An unexpected illness or injury is tragic enough when you're insured. But imagine lying in the hospital and learning that your insurance company took your money without ever intending to protect you in return. Now you face huge medical bills and, if you can't pay, grave damage to your credit.

More than 30,000 Floridians have reported being left with millions of dollars in unpaid claims as a result of being duped, many by their agents, into buying coverage from unlicensed entities. Since early 2001, numerous unlicensed companies and several agents marketing these bogus products have been put out of business in Florida.  No one acting in the public interest had the opportunity to check the financial health of these companies or their ability to cover claims and, as a result, Floridians have suffered emotionally and financially.

Don't let yourself be taken in.

Licensed companies are subject to regular monitoring and oversight that can help the department identify potential problems and prevent large losses. There is no safety net when a phony “insurer” operates without a license. Unlicensed entities are not regulated, may not be actuarially sound, and there is no claim payment guarantee if the company goes bankrupt.

Many Floridians who purchased unlicensed health plans report difficulty securing new coverage because of pre-existing conditions and the subsequent lapse in continuous coverage. Often their stories are tragic. Using the cases of Floridians who found that their health insurance was worthless just when they needed it most - and who volunteered to come forward to warn others -- the department produced a public service announcement and a video news. Also, billboards, which the department has placed throughout the state, warn “Verify Before You Buy.”

The department also pushed for tougher penalties for licensed agents who sell unlicensed insurance. The 2002 Legislature passed a law increasing the penalty for a licensed agent selling unauthorized insurance to a third-degree felony, punishable by up to five years in jail. These agents are also subject to disciplinary action, including license revocation. The department is also seeking stronger laws against the organizers of these unlicensed entities.

Under Florida law, if an unlicensed insurer fails to pay claims, agents who sold the unlicensed coverage may be held responsible. The vast majority of Florida agents do not sell these unlicensed products. Remember: Verify before you buy. Check with the Department of Financial Services to be certain a company is licensed before you give it your business.

Sincerely,

Alex Sink
Chief Financial Officer of Florida