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Volume 6, No. 11 - November 2017

Case Notes

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 Investigative & Forensic Services for criminal investigation.

Case: A surety company Managing General Agent (MGA) notified Department investigators a bail bond agent executed bonds and collected premium, but failed to forward the funds to the company.

During the course of the investigation, statements were obtained from multiple consumers who paid premiums for bonds, however, those premiums were never forwarded to the surety company. A review of bank records revealed the subject shared a financial interest in the bail bond agency with a suspended bail bond agent, and also allowed the suspended agent to participate in agency operations. In addition, the investigation revealed the subject allowed other unlicensed employees to perform duties for which a bail bond license is required.
Disposition:
License suspended for 24 months.

Case: Investigators were informed by the Florida Office of Insurance Regulation that an entity was selling various automobile warranty products without being properly licensed.

Investigators performed an agency inspection, interviewed witnesses and reviewed bank records to substantiate the unlicensed transaction of warranty products. During the course of the investigation, the agency’s staff failed to make its records available to the Department as required, compounding its violations.
Disposition: Fined $6,000.

Case: According to a complaint filed with the Department by an insurer, a life, health and variable annuity agent admitted to application misrepresentation by falsifying the signatures on behalf of three consumers. The agent also failed to report a FINRA action to the Department.
Disposition: License suspended for 12 months.

Case: An investigation was opened to determine if a general lines agent was actively transacting insurance without a valid agency license. During the course of the investigation it was discovered the agency license had been cancelled for over a year for failing to designate an Agent in Charge, yet the agent continued to conduct daily insurance business. Investigators were able to confirm the agent was actively selling and the agency was open for business during the year by visiting the agency and verifying transactions through policy documents and insurance carrier notifications.
Disposition: Fined $1,500 and placed on probation for one year.

Case: This investigative case originated as a referral from the Department's Division of Consumer Services. A number of consumer complaints, including multiple allegations of misappropriation of premium and generating fraudulent policy documents, were received. Investigators confirmed the general lines agent collected premiums for commercial insurance policies but failed to remit them to the insurers. The agent escalated the fraud by issuing fraudulent certificates of insurance for insurance coverage that was never placed with the carrier.
Disposition: Administrative surrender of license, ordered to pay restitution and cannot reapply for a license for five years.

Case: Department investigative staff initiated an investigation of an insurance agency based on a referral from the Florida Office of Insurance Regulation. The referral alleged the agency employed unlicensed individuals to solicit and transact insurance with Florida consumers. Examination of records obtained during the course of the investigation revealed the agency employed approximately 568 individuals who collectively held over 5,500 resident and non-resident licenses. However, the investigation also revealed approximately 330 events in which an employee, not licensed in Florida, conducted transactions requiring a Florida insurance license. While no consumer harm was found in these events, the volume of occurrences demonstrated a business practice on the part of the agency in allowing employees to conduct a high volume of insurance business without the proper licenses and appointments.
Disposition: The agency was fined $165,000.

Case: A consumer filed a complaint with the Department alleging funds were not disbursed in a timely manner after a real estate closing.

In response, investigators conducted an inspection of the title insurance agency and obtained its bank records, proving the misappropriation of $275,000 from the escrow account. The records confirmed the licensed title agent was an authorized signor on the account with access to the escrow funds.
Disposition: Agency and agent licenses were administratively surrendered with the same force and effect as revocation.