THE
INTERCOM
VOL5, N0.2
JUL OCT 1995
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PUBLICATION FOR AGENTS AM0 ADJUSTERS FROM
THE STATE OF FLORIDA DEPARTMENT OF INSURANCE
E W l ~
Treasurer/lnsuraneeCommissioner/Fire Marshal
1
(CE)
GUN I INUINU EUULAI IUN
COMPLIANCE
December 1, 1995, the
information
should call
(904) 922-3134,
Ext. 1 If0 Please
remain on the line;
order in which it
h x l In the Rule,
FUNDS-%~!+
ment entered into a Seltkmnt Stipulation for Conswit Older with ti^
agent. The settlrrmmt rendered a $1,000 fine, a one-year
A Property and Casualty agent wes served wkh a n i ~ n t and won
of $528 to
inswed.
in
Administrative Complaint alleging that the agent engaged in sliding
DECEPTlVE ACTSmotor club memberships, required consumerstopurchasemotor dubs
In order to obtain premium financing, and allowed unlbmed employAn agent under imrsstigalion by the h p t m m l of Insurance fw
ees to transact Insurance. The agent's requestfor afwmat hearingwas
-lble
,,,lsapproprialion of m ~ u mfunds
found to
granted and the case concludedwith m t l o nd the agenfs Iloensas.
arm -.
humem
frwn lllhil mtehlb
thtd that the name, Social Sear* number and date of birth being
DECEPTIVE PRACTICES-used by the w n t wewe those of a deceased person. An Emergency
A licensed Health agent communicated falsa hformath to other
isrwed immedhbb
amow
agents wncerning-the screening of small employer groups for health
Ingthis
puan mnlstrative writ on me -mpriaproblems before offering to write the coverage. Benefit plans must be
tlon charge.
Issued to small employer groups on a guarantee-hue basls. ScreenFAILURE TO DISCLOSEIng for pm-exkt!ng conditions or elalms hismy h not allowed by taw.
Such a c t h s by the agent demo~trated
a lack of M e s s or trustwoMlAn a m falsified his appllmtion for Insumnee license by
and a one-ycrarpwas - I
On the
ness. A fine Of
stating that he had not %een arrested or Indicted by any state or
agent.
.
federal authorities anywhere in the United States in the last 12
MISAPPROPRIATIONOF
m t h a . mThe llwnsinp p m n s rmqulru m FBllFDLE repod on
each appllmnt, but issuance of the Ilaanae Isr not delayed while
The D e p d m n t of Insumme issued an Administmth Complaint
waltlng Por the report. Accordindy. the applhnt was llcensed
agaimt an agent
that he mlaa~roprlatedmd~fundrrend
bawd lrpon
Imrmat)on contalmd [n
mm
made matterla1misstatamenti3for the purposeof ilcduclngmeurnem lo
th.
bklwy report was receld
by
it
e-te
l ~ ~ a Ilfelnsumnw
~ ~ l ~ ~ A f~t e rl w nr g
a m far a g g m m t d ba~aryand m s l a l n ~an -r
want
the scent aurmndered Ibnsefor
t h m a~
w ~ hvio~mce.
t
TII~m r t r n e n t entarad lntoa~ettlment~ t i p u Settlement Stipukth for mwnl Order.
latlon lor Consent Order which r m u M In a Ilne olW and n
FALSE AND MATERIAL MISREPRESENTATION%
one-year probation for a materlal mimrspmsenhtlon on an applC
'Or
license'
life and Healthagent wasE3legedto haw madefah a n d material
mlsreprewntatlonsto a consumer eoncerntng the replacement of a life
Insurance policy and execdon of a ,Sectlan1085 Exchange Form.
+ 9 9 4 + 9
These misrepresentations and f
a
H
m to execute the proper forms
resulted In four poncles lapslng and being amelled, which a t t m d the
If you en nol sure about the intent of ths law or have q#stha
consumer to lose the cash surrender velum of the polldes. Afbr an
about Um FlaWa Insurams Code, plea- mU (a)
922-9138 for
. Investigation, an Admlnletrath Complaint wae I#wdand the DeparthfamWa~
SLIDIIYG/MISREPRESENTAfION-
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ENTITIES
UNLICENSED
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donorable William Gary, Judge of the leon County Circult Court, has entered
rmanent injunction a @ m
Insurance Company of Great Britain, Professional Indemnity Corporation, American Institute of Chiropractic, Jean
Busch, Dr. Richard Busch, and Chiropmcth Associationfor Research and Education, permanentlyand forever enjoining
them from transacting Insurance in Florida or relative to rhks or insureds locsted in Florida, unless and until they o h i n
a Certificate of Authority from the Department of Inwrance. The court also entered a final judgment w i n s t the
defendants ordering them to pay a substantial fine and delinquent premium taxes.The defendants had organized an
unauthorized purchasing group and were soliciting insurance through a magazine maled to Chiropracton. The group
was purportedly insured by two unauthorized &horn compani*
lnsuranoe Company of Great Britain and Profes::. -.:s-*. - .
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.: .,LA- - ,.<: .!-,.slonal Indemnity Corporation. .,*..;
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CHANGE IN UNAUTHORIZED ENTITIES COORDINATOR
The Division of Insurance Fraud, Unauthorized Entities Section, recently announced the appointment of Denise
Prather to the position of Unauthorized Entities Coordinator. Denise replaces Gail Connell who hers transferred to the
Ortando Fraud Field Office as a Crime lntelllgenca Analyst.
Persons suspecting any unauthorized insurance activity are urged to contact Me. Prather Immediately by calling
(904) 413-4036or addressing your correspondence to 200 East Gaines SL, Tallahassee, FL 32399-0324; Fax eomrnunk
cations should be directed to (904) 488-2632. Unauthorized aethrlty may invohre unlicenseddome& entities, unlicensed
oflrhordforeign companies, unapprove(l union plans, unapprwd employee leasing plans, unapprovedinsurance benefit
plans and lndlviduats !hat are marketing andlor solkltlng unauthorized insurance plans within the State of Rorlda.
To determine whether or not an insurer is authorized in Florlda, please call the Departmenfs Consumer Sewices
Hotline at 1-800-342-2762in Florida or (904) 922-3131 outside of ~lorida.
rn
WARNING: RESIDENT AND NON-RESIDENT AGENTS RISK LOSING THEIR LICENSE
WHENEVER THEY SOLICIT FOR AN UNAUTHORIZED INSURER
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I
.......o u r r murrw rrLrwnaiwa art: r t m r r g r y esrrvuurugw ru u u r r r p ~ y
W I L rr II re: UUIR
w r r u ~urrr;rrurrurr
laws and regulations and to ensure the proper discipline of violators by filing formal
written comdaints wlth the De~artmen
t of Insurance
..,....
ILLEGAL BAlL BOND SOLICITATION
The Department has stepped up its efforts statewide to
curtail illegal bail bond solicitation activities. Section
648.44(1)(b), Florida Statutes, provides that bail bondsmen and runners may not directly or indirectly solicit business in or on the property or grounds of a jail, prison, or
other place where prisoners are confined or in or on the
propertyor grounds of any court. Section4-221 -095,Florida
Administrative Code, further specifies that prohibitedsolicitation includes displaying, wearing, or distributing any item
which directly or indirectly advertises bail bond services, or
approaching anyone or urging, enticing, luring, or inviting
anyone to approach a bandsmen to use his senrices, and
parking a motor vehicle, which displays the name of a
bondsman, a bail bond agency, or any other information
advertising bail bond senrices, when not conducting bail
bond business or for a longer perid of time than necessary
when conducting bail bond business. The property or
grounds of a court, jail, prison, or other place where
prisoners are confined includes all parking lots and
p r k i n g spaces adjacent to such places or adjacent to
-9blic walkways adjacent to such places.
The Department recognizesthat, while the solicitation of
bail bond business is constrained at designated locations,
the approach of licensees whlle at these locations by
otherwise unsolicited clientele. does not necessarily constitute a violation of the law; therefore, it is necessary to
distinguish between direct and indirect solicitation. It is the
Departrnenfs position that a bail bond licensee's presence
inasolicitatianprohibitedarea,when said licenseeis not on
court or bail bond related business, may constitute indirect
solicitation. Licensees should exercise caution to ensure
that neitherthey nor their agents violate these provisionsof
the law.The Departmentfurther cautions that it is improper
to monitor first appearance court hearings for the purpose
of prequalification of candidates for follow-up solicitation,
make unrequestedjail visitations with detainees to solicit
aeir business, or take any other unrequested actions at
prohibited Imtions which facilitate bringing together bail
bondsmen and potential clients.
Prohibitedsolicitation is a crime punishableas a misde
m n o r of the first degree, as well as a regulatory violation
punishable by administrative sanctions against an agent's
limnsure status. Clear distinctions between legal and illegal bail bond solicitation balances the recognized legiti
mate activity of attracting business clientele while prohibiting activity which would foster unfair methods of competition within the bail bond industry.
BAlL BOND AGENTS MAY NOT EMPLOY
PERSONS WITH A FELONY HISTORY
The Department is presently investigatingseveralcaseswhere lt h r s
that llcensed bait bond agents have
employed persons who have pleaded
gull@or no contest to a felony or crime
punishable by impdsonrnentof one (1)
year or more. AH bail bond licensees
are remindedthat pursuantto Chapter
648.44(7)(&),ES., personswithafelony
background may not m i p a t e as a
director, offlwr, manager, or employem
of any bail bond agency or office, m
gardtemof whether or not adjudication
of gulh was withheld. Such mstrlctians
apply even ifthe felony case is under
appeal. W u s e of the dose relationip between the ball bond business
epartment v i m thls as a very serious matter and urges all ticensees to
conduct a thorough, due-diligence
background w i e w before &ending
an &r of employment to any p e m i
Bail bond agents ate subject to licensure suspension, revocation, or other
administrative penatdes for violating
this statutory prohibition. Further, any
person who knowingly permits a person who has been convicted of or who
has pleaded guilty or no oontesl to a
felony to engage in the bail bond buiness commits a felony of the third degree. A felony charge of thls nature
against a llcensed bail bondsman will
muR Intheimmediateemergency swpension of the bondsman's license;
and, depenciing upon the autcome of
the case, could muttinthe permanent
revacation of the Ilcense. Bail bond
agents are strongly encouraged to
closely adhere to this law.
1
BAlL BONDSMEN
CHARGED
WORKERS' COMPENSATION
INSURANCE PURCHASING ALLIANCE
ASSISTS SMALL EMPLOYERS
The 1993 Special Session of the
Legislature passedthe Workers' Compensation Insurance PurchasingAllian# (WCIPA) bill. The prwisions of
this law assist small employers (50 or
fewer employees) in obtaining workers' compensation coverage in the
voluntary market. The Alliance was
created within the,Departmentof Insurance, yet its seven-member Board
of Directors is comprised of representatives from insurancecompanies
and small employers.
The WClPA
r CHPA
Although the WClPA may sound
simllar to a Community Health Care
Purchasing Alliance, it is not. The
CHPAs (pronounced %hippas") enable small businesses to group together to purchase health insurance
for their employees in greatervolume
at reduced rates. With worken' compensation insurance, this 'grouping"
of small businesses is not possible
for small employers given the wide
variety of classlfications involved.
Conseque't'~~the WClPA merely
assists individual risb in obtaining
workem' camp co''eraW in the voluntary mark* by contading interested
insurem. The Alliance staff neither
underwrites nor earns a commission
for this service, and contacts only
those insurerswho have expressed a
willingness to review Alliance risks.
Free Sewlce, but no
Guaranteed Results
0
Section 626.9541(l)(m), Florida
Statutes, provides a limited exceptionto the statutory prohibitionagainst
rebating. This exception permits the
giving of sadvertisinggifts* limited to
'articles of merchandise having a
value of not more than $25.' Under
this provision, insurers and agent3
may giveclients advertising gifts such
as pens, pencils, calendars, etc.,with
the company or agency name and
telephone number or clocks with company trademarks. Merchandisa is
defined as anything movableand customarily bought and sold for prom.
The Department of Insurance previously has Issued opinions which
specifically provide that cash and gif!
certificates are not articles of merchandise. Further, no court has connoted merchandise as a plan or ser-
While thk senrice is free to the
small employer, the WClPA staff does
not guarantee that it can find every
riskawillingvoluntary marketinsurer.
However, in its first few months of
operation, the WClPA staff has been
successful in finding voluntary coverage for over 50 percent of those requesting assistance. Small employers who cannot find coverage in the
voluntary market either go bare or
usuallyhaveto settlefor paying higher
pollcy premiumsinthe Workers' Cornpensatlon Joint Undennriting Aweciatian (WCJUA).
In an effort to attract more inwrers, the Purchasing Alliance encour- such things as auto club
ages employers to lrnpkment drugfree workplace programs, workplace
safety standards, and managed care
arranaements
for their employees.
. ifa limnsee encounters amall emeyers for whom worksmi mmpen-tion ins" ranee in the wluntary
market cannot be found, please ento **&
the WCIPA
counge
staff at -800-342-2782,
a
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New Phone Process Aids Callers
In the midst of this technological age, Commissioner Bill
Nelson has called for a little more human touch to the handling
of telephone calls .rec-merit's main tele-
calls received by th
Ize the system b c
posslble to those needlng the services of the Department of
Insurance.
4
ADVERTISING
GIFTS
PERMITTED
EEma
Reminder
Each penon operating an insurance agency
or adjusting firm and each location of a multiplm
agency or firm must complete a Primary Agent/
Primary Adjuster Form (014-WM) on or Wore
January 1 of each year. No Insurance agency
location or adjusting firm lacation shall conduct
t
hbusinessof insuranceu n ha pdmmy W n t
or primary adjuster is designated at aH times.
Failure to designate a primary ~
nor primary
t
adjusteras muired undar W o r t s $28.592 and
626.8895, F.S., shall oonstktle gmunds far rt+
qulfing that the agency or
Please refer to pati4 1 ~ 8 ~ 8 8
copy of the form. If you havequestionsw
Guest the form, &tact me Bureau of I n W -
]
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I NEW COMPANIES
4:
, ,
k
Statewide of Florida Ins. Co. was
uthorized on 8/11/95, Lines of
siness: Fire, Allled Lines.
omeowners Multi Peril, Inland
Marine, Private Passenger Auto
Clablfity, PPA Physical Damage,
Mobile Home Multl Peril, Mobile Home
Physlcal Damage; Re-Insurance on
all lines listed. Address: 2500 N.W.
79th Avenue, Miami, FL 33122;
telephone (305) 715-0000.
Paramount Dental Plan, Inc., was
authorized on 7120195. Lines of
burlness: Dental Service Plan
(Prepaid). Address: 10627 Rivercrest
Drive, Rlvervlew, FL 33569;
telephone (813) 667-4955.
Frontier Pacific lnsurance Go.
was authorized on 4/6/95. Address:
6404 WHshire Boulevard #850, Los
Angeles, CA 90048; telephone
(2 I3) 653-4058.
HIP lnsurance Company d Florida
was authorized on 4/6/85, Lbrs of
business: Re-insurance-Life, Rainsurance-Accldent and Health, Life,
Accldent and Health. Address: 200 S
Park Road, Suite f 00, Hollywood, FL
021 ; telephone (305) 962-3008.
1
Spedrslty I n s w a m Go.
1wasLeadw
authorized on 5111/95. Llnea of
business: Re-insurance on Private
PassengerAuto Liability, Commercial
Auto Llablllty, PPA Physlcal Damage,
Commerclal Auto Physical Damage;
Prlvater Passenger Auto Liability,
Commerclal Auto Liability, PPA
Physlcal Damage. Address: 4807
Ftockslde Road, Independence, OH
44131; telephone (218) 447-1660.
Plnnacle Assurance Corp. an
Assessable Mutual was authorized
on 4/7/05 to convert Irom a WC Self
Insurance Fund under the name of
Self lnsurance Fund. Address: P. 0.
Box 14846, North Palm Beach, FL
33408; telephone (407) 840-7171.
Voyager lndemnlty Insurance was
authorized on 4/6/95. Address: P. 0.
Box 901045, Ft. Wofih, TX 76101;
telephone (404) 41 1-2389.
PHL Varlablcr Insurance Co. was
purchased by Phoenix Home Life and
re-admitted t o Florida on 7/20/05.
Former company names were:
rtford Llfe and Annuity, Dreyfus
nsumer Life. Address: 100 Brlght
adow Boulevard, Enfield, CT
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Sunrise Healthcare Plan, Inc., was
authorized on 7/13/95. tines of
business: Health Maintenance
Organizations. Address: 500 West
Cypress Creek Road. Suite 640, Ft.
Lauderdale, FL 33309; telephone
(305) 492-4243.
Crum and Forster Indemnity Co. was
authorized on 5/11/95. Lines of
business: Fire, Allied Lines,
Commercial Multi Peril, Inland Marine,
Workers' Comp. Other Llabibity,
Commercial
Auto
Liability,
Commercial Auto Physical Damage.
Address: 6 Sylvan Way. Parsippany,
NJ 07054; telephone (2f2) 416-51 00.
Federal Emergency Management Agency
Washington, D.C. 20472
National Flood Imurance Program (NRP)
Subject: Rebating of Agents' Commissions
Background: The Federal Insurance Administmtlon (FIA) has reoehfed
inquiries from producers and Write Your Own Companies concerning the
tmbatlng of q#mtsLmrnmjSSjOne wlth respect to the NationJ Flood tnswam
Program (NNP). The three committees that advise the FIA regardingthe MNP
have provided input on this h u e : the Flood Insurance Producers National
Commitlee, the Insurance Institute for Property Loss Reduction flood Insurance Committeeand the Write Your Own MarketingCommittee. The Insurance
Institute for Propetty Loss Reduction Flood Insurance Committee did not
comment as a committee because of concerns about potential anti-trust
issues. Howewer, two member companies of that committee responded as
lndlvldual companies.
The comments pointed out the need for the NFIP, as a Federal program
operatingon a natlonalscale, to havea uniform pricingsystem countrywide, so
that insuredswould always pay the mme price for the same risk, regardless of
geographic location. This Is the only insurance program for the general public
that is nationally available with Federal programmatic oversight.
After reviewing all the comments received, the FIA has concluded that the
purposes of the NFlP are better served by maintaining the uniform pricing
system countrywide.
Polley Statement: In order to preserve the uniform pricing system of thls
national program, producen writing policies directly with the Federal Government as well as with Write b u r Own Companies shall not engage in rebatinq
agents' mmlssion8 on NFlP policies.
B+f/9r
Date
Eldne A. McReynolds
Federal Insurance Administretor
W o n 624.438, F.S., G e m l Eligibility for Multiple
Employer Welfare Arrangements (MEWA's)
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MEWA's were designed to afford businessesthe opportunity to join together in insurancepurchasingpoolsfor thr -beneM of themselves and their employees. The
revisions provide that MEWA's licensed by the Depad
ment of Insurance are required to be employers who are
of the same profession, trade or industry as recognizedby
the appropriate licendng agency. The new requirement
does not apply to an arrangement licensed prior to 4/1/95
regardless of the nature of its business.
nee
FRPCJUA House Bill
2619 (Chapter 95-276
Laws of
Florida). Relates t o property insurance; became
law on J u n e 14, 1995.
Included in this bH1 were increased coverage limits for
the Florida Windstorm Undenvriting Association, the redefinition of residentla1coverage to include both personal
lines residential coverage and commercial Lines residential coverage, and a depopulation mechanism for the
Florida Residential Properly and Casualty Joint Underwriting Association (FRPCJUA). The depopulation plan
affects insureds, Insurers and agents.
The new law provides for a take-out bonus which
requires the JUA to pay up to $100 to insurers for each risk
the Insurer removes from the FRPCJUA, if the insurer
takes out a minimum of 25,000 policies. The bill also
allows an exemption from a deficit assessment if the
insurer removes at least 50,000 policies, subject to a
three-year decreasing percentage.
House Sill 2619 also addresses the affect the take-out
plan has on the FRPCJUA agent of record. When a policy
is removed from the JUA, either by buance of a policy
upon exptratlon of the JUA pollcy or by assumption, the
agent of record is entitledto retain any unearnedcommission on the policy. In addition, the insurer must either pay
this agent an amount equal to the JUA commission tha
agent would have earned If the policy had been renewed,
or the insurer shall offer to retain the agent to continue
servicing the policy for at least one yea<~heagent shall
receive the insurer's usual commission according to the
policy type. The agent has the option to accept or reject
this offer. If the offer is rejected by the agent, the insurer
is under no further obligation to the agent.
The Department of Insurance is committed to the
stabilization of the insurance market in the State of
Florida. This tegislatlon takes the first step toward that
goal. The Department encourages anyone who may be
affected by this bHI to read it thoroughly, as t h b article
deals with only a very smell part. If you have questions
concerning these matters, you may call the Oivisbn of
insurer Services at (904) 822-3142 or the Depanment
Hotline at 1-800-342-2762.
Section 628.561, F.S., Reporting and Accounting for
Funds
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This section was amended to provide that any agent,
solicitor or adjuster who either temporarily or permanently diverts or approptiates
premiums, return premiums, or
other funds, or any portion thereof,
belonging to insurers or others, to
his own use or deprives the other
person of such a benefit therefrom
commits an offense. The offense
can be deemed a misdemeanor of
the first degree, a felony of
the third degree, a felony of
the second degree, or a
felony of the first degree,
depending upon the amount
of funds diverted.
4
h
Sectlon 626.902, F.S. Penalty tor ~ e ~ r e k o n t ~nauthorlzed
ln~
Insurers
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This section was amended to make it a third degree
felony for an unlicensed person to represent or aid an
unauthorized insurer.
Saclion 626.989, F.S., Dlvlslon of Inuuranw Fraud;
Dellnition; Invertlgallve, Subpottna Powers; Proteotton from Clvl Llablllty; Reportsto Dlvlslon; Oivislon
Inveutigator's Power to Exacute Warrants and Make
Armst8
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This section was amended to provide immunity to
members of insurers' Speclal Investigative Units (SIU's)
and like entities which share information &out fraudulent insurance acts with other SlUP and like entities.
, Fraud 6IllCSIHB 1745 (Chapter95-340Laws of Florida).
Effective July 1, 1995.
This bill makes it easier for the Division of Insurance
Fraud within the Department of Insurance and insurers to
pursue and prosecute cases of insurance fraud.
Followingare summaries of the eight amendedor newly
created statutory sections included In this bill:
Sectlon 826.9091, F.S., Insurer Antl-Fraud lmerti-
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Unitm
e
This newly createdsection requiresinsurerswhich have
$10 million or more in written premiums to establish an
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internal SIU or contract with others for investigative services. An insurer subject to this suClsection shall file a
detailed description of their unit with the Division of Insurance Fraud on or before July 1, 1996. Insurers with less
han $10 million written premiums must adopt and submit
anti-fraud plan tothe Divisionof Insurance Fraudby July
*l996,
or they may, in lieu of adopting and filing an antifraud plan, comply with the same provisions as the larger
insurers.
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Section 772.102, F.S., Civll Remedies for Criminal
Practices. Definltlons.
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Under this section of the statutes, new language provides that acting as or representing an unauthorized
insurer, acting as an unauthorized MEWA, or transacting
insurance without a CertZficate of Authority is subject to
civil liability.
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Sectlon 817.234, F.S., Falser and Fnrudulmnt Insurance
Clalms
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A new provision was added to this section stipulating
that any person who knowingly presents a false, incomplete, or misleading insurance application to an insurer
can be charged with s third degree felony. A statement
_I
will be addedto applications clearly definL
ingthis obj&h.The deadtian
line for
changes
applicais
e
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March I,1996.
Section 895.02, F.S., Offenses Concerning R a c b t w Ing and Ilkgal Pebts. Deftnltlons.
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A new dsfinltion was added to this section whlch states
that transacting insurance without a Certifkate of Authority, operating an illegal MEWA, or representing an unauthorized Insurer, are prosecutable acts under the Racketeer Influenced and Corrupt Organization Act (RICO).
who prepares or files a health insurance claim on
behalf of a patient was unchanged by the amendments.
The new measures exempt persons who file a health
insurance claim on behalf of another and does so
without compensation.
The revisions to the law specifically prohibit a Public
Adjusterfrom giving legal actvie and from acting on behalf
of or aiding any person in negotiating or settling a claim
relatingto bodily injury, death, or noneconomic damages.
For the purposes of this section, the Legislature has
M n e d the term 'insured" to indude only the policyhddr
and any beneficiaries named or similarly identmed in the
PQl~cy.
Section 626.8698, F.S., relating to disciplinary guide
lines for PuMic Adjusters was created by the new legislation. These disciplinary guidelines are supplementary to
those found in Chapters 626.561,828.011,626.621, and
elsewhere in the Florida InsuranceCode. The new guide
llnes specify that the Department may dsny, suspend, or
revoke the license ofa Public Adjuster, and administer a
fine not to exceed $5,000 per act for any of the following:
violating any provision of this Chapter or a Ruk or Order
of the Department; receiving payment or anything of value
as a result of an unfair or deceptive practice; receiving or
accepting any fee, kickback, or other thing of value pursuant to any agreement or understan-,
mlor otherwise;
entering into a spllt-fee arrangement with another person
who is not a PuMlc Adjuster; or being otherwise paid or
accepting payment for senrims that have not been performed; violating s. 817.234, or s.316.006, F.S.; soliciting
or othemise taking advantage d a prson who is vulnerable, emotional, or othemise upselasthe mutt of trauma,
accident, or other similar occurrence; or violattry any
ethical Rule of the Department.
The Deparhnentsupportedthe implementation of tnew disciplinary provisions since Publlc Adjusters are
independent practitioners and are solely responsible for
their conduct when transacting the business of insurance.
Churning Senate Bill 906 (Chapter 95-219 Laws
Public Adjusters CS/SBs 2030 and 2144 (Chapter
95-238 Laws of Florida). Amends Section 626.854, F. S.
Effective June 9, 1995.
The new language states that *the Legislature finds it Is
necessary for the protection of the publk to regulate
Public Insurance Adjusten and to prevent the unauthorlred practice of law." A Publc Adjuster is defined as any
person, except a duly licensed attorney, who for money,
commission, or any other thing of value, prepares, completes, or files an insurance claim form for an insured or
third-party clalmant or who, for money, wmmisslon, or any
other thlng of value, acts or aids in any manner on behalf
of an Insured or third-party claimant in negotiating for or
effecting the settlement of a daim or daims for loss or
amage covered by an insurance contract, or who adverses for employment as an adjuster of such claims.
The exemption from licensure end appointment for
a licensed health care provider or employee thereof
-a
of Florida). Amends Section 626.9541, F. S. Effective July 1, 1995.
Section 626.9541, F.S., relating to unfair methods of
competition and unfair or deceptive acts or practiceswas
amendedto prohibit the practke of churning. Churning is
the practke whereby policy values in an existing life
insurance policy or annuity contract, including, but not
limitedto cash, loan values, or dividend values, and in any
riders to that policy or contract, are utilized to purcha8e
another insurancepdicy or annulty contract with the same
insurer for the purpose of earning additional premiums,
fees, commissions, or other compensation.
The new language requires insuren to a&pt wrttten
procedures whlch will provide notice of Intended replacement of life insurance policies or annutty tycontraets. Chuming d-n from the unfair method of competition known as
CONTINUED ON PAGE 8
CONTiNUED FROM PAGE 7
twisting only in that twisting involves the replacement of a
policy by another insurer. Problems created by these sales
practices became more obvious to the Department during
the pastyear when consumersfiled complaintsallegingthat
they had been ha&
as a result of such replacements.
The replacementof policies, per se, is not a violation of
the Florida Insurance Code; the violation mcurs when
misrepresentation or deceptive practices are used to
convince the policyowner to surrender one policy in favor
of another.
The written procedures for contract replaoement defined in the new statute requires insurersto provide notice
to the policyowner which compares the benefits of the
existing policy wlth what is being offered in the replacement policy. Advantages of the replacement policy must
be clearly described so that the pollcyowner can determine if the surrender or use of cash values in existing
contracts to purchase a different contract is in their best
interest. The statute also requires that this notice be
providedto all named partieswho may have an interest in
the continuation of the policy. Additlonatly, the new law
mandates an unconditional
refund period of 60 days
which begins the date the policy is delivered.
Most churning and twisting complaints received by the
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Section 1. Paragraph (aa) is added to subsection
(1) of Section 626.9541. F.S., to read:
628.941 Unfair m a h i i s of competition and unfair
or deceptive acts or practices defined.(I)UNFAIR METHODS OF COMPETITION AND
UNFAIR OR DECEPTIVE ACTS.-The following are
defined as unfair methods of competition and unfair or
deceptive acts or practices:
(aa) Churning.1. Churning is the practice whereby policy values in an existing life insurance poiicy or annuity
contract, including, but not limited to cash, loan values,
or divldend values, and In any riders to that policy or
contract, are utilized to purchase another insurance
policy or annuity contract with that same insurer tor the
purpose of earning additional premiums, fees, commissions, or other compensation:
a. Without an objectively reasonable basis for
believing that the replacement or extraction wilt
result in an actual and demonstrable benefit to the
policyholder;
b. In n fashion that is fraudulent, deceptive, or
otherwise mlsleadlng or that involves a deceptive
omission;
c. Effective October I,1995, when the applicant
is not informed that the policy values including cash
values, dividends, and other assets of the existing
polcy or contract will be reduced, forfeited, or utilized
Department have been as a result of consumers being
convinced to ustrip' cash value out of existing policies to
provide substantial roll-in funds or replace policies with
higher death benefits. Projections made by agents re-' garding future values of the replacement polides we*
apparently bawd upon the interest rates andlor dividends
effectiveat he time of replacement. Many consumerswere
notmadeawareofhrturev~luesbaseduponthemrstcase
scenario or what is known as the muarantees.' Further,
some consumers were advised that no future premiums
would ever be due over the Me of the new p d i when, in
fact, prendums may very possibly become due later in life
when the policyholder may be less able to afford it
Consumers have a right to information which will enable them to make an informed decision when conternplating the replacementof an existing insurancecontract.
It is the responslbitity of agents in the insurance profession to provide as much pertinent information as is available, even if it means losing the sale.
Following is a re-print of the text of the new statute,
which ml8tes to the replacementof life insurance policies
or annuity contracts. The Department hopes this new Act
will assist the Industry in providing crucial information to
consumers who are contemplating a replacement policy.
in the purchase of the replacing or additional policy or
contract, ifthis is the case; or
d. Effgctive Octaber 1,1995, without informing
the applicant that the replacing or additional policy or
contract will not be a paid-up policy or that additional
premiums will be due, if this is the case.
Churning by an insurer or an agent is an unfair methad
of mnptkionand an unfair or deoeptive act or practice.
2. Effective October 1, 1995, each insurer
shall comply with sub-subparagraph 1.c. and subsubparagraph 1.d. by disclosing to the applicant at
the time of the offer on a form designed and adopted
by rule by the department if,how, and the extent to
which the policy or contract values (including cash
value, dividends, and other assets) of a previously
issued policy or contract will be used to purchase a
replacing or additional policy or contract with the
same insurer. The form shall include disclosure of
the premium, the death benefit of the proposed
replacing or additional policy, and the date when the
policy values of the existing policy or contract will be
insufficient to pay the premiums of the replacing or
additional polby or contract.
3. Effective October I , 1995, each insurer shdl
adopt written procedures to reasonably avoid churning
of policies or contractsthat it has issued, and failure to
adopt written procedures sufficient to reasonablyavoid
churning shall be an unfair method of competition and
an unfar or deceptive act or practice.
-
PREMIUM FINANCING
DISCLOSURE FORM
REQUIRED
L
Effective August 16, 1995, when motor vehicle insurance premiums are financed, agents
are required to disclose certain types of coverages financed with personal injury protection.
The disclosure is to be made at the time of sale
using e completed disclosure form (see page
lo), signed by the insured, with copies provided to the insured and the premlum finance
company. A copy must also be retained by the
agent.
If insurance coverages other than property
damage liability, bodily injury, collision, uninsured motorist, or comprehensive coverage for
damage of or loss to the vehicle are not financed with personal injury protection, then no
disclosure form is required.
The form i s adopted by reference in Rule
4-196.02 1, Florida Administrative Code. (A reprint of the Rule is shown in the column to the
right.) The Rule, along with a slightly different
format of the form, was initially effective on
February 1, 1995.
Licensees should ensure that the disclosure
requirements are followed and that copies of
completed disclosure statements are included
in the file maintained by the agency.
Failure to comply wlth the disclosure requirements constitutes grounds for disciplinary action under Ssctlon 628.621 (12), Florida Statutes. Depending upon the circumstances, a
three- month suspension may result from a single
transaction where the disclosure requirements
are not followed.
A photocopyof the new form 'Insurance Premium
Financing Disclosure Formm-DI4-1 182 (3/95), may
be used as long as there are no alterations in
text and type size and the copies are clearly
legible.
Rule 4-1 96.021
Disclosure Requirements for
Insurance Coverages Financed
With Personal Injury
Protection
(1) Whenever motor vehicle insurance is
financed, the agent shall disclose at the time
of sale any cwemges financed with personal injury protection other than property
damage liabiti, bodily injury, collision, uninsured motorist, or comprehensive coverage for damage of or loss to the vehicle.
(2) The disclosure shall be on Form
014-1 182 (3195), which is incorporated
herein by reference. A blank form can be
obtalW from the Bureauof Specially Insurers, 200 East Qaines Street, Tallahasree,
Florida 32399-0331, fm which you may
make as many copies as needed. Photocopies of Form Dl41162 (3/95)are acceptable, provided that the copits are dearly
legible and contain no alterations intext and
type she.
l
(3) The disclosure shall be signed by the
insured.
(4) Copies of the signed d ~ l o r u n shall
r
be given to the agent, insured, and fhe
premium finance company.
Specfflc Authority 627.8405 FS.
Law Implemented 828.9541 (I)@),
627.734,627.8405 FS.
History-New 3-1-95, Amended 8-16-95.
FYI
Consumers in Florida may call the Department's HelpLine for assistance with insurance-related questions.
The Toll-Free number is 1-800-342-2762
INSURANCE PREMf UM FINANCING
DISCLOSURE FORM
Florida law requires the owner of a motor vehicle to maintain personal injury protection and
property damage liability insurance. Under certain circumstances as provided in Chapter 324,
Florida Statutes, additional liability insurance may be required for bodily injury liability. Also,
additional insurance is usually required by a lienholder of a financed vehicle. Florida law
does not require other insurance. The direct or indirect premium financing of auto club
memberships and other non-insurance products is prohibited by state law.
i
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Insurance you are REQUIRED by law to have:
Personal Injury Protection {PIP) .....................................................................
$
Property Damage Uability (PD) .......................
.......................................
.
.
.
Other insurance which you MAY be required by law to have:
Bodily Injury (If an SR-22 has been issued) ..................................................
OPTIONAL insurance coverage:
Bodily Injury (If an sR-22 has NOT been issued) ............................... 1.....
Uninsured Motorist ............................................................................................
Comprehensive ..................................................................................................
Collision ............................................................................................................
........................................................
........................................................
@
Policy Fee, i f applicable ...........................................................................................
..........................................................................
..........................................................
TOTAL INSURANCE PREMIUMS
$
Less Down Payment Applied ..................................................................................
(
AMOUNT FINANCED (LOANED TO YOU)
$
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,have read the above and understand the coverages I am buyingand
1,
{Pdm Namm ol tnrursd)
how much they cost.
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!
Department of Insurance
BULK RAT€
Division of Agent and Agency Services
U.S. Poetage
I
200 East Gaines Street
TaikhamM, R
Permit No. 101
Tallahassee, Florida 32399-0318
NAMEIADI)RESS
CHANGE?
If your name, residence addms, principal business street
address, or mailing address
changes, you mud notify h e Department within 30 days of the
change. Lkensees who fall to
comply are In vlolatlon of Chspter
826.551, ES., and are subject to
investlgatlon and possible discipllnary action.
'
Please mall your notice of
change to:
Bureau of Wnslng
Department ol In8umm
200 East Gaines Street
T a l h h ~ @ eFL, 32308-0919
A name change necessitates
the re-iss~anceof your insurance license. Please remember to enclose the $5 fee and a
copy of your marrlage certiflcate, divorce decree, or other
documentation at the time you
request re-lrsuance.
i
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Bill Nelson
r
john
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(804)922.8187 Ext. 1101
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The Intercom ispulz
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partment of Insurance, Division of
~ ~ and
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Services, 200 East
Gaines Street, Tallahassee, FL
32399-0318.
Lucy Walker
Editor /Publisher
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Contributors:
GerrySmith
Phil Fountain
ShirleyKerrIs
Dale Gliare
Vinw Mount
DonPowem
JoanC a b g e
Sally Burt
Eugenia Tyua
Barry Lanier
D a ~ F l u m m e r DickKealw
K e n y Edgil
Tom Zutell
Denisr Prather
onpny-&~Orp
Wewthmmemgeestlomsand~eolreamlag
The bt*rrom. Written suggestions rbould k
mailed to Lucy Walker, Florida Department of
Inrurance, 2M1 E. Gain- Street, ~nllahmsaa,
Plodda 32399-0318
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