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Volume 1, No. 1 - June 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.

Rebating Commissions on Flood Insurance Policies

The Federal Insurance and Mitigation Administration (FIMA) manages the National Flood Insurance Program (NFIP) and a range of programs designed to reduce future losses to homes, businesses, schools, public buildings, and critical facilities from floods, earthquakes, tornadoes, and other natural disasters. Additionally, the Federal Emergency Management Agency (FEMA) administers the NFIP and sets standards governing the activities of participating "Write Your Own" (WYO) companies related to the sale and marketing of flood insurance.

The State of Florida holds these companies' agents accountable for providing NFIP customers with the same standards and level of service that the State requires of them when selling other lines of insurance. This includes compliance with Section 626.572, F.S.

Effective October 1, 2012, Write Your Own (WYO) Companies must not authorize the rebating of commissions on new or renewal NFIP policies. So, after this date, there should not be any Florida agents rebating commissions for policies of flood insurance through the WYO Program as the WYO Company is forbidden to authorize this activity.

[See 626.572, Florida Statutes and the memorandum from FEMA]

Unlawful or Unauthorized Charging of Fees

The Department has received an increasing number of consumer complaints that Florida agents and agencies are charging fees for policies or services that are unlawful under the Florida Insurance Code. Subsection 626.9541(1)(o), F.S., states that it is unlawful for any licensee to collect any sum connected with the purchase of insurance that is not forwarded to the appropriate insurer, or part of the insurer's rates as filed with the Florida Office of Insurance Regulation, or otherwise designated as lawful within the Florida Insurance Code. This law applies to all licensees, including agencies and surplus lines agents.

The Department will vigorously investigate all allegations of unlawful fees and take the appropriate enforcement action for the overcharging of Florida consumers in insurance transactions.

[See 626.9541(1)(o), Florida Statutes]

Residential & Commercial Residential Mediation Change

HB 1101 passed during the 2012 Legislative Session amended Section 627.7015(1), F.S., that provides for alternative procedures for resolution of disputed property insurance claims.

Effective July 1, 2012, mediation may be requested only by the policyholder, as a first-party claimant, or the insurer.

[See Chapter 2012-151, Laws of Florida]