Insurance Insights header
Volume 1, No. 4 - September 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.

Agent, Adjuster and Agency Records

Section 626.748, Florida Statutes, requires agents to keep records of policies transacted. These records include daily reports, applications, change endorsements, or documents signed or initialed by the insured concerning the policies. The records must be available to policyholders and the Department upon request.

Every licensee is also required to preserve books, accounts, and records relating to a premium payment for at least three years after payment, per Section 626.561, F.S. The law allows a licensee to maintain policy and premium payment records by electronic or photographic means, as long as they are readily accessible in the licensee's office.

Section 626.875, F.S. states that the records of an adjuster relating to a particular claim or loss shall be retained in the adjuster's place of business for three years after the adjustment is completed.

Public adjusters have an additional specific requirement as to their written estimate for an insured/claimant. Subsection 626.854(12), F.S., states that public adjuster shall retain such written estimate for at least 5 years and shall make the estimate available to the claimant or insured, the insurer, and the department upon request.

It's always a good idea to maintain a backup copy of all required records in the event that a hurricane or other disaster damages the business. That way, you will be able to access policyholders' records and be able to provide assistance to them.

[See Sections 626.561, 626.748, 626.854, and 626.875, Florida Statutes]

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.

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. This rule does not restrict mailroom employees, or other unlicensed personnel who handle mail, from handling premium that arrives via mail. 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 [ss. 626.753(4), F.S.].

[See Chapter 69B-222, Florida Administrative Code]

Moving to Florida? Leaving Florida? You Need a New License

If you are licensed and appointed as a Florida nonresident agent or adjuster and you move to Florida, you can continue to transact insurance or adjust claims in this state under your nonresident license and appointment(s), for a period not to exceed 90 days. However, you must apply for and become licensed and appointed as a resident agent or adjuster within 90 days of becoming a resident of this state. Section 626.741(5), Florida Statutes, governs this procedure for general lines agents. Similar language is in the laws governing other types/classes of agents and adjusters.

If you have a Florida resident license and move to another state, you must surrender your resident license to the Department. Most states require you to give up your Florida license before you can obtain a resident license in that state. Once you have obtained a resident license in your new home state, you may submit an application to us if you wish to become licensed as a Florida nonresident agent or adjuster.

If you have a Florida nonresident license and you move to a state other than Florida, you may be eligible for a nonresident license if: 1) you become licensed in the other state for the same type/class(es) of license, and 2) the other state has a reciprocal agreement with Florida. You must provide the Department with a letter of certification from your new home state. Section 626.741(1), F.S., governs this procedure for general lines agents. Similar language is in the laws governing other types/classes of agents and adjusters.

In all of the above cases, you must also be properly appointed for each type/class of license you hold, before you can transact insurance or adjust claims.

If you change your state of residence and no longer wish to transact insurance or adjust claims, you must surrender your license to the Department.

[See 626.292 and 626.551, Florida Statutes]