Volume 2, No. 5 - July 2011

Compliance Corner

We continue to see a pattern of noncompliance in the areas noted below. This section has been created to assist you in keeping your insurance business in compliance. The items are intended as reminders only and are not necessarily the exact text of the Florida Statutes or Florida Administrative Code. The legal cites have been provided for your further reference.

Altering Certificates of Insurance

We'd like to remind agents about the unlawful nature of issuing certifications, declarations or other evidence of coverage that differs from the terms, benefits or conditions of an underlying insurance contract. Informational Memorandum OIR-03-003M issued on February 21, 2003 addressed this topic and remains relevant today.

Certificates of insurance generally serve only as evidence of insurance in lieu of an actual copy of an insurance policy. An insurer is under no obligation to abide by any certificate of insurance which has been modified by any person or entity which does not have actual or apparent authority to do so. Distribution of a certificate of insurance which has been modified without authorization and which purports to alter the provisions of the underlying policy, misrepresents the conditions or terms of the insurance policy in violation of Section 626.9541(1)(a)1, Florida Statutes, thereby subjecting the person or entity modifying the certificate to license discipline and administrative fines, in addition to possible criminal penalties.

[See Informational Memorandum OIR-03-003M]

Title Insurance Reissue Rates

The Florida Administrative Code sets the premium for title insurance policies issued within 3 years of a previous policy at:

  • $3.30 per thousand for policies up to $100,000
  • $3.00 per thousand for policies over $100,000 and up to $1 million
  • $2.00 per thousand for policies over $1 million and up to $10 million
  • $1.50 per thousand for policies over $10 million

In order to qualify for these rates, the title agent must include proof of the previous title insurance policy.  Failure to include the proof of prior coverage  within 3 years could result in the title insurance agent and agency being found to have violated Subsection 627.780(1), Florida Statutes, for quoting, charging, collecting or accepting a premium for title insurance that is other than the premium promulgated by the Florida Administrative Code.

Please be aware that the Department may suspend or revoke the license of a title insurance agent or agency that has:

  • Engaged in a willful deception of any title insurance commitment or policy,
  • Demonstrated a lack of fitness or trustworthiness to represent a title insurer in the issuance of its commitments or policies of title insurance,
  • Demonstrated a lack of reasonably adequate knowledge and technical competence to engage in the transaction of title insurance business,
  • Engaged in fraudulent or dishonest practices.

Cases involving reissue rates that were charged illegally will also be referred to the Office of Insurance Regulation to determine if the title insurer violated Subsection 627.780(2), Florida Statutes, by accepting a premium for a title insurance policy issued by their company that is not the premium promulgated by the Florida Administrative Code.

Title Insurance Closing Services Fees

The Florida Statutes defines closing services as the services performed by a licensed title insurer, title insurance agent or agency, or attorney agent in the agent's or agency's capacity as such, including, but not limited to, preparing documents necessary to close the transaction, conducting the closing, or handling the disbursing of funds related to the closing in a real estate closing transaction in which a title insurance commitment or policy is to be issued.

This means the closing services fee listed on the settlement statement form is to include all the fees and charges made by the agency to close and complete the transaction. Consumers should not be charged additional fees in addition to the amount listed as the closing or settlement services fee on the HUD-1 or other settlement statement form.

Examples of fees that should not be listed as separate line items on the form include, but are not limited to:

  • Postage and handling
  • Notary services
  • Copies
  • Digital documents
  • Document preparation fees
  • Document storage or warehousing fees
  • Electronic conversion of documents to CD or DVD formats

Agencies that charge additional fees as separate line items may be found to be engaging in deceptive practices against Florida consumers in violation of the Florida Statutes. The penalty for violations such as this can be as strong as suspending or revoking the license of the agent and the agency involved in the practice. Agencies may provide consumers with a detailed listing of the fees and charges that comprise the closing services fee being charged. This listing would be in addition to the settlement statement (HUD-1) form and the amounts included would need to total to the same number listed on the settlement statement form as the closing services fee.

Public Adjusters and Unlicensed Practice of Law

The Florida Bar has recently made it clear that if a public adjuster files a claim of lien against a customer on their behalf or on behalf of their adjusting firm, which is a fictitious entity requiring representation by a lawyer, it would be considered engaging in the unlicensed practice of law. There is no statutory authority to authorize the conduct as Section 713.03, Florida Statutes, creates liens rights in favor of numerous occupations and professions, but fails to include public insurance adjusters.

Any public adjuster that engages in this type of activity is subject to disciplinary action by the Florida Bar and the Florida Department of Financial Services if a violation of the Florida Insurance Code is committed.

 

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