Law & Ethics Update

 

Agency Personnel Powers, Duties, and Limitations [§626.0428]


An individual employed by an agent/agency on salary who is a full-time clerical worker, with incidental taking of insurance applications, quoting, or receiving premiums on incoming inquiries in the office, is not deemed an agent or customer representative if compensation does not include commissions on business and is not related to the production of applications, insurance, or premiums. However, an employee cannot perform duties requiring a license or appointment. These office employees are also prohibited from initiating contact with anyone for the purpose of soliciting insurance.

 

SCOPE OF LICENSE: Except with respect to a limited license, the license of a life agent covers all classes of life insurance business.[§626.311(1)]

 

The license of a health agent covers all kinds of health insurance and is not limited to a particular class of health insurance (with the exception of a limited license as a travel insurance agent). [§626.311(2)]

 

 

Effect of expiration of license and appointment

Upon the expiration of any appointment, the person will be without any authority and shall not engage or attempt to engage in any activity requiring an appointment. When a licensee’s last appointment for a particular class of insurance has been terminated or not renewed, the department must notify the licensee that his or her eligibility for appointment will expire unless he or she is appointed prior to 48 month expiration. An individual who fails to maintain an appointment with an appointing entity writing the class of business listed on his or her license during any 48-month period will loose the license and will be required to qualify as a new applicant. [Source: 626.431]

 

 

Prohibition Against Unlicensed Transaction of Life Insurance [§626.7845]

You may not solicit or sell variable life insurance, variable annuity contracts, or any other indeterminate value or variable contract, unless the individual has successfully completed a licensure examination relating to variable annuity contracts authorized and approved by the department. See also, FINRA Rule 2330, Members’ Responsibilities Regarding Deferred Variable Annuities at FINRA.org.


Except as otherwise provided, with respect to any line of authority, no individual can, unless licensed as a life agent: 

· Solicit insurance, annuities, or procure applications;

· Engage or hold yourself out as engaging in the business of analyzing or abstracting insurance policies or of counseling, advising, giving opinions relative to insurance, or insurance contracts other than:

*            As a consulting actuary advising an insurer; or

*            As to the counseling and advising of labor unions, associations, trustees, employers, or other business entities, and subsidiaries or affiliates of each, relative to their interests and their members or employees under insurance benefit plans; or

· In Florida or with a resident of Florida, offer or attempt to negotiate on behalf of another, a viatical settlement contract.

 

Unlawful Payment or Sharing of Commissions

No licensed health agent or insurer can pay commissions for services as a health insurance agent in Florida unless such a person holds a valid license and appointment to act as a health insurance agent as required by law. Except a health insurer may pay a commission with an incorporated insurance agency if all employees, stockholders, directors or officers who solicit, negotiate or effectuate health insurance contracts are qualified health insurance agents. [Source: §626.838]

This does not prevent the payment or receipt of renewal or other deferred commissions or pensions to or by anyone solely because the person has ceased to hold a license or appointment to act as a life insurance agent and does not prevent the payment of renewal or other deferred commissions to any incorporated insurance agency solely because any of its stockholders has ceased to hold a license or appointment to act as a life insurance agent.

Prohibition Against the Unlicensed Transaction of Health Insurance

Except as otherwise provided with respect to any line of authority, no one except a licensed health agent can:
⦁ Solicit insurance or procure applications; or
⦁ Engage in the business of analyzing or abstracting insurance policies, or of counseling, advising, or giving opinions to people relative to insurance contracts other than:
⦁ As a consulting actuary advising insurers; or
⦁ Counseling and advising of labor unions, associations, trustees, employers, or other business entities, subsidiaries and affiliates of each, relative to their interests, and their members or employees under insurance benefit plans. [§626.8305]

Unlawful Payment or Sharing Commissions - Health

No licensed health agent or insurer can pay commissions for services as a health insurance agent in Florida unless such a person holds a valid license and appointment to act as a health insurance agent as required by law. Except a health insurer may pay a commission with an incorporated insurance agency if all employees, stockholders, directors or officers who solicit, negotiate or effectuate health insurance contracts are qualified health insurance agents. [Source: §626.838]

 

Other Requirements

 

Continuing Education [Source: §626.2815] 


Except as otherwise provided, CE applies to individuals licensed to engage in the sale of insurance or adjustment of insurance claims for all lines of insurance for which an exam is required for licensing and to each insurer, employer, or appointing entity, including those created or existing pursuant to Insurance Risk Apportionment Plans. This does not apply to an individual who holds a license for the sale of any line of insurance for which an exam is not required by the laws of Florida or who holds a limited license as a crop or hail and multiple-peril crop insurance agent. Licensees who are unable to comply with CE requirements due to active duty in the military can submit a written request for a waiver.

 

 

Continuing Education Requirements

 

· Except as otherwise provided, each licensee must complete 19 hours of elective CE courses every two years.

· A licensee who has been licensed for six or more years must only complete a minimum of 15 hours of elective CE every two years.

· A licensee who has been licensed for 25 years or more and is a CLU or a CPCU or has a Bachelor of Science degree in risk management or insurance with evidence of 18 or more semester hours in insurance-related courses must also complete a minimum of five hours of elective CE courses every two years.

· An individual who holds a license as a customer rep, limited customer representative, motor vehicle physical damage and mechanical breakdown agent, or an industrial fire insurance or burglary insurance agent and who is not a licensed life or health agent, must also complete a minimum of 5 hours of continuing education courses every 2 years.

· Elective CE courses for public adjusters must be specifically designed for public adjusters. Public adjusters for workers’ compensation insurance or health insurance are not required to take CE courses, unless otherwise compelled by this section.

· Excess hours accumulated during any two-year compliance period may be carried forward to the next compliance period.

· For compliance periods beginning on or after October 1, 2014, any person who holds a license as a title insurance agent must complete a   minimum of 10 hours of CE credit every 2 years in title insurance and escrow management specific to Florida, which must include at least three hours of CE on the subject matter of ethics, rules, or compliance with state and federal regulations relating specifically to title insurance and closing services.

· Compliance with CE requirements is a condition precedent to the issuance, continuation, reinstatement, or renewal of any appointment. However, there are exemptions.

 

Each licensee except a title insurance agent must complete a 5-hour law and ethics update course every two years that is specific to the license held. The content of the course must address all lines of insurance for which examinations and licenses are required and include the following subject areas: insurance law updates, ethics for insurance professionals, disciplinary trends and case studies, industry trends, premium discounts, determining suitability of products and services, and similar insurance-related topics the department determines are relevant to legally and ethically carrying out the responsibilities of the license granted. A licensee who holds multiple insurance licenses must complete an update course specific to at least one of the licenses held. Except as otherwise specified, any remaining required hours of CE are elective and may consist of any approved CE.

 

For good cause shown, the department may grant an extension of time during which the requirements for CE be completed, but such extension will not exceed one year.

 

A nonresident licensee who must complete CE requirements in the home state can use the home state requirements to meet Florida’s CE requirements if the licensee’s home state recognizes reciprocity with Florida’s CE. A nonresident licensee whose home state does not have a CE requirement but is licensed for the same class of business in another state that does have CE requirements may comply with Florida’s requirements by furnishing proof of compliance with the other state’s requirement if that state has a reciprocal agreement with Florida relative to CE. A nonresident licensee whose home state does not have CE requirements, and is not licensed as a nonresident licensee in a state with CE requirements and reciprocates with Florida, must meet the CE requirements of Florida.

 

The following courses may be completed in order to meet the elective CE course requirements: 

 

· Any part of the Life Underwriter Training Council Life Course Curriculum: 24 hours; Health Course: 12 hours;

· Any part of the American College “CLU” diploma curriculum: 24 hours;

· Any part of the Insurance Institute of America’s program in general insurance: 12 hours;

· Any part of the American Institute for Property and Liability Underwriters’ Chartered Property Casualty Underwriter (CPCU) professional designation program: 24 hours;

· Any part of the Certified Insurance Counselor program: 21 hours;

· Any part of the Accredited Advisor in Insurance: 21 hours;

· In the case of title agents, completion of the Certified Land Closer (CLC) professional designation program and receipt of the designation: 24 hours;

· In the case of title agents, completion of the Certified Land

· Searcher (CLS) professional designation program and receipt of the designation: 24 hours;

· Any insurance-related course that is approved by the department and taught by an accredited college or university per credit hour granted: 12 hours;

· Any course, including courses relating to agency management or errors and omissions, developed or sponsored by an authorized insurer, recognized agents’ association, insurance trade association, or an independent study program of instruction, subject to approval by the department, qualifies for the equivalency of the number of classroom hours. However, unless otherwise provided, CE hours may not be credited toward meeting the requirements of this section unless the course is provided by classroom instruction or results in a monitored examination.

 

 

The department may immediately terminate or refuse to renew the appointment of an agent or adjuster who has been notified that the CE requirements have not been certified, unless the agent or adjuster has been granted an extension or waiver. The department may not issue a new appointment of the same or similar type to a licensee who was denied a renewal appointment for failing to complete CE as required, until the licensee completes the CE requirement. The department may contract services relative to the administration of the continuing education program to a private entity.

For compliance periods beginning on or after October 1, 2014, any person who holds a license as a title insurance agent must complete a minimum of ten hours of continuing education credit every two years in title insurance and escrow management specific to this state and approved by the department, which shall include at least three hours of continuing education on the subject matter of ethics, rules, or compliance with state and federal regulations relating specifically to title insurance and closing services.

 

 

Reporting of Administrative Actions

Within 30 days after final disposition of an administrative action against a licensee or agency by a governmental or regulatory agency in any state or jurisdiction relating to the business of insurance, the sale of securities, or activity involving fraud, dishonesty, trustworthiness, or breach of a fiduciary duty, the licensee or agency must submit a copy of relevant legal documents to the department. [Source: §626.536]

Information Required to be Reported


Any agent, TPA or insurer with knowledge of an unlicensed insurer doing business in Florida, is required to report, by mail or phone: 

 

· Organizational information concerning the reportable MEWA, PEO arrangement, welfare benefit plan, employee organization, collectively bargained arrangement, or other unlicensed insurer

· Information on any insurance or reinsurance contracts, benefits or coverage

· Names, addresses, and phone numbers of any officers or agents of reportable MEWA, PEO arrangement, welfare benefit plan, employee organization, collectively bargained arrangement, or other unlicensed insurer

· Names, addresses, and phone numbers of any employers, employees, or individuals who may be enrolled by, or who will be receiving services from, reportable MEWA, PEO arrangement, welfare benefit plan, employee organization, collectively bargained arrangement, or other unlicensed insurer

 

Submitting these reports helps maintain the integrity of the insurance industry, in which legitimate licensees do not need such sucker punches to their trade. [Chapter 69B-230.033(3)]

 

 

 

Advertising

 

Advertising by any regulated business, must employ stringent methods of approval to refrain from misleading the public. The public, in general, is not trained in regulated businesses and should be advertised to accordingly. [626.887]

 

A registered insurance agency, as a condition to continuing business, must obtain an insurance agency license if the department finds, with respect to any person who manages or controls the agency, has misrepresented an insurance policy or annuity contract, or used deception with regard to a policy or contract, whether in person or by any form of dissemination of information or advertising. An administrator can use only advertising pertaining to the business underwritten by an insurer as has been approved in writing by the insurer in advance of its use.  [Source: 626.112(7)(b) and (4)(d)]

 

 

Identification of Insurers, Agents, and Insurance Contracts

Advertising materials and communications developed by insurers and approved by the office to do business in Florida, must clearly indicate the communication relates to insurance products. When soliciting or selling insurance products, agents are required to clearly indicate to prospective insureds the agent is acting as an insurance agent with regard to insurance products and identified insurers, and are approved by the office to do business in Florida.

 

 

There is no liability to the insured on the part of, and no cause of action may arise against any licensed and appointed insurance agent for the insolvency of any risk-bearing entity when such entity has been authorized or approved by the office to do business in Florida. However, if the licensed and appointed agent was a controlling producer of the risk-bearing entity within two years preceding the insolvency, the agent may be subject to a penalty.

The term “risk-bearing entity” is:

· A local government self-insurance fund

· An independent educational institution self-insurance fund

· A reciprocal insurer

· A group self-insurance fund

· A self-insured public utility

· A commercial self-insurance fund

 

"Risk-bearing entity" does not include an authorized insurer.  [§626.9531]

 

 

Advertising Gifts Permitted [§626.9541(1)(m)]
Gifts valued at $25 or less may be given to insureds, prospective insureds, and others, for the purpose of advertising.



Free Insurance Prohibited  [§626.9541(1)(n)]
Advertising, offering, or providing free insurance as an inducement to the purchase or sale of or services connected with real or personal property, is strictly prohibited.
“Free” insurance is considered: 

· Insurance for which no identifiable and additional charge is made to the purchaser of such real property, personal property, or services.

· Insurance for which an identifiable or additional charge is made in an amount less than the cost of the insurance as to the seller, other than the insurer, providing the policy.

 

Using the word “free” or words that imply the provision of insurance without a cost (to describe life or disability insurance), in connection with the advertising or offering for sale, of any kind of goods, merchandise, or service is also prohibited.

This does not apply to:

· Insurance of, loss of, or damage to the real or personal property involved in the sale or services, under a policy covering the interests of the seller or vendor

· Blanket disability insurance

· Credit life or credit disability insurance

· Any individual, isolated, nonrecurring, unadvertised transaction not in the regular course of business

· Title insurance

· Any purchase agreement involving the purchase of a cemetery lot or lots in which, under stated conditions, any balance due is forgiven upon the death of the purchaser

· Life insurance, trip cancellation insurance, or lost baggage insurance offered by a travel agency as part of a travel package offered by and booked through the agency.

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