Law & Ethics Update
Defendant was sentenced to about three years in prison followed by 25 years' probation, and was ordered to pay full restitution to the victims. He is also banned from the Florida insurance industry.
A South Florida man was accused of taking loans and life insurance policies out in the name of a Tallahassee man. The suspect, 60-year-old John Smith, told the victim about an investment opportunity called, "Endowment to the 21st Century." In this investment scheme, the victim was told that, with no financial risk at all, he could get a life insurance policy. When he died, a portion of that insurance money would go to a Christian School.
Smith gained the victim's trust, and was able to get confidential information from him. The victim even agreed to get a physical and give blood and urine samples in order to participate in the program. By the way, Smith was not licensed to perform any insurance activities, and the school was never intended to receive any funds from the illegal investment scheme.
An investigation of a life and health agent alleged that he sold consumers health insurance plans from unauthorized insurers. When the consumers had medical claims they were informed there was no coverage and the consumers suffered significant financial hardships.
Patrice Sands of Pompano Beach for selling fraudulent insurance policies to elderly military veterans and their families at Make-A-Wish Veterans, Inc., a Miami-based company that provides assistance to veterans. An agency investigation discovered that Sands collected premiums from her victims and deposited the funds into bank accounts tied to her business, Universal Research Group Insurance Agency, but failed to secure policies through a company licensed to transact insurance in the state of Florida. Sands faces up to 25 years in prison.
Since July 2014, the Division of Insurance Fraud has made 59 arrests of individuals who were licensed by the Department or who were required to be licensed but were operating without one. These arrests represent $4.47 million in fraud and involved insurance agents, bail bond agents and public adjusters. [Florida CFO, Division of Fraud, Insurance Fraud Press Releases]
This is a single example of how “agencies” and their policies are created and later solicited to you, to offer to your customers.
If you DO solicit or sell for an unauthorized entity you are violating the Representing or Aiding Unauthorized Insurer Prohibited statute, which could cause you to be liable for repayment of any losses suffered by a client when the unauthorized entity fails to pay claims. You may also be charged with a third degree felony for violating the Penalty for Representing Unauthorized Insurer statute, punishable by up to five years in prison and a fine of up to $5000 (first offense).
As our CFO, DFS, OIR, Fraud Strike Force and others work to maintain or improve the integrity of the insurance industry, technology continues to improve with them. As it turns out, fraudulent agents, agencies and products don’t usually lag too far behind. It’s our job to ensure we stay one step ahead of these criminals.
New and Important Terminology Applicable to Licensed Florida Insurance Professionals
Florida’s OIR recognizes that each state has its own terminology among licensed insurance professionals. It provides the NAIC’s complete list for every state at www.FLOIR.com.
You may need to use the website to secure terms and codes when you are required to complete a transaction with another state.