Volume 4, No. 3 - March 2015

Compliance Corner

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.

Customer Representatives' Lawful Duties and Compensation

Occasionally, general lines agents and the customer representatives (4-40s) they supervise blur the lines when transacting insurance under their licenses and find themselves the subject of Department discipline. We've put together a primer to clarify the duties a CR can lawfully perform followed by those activities that can only be performed by a licensed General Lines agent:

Chapter 626, Part II General Lines Agents - please pay particular attention to section 626.7315, F.S. - Prohibition against the unlicensed transaction of general lines insurance. This section discusses activities that can be lawfully conducted only by a licensed and appointed general lines agent. Florida Statute sections 626.7352, 626.7353, and 626.7354 apply specifically to customer representatives.

Chapter 69B-213, Florida Administrative Code, provides additional guidance regarding customer representatives. Please review 69B-213.010, F.A.C. regarding “Duty to Supervise” which clarifies what the Department requires of a general lines agent that is supervising customer representatives.

A customer representative can only solicit business within the office or by phone from the office [see subsection 626.7315(1), F.S.], and cannot "run the office" during the extended absence of a general lines agent. In the case of more than an absence of the general lines agent, a new general lines agent must be appointed as the agent in charge to supervise the customer representative during the extended absence of the original supervising agent.

A customer representative can conduct activities under his/her license during an absence of the general lines agent, but the general lines agent must have daily, in-person contact with the customer representative. Should a complaint be filed with the Department regarding business conducted during the absence of the supervising general lines agent, the Department will review all facts prior to considering the appropriate enforcement action. You can review 69B-213.120, F.A.C., for more information.

An example of how the law is interpreted: We were recently asked if a customer representative could access her agency work emails from home via her smart phone. Although the employee can lawfully view the emails, to take any type of action that falls under her lawful duties as a customer representative would be unlawful as she would not be under the direct supervision of her designated supervising general lines agent.

We are frequently asked how an agency can lawfully compensate customer representatives. Customer representatives must be salaried, non-commissioned employees. However, customer representatives can receive bonus income provided the bonuses are given to everyone in the agency for the overall production/performance of the agency, but not for the customer representative's individual production.

Unlicensed Insurance Personnel: What They Can (and Cannot) Do

A license is required to transact insurance in the state of Florida, but there are some insurance agency tasks that can be performed by unlicensed persons. These tasks are specifically outlined in Chapter 69B-222 of the Florida Administrative Code. This rule is intended to give an overview of what unlicensed personnel can and cannot do. We encourage our licensees who employ unlicensed persons to read the entire rule chapter.  Agencies should encourage unlicensed employees to be aware of the laws as well to prevent them from unknowingly engaging in unlicensed activity.  Transacting insurance without a license is a third-degree felony under subsection 626.112(9), F.S.

In the agency's regular course of business, an unlicensed employee may give information or explain procedures to clients, as long as the employee reads from agency records or files and does not interpret or judge the information.

At the request of a licensed agent or customer representative, an unlicensed person may return a customer's telephone call and set up a meeting between the customer and the agent or customer representative. The agent or customer representative may also authorize the unlicensed employee to convey specific information to existing clients or claimants, such as acknowledging the receipt of paperwork.

An unlicensed employee may conduct some activities that are considered incidental to the employees' duties. Section 69B-222.020(2), F.A.C. states that work can be classified as incidental if the employee spends ten (10) percent or less of his/her time on the task, and the exact amount and timing of the work is unpredictable. An unlicensed employee can perform three activities if they are incidental:

  1. Taking an application for insurance in the agent's office, for a person who has called or come into the office. Taking an application means filling in the blanks on an application form in response to information provided by the applicant, and then giving the application to an agent or customer representative. It does not include application of judgment, processing, binding, policy interpretation, signing an application, procedure explanations or insurance advice and counsel, or similar activity.
  2. Giving a quote in the agent's office, to a person who has called or come into the office. Giving a quote means obtaining certain basic underwriting answers from the inquirer, then consulting written underwriting materials that state the rate. It does not include application of judgment, processing, binding, policy interpretation, signing an application, procedure explanations or insurance advice and counsel, or similar activity.
  3. Receiving premium at the agent's office.

Unlicensed insurance agency personnel are never allowed to perform the following activities:

    • comparing insurance products;
    • advising customers as to insurance needs or insurance matters;
    • interpreting polices or coverages;
    • binding new, additional or replacement coverage for new or existing customers;
    • binding coverage on or recording additional property under existing policies; or
    • soliciting the sale of insurance by telephone, in person, or by other communication.

Unlicensed insurance agency personnel may not receive any type of pay that is formally tied to the production of insurance or insurance applications. Such payment constitutes illegal sharing of commissions. The statutory penalty for general lines agents engaging in unlawful commission sharing is revocation [subsection 626.753(4), F.S.].

Title Agencies: The 2015 Data Call

This is the first year title insurance agencies are required to submit information to the Florida Office of Insurance Regulation (OIR) under the data call required by section 627.782, Florida Statutes. Title agencies have until June 1, 2015 to make their submission to the OIR. The OIR has sent an email to each licensed title agency in Florida to remind them of the new law with instructions on how to complete the process accurately.

The Title Agency Data Call is performed by the agency first downloading the template from the OIR website to complete offline. To do this, the agency will need to create an account and subscribe to your agency in the Data Collection and Analysis Modules (DCAM) used by the OIR, which is located at https://apps.fldfs.com/DCAM/Logon.aspx.
(The user's guide for DCAM is located at: https://apps.fldfs.com/DCAM/Help/DCAMUserGuide.pdf)

Once the agency's data template form is completed and the agency is ready to certify it is accurate, it is then that the agency must upload the form to the OIR before the deadline, June 1, 2015.

The data template has seven tabs or worksheets:

  1. Version: includes the OIR contact information and reporting date reminder
  2. Instructions: data template must be downloaded from DCAM for the purpose of reporting information
  3. Report_Lines: Two columns extend down a series of questions and required responses (enter either text or numeric in the two columns, as shown)
  4. Schedule A: Additional agency information
  5. Schedule B: Agent activities
  6. Schedule C (Residential): Title agent statistical information submission for 1-4 residential units
  7. Schedule C (Commercial): Title agent statistical information submission for commercial units

Each agency's submission must contain a Filing Certification signed by an agency officer (electronic signature accepted), stating the information provided is accurate to the best of their knowledge and belief. A sample copy is available on the OIR's website at: www.floir.com/siteDocuments/CertificationOfTitleDataSubmissionExample.pdf

The agency may include a cover letter, but this is an optional component for the filing.

Each agency is encouraged to include any additional or optional information that is deemed important to the overall submission. These optional items may be uploaded as PDF documents under the "Other Information/Documents" component.

It is important to know that the agency's submission is not considered to be complete until the agency receives an email receipt showing the agency's file log number.

If you have any questions regarding this filing process, please contact the OIR's Market Data Collections Unit at 850-413-3147 or via email: TitleAgencyReporting@floir.com.