Law & Ethics Update
· File on the appropriate department forms, a written statement of the firm, corporate, or business name used
· Include the address of all offices or places of business making use of the name, and
· The name and Social Security number of each officer and director of the corporation
· The name and Social Security number of each individual associated in the firm or corporation as to the insurance transactions it makes or in the use of the business name
In the event of any change of the name, officers, directors, locations, or personnel, written notice must be filed within 30 days by or on behalf of those licensees terminating any firm, corporate, or business name, or those continuing to operate under the name. Any licensed insurance agency must, within 30 days after a change, notify the department of changes to the information contained in the application on file.
Notice of Change of Address, Name
· Residence address
· Principal business street address
· Mailing address
· Contact phone numbers, including a business phone, cellphone, and email address.
A licensee who has moved his or her principal place of residence and principal place of business from Florida must have his or her license and all appointments immediately terminated. Failure to notify the department within the required time will result in a fine up to $250 for the first offense and a fine of at least $500 or suspension or revocation of the license for subsequent offenses. [Source: §626.551]
Insurance Agency Licensing
Limited customer representative” means a customer representative appointed by a general lines agent or agency to assist that agent or agency in transacting only the business of private passenger motor vehicle insurance from the office of that agent or agency. A limited customer representative is subject to the Florida Insurance Code in the same manner as a customer representative, unless otherwise specified.
Unaffiliated Insurance Agent
An unaffiliated insurance agent, is a new type of insurance agent and specifies the scope of the license. The bill defines this type of agent as a licensed insurance agent, except a limited lines agent, who is not appointed by or affiliated with any insurer, but is self-appointed. This agent acts as an independent consultant in the business of analyzing or abstracting insurance policies, providing insurance advice or counseling, or making specific recommendations or comparisons of insurance products for a fee established in advance by a written contract signed by the parties. The bill prohibits an unaffiliated insurance agent from being affiliated with an insurer, insurer-appointed insurance agent, or insurance agency contracted with or employing insurer-appointed insurance agents. However, these agents may continue to receive commissions on sales made before the date of appointment as an unaffiliated insurance agent, as long as the agent discloses the receipt of commissions to the client when making recommendations or evaluating products of the entity from which commissions are received. The bill requires unaffiliated insurance agents to pay the same agent appointment fees required under current law for agents appointed by insurers. Chapter 626.015(18)
Insurance Agency Licensure
HB633 makes significant changes to the insurance agency licensure law to streamline the licensing process and to better align the regulation of insurance agencies in Florida with other states. The Department of Financial Services (DFS) is the state agency responsible for licensing insurance agencies in accordance with s. 626.172, F.S. In Florida, insurance agents who are sole proprietors and do not employ other insurance agents must be licensed as both an insurance agent and an insurance agency. According to DFS, no other state requires licensure of an insurance agency when the licensed insurance agent is the sole proprietor of the agency. Furthermore, because insurance agents are vetted by the agent license process, DFS believes also licensing the agency serves no purpose. The bill eliminates the insurance agency licensing requirement for agencies that are owned and operated by a single licensed agent who conducts business in her/his own name and does not employ or use other insurance licensees.
A branch place of business established by a licensed agency is considered a branch agency. A branch agency is not required to be licensed if it: (1) transacts business under the same name and federal tax identification number as the licensed agency and has designated with DFS a licensed agent in charge of the branch location; and (2) has submitted to DFS for inclusion in the licensing record of the licensed agency the address and telephone number of the branch location within 30 days after insurance transactions began at the branch location.
Registration Vs. Licensing
According to DFS, when the agency licensing law was created, some existing agencies were given the opportunity to register in lieu of licensing the agency. The primary benefit of registration over licensing is that registrations do not expire, whereas licenses expire every three years. DFS indicates that Florida is the only state that registers insurance agencies in lieu of licensing them. Thus, insurance agencies registered in Florida cannot be recognized in other states because the states only recognize licensed agencies. As a result, insurance agencies have been turning in their registrations to DFS and applying for a Florida agency license. This allows the agency to also obtain an agency license in other states. HB633 bill repeals current law allowing certain insurance agencies to obtain a registration in lieu of a license and makes conforming changes due to this repeal. The bill converts all agency registrations to licenses effective October 1, 2015. [§626.112(7)(d)]
An application for an insurance agency license must be signed one of the following: owner, partner, officer, director, president, senior vice president, secretary, treasurer, and limited liability company member. An insurance agency may permit a third party to complete, submit, and sign an application on the insurance agency’s behalf; however, the insurance agency is responsible for ensuring that the information on the application is true and correct and is accountable for any misstatements or misrepresentations. [§626.172(2)]
Effective January 1, 2015, HB633 eliminates the three-year expiration of an agency license. Thus, an agency license will continue in force until canceled, suspended, revoked, or until it is otherwise terminated or it expires by operation of law. [§626.382]
Agent in Charge
Each person operating an insurance agency and each location of a multiple location agency must designate a licensed and appointed agent in charge for each location.
Under current law, the term agent in charge is not defined and the scope of such agent’s responsibilities is not clearly delineated. Effective January 1, 2015, HB 633 deletes s. 626.747, F.S., relating to branch agencies, and creates s. 626.0428(4), F.S., which defines agent in charge and specifies the scope of their responsibilities.
An agent in charge is defined as the licensed and appointed agent responsible for the supervision of all individuals within an insurance agency. Each business location established by an agent or insurance agency must be in the active full-time charge of a licensed and appointed agent holding the required licenses for the lines of insurance transacted at the location. The agent in charge of an insurance agency may be the agent in charge of additional branch locations if:
(1) insurance activities requiring licensure as an insurance agent do not occur at the location(s) when an agent is not physically present and
(2) unlicensed employees at the location(s) do not engage in insurance activities that require licensure as an insurance agent or customer representative.
Under the bill, each insurance agency and branch office is required to designate an agent in charge and to file the agent’s name, license number, and physical address of the insurance agency location with DFS at the DFS website. A change of the designated agent in charge must be reported to DFS within 30 days, and becomes effective upon notification to DFS. An insurance agency location is precluded from conducting the business of insurance unless an agent in charge is designated by, and providing services to, the agency at all times. When the agent in charge ends her/his affiliation with the agency, the agency must designate another agent in charge within 30 days. If the agency fails to make such designation within 90 days after the designated agent has ended their affiliation with the agency, the agency license automatically expires 91 days after the designated agent ended their affiliation with the agency.
The bill provides that an agent in charge of an insurance agency is accountable for misconduct or violations committed by the licensee or agent or by any person under her or his supervision acting on behalf of the agency. However, the agent in charge is not criminally liable for the misconduct unless she or he personally committed the act or knew or should have known of the acts and of the facts that constitute the violation. [Source: House of Rep. Final Bill Analysis HB633]
Agency License Expirations Eliminated
Insurance Agency Names; Disapproval
· The name interferes with or is too similar to a name already filed and in use by another agency or insurer.
· The use of the name may mislead the public.
The name states or implies the agency is an insurer, motor club, hospital service plan, state or federal agency, charitable organization, or entity that primarily provides advice and counsel rather than sells or solicits insurance, or is entitled to engage in insurance activities not permitted under licenses held or applied for. Uses of the words “state” or “states” in the name of an agency does not in and of itself imply that the agency is a state agency. [§626.602]
SUMMARY ANALYSIS HB633
CS/CS/HB 633 passed the House on March 27, 2014, and subsequently passed the Senate on April 25, 2014.The bill amends the insurance agency licensure law. Among other changes, the bill:
General - Effective July 1, 2014.
· Creates a new type of insurance agent, an unaffiliated insurance agent, and specifies the scope of the license;
· Requires DFS to immediately suspend the license or appointment of licensees charged with certain crimes;
· Bars applicants for licensure with sealed or expunged criminal history records from denying or failing to acknowledge arrests covered by these records;
· Exempts members of the United States Armed Forces, their spouses, and veterans who have retired within 24 months from the application filing fee for specified licenses;
· Requires agents who recommend the surrender of an annuity or life insurance policy to provide financial information to the consumer;
· Requires DFS to deny an application to be a mediator or neutral evaluator (sinkhole claims) or revoke or suspend a mediator or neutral evaluator in certain circumstances;
· Amends eligibility requirements for mediators under alternative dispute resolution programs administered by DFS;
· Amends the definitions of neutral evaluator and professional engineer;
· Authorizes DFS to investigate improper conduct of mediators, neutral evaluators, and navigators and permits DFS to share investigative information with any regulatory agency;
· Amends requirements for licensure as a nonresident surplus lines agent;
· Bars issuance of any new limited customer representative license after September 30, 2014;
· Authorizes additional methods for service of process in certain administrative actions; and
· Deletes requirement that applicants who take a licensure examination in Spanish must pay all associated costs.
· Licenses issued to businesses that rent vehicles will cover the office, branch office, employee, or authorized representative located at the location
Insurance Agencies - Effective January 1, 2015.
· Eliminates the insurance agency licensing requirement for agencies owned and operated by a single licensed agent under certain conditions;
· Allows third parties to sign agency applications;
· Specifies circumstances under which branch agencies do not have to be licensed;
· Repeals provision allowing insurance agencies to obtain a registration in lieu of a license and converts all agency registrations to licenses;
· Eliminates the three-year expiration period for agency licenses;
· Provides for agency licenses to automatically expire if the agency does not designate a new agent in charge with the Department of Financial Services (DFS) within 90 days after the agent in charge on record has left the agency;
· Repeals current law governing branch agencies and creates s. 626.0428(4), F.S., to define agent in charge and specifies responsibilities;
[Source: Insurance Insights, May, 2041 & June 2014 issue]
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