Volume 6, No. 4 - April 2017

Compliance Corner

This section has been created to assist you in keeping your insurance business in compliance. The items are intended as reminders only. Note: Division publications may include references to the Florida Statutes and/or the Florida Administrative Code. The laws noted in our publications are/were in effect at the time of publication but may have been repealed, amended or replaced and new laws may have been enacted subsequently.

Compliance Topic of the Month: Insurance Agency Requirements

It is important to remember that an insurance agency is required to be licensed by the Department of Financial Services. The Florida Insurance Code defines “agency” a little different for certain license types.

Title insurance agency means an insurance agency under which title insurance agents and other employees determine insurability in accordance with underwriting rules and standards prescribed by the title insurer represented by the agency, and issue and countersign commitments, endorsements, or policies of title insurance, on behalf of the appointing title insurer. The term does not include a title insurer. [See s.626.841(2), F.S.]

Life, health, and general lines insurance agencies are defined as a business location at which an individual, firm, partnership, corporation, association, or other entity, other than an employee of the individual, firm, partnership, corporation, association, or other entity and other than an insurer… or an adjuster… engages in any activity or employs individuals to engage in any activity which by law may be performed only by a licensed insurance agent. [s.626.015(8), F.S.]

Bail band agency means the building where a licensee maintains an office and where all records required… are maintained; or an entity that charges a fee or premium to release an accused defendant or detainee from jail; or engages in or employs others to engage in any activity that may be performed only by a licensed and appointed bail bond agent. {s.648.25(1), F.S.}

Each location must be under the full time charge of a properly licensed and appointed agent for the insurance being transacted at the agency. Each agency must notify the department of the physical address of each agency location and the name and license number of the agent designated to be in charge of each location. [s.626.0428(4)(a)(f), 648.387, 648.44(4), F.S.]

ALL insurance agencies are required to be open and accessible to the public.

General lines and title insurance agents may have an agency located in their home if -

• a separate room is set aside and actually used as the office or place of business;
• the room is easily accessible to the public and used by the agent to deal with the public;
• the location is suitably advertised to allow the public to locate it. [s.626.749, F.S.]

Bail bond agencies must have an entrance that is easily accessible to the public with a sign, or other display, that is visible from a reasonable distance and it provides at least the name of the agency. If the agency is in a building that has a uniform office directory, the directory must show no less than the name of the bail bond agency. The bail bond agency must be open to the public at least 8 hours daily between 8:00 AM and 6:00 PM, Monday through Friday. [69B-221.051, F.A.C.]

Penalties for violations of the above range from a minimum of a $1,500 fine to a maximum of a 12-month suspension for a willful violation. These penalties may be directed to the agency, the owner, and/or the agent in charge, or primary bail bond agent.

Agent in Charge - Requirements, Changes and Responsibilities

Each person operating an insurance agency and each location of a multiple location agency must designate a licensed and appointed agent in charge for each location.

An agent in charge (AIC) is defined as the licensed and appointed agent responsible for the supervision of all individuals within an insurance agency.

Requirements

Each business location established by an agent or insurance agency must be in the active full-time charge of a licensed and appointed agent holding the required licenses for the lines of insurance transacted at the location. The AIC of an insurance agency may be the AIC of additional branch locations if: (1) insurance activities requiring licensure as an insurance agent do not occur at the location(s) when either the AIC or an appropriately licensed agent is not physically present and (2) unlicensed employees at the location(s) do not engage in insurance activities that require licensure as an insurance agent or customer representative.

Each insurance agency and branch office is required to designate an AIC and to file the agent’s name, license number, and physical address of the insurance agency location with DFS at the DFS website. Adding and removing an AIC can be done by going to www.MyFloridaCFO.com/Division/Agents and logging in to the agency's account in MyProfile.

Changes

A change of the designated AIC must be reported to DFS within 30 days, and becomes effective upon notification to DFS. An insurance agency location is precluded from conducting the business of insurance unless an AIC is designated by, and providing services to, the agency at all times. When the agent in charge ends her/his affiliation with the agency, the agency must designate another AIC within 30 days. If the agency fails to make such designation within 90 days after the designated agent has ended their affiliation with the agency, the agency license will automatically expire.

Responsibilities

The AIC of an insurance agency is accountable for misconduct or violations committed by the licensee or agent or by any person under her or his supervision acting on behalf of the agency. However, the AIC is not criminally liable for the misconduct unless she or he personally committed the act or knew or should have known of the acts and of the facts that constitute the violation.

For complete information on the duties and responsibilities of the AIC, see s.626.0428, F.S.

Agency License Cancellation for Failure to Designate an Agent in Charge

An insurance agency location may not conduct the business of insurance unless an agent in charge is designated by, and providing services to, the agency at all times. If the agent in charge designated with the Department ends his or her affiliation with the agency for any reason the agency must designate another agent in charge within 30 days. If there is no agent in charge designated within 90 days, the agency license shall automatically expire on the 91st day from the date the designated agent in charge ended his or her affiliation with the agency [s.626.0428(4)(f), F.S.]

State of Emergency Claims - Special Requirements Upon Governor's Declaration

Hurricane Season is just around the corner. During the "Mean Season" and other incidents of natural disasters, the Governor may issue a "State of Emergency". Claims that are based on events that are the subject of a declaration of a state of emergency by the Governor, and during the year after the declaration of emergency have the following additional statutory requirements:

  • A public adjuster may not charge, agree to, or accept from any source compensation, payment, commission, fee, or any other thing of value in excess of ten percent (10%) of the amount of insurance claim payments made by the insurer for claims for one year after the declaration of emergency is issued.
  • The insured or claimant has 5 business days after the date on which the contract is executed to cancel a public adjuster’s contract.

The following are excerpts of the standards of conduct that define ethical behavior, and are included in the code of ethics:

  • The work of adjusting insurance claims engages the public trust. An adjuster shall put the duty for fair and honest treatment of the claimant above the adjuster’s own interests in every instance.
  • An adjuster shall not attempt to negotiate with or obtain any statement from a claimant or witness at a time that the claimant or witness is, or would reasonably be expected to be, in shock or serious mental or emotional distress as a result of physical, mental, or emotional trauma associated with a loss.
  • An adjuster shall not directly or indirectly refer or steer any claimant needing repairs or other services in connection with a loss to any person with whom the adjuster has an undisclosed financial interest.
  • A public adjuster shall not prevent, or attempt to dissuade or prevent, an insured or claimant from speaking privately with the insurer, company employee adjuster, independent adjuster, attorney, or any other person, regarding the settlement of the claim.
  • A public adjuster shall not enter into a contract or accept a power of attorney which vests in the public adjuster the effective authority to choose the persons who shall perform repair work.

Please refer to Section 69B-220.201, Florida Administrative Code for the full Adjuster Code of Ethics.

Accepting Referral Fees from Property Inspectors or Inspection Companies is Prohibited

An insurance agent, insurance agency, customer representative, or insurance agency employee is prohibited from directly or indirectly accepting any compensation, inducement, or reward from an inspector for the referral of the owner of the inspected property to the inspector or inspection company. This prohibition applies to an inspection intended for submission to an insurer in order to obtain property insurance coverage or establish the applicable property insurance premium. [s.626.621(15), F.S.]

What's the Difference? Referral Fees, Marketing/Advertising Gifts and Unlawful Inducements

We are frequently asked about referral fees, marketing or advertising gifts, and what constitutes an unlawful inducement. These three topics are often confused by licensees. Let's review the definition and practical use of each, lawful and unlawful:

Referral fees - referral fees are either cash or an item given to the source of a referral provided for the referral of a prospective insurance customer. The fees are lawful provided they are given for every referral, not just those that result in insurance sales. Acceptable fees can be paid in cash, with a gift card, merchandise, lottery tickets, etc. There is NO limit on the amount of a cash referral fee or the value of merchandise. [s.626.112(8), F.S.]

Marketing/Advertising Gifts - these are items of merchandise given to prospective or current policy holders or to the public that market or advertise a licensee or agency. Acceptable items include coffee mugs, golf balls, golf towels, mouse pads, calendars, etc., and generally include the name of the agent or agency. Cash, gift cards, lottery tickets, etc., are not acceptable advertising gifts. The value of the merchandise given to each person cannot exceed $25. There is no annual cap or limit [s.626.9541(1)(m), F.S.]

Unlawful Inducements - the definition of an unlawful inducement in its simplest terms is to give a prospective customer, existing customer or any other entity or person a "thing of value" in exchange for something of value to the licensee. An example is giving any person or entity cash, a gift card, merchandise, lottery tickets, tickets to a sporting event, etc. in exchange for the ability to produce an insurance quote or sell insurance. If another agent or agency sells the same product for the same price, the consumer may choose to work with the licensee that offers a gift card. The law was created in part to deter unfair competition among licensees. [s.626.9541(1)(h), F.S.]

Title Agency Data Call 2017

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(8), Florida Statutes. Title agencies have until June 1, 2017 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 title agency by 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://apps8.fldfs.com/DCAM/Logon.aspx.
(The user's guide for DCAM is located at: https://apps8.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, the agency must upload the form to the OIR before the deadline, June 1, 2017.

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.

Compliance Information

Department licensees and consumers can access compliance information at the Division of Insurance Agent and Agency Services' web page Compliance Information. Additional information is available by type of license at our Frequently Asked Questions web page.  

Note: Some information in archived articles may now be out-of-date or superseded by changes in Florida law. Please be sure you refer to the most current law.