Florida Commissioner Shuts Down Another Unlicensed Insurer

Bestwire
May 15, 2002
By Marie Suszynski, associate editor, BestWeek

Florida Insurance Commissioner Tom Gallagher has ordered a sixth unauthorized health insurance entity in the state to shut down, according to the department of insurance.

New York-based Vanguarde Asset Group, also known as Vanguard Asset Group, said it qualified under the federal Employers Retirement Income Security Act to do business in the state without a license, the department of insurance said. ERISA allows, under certain circumstances, an individual employer, union or association to establish and self-insure a health plan for its own employee or members without a license.

However, the department of insurance alleged that Vanguarde offered coverage to unrelated employers and consumers and operated more like a multiple employer-welfare arrangement, or a MEWA, which is required to be licensed in the state. The department said it didn't know how many people bought products from Vanguarde.

The cease-and-desist order alleged that Vanguarde is linked with American Financial Management Association, Inc. and several individuals. Gallagher ordered Vanguarde to continue paying claims, but give its policyholders notice to find new health insurance coverage. Every agent and broker that sold its products must offer to place policyholders in comparable plans, the department said.

A representative from the department of insurance couldn't be reached for immediate comment.

Vanguarde is the sixth unlicensed insurer Gallagher has shut down since February 2001. Unlicensed entities don't participate in a state guaranty fund, which covers unpaid claims if the insurer goes bankrupt, the department said. Gallagher has ordered N.A.P.T., Texas-based American Benefit Plans, Nevada-based Employers Mutual L.L.C. and two principles of Well America Group, Inc. to stop doing business in the state.

Earlier this month, the Florida District Court of Appeal in Florida upheld an order by Gallagher for a company that operated under the acronym N.A.P.T. to stop doing business in the state because it was allegedly selling bogus health insurance (BestWire, May 10. 2002). In April, Gallagher ordered Texas-based American Benefit Plans, which has operated in Florida under more than a dozen different names, to stop operations (BestWire, March 8, 2002).

This year the legislature passed a law that increased the penalty for a licensed agent selling unauthorized insurance from a first-degree misdemeanor to a third-degree felony, punishable with up to five years in jail, the department said. If an unlicensed insurer fails to pay claims, agents who sold the coverage may be held responsible for the claims.

The department launched a media campaign with the slogan "Verify before you buy," to warn employers and individuals not to buy insurance from unlicensed companies, the department said.