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Volume 4, No. 12 - December 2015

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 The laws noted in our publications are/were in effect at the time of publication but may have been repealed, amended or replaced and new laws may have been enacted subsequently.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: Frequently Investigated Allegations

Advertising Violation

Use of an advertisement, announcement, or statement containing any assertion, representation, or statement with respect to the business of insurance, which is untrue, deceptive, or misleading. Example: A life and health advertisement must have the prior approval of the benefiting insurance company before being disseminated. Any advertisements approved by the insurer should be used exactly as approved. Some licensees decide to be creative and make changes to pre-approved advertisements. We will verify with the benefiting insurer whether it approved the advertisement in question. If the advertisement does not have the approval of the benefiting insurer, the agent placing the advertisement is in violation. See rule 69B-150.013(10), F.A.C., and paragraph 626.9541(1)(b), F.S. In addition, advertising materials and other communications developed by insurers, or other risk bearing entities authorized under the Florida Insurance Code and approved by the Office of Insurance Regulation to do business in this state, must clearly indicate that the communication relates to insurance products. As an agent soliciting or selling insurance products you must clearly indicate to prospective insureds that you are acting as an insurance agent with regard to insurance products and identified insurers, or other risk bearing entities authorized under the Florida Insurance Code and approved to do business in this state by the "Office". See s.626.9531(1), F.S.

Aiding and Abetting an Unauthorized Insurer

Acting from offices or by personnel or facilities located in this state, or in any other state or country, directly or indirectly acts as agent for, or otherwise representing or aiding on behalf of another, any insurer not authorized to transact such insurance in this state. An example would be an agent representing an unauthorized company that offers health insurance coverage to residents of Florida and claims to have exemption from state regulation under the Federal ERISA ACT of 1974. See s.626.901(1)(a)-(h), F.S. (Note: this law does not apply to the transaction of surplus lines through insurers approved to transact insurance business in Florida by the Office of Insurance Regulation. See s.626.901(4)(a-d), F.S.)

Aiding and Abetting an Unlicensed Individual

If an agent or other person licensed under the Florida Insurance Code knowingly authorizes, assists or allows an unlicensed person to transact insurance it is considered aiding and abetting that unlicensed individual to violate the insurance code. See s.626.621(12), F.S.

Annuity Suitability

The failure of an agent to follow mandated guidelines requiring that a determination be made about the suitability of an annuity sale. The law also requires certain disclosures and an objective comparison of annuity contracts when recommending the exchange or replacement of an annuity. See s.627.4554, F.S.

Criminal Proceedings

ALL LICENSEES

If you, as a licensee, have pled guilty or nolo contendere (no contest) to or been found guilty of, a felony or a crime punishable by imprisonment of 1 year or more under the laws of the United States of America or of any state thereof or under the law of any other country, without regard to whether a judgment of conviction has been entered by the court having jurisdiction of such cases, you must report it to the Department. Failure to inform the Department in writing within 30 days after pleading guilty or nolo contendere to, or being convicted or found guilty of, any felony or a crime punishable by imprisonment of 1 year or more under the law of the United States or of any state thereof would be a violation of the insurance code and a reason for BOI to conduct an investigation.
See s.626.611(14) and 626.621(8)(11), F.S.

Note: The Department shall, upon receipt of information or an indictment, immediately temporarily suspend a license or appointment issued under this chapter when the licensee is charged with a felony enumerated in section 626.207(3), F.S. Such suspension shall continue if the licensee is found guilty of, or pleads guilty or nolo contendere to, the crime, regardless of whether a judgment or conviction is entered during a pending appeal. A person may not transact insurance business after suspension of his or her license or appointment. See s.626.611(2), F.S.

BAIL BOND AGENTS

If you are a bail bond agent, the Department shall, upon receipt of an information or indictment, immediately temporarily suspend any license or appointment issued under this chapter when the licensee has been charged with a felony or a crime involving moral turpitude or a crime punishable by imprisonment of 1 year or more under the law of any state, territory, or country. Such suspension shall continue if the licensee has been found guilty of, or has pleaded guilty or no contest to, the crime, whether or not a judgment or conviction has been entered, during a pending appeal. A person may not effect any additional bail bonds after suspension of his or her license or appointment. However, he or she may discharge any liability on bonds effected prior to such suspension. See s.648.45(1), F.S.

Failure to Pay Title Surcharge

Subsection 624.501(27)(e)2, Florida Statutes, requires any title insurance agency licensed in Florida on January 1 of each year to remit an administrative surcharge of $200 to the Florida Department of Financial Services. Failure to pay the surcharge on or before January 30 of each year will result in administrative action and/or a fine, in addition to the original surcharge.

Fraudulent and Deceptive Practices

Performing a fraudulent or dishonest practice in the conduct of business under your license and appointments. See s.626.611(9), F.S.

Illegal Dealings in Premium

Knowingly collecting as a premium or charge for insurance any sum in excess of or less than the premium or charge applicable to such insurance. See s.626.9541(1)(o), F.S.

Inadequate Knowledge and Technical Competence

Actions by a licensee that demonstrate a lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by their license or appointment. An example would be an agent submitting an application with an insurance company wherein the risk was not eligible and it was clearly stated in the field underwriting guidelines, but the agent failed to study those guidelines or consult them when submitting the risk.
See s.626.611(7), F.S.

Licensing Violation

An example of this allegation would be transacting insurance without an appointment or failing to provide your current address, including e-mail, to the Department. See s.626.112(1), F.S. and 626.551, F.S.

Misappropriation of Funds

Misappropriation, conversion, or unlawful withholding of moneys belonging to insurers or insureds or beneficiaries or to others and received in conduct of business under the license or appointment. See s.626.611(1)(j), F.S.

Misrepresentation

A misrepresentation can be defined in several ways: (1) a person or agent knowingly makes a material misrepresentation on an application for insurance; (2) an agent induces the purchase of insurance by any form of dissemination of deceptive information or advertising. (3) a person does not disclose criminal history on an application for an insurance license (certain criminal history can prevent an applicant from obtaining licensure).
See s.626.9541(1)(a), F.S.

Twisting

Knowingly making any misleading representations or incomplete or fraudulent comparisons or fraudulent material omissions of or with respect to any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance in another insurer. See s.626.9541(1)(l), F.S.

Unlicensed Activity

Transacting insurance without a license, without the proper license or while your license is lapsed, suspended or revoked. See s.626.112(10)(a), F.S.

Violation of Escrowed Funds

Funds required to be maintained in escrow trust accounts pursuant to this section shall not be subject to any debts of the title insurance agent and shall be used only in accordance with the terms of the individual, escrow, settlement, or closing instructions under which the funds were accepted. See s.626.8473(4), F.S.

Old Bail Bond Scam Resurfaces

We have learned of an old scam being reborn that involves the consumer being told the bail bond agent, or agency, needs additional funds to allow the defendant to remain out on bail. However, the caller is not from the bail bond agency and the funds are not needed for the defendant to remain free on bail. This is what we have learned…

A defendant arranges to be released from jail by contracting with a bail bond agent to post the required bail. Sometime later, the defendant, or the indemnitor is contacted by someone claiming to be the bail bond agent who just executed the bail bond.

The imposter bail bond agent advises the consumer that additional money is needed because the court decided to increase the amount of bail required, or because additional charges were filed that would require an additional bail bond to be posted.

The caller knows the name of the defendant, the original amount of the bail bond(s) posted and the name of the executing bail bond agent. The consumer has no reason to think the call is not genuine and they agree to pay the additional amount.

The caller instructs the consumer to wire the funds to the agency immediately using the account number provided by the caller. The caller may also tell the consumer that they can pay the amount needed now and they will be billed for any additional charges the bail bond agency incurred to get the wired funds into the proper account.

In one case, the indemnitor told the caller he would bring the money to the bail bond agency instead of wiring the money. When the caller refused to accept the money in this manner, the indemnitor became suspicious and ended the call.

We suggest advising your customers of this scam and telling them to verify any requests for more money by contacting you directly. Any consumer receiving such a call should also contact their local law enforcement agency to file a formal report about the incident. The Florida Sheriffs' Association has alerted its members to this scam.

Title Agencies: Invoices for 2016 Administrative Surcharge Coming Soon

Subsection 624.501(27)(e)2, F.S., requires any title insurance agency licensed in Florida on January 1 of each year to remit an administrative surcharge of $200 to the Florida Department of Financial Services. Therefore, we are reminding all title agencies that the 2016 administrative surcharge due date will soon be approaching.

NOTE: This surcharge is not related to the one imposed on each new policy written due to the receiverships of National Title Insurance Company and K.E.L. Title Insurance Group, Inc.

Any title insurance agency licensed in Florida on January 1, 2016, will be emailed a reminder a few days afterward to the agency's email address on file with the Department. To ensure you receive the invoice and avoid failing to pay by the January 30 due date, please log in to the MyProfile account for your title agency and make sure the correct email address is on file. While doing so, we also recommend you do the same for your individual MyProfile account.

Surcharge Sample.jpg

Occasionally we discover agencies that were not aware of the reminder because of the retirement or termination of the employee assigned to monitor the email address provided to the Department. Failure to open the email sent by the Department containing the administrative surcharge reminder does not release an agency from the January 30 deadline. Please verify your information soon so this does not happen to you. If you need our assistance, you may contact us at Title@MyFloridaCFO.com to assist you through the steps to update your information. Be proactive; do not procrastinate.

Failure to pay the surcharge on or before January 30, 2016 could result in administrative action which could include a fine or a suspension of the agency’s license, in addition to the original surcharge. Payment must be made securely online via the title agency's MyProfile account. Paper checks are not accepted.

Note: To make sure you receive email notices from us, add email addresses Title@dfs.state.fl.us and Title@MyFloridaCFO.com to your email account's "Safe Senders" or other list.

Title Agency Data Call 2016

2016 marks the second year 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, 2016 to make their submission to the OIR. The OIR will send 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://apps.fldfs.com/DCAM/Logon.aspx.
(The user's guide for DCAM is located at: https://apps.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, 2016.

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's web page Compliance Information. Additional information is available by type of license at our Frequently Asked Questions web page.