Volume 3, No. 8 - September 2014

Case Notes

Bureau of Investigation

The following are instances in which licensees or other persons violated the Florida Insurance Code and the administrative action the Department has taken against them. Note: All administrative investigations are subject to referral to the Division of Insurance Fraud for criminal investigation.

Case: An investigation of a general lines agent, who owned an insurance agency, revealed he met with proposed insureds and accepted funds for payment towards commercial, homeowner and automobile insurance policies. Unbeknownst to the insureds, the agent pocketed the premium funds and established fraudulent premium finance contracts for their policies. The agent made some payments on the fraudulently financed policies; however, they all fell into arrears resulting in the cancellation of the consumers' insurance policies.
Disposition: License revoked and he is permanently barred from the insurance industry. He was arrested by the Division of Insurance Fraud and charged with presenting false certificates of insurance and misappropriation of insurance funds to which he pled guilty. Also, he was ordered to pay restitution to the victims. The insurance agency's license was surrendered.

Case: An investigation of a life & health agent revealed that he sold a long term care policy to a developmentally disabled consumer who did not need the coverage as she was already residing in a group home. Compounding matters, the agent made sure not to disclose this fact on the application among other glaring omissions. The agent was looking to collect more than $16,000 in commissions. Adding insult to injury, the agent even made unauthorized withdrawals from an annuity belonging to the same victim so he could finance his lavish lifestyle.
Disposition: License revoked. He was arrested and charged with financial exploitation of a disabled adult to which he was convicted.

Case: The Department received notification from another state Department of Insurance that a customer representative was working out of her home here in Florida for an agent located in Pennsylvania. She had been licensed as a customer representative for many years; however, along with working outside of an agency, her license expired as she failed to have a valid appointment for 48 months. For months, the customer representative was unlicensed while working out of her home. During the time that her license was expired, it was revealed that she signed six applications for insurance that were submitted to the insurance companies for coverage. She later applied for a general lines license.
Disposition: License revoked and her application for the general lines license was denied. She is no longer eligible to apply for or hold a customer representative license.

Case: An investigation of a title agency revealed that an individual at the agency mishandled escrow funds in excess of $100,000, and placed said funds in an interest-bearing account without the consent of the buyer or seller. Premiums were not remitted, in a timely manner, to the title insurance company. It was also discovered that there were excessive fees charged for title-related services as well as failure to properly maintain records.
Disposition: License surrendered for two years.

Case: An investigation of a customer representative revealed that she told a consumer looking for auto coverage that she was going to add her vehicle, and her as a driver, to her own personal auto policy for a few months until the agency got with a cheaper insurance company and would charge her $60 each month. The consumer made deposits directly into the customer representative's personal bank account. A couple of months later the consumer had an accident, totaling her car, and found that she had no coverage.
Disposition: License suspended for 12 months and ordered to complete six additional hours of continuing education covering ethics. If her license is reinstated after the suspension, it will be placed on probation for 12 months. She was arrested by the Division of Insurance Fraud. She pled to petit theft and was ordered to pay investigative costs and to make restitution to the consumer.

Case: An investigation of a life agent was opened based on a complaint from an insurance company alleging she, as their debit life agent, failed to remit nearly $2,000 in premiums she collected from policyholders. The investigation included sworn statements from multiple policyholders stating they paid their cash premium directly to the agent, none of which ever made it to the insurance company.
Disposition: License suspended for 12 months.

Case: A complaint was received from a consumer who discovered that he did not have homeowners insurance coverage in effect after he suffered a loss. The investigation revealed that a customer representative had issued certificates of insurance to the mortgage company indicating that the insured had homeowners insurance coverage with an insurance company for two policy terms. The agency bank account revealed that the premiums for both policy terms were deposited into the agency bank account, but the policies were not placed. The insured pursued this matter in civil court and the case was settled for $22,500. The consumer was refunded $6,990.56, which represented the premiums for two years. Lastly, the investigation revealed that the owner/agent was operating the agency without a general lines agent in full-time charge of the agency.
Disposition: The license of the customer representative was suspended for 12 months. The owner/agent and insurance agency's licenses were both suspended for three months.

Case: An investigation of a life & variable annuity agent revealed that he was the subject of an administrative proceeding by the Securities and Exchange Commission (SEC). He failed to report the administrative action to the Department within 30 days after the final disposition. He also failed to notify the Department within 30 days of a change to his email address.
Disposition: License revoked.

Case: A referral was received from an insurance company regarding a violation by a customer representative. Apparently, she had misappropriated fiduciary funds collected in the normal course of business and failed to notify the Department in writing within 30 days after a change of contact information. The insurance company advised that the customer representative admitted to using cash payments made by customers to pay her own personal expenses. Approximately $1,689.29 was misappropriated by the representative. No criminal charges were filed due to the fact that all funds were reimbursed.
Disposition: License suspended for 12 months.