Volume 3, No. 1 - January 2012

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.

Unlawful Sharing of Commission and Controlled Business

An agent may divide or share commissions only with other agents appointed and licensed to write the same kind or kinds of insurance. A licensed or registered insurance agency may legally split, or share, commissions on a sale, but cannot pay new commissions to an unlicensed or non-appointed agent. Legal commission sharing between an agent and an agency is typically arranged through a contract between the parties, in which the producing agent assigns his or her commissions to the agency.

The Department has recently taken disciplinary action against licensees that were engaging in alleged controlled business and unlawful sharing of commissions with entities that were not licensed as a legitimate insurance agency or agent. "Controlled business" is insurance written by an agent on his or her own interests or those of his or her family or of any firm, corporation, or association with which he or she is associated, directly or indirectly, or in which he or she has an interest. A violation of the controlled business law occurs if aggregate commissions in addition to any other compensation accruing in favor of a licensee on the controlled business written exceeds or will exceed 50 percent of the total commissions earned by the licensee during any 12-month period.

Please familiarize yourself with this part of the Florida Insurance Code to ensure you remain compliant and can notify the Department if you become aware of others engaging in these activities.

[See 626.611(12), 626.730, 626.753(1)(a), 626.784, 626.794(1), 626.830, and 626.838, Florida Statutes]

Customer Representatives: Make Sure You're Appointed

The Florida Statutes are very specific that a licensed customer representative may not act as a customer representative until they have been appointed. Working as a customer representative without an appointment can result in similar disciplinary action as that to working without a license. Therefore, it's very important that you make sure you have an appointment on file with the Department. You can verify if you have an appointment by logging in to your MyProfile account and click on "Click here to review a list of your active appointments" under APPOINTMENTS. Appointments last no longer than 2 years and must be renewed.

If you have been working as a customer representative for an agency or general lines agent without an appointment, then you will need to get them to retroactively appoint you to the date you first started working for them to cover you for that time period you were not properly appointed. They will need to do this through their MyProfile account. The agency or agent will need to complete an Affidavit of Insurance Activity While Not Properly Appointed form (DFS-H2-1105) and submit it to the department.

[See 626.371 and 626.7353, Florida Statutes]


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