and/or dividends of an existing policy to purchase another policy with the same insurer. this normally is done using misrepresentation or deception and is not in the policyholder's best interest.
Note: agents who use twisting or churning can be charged with a first degree misdemeanor and a fine from $5k - $75k for each violation

occurs when an agent tells an applicant that in order to get the product they want, they are requires by law to get an additional product as well. It can also mean falsely representing to an applicant that specific coverage is included in the policy applied for with no additional charge.

is when an agent uses physical or mental force, with the intent of convincing an applicant to buy insurance.

when an agent uses publications, sales materials, or makes statements that are false, misleading, or deceptive to unfairly influence the purchase of a policy.
-an example of misrepresentation would be when an agent tells a client that dividends are guaranteed

occurs when an oral or written statement is made that is intended to injure a person in the insurance business or be critical and misleading about the financial condition of a person or company

occurs when someone intentionally deceives another with the intent to gain financially

it is an illegal practice to unfairly discriminate against a person in any way on an insurance-related matter.

is coverage written by an agent on his/her own life, health, property, immediate family, or business associates. Most states will not issue a license to a person if it is determined that their primary purpose is to write controlled business. Note: no more than 50% of an agent's insurance sales are allowed to come from controlled business.

happens when an agent refunds part of their commission, or exchanges anything of value to induce someone to purchase an insurance policy. Rebating is allowed in Florida if the agent rebates insureds in the same actuarial class.
-An insurer or agent may give to a prospective insured for the purpose of advertising, any article of merchandise having a value of not more than $25

The names of the parties to the contract, the subject of the insurance, the risks insured against, the effective date and period of coverage, the premium, the conditions pertaining to the insurance, the form numbers and edition dates of all endorsement attached to the policy.

allows an insured a period of 14 days from the delivery date of the policy to look over the new policy and return it for a full premium refund if dissatisfied for any reason. Note: the 14 day period begins when the applicant receives the policy in the mail or is delivered by an agent.

a provision that the policy terms shall be incontestable after it has been in force for a period of 2 years from its date of issue (unless the purpose for taking out the coverage was fraud)

life insurance policies must provide a grace period of 30 days after the due date

the maximum fixed policy loan interest rate that an insurer can charge in Florida is 10%. Adjustable rates for policy loans are based on Moody's corporate bond index.