Beware unlicensed insurers, warns DOI

Jill Krueger  
South Florida Business Journal
4-11-02

Florida's Department of Insurance introducing a media campaign to warn employers and health insurance buyers to not deal with insurers until they know the insurers are licensed in Florida.

Florida Insurance Commissioner/Treasurer Tom Gallagher said he will seek the toughest penalties against unlicensed insurance sellers.

Those who are caught selling unauthorized insurance will have their licenses revoked and will face criminal charges, he said.

This year, the Florida Legislature raised the penalty for a licensed agent selling unauthorized insurance from a first-degree misdemeanor to a third-degree felony, punishable by up to five years in jail.

The department said agents who sold unlicensed coverage could be held responsible for an unlicensed insurer's unpaid claims.

Last year, Gallagher took action against four unlicensed companies that convinced as many as 15,000 people to buy health insurance plans that shut down when incoming premiums no longer covered costs.

Although unlicensed companies typically charge lower premiums, the department said these companies do not set aside money for reserves and do not participate in a state guaranty fund, which covers unpaid claims if an insurer goes bankrupt. Therefore, when an an unlicensed insurer goes out of business, the policyholders must pay the medical bills, said the department.

Employers and individuals can protect themselves by checking with the Department of Insurance to make sure they are dealing with a Florida-licensed insurance company and insurance agent, said Gallagher.