Consumer eViews

Volume 1, Number 18, May 3, 2004

Students throughout Florida will begin their summer breaks later this month.  In between the family vacations and summer camps, what will they do? 

As Florida’s State Fire Marshal, I urge parents to take steps to make sure their children don’t fill their time by getting involved in the No. 1 crime among youth in the nation. 

Arson has the highest rate of juvenile involvement of all other serious crimes. Given the chance, children will play with fire, and  most fire deaths involve children. These are preventable occurrences that can be stopped with education and information.

Arson Awareness Week focuses on juvenile firesetting this year, and it is important for all of us to be educated on this issue. Our communities need to get involved with education, intervention and treatment programs for youth firesetters before tragedy occurs.

Youthful curiosity can become juvenile crime in an instant. Community and parental awareness can make this crime preventable.

                                                                                     --Tom Gallagher


This week, May 2-8, is Arson Awareness Week.  Organized by the United States Fire Administration, and sponsored in Florida by the Florida Advisory Committee on Arson Prevention, the annual event is aimed at raising awareness about the costs, both in lives and property, related to arson.  This year’s theme is “Juvenile Firesetting: The Preventable Arson.”

Some troubling statistics:

  • Children under the age of 18 are responsible for more than 50 percent of all set fires.
  • Juvenile-set fires cause an estimated $300 million in property damage every year. 
  • At least four-fifths of associated deaths and injuries involve matches or lighters.
  • Three out of four children experiment with fire.

The State Fire Marshal’s Office has organized numerous public education events throughout the state during the week, including television and radio programs, a poster contest and open houses at fire stations and fire and arson investigation offices.  Some counties are announcing plans to launch new Juvenile Firesetter Programs.  For a complete list of events, visit Arson Awareness Week Events.

Parents can take steps to protect their children. For younger children, parents should store matches and lighters out of children’s reach and sight, encourage and reward them for reporting when they find a match or lighter, and be sure never to play with a match or lighter in front of young children.

“Parents should not underestimate their children’s curiosity about fire,” Gallagher said.

For older children, parents should point out some hard facts. Arson is a crime, punishable by jail time and fines. If they commit arson at school, they could be expelled. If someone dies or is injured, they could be charged with murder or attempted murder.

Florida is one of seven states participating in a new Juvenile Firesetting Intervention and Prevention Project. The Florida project is being coordinated by the State Fire Marshal’s Office with funding from the Office of Juvenile Justice and Delinquency Prevention. Fire and law enforcement officials in Bay, Brevard, Columbia, Lake, Leon, Marion, St. Johns and Walton counties are now organizing new juvenile firesetting programs that will coordinate county resources to prevent and combat this crime.

Parents who believe their children need these services should call their local fire department.

“Unfortunately, juvenile firesetting is not always reported. Parents and school systems may be try to deal with such issues on their own,” Gallagher said. “But the earlier a problem of juvenile firesetting is addressed, the better chance we have of preventing a possible tragedy.”

To find out more about fire safety and arson prevention, visit the State Fire Marshal’s web site at .


Florida Chief Financial Officer Tom Gallagher commended state lawmakers for approving Senate Bill 2488 that will increase the availability of homeowners insurance through changes to the Florida’s Hurricane Catastrophe (Cat) Fund.  The Cat Fund was created after Hurricane Andrew to ensure that Florida’s insurance companies could quickly pay homeowners claims after a major hurricane and continue to provide coverage.

“This legislation will promote needed competition in the marketplace and help thousands of homeowners who are frustrated with the lack of insurance available,” said Gallagher, who oversees the state Department of Financial Services.  “In fact, several companies have committed that they will write more coverage this hurricane season.” 

The legislation, sponsored by Senator J.D. Alexander and Representative Kim Berfield, will strengthen the Cat Fund by resetting the retention to $4.5 billion and increasing its capacity to $15 billion for the 2004 hurricane season.  The Cat Fund currently provides $11 billion of capacity, or reinsurance, to the insurance industry.   Access to private reinsurance, which is insurance for insurance companies, has been limited in recent years.  As a result, many insurance companies have stopped writing coverage or reduced their exposure by non-renewing policies.   

The lack of reinsurance available through the private market, coupled with the inability of the Cat Fund to grow with the market, has resulted in a number of consumers being forced into the Citizens Property Insurance Corporation, the state’s insurer of last resort for homeowners who can’t get coverage from the private market.  Reinsurance is insurance for insurance companies.

“This legislation will encourage the private market to write more coverage and reduce the state’s role in providing insurance,” said Sen. Alexander.

“Those who live here and move here deserve access to a viable and competitive insurance market,” said Rep. Berfield.  “This legislation gives homeowners a fighting chance to get coverage.”

The bill now heads to the Governor for signature.


Chief Financial Officer Tom Gallagher said Floridians facing the need to buy funeral and cemetery services will have more choices and more protections under a bill sponsored by Sen. Ken Pruitt (R-Port St. Lucie) and Rep. Don Brown (R-DeFuniak Springs) that passed the Legislature.

The Florida Funeral, Cemetery and Consumer Services Act, also called the "Howard Futch Bill" for the late senator whose body had to be relocated because of a burial mistake, passed out of final reading in the House of Representatives on Thursday. The bill will require cemetery operators to survey and plot new grounds, establish minimum grave sizes, and put names on vaults.  It also will establish a monument dealer inspection program, allow monument companies to join funeral homes, cemeteries and crematoriums in the pre-need funeral services industry and consolidate the regulation of the industry under the Department of Financial Services, which Gallagher oversees.

“These measures aim at avoiding instances of misplaced, lost or unidentifiable graves that have caused some Florida families much grief and anxiety,” Gallagher said.  “It also will give consumers more choices when shopping for funeral and cemetery services.  I thank Sen. Pruitt and Rep. Brown for making the process of putting a loved one to rest a little easier.”

“Consolidating the regulation of the industry under one state agency should enhance oversight and give consumers access to comprehensive consumer information and assistance,” said Sen. Pruitt.   “I appreciate the hard work of CFO Gallagher and his staff, Rep. Brown and all legislative members who helped get this measure passed.”

Rep. Brown agreed the bill also will simplify the investigation of complaints.  “Consumers will have one place to turn to for help,” he said.  “This bill places consumers first and ensures that surviving family members are treated with the dignity and respect they deserve.

The regulation of funeral and cemetery services had been spread between at least two agencies for years. 

Oversight was divided between the Department of Business and Professional Regulations (DBPR) and the Department of Banking and Finance (DBF) until January 2003.  That is when DBF merged with the former Department of Insurance to form the Department of Financial Services.

Now, the industry will be regulated under a newly created Division of Funeral, Cemetery and Consumer Services within the Department of Financial Services and under one new consolidated board of directors.

The consolidation, which now goes to the governor, will become effective October 1, 2005. 


Florida Chief Financial Officer Tom Gallagher commended state lawmakers  for approving legislation that will improve protections and increase the rights of Florida’s insurance consumers, especially the state’s elderly. 

One of the measures, amended on to Senate Bill 2994 and passed,  would require insurance companies and agents offering annuity products to seniors over the age of 65 to clearly document the basis for selling the product, including consideration of a senior’s financial and tax status, as well as investment objectives.  It would also give the Department of Financial Services, which Gallagher oversees, and the Office of Insurance Regulation the authority to take corrective action if a company or agent violated the law.

“Annuities can be an effective investment tool for many Floridians wanting a steady stream of income for retirement,” said Gallagher, who credited Sen. Jeff Atwater and Rep. Dave Murzin for sponsoring the original annuities legislation.  “But some of our state’s seniors are being preyed upon by agents who are motivated by commission payments, not consideration of a senior’s financial circumstances.  This legislation will allow us to hold companies and agents accountable for the products they sell and the investment advice they give.”

Also amended on to SB 2994 were much-needed protections to consumers insuring homes or automobiles, including requiring insurance companies to reinstate coverage when a consumer’s insurance policy is canceled for non-payment by the mortgage company.

“For every Florida consumer whose mortgage company has failed to make a payment, this legislation will protect them from losing their insurance coverage,” Gallagher said.

The legislation restores a standard of “like, kind and quality” for replacement parts, a requirement which had been in place in department rule for nearly 10 years.   It also establishes standards for dealing with total loss of automobiles to ensure consumers are paid a fair price when their car is totaled in an accident. 

The legislation also prohibits insurance companies from mandating arbitration as the sole claims-dispute resolution process in lieu of a consumer’s statutory right to have the claim mediated.  Arbitration can place a considerable burden on the insured, both in terms of time and money, which may lead some consumers to accept what they consider an unfair settlement of their claim.

Other strong provisions in the bill include requiring insurance companies to refrain from canceling coverage for homeowners due to a water damage loss that was rectified, as well as disclose to applicants who are denied coverage the reason for denial, including information used from CLUE reports.

Finally, the legislation calls for a study to be done on the feasibility of creating a state-sponsored insurer to offer sinkhole insurance and creates a dedicated consumer contact within the Department of Financial Services to track trends and provide information to state policymakers regarding sinkholes.

“Consumers deserve to be in the loop on decisions made by their insurance companies so they know exactly what’s going on with their policy or claim,” Gallagher said. “This legislation puts the consumer first and demands consumers receive fair and equitable treatment from insurance companies.”

Gallagher said Sen. Mike Fasano and Rep. David Rivera were instrumental in getting the consumer protections approved.



State regulators announced today that they are seeking revocation of a South Florida mortgage lender’s license for predatory lending practices, including misrepresenting loan terms and fees.  The lender, First Mortgage America, Inc., provided loans to consumers through several of its branch offices, including Miami, Dania, West Palm Beach, Sarasota and Tampa.

The Office of Financial Regulation (OFR) filed an Administrative Complaint against First Mortgage America, Inc., d/b/a The Financial Group, Inc., on April 16, 2004.  The Complaint seeks revocation of the firm’s mortgage lender’s license and other penalties.  The Financial Group, Inc., is headquartered in Ft. Lauderdale.

State regulators initiated a statewide examination into the lender’s activities and its owner, Blair Wright, after receiving more than fifty consumer complaints alleging, in part, “ misleading advertisements, misrepresentation of loan terms and conditions and misrepresentation of fees.”

According to examiners, The Financial Group, Inc., engaged in frequent radio advertising of very low interest rates.  Potential borrowers were led to believe that the low rates advertised on the radio were fixed rate mortgages, when in fact they were adjustable rate mortgages. The loans were structured such that the monthly payment may not be sufficient to cover the monthly principal and interest payment resulting in an increase rather than a decrease to their mortgage loan balance.

Examiners also determined that The Financial Group, Inc., failed to disclose or underestimated to potential borrowers the total costs to be incurred in obtaining their mortgage loan.

“It is essential that mortgage companies reasonably disclose the cost of obtaining a mortgage loan to consumers so they have the ability to make informed decisions on one of the most important purchases they will make,” said Don Saxon, Director of the Office of Financial Regulation.  Mortgage companies that fail to comply with Florida law will be investigated and appropriate action will be taken to protect consumers.  

Regulators should be commended for taking swift and severe action against a company that has been preying on Florida consumers," said Florida's Chief Financial Officer Tom Gallagher, who oversees the Department of Financial Services and launched a public education campaign last year to warn the public against predatory lending practices.  "Whether you're purchasing your first home, refinancing or need a home equity loan, watch out for excessively high interest rates and hidden fees, bait-and-switch tactics, and unnecessary add-ons.”

Consumers seeking mortgage loans are encouraged to verify that they are dealing with a licensed mortgage broker or lender.  The Department of Financial Services' toll free consumer help line is available at 1-800-342-2762 from 8:00 a.m. to 7:00 p.m. E.S.T., Monday-Friday.

Florida Department of Financial Services'
Consumer Services HelpLine