Insurance Insights header
Volume 1, No. 3 - August 2012

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: An investigation alleged that numerous insureds paid their premiums in full for homeowners' insurance; however, the agent systematically forged the insureds' signatures to premium finance agreements and submitted them to a premium finance company without the knowledge or consent of the insureds. To enhance the effectiveness of the scheme, the premium finance agreements displayed a mailing address that appeared to be that of the consumer. In reality, the addresses belonged to the agent for the purpose of intercepting correspondence intended for the insureds.
Disposition: The agent's license was revoked and he was arrested by the Division of Insurance Fraud on charges of misappropriation of insurance funds and fraudulent use of personal identification information.

Case: A consumer filed a complaint with the Department that an agent went to her place of business to enroll her and her co-worker in a health plan but sold her life insurance instead. Additionally, the investigation revealed the agent's license had been revoked in 1993 and the former agent remained unlicensed. The former agent indicated to the consumer that she would receive a "free" life insurance policy regardless whether she was approved for the health plan. When the consumer received her bank statement and discovered withdrawals from the life insurance company, she learned that she had a life insurance policy without her knowledge. Obviously, the life insurance wasn't free.
Disposition: The former agent was permanently barred from any and all participation in the insurance industry.

Case: An auto warranty agent operated a call center, which was licensed as an auto and service warranty firm, that engaged in the illegal practice of "robo dialing" and "voice blasting" to solicit auto warranty business nationwide. The calls, described as relentless and nearly impossible to stop, misled consumers into believing that their factory warranty was or had expired. He then sold them auto warranties from third party companies that were inferior to the ones they presently owned. He also failed to return premiums due consumers and used a non-working phone number that appeared in the consumers' caller ID.
Disposition: Both licenses were revoked. Federal authorities prosecuted the agent and sentenced him to five years in prison.

Case: An investigation revealed that a life agent failed to report administrative action taken by the Florida Office of Financial Regulation (OFR). The OFR had issued a Default Final Order against the agent, another individual, and a firm. They were collectively assessed an administrative fine of $27,000 by the OFR for failing to file their annual report.
Disposition: Life agent's license revoked.

Case: A consumer filed a complaint with the Department that an agent sold her and her husband products that were inappropriate for their financial condition and never disclosed the risk. The consumers had purchased in excess of $7 million in life insurance, much of it that was financed. When the loan was cancelled by the finance company after two years, after cashing out the policy value, the consumer was left owing more than $200,000. During the investigation, it was discovered that the application noted it had been signed in another state, where the consumers own a second home. Since the husband had a physical in Florida the next day (as well as an active business), the investigation revealed that the transaction had occurred in Florida. The product sold was not available in Florida at the time of the transaction, hence the use of the other state's address. After contacting the other state's insurance regulator and the company, it was determined that had the company known where the policy was sold it would not have issued the policy. This was a violation of both Florida law and the other state's.
Disposition: Fined $50,000 and placed on probation for one year.

Case: An investigation of a life including variable annuity & health agent alleged he was charging a 1% annual service fee to consumers who had purchased annuities, indexed life, mutual funds, and other products from him. He told the consumers the fees were for his financial planning services. The services included annual reviews, tax information, asset rebalancing, estate planning, withdrawals and deposits to their accounts, beneficiary, ownership, and address changes, and other things.
Disposition: Agent refunded monies collected back to the impacted consumers; fined $7,500 and placed on probation for one year.

Case: An investigation of a public adjuster alleged that she was charging excessive fees for services, disseminating misleading advertisements, and failing to include all statutorily-required provisions in contractual agreements.
Disposition: Suspended for one year; to be placed on two years probation if reinstated following the suspension; complete an additional two hours of CE on ethics; and make restitution to the impacted consumers.

Case: A bail bond agent was determined to be in violation of Florida Statutes for improper advertising and failing to maintain an agency that was open during reasonable business hours.
Disposition: Fined $1,000, placed on probation for one year, and shall maintain an office that is open and accessible during reasonable business hours and all advertising shall include the agency address.