Volume 4, No. 3 - March 2015

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: The Department became aware of administrative action taken against a life, health and variable annuity agent by the Securities and Exchange Commission (SEC). The agent misappropriated at least $308,850 in purported "financial planning" fees from at least 47 advisory clients by forging signatures on or adding costs to financial planning agreements after the clients had already signed them without their knowledge or authorization. The SEC permanently barred the agent from association with any individual, firm or organization it regulates. The SEC ordered the agent to pay disgorgement in excess of $360,000 and prejudgment interest in the amount of nearly $25,000.
Disposition: License revoked.

Case: The Department looked into a termination for cause of a life, health and variable annuity agent after being notified by an insurance company. The insurer alleged that the agent conducted fraudulent loan transactions, had account shortages and a missing deposit while doing business with a subsidiary of the insurer. The agent added policies to policy loan requests without the knowledge or consent of five policyholders and allowed a consumer to sign a document for her son who was incarcerated.
Disposition: License suspended for 12 months. Additionally, he was ordered to make restitution to the insurer and provide the Department proof of payment.

Case: The Department's Division of Rehabilitation and Liquidation ("receiver") issued a final judgment against a general lines agent's agency for unearned commissions due to the receivership of Northern Capital Insurance Company. The receiver was due more than $4,000 in unearned commissions and interest. The agent failed to complete an agreement to repay the debt, and an Administrative Complaint was issued in the matter, but the agent failed to respond.
Disposition: License revoked.

Case: An investigation of a managing general agent and bail bond agent determined the licensee failed to forward premium and other funds belonging to a surety company and failed to meet contractual obligations with a surety company. The agent ultimately paid the funds to the surety company.
Disposition: Fined $3,000 and placed on probation for one year.

Case: The Department became aware of multiple disciplinary actions taken against a nonresident life, health and variable annuity agent, including being barred by a securities regulator in another state. The actions were related tot he sale of unregistered securities to an elderly consumer resulting in a loss of an estimated $500,000 to the consumer. In response to the securities case, the state's Department of Insurance revoked the agent's insurance license. The agent also had disciplinary action taken by another state for contacting insurance companies in an improper manner for the purpose of obtaining policyholders' information. None of the actions were reported to the Department as required by statute.
Disposition: License revoked.

Case: A complaint to the Department against a general lines agent was made after a consumer purchased an auto policy from the agent and made premium payments but the agent failed to remit the premium to the insurer. This resulted in the suspension of the consumer's driver license. Department audits of the agency's records discovered there was a pattern of NSF fees, with one insurer due $6,843 in unpaid premium related to NSF transactions by the agency. The audits also revealed the agent was overcharging for MVR fees and unlawfully charging PIP fees on policies that included comprehensive and collision coverage. The agent also failed to maintain critical records such as applications, policy declaration pages, or receipts for down payments.
Disposition: License suspended for nine months and placed on one year probation if reinstated after the suspension.

Case: A life agent sold low face amount "final expense" policies to low income consumers, many of which were illiterate or financially unsophisticated. The agent went to the consumers' homes and collected premiums as if he was a debit agent, which was forbidden by the contract he had with the insurer involved. The agent submitted more than 48 applications that contained fraudulent bank information. The agent went so far as to use his own bank account information in one case. The agent failed to keep a record of the payments he collected and did not give receipts or provide a premium receipt book, which is customary in debit cases. Some consumers were set up to have their premiums deducted from their government assistance debit card, causing all types of problems for them as they were unaware of the deductions. Many consumers lost their coverage and were re-written multiple times. The agent had a 73% lapse rate with the insurer that issued the policies.
Disposition: License revoked.

Case: A life and general lines agent fraudulently signed a senior consumer's name in order to withdraw $75,000 from her annuity contract. The agent befriended the consumer and became close to her by checking in on her and taking her for groceries and to the bank. The agent was able to convince the consumer to give her Power of Attorney and the agent added herself to the consumer's checking account. The consumer later suffered a major stroke and was placed in hospice care then died a week later. Using the Power of Attorney, the agent withdrew the $75,000 from the joint account. The agent was arrested by the Division of Insurance Fraud and charged with felony organized fraud $50,000 or more.
Disposition: License revoked and permanently barred from the insurance industry. She pleaded guilty and was convicted. She was placed on 10 years felony probation and ordered to pay $75,000 in restitution to the senior consumer's beneficiary and $1,287.40 in investigative costs to the Department.

Case: Over the course of two years, a warranty company was busy mailing out postcard fliers to unsuspecting Florida consumers. The fliers falsely implied a sense of urgency, gave the impression it had knowledge of the consumer's original auto warranty, and told recipients their automobile warranties were about to expire. The problem was, in numerous instances, this was not true at all. To compound the problem, the company failed to disclose its business name, address, or even its license number on the postcards.
Disposition: Fined $2,000.