Volume 3, No. 3 - May 2012

In The Know

- Keeping you informed is what it's all about

2012 Legislative Session Roundup

The information below is only summarized portions of bills passed during this year's legislative session that affect our licensee population. It is not intended to be a guide or interpretation of law. Please review the Laws of Florida for the full language of the laws that were passed.

HB 725 - Insurance Agents and Adjusters

This bill substantially revised the licensing laws for insurance agents, adjusters, and limited lines licensees. The definition of "home state" was additionally revised.

Licensure and Appointment of Adjusters

Consolidates all different license types for company employee and independent adjusters into one license, an all-lines adjuster - either resident or nonresident. Adjusters holding an adjuster license to adjust motor vehicle physical damage and mechanical breakdown, workers' compensation, health, or property and casualty insurance claims as of October 1, 2012, can remain licensed as such but no new licenses to adjust only these types of claims can be issued after October 1, 2012. The license consolidation does not make any substantial changes to the qualifications for licensure as an all-lines adjuster as compared to those for company or independent adjuster under current law.

Consolidates all ten temporary adjuster licenses into one license, a temporary all-lines adjuster license. Adjusters holding a temporary adjuster license to adjust motor vehicle physical damage and mechanical breakdown, workers' compensation, health, or property and casualty insurance claims as of October 1, 2012, can remain licensed and the license can be continued, but no new licenses to adjust only these types of claims can be issued after October 1, 2012.

Makes changes to the appointment requirement because of the creation of the all-lines adjuster license. It requires a resident, nonresident, or temporary adjuster to be licensed as an all-lines adjuster, but to be appointed as an independent or a company employee adjuster, depending on the adjuster's employer.

Removes the current qualification that requires an individual applying for a public adjuster apprentice or public adjuster license to be a resident of Florida. Allows public adjusting firms adjusting claims primarily for certain commercial entities to have more than 12 apprentices working under a public adjuster and allows a public adjuster working for these firms to supervise more than three apprentices at once.

License qualifications for a nonresident public adjuster license are also changed. The bill allows a public adjuster licensed in the adjuster's residence state for one continuous year, rather than three years as required in current law, to qualify for a Florida nonresident public adjuster license. The continuous year must be the year prior to the public adjuster applying for a Florida nonresident public adjuster license. If a state does not license public adjusters, current law allows a company adjuster, independent adjuster, insurance agent, insurance broker, or other insurance representative licensed in the state to qualify for a Florida nonresident public adjuster license, as long as the adjuster, agent, broker, or representative was licensed continually for three years immediately before applying for a Florida nonresident public adjuster license. The bill reduces this licensing requirement from three years to one year. The bill also allows only company adjusters or independent adjusters licensed in another state to qualify for a Florida nonresident public adjuster license and eliminates insurance agents, insurance brokers, or other insurance representatives licensed in another state from qualifying.

Current law requires public adjusting contracts between the public adjuster and the policyholder to contain certain information about the public adjuster, the policyholder, the claim, and the public adjuster's compensation. The contract must also be signed by the policyholder and the public adjuster and be provided to the insurer within 30 days of execution. The bill allows public adjusting firms adjusting claims primarily for certain commercial entities to submit an affidavit, instead of the public adjuster contract, to the insurer which contains specified information about the public adjuster, the policyholder, the claim, and the public adjuster's compensation. The affidavit must be signed by the public adjuster or public adjuster apprentice, but does not have to be signed by the policyholder.

Allows adjusters licensed and in good standing in another state who move to Florida to transfer their adjuster license to a Florida all-lines adjuster license.

Applications and Examinations for Licensure, Generally

Allows a third-party to complete, submit, and sign an application for licensure as an agent or adjuster as long as the applicant authorizes the third-party to do so. The applicant is accountable for any misstatements or misrepresentations on the application.

Requires that licensees must notify the Department of any name, address, phone, or email address change within 30 days of the change - a reduction from 60 days. Bail bond agents are still required to notify the Department within 10 days of such change.

Allows the Department to take action against an applicant, licensee, or appointee for failure to comply with any civil, criminal, or administrative action taken by a child support enforcement program under Title IV-D of the Social Security Act.

Deletes the requirement in current law that an applicant for examination provide his or her age in the application for examination and instead requires the applicant for examination to provide his or her date of birth. It requires the applicant to provide an email address on the examination application.

Restricts all licensure applicants from taking a licensing examination for the same license type more than five times in a 12-month period. Exception: The laws governing bail bond agent licensing examinations remain unchanged. For information about current law in this area please see Section 648.381, F.S.

Requires persons transacting mortgage guaranty insurance to be licensed and appointed as credit insurance agents.

Continuing Education Requirements

Consolidates continuing education requirements in current law for all insurance agents, including bail bond agents, and adjusters licensed by the Department into one section of law.

Exempts agents holding a limited license for crop or hail or multi-peril crop insurance from continuing education requirements.

Provides that licensees who cannot complete the required continuing education due to active military service can request a waiver of the continuing education requirements.

Reduces the time period for continuing education course providers to submit course completion rosters to the Department from 30 days to 21 days.

Changes the course requirements a licensee must take to satisfy the continuing education requirements. The bill maintains the 24-hour continuing education requirement for most licensees but requires five of the 24 hours be an update course specific to the licensee's license such as covering insurance law updates, premium discounts, ethics, disciplinary trends and case studies, industry trends, and determining suitability of insurance products. The remaining 19 hours of continuing education required are elective hours. Licensees who are required to take fewer than 24 hours of continuing education every two years are also required to take the five-hour update course, but their required elective hours are reduced in accordance with the total number of continuing education hours required for their license. For licensees holding two different license types, the licensee must complete the five-hour update course in the subject area of at least one of their license types.

Other Changes

Requires all licensees, rather than only agents and agencies, to report administrative actions to the Department taken against the licensee. It also expands the types of administrative actions required to be reported from actions by governmental agencies to actions by governmental agencies or other regulatory agencies.

Consolidates the limited licenses for credit life or disability, credit property, and mortgage guaranty insurance into the credit insurance limited license. Additionally, the scope of the license is expanded to cover credit unemployment, involuntary unemployment, mortgage life, mortgage guaranty, mortgage disability, guaranteed automobile protection, and any other type of insurance covering the extension of credit to extinguish a credit obligation. All currently existing licenses covering the types of insurance being consolidated into the credit insurance limited license are converted to a credit insurance limited license as of October 1, 2012. Repeals the mortgage guaranty insurance agent license and its associated licensing requirements as of October 1, 2012, because this license is subsumed into the expanded credit insurance license. Mortgage guaranty insurance licenses issued before October 1, 2012, are transferred to credit insurance licenses. After October 1, 2012, in order to transact mortgage guaranty insurance, an agent must be licensed and appointed as a credit insurance agent.

Repeals current law outlining the scope and restrictions associated with all limited agent licenses relating to communications equipment insurance and creates a new limited license related to the sale of portable electronics insurance. The definition of "portable electronics" is much broader than the definition of "communications equipment" in current law. So, the newly created portable electronics license will cover more types of equipment than is currently covered by the communications equipment license.

Provides parameters for the portable electronics insurance limited license. Some of the parameters are the same as those that applied to the communications equipment limited license. However, many new parameters are added, such as:

  • Licensing of employees of licensed portable electronics insurance agents;
  • Payment of commissions for the sale of portable electronics insurance;
  • Required disclosures in brochures related to portable electronics insurance;
  • Exemptions from the portable electronics insurance limited license;
  • Billing and collection of premiums for portable electronics insurance by a licensee;
  • Terms for termination or modification of coverage under a portable electronics insurance policy; and
  • Requirements for required notices or correspondence under the portable electronics insurance policy.

Repeals the bond requirement for surplus lines agents; however, maintains current law allowing the Department to file suit to recover surplus lines premium tax or service fees owed by a surplus lines agent.

The bill prohibits an employee or an agent or agency from initiating contact with any proposed insured for the purpose of soliciting title insurance unless the employee is licensed as a title insurance agent or exempt from such licensure.

[Effective Date: October 1, 2012. See Chapter 2012-209, Laws of Florida.]

HB 777 - Criminal Penalties for Violations of Securities Laws

Increases criminal sentencing offense severity ranking for failing to register securities with the Florida Office of Financial Regulation (OFR). Also specifies criminal sentencing offense severity ranking for failure of dealer, associated person, or issuer of securities to register with the OFR .

[Effective Date: July 1, 2012. See Chapter 2012-68, Laws of Florida.]

HB 643 - Title Insurance

Title Insurance Forms

The bill requires the Office of Insurance Regulation (OIR) to approve or disapprove filed title insurance forms within 180 days of receipt. Currently, there are no timeframes within which filed forms must be approved or disapproved. When approving a form, the OIR must determine if the current rate applies or if the coverages require rulemaking. To prevent a competitive advantage to an insurer that has received approval of a filed form, the OIR is required to expeditiously approve forms filed by other insurers that contain identical coverages, rates, and approved deviations as the approved form.

Submission of Data to the OIR

Title insurers, their direct or retail businesses in the state, and title agencies will be required to submit to OIR, on or before March 31 of each year, revenue, loss, and expense data for the most recently concluded year that are determined necessary to assist in the analysis of premium rates, title search costs, and the condition of the Florida title insurance industry. The Financial Services Commission is authorized to adopt rules regarding the collection and analysis of the data. Failure to submit the required data timely to the OIR will constitute grounds for the Department to take disciplinary action against the license and appointment of the title insurance agent or agency. Possible sanctions include suspension or revocation of a license or appointment.

Separate Escrow Account for Specified Funds Held by Attorneys

Attorneys who serve as title insurance or real estate settlement agents will be required to deposit and maintain funds received in connection with such transactions into a separate trust account, unless maintaining funds in the separate account for a particular client would violate rules of the Florida Bar. Attorneys are required to allow insurers for whom they hold funds to audit the separate account.

Continuing Education Requirements for Title Insurance Agents

While the number of continuing education (CE) hours title insurance agents must complete every 2 years remains unchanged (10 hours), the bill requires that the credits be earned in title insurance and escrow management courses specific to Florida, and which have been approved by the Department. At least 3 of these hours must be in ethics, rules, or compliance with state and federal regulations relating to title insurance and closing services.

[Effective Date: July 1, 2012. See Chapter 2012-206, Laws of Florida.]

HB 645 - Public Records/Title Insurance Data/Office of Insurance Regulation

The bill provides that proprietary business information provided to the OIR by a title insurance agency or insurer is confidential and exempt from public records requirements until such information is otherwise publicly available or is no longer treated by the title insurance agency or insurer as proprietary business information. However, information provided by multiple title insurance agencies and insurers may be aggregated on an industry-wide basis and disclosed to the public as long as the specific identities of the agencies or insurers are not revealed. The bill defines "proprietary business information" as information that:

  • Is owned or controlled by a title insurance agency or insurer requesting confidentiality under this section;
  • Is intended to be and is treated by the title insurance agency or insurer as private in that the disclosure of the information would cause harm to the business operations of the title insurance agency or insurer;
  • Has not been publicly disclosed unless disclosed pursuant to a statutory provision, an order of a court or administrative body, or a private agreement, providing that the information may be released to the public; and
  • Concerns business plans, internal auditing controls and reports of internal auditors, reports of external auditors for privately held companies, trade secrets as defined in s. 688.002, F.S., or financial information, including, but not limited to, revenue data, loss expense data, gross receipts, taxes paid, capital investment, customer identification, and employee wages.

[Effective Date: July 1, 2012. See Chapter 2012-207, Laws of Florida.]

HB 1011 - Warranty Associations

The bill provides criteria for motor vehicle service agreement companies to effectuate refunds through the issuing salesperson or agent. The bill deletes the provision excluding service agreements sold to persons other than consumers that cover motor vehicles used for commercial purposes. Therefore, motor vehicle service agreement coverage for commercial vehicles having a gross weight rating of less than 10,000 pounds will be required to be offered through a regulated company and vehicles over 10,000 pounds will continue to not be covered. Under the bill if a motor vehicle service agreement company effectuates refunds through the issuing salesperson or agent, the company must send to the salesperson or agent effectuating the refund the unearned pro rata premium refund due, less any unearned pro rata commission. The salesperson or agent must then refund the unearned pro rata premium including any unearned pro rata commission and the sales tax to the service agreement holder. The bill requires the salesperson, agent, or company to maintain a copy of certain specified documents demonstrating the occurrence of the refund to the service agreement holder. The salesperson or agent effectuating the refund shall provide a copy of the required documentation to the company within 45 days after a request is made by the Department or the OIR. If the OIR finds that a salesperson or agent exhibits a pattern or practice of failing to properly effectuate refunds owed or to maintain and remit to the service agreement company the required documentation, the OIR shall notify the Department. The bill authorizes home and service warranty associations to effectuate refunds through the issuing sales representative. The bill provides that refunds for service warranties may be made by cash, check, store credit, gift card, or other similar means. The bill provides that upon the request of the service warranty holder, the refund must be remitted by check.

[Effective Date: July 1, 2012. See Chapter 2012-77, Laws of Florida.]

HB 1101 - Insurance

Altered Certificate of Insurance

The bill codifies an Informational Memorandum issued by the OIR in 2003 relating to altered certificates of insurance. According to the Memorandum, "distribution of a certificate of insurance which has been modified without authorization and which purports to alter the provisions of an underlying policy, misrepresents the conditions or terms of the insurance policy" which is a violation of the unfair trade practices act. The person or entity violating the unfair trade practices act is subject to license discipline and administrative fines. The bill codifies the Memorandum by making altering a property and casualty certificate of insurance after the certificate is issued an unfair trade practices violation.

Travel Insurance Limited Licenses

License Coverage: Current law provides travel insurance covers: accident death or dismemberment of a traveler; trip cancellation, interruption, or delay; loss of or damage to personal effects or travel documents; baggage delay; emergency medical travel or evacuation of a traveler; or medical, surgical, and hospital expenses related to an illness or emergency of a traveler. The bill expands the coverage of travel insurance to include event cancellation and damage to travel accommodations.

Policy Term: Under current law, a travel insurance policy can cover no more than 60 days of travel within the policy term, although the policy term may be longer than 60 days. The bill lengthens the travel period that can be covered by a policy from 60 days to 90 days, with a corresponding extension of the allowable policy term.

Eligible Licensees: Generally, current law only allows employees of a common carrier, employees of a transportation ticket agency, timeshare developers, timeshare exchange companies, and sellers of travel regulated under ch. 559, F.S., (e.g., sellers of tour packages and tour-guide services) to sell travel insurance. The bill expands who can be licensed to sell travel insurance to allow full-time salaried employees of general lines agents and business entities that engage in travel planning to sell travel insurance. The bill specifies travel insurance license requirements for business entities that engage in travel planning to ensure each office location of the entity is covered by the license. These requirements are virtually the same as those required for business entities with offices that offer motor vehicles for rent or lease and are eligible to offer motor vehicle rental insurance under a limited license.

Adjusters for Portable Electronics Insurance Claims

HB 725 creates a definition for portable electronics insurance and creates a limited license for an agent to sell this type of insurance. According to HB 725, portable electronics insurance covers the loss, theft, mechanical failure, malfunction or damage on portable electronics. Portable electronics is broadly defined by HB 725 to encompass electronic equipment such as cellular phones, pagers, portable computers, GPS units, gaming systems, docking stations, digital cameras and video cameras.

Generally, persons who adjust insurance claims must be licensed as an insurance adjuster. The bill exempts certain employees of licensed insurance agents or licensed insurance adjusters from having to be licensed as an insurance adjuster. Specifically, employees who handle claim information or enter data into a preprogrammed automated claims adjudication system for portable electronics insurance do not have to be licensed as an adjuster. The bill provides parameters for the licensing exemption for these employees.

Furthermore, the bill provides consistency in the licensing of nonresident independent adjusters adjusting portable electronics insurance claims residing in Canada with the licensing of nonresident independent adjusters residing in the United States. Nonresident independent adjusters are recognized by s. 626.8584, F.S., and license qualifications for this type of adjuster are prescribed in s. 626.8734, F.S. Under current law, generally, a nonresident independent adjuster is not a resident of Florida, is a licensed independent adjuster in the adjuster's state of residence, and is self-employed or employed by an independent adjusting firm or other independent adjuster. Thus, adjusters holding a license in a state other than Florida can obtain a nonresident adjuster license in Florida due to Florida's reciprocity with the licensing state (home state). In order to be able to adjust claims in the U.S., adjusters residing in Canada often become licensed in a state in the U.S. and use that license to obtain a license as a nonresident adjuster in another state with a reciprocity agreement with their initial licensing state (or home state). The bill requires this licensing arrangement for adjusters that reside in Canada and adjust portable electronics insurance claims. To that end, the bill requires Canadian residents to be licensed in a state in the U.S. in order to be licensed as a nonresident independent adjuster in Florida.

Department Licensure Examinations in Spanish

The bill allows the Department to administer licensure examinations in Spanish and requires license applicants requesting an examination in Spanish to pay the full costs related to the development, preparation, administration, grading and evaluation of the examination. The bill requires the Department to consider the percentage of the population who speak Spanish when determining whether it is in the public interest for an examination to be given in Spanish.

[Effective Date: July 1, 2012. See Chapter 2012-151, Laws of Florida.]

 

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