Law & Ethics Update3

Department Communication


The Communications Director manages the Department of Communications. The Insurance Commissioner appointed Florida’s Communications Director in March 2014. According to the Insurance Commissioner, the department’s Director (aka “Commissioner”) of Communications is responsible for: “… the day-to-day activities of the communications business unit. He will serve as the key spokesperson for the OIR, and advise on overall communication strategies.” [Source: OIR Press Release]


The CFO and Insurance Commissioner are proponents of transparency for its citizens. Managing communications and making them public (as appropriate) enforces the transparency process. The Newsroom on the website makes the Director available, provides access to OIR actions, and ensures related news is current. Citizens are invited to follow them @FLOIR_comm on Twitter© and Facebook© and sign up for the weekly newsletter Dollars & Sense.



Guaranty Association


Florida Insurance Guaranty Association (FIGA) is part of a non-profit, state-based, statutorily-created system that pays certain outstanding claims of insolvent insurance companies. By paying these claims, guaranty associations protect policyholders and claimants. Guaranty associations are active in every state, the District of Columbia, Puerto Rico and the Virgin Islands. 

Guaranty associations ease the burden on policyholders and claimants of the insolvent insurer by immediately stepping in to assume responsibility for most policy claims following liquidation. The coverage guaranty associations provide is fixed by the policy or state law; they do not offer a "replacement policy."

By virtue of the authority given to the guaranty associations by state law, they are able to provide two important benefits: prompt payment of covered claims and payment of the full value of covered claims up to the limits set by the policy or state law.

Specifically, when a member insurer is found to be insolvent and is ordered liquidated, a receiver takes over the insurer under court supervision and processes the assets and liabilities through liquidation. Upon liquidation, FLAHIGA automatically becomes liable for the policy obligations the liquidated insurer owed to its Florida policyholders. [Chapter 631]



Life and Health Insurance Guaranty of Payments [§631.711]

What follows applies to direct life insurance, health insurance, annuity contracts, and supplemental contracts issued by those licensed to transact insurance in Florida. Coverage is provided to: 


· Those who are the beneficiaries, assignees, or payees of covered persons; and

· Those who are owners of policies or contracts, and who:

o Are residents of Florida; or

o Are residents of other states, IF:

* The insurer is in Florida;

* The insurers were not licensed in the states in which the individuals reside at the time specified in a state’s guaranty association law (necessary for coverage);

* Such other states have associations similar to the association created by Florida; and

* Such persons are not eligible for coverage by those associations.

* Notwithstanding any other provisions this part applies to coverage of a person who is a payee under a structured settlement annuity, or a beneficiary if the payee is deceased, with a coverage limit of $300,000 by the association, if:

· The payee is a resident of Florida.

· The payee, the beneficiary, or the contract owner is eligible for coverage by the association of the state in which the contract owner resides.


Administration and Assessment [§631.715(2)(a)]

 For purposes of administration and assessment, the association maintains three accounts:

· The health insurance account;

· The life insurance account; and

· The annuity account.

Borrowing between accounts for payment of policyholder and contract holder claims and other obligations of the association is authorized at the discretion of the board of directors, provided that the amounts are restored to the appropriate accounts not less than annually.

The association is under the immediate supervision of the department and subject to the applicable provisions of the insurance laws of Florida.



Florida HMO Consumer Assistance Plan [§631.811 and §631.828]

There is a nonprofit legal entity known as the Florida HMO Consumer Assistance Plan. All HMOs must remain members of the plan as a condition of their authority to transact business in Florida. The plan performs its functions under the plan of operations established and approved under the provisions and exercise its powers through a board of directors. The plan comes under the immediate supervision of the department and is subject to the applicable laws of Florida.





New Florida Law Updates

The following are summaries of new Florida laws and their effective date:

[SB 1524] Florida Information Protection Act of 2014
Repeals provisions relating to a breach of security concerning confidential personal information in third-party possession; requires specified entities to take reasonable measures to protect and secure data containing personal information in electronic form; requires notice to individuals of data security breaches under certain circumstances.

Source: Florida Legislature 2014: What Passed and What Failed; Tampa Bay Times, May 26, 2014; State Library and Archives of Florida, 2013 and 2014 Florida Senate Glossary

Under the Florida Information Protection Act of 2014 (FIPA), any covered entity or third-party agent must now report breaches to the Florida Department of Legal Affairs and to consumers within 30 days (compared with the prior law's 45 days). If they show good cause, organizations may get a 15-day extension or receive a law enforcement extension. Violators can be fined $1,000 per day for the first 30 days and $50,000 for each subsequent 30-day period under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA); the fine is not to exceed $500,000.

[HB1133] Agent in Charge
Prior to the 2014 law change, the agent in charge was not required to maintain a license in every line that the location was handling. In 2014, an agent in had to be licensed for each line of insurance that the particular location of the agency handles. The DFS reports that this requirement has proven unrealistic and unnecessary. The bill reduces the number of lines that the agent in charge must be licensed to transact in order to qualify for the designation. The agent in charge is required to be licensed in at least two of the location’s lines, except that if the location only handles one line, the agent in charge must be licensed in that line of insurance. The bill results in a larger number of insurance agents eligible to fulfill the agent in charge role. [House of Representatives Final Bill Analysis — June 17, 2015]

[HB1133] Examination Requirements
The bill removes any examination exemption limitations applicable to license transferees from other states. Also, non-resident agent applicants receive an examination exemption if they hold a comparable license in another state with similar examination requirements.

Knowledge, Experience, or Instruction Requirements

Life applicants

Currently, life agent applicants must meet specified knowledge and experience requirements within the four years preceding their application. These requirements are waived if the applicant holds the Chartered Life Underwriter (CLU) designation. The bill eliminates some requirements and revises others. It specifies that whoever satisfies their knowledge requirement through coursework must do so in the subjects of life insurance, annuities, and variable contracts, rather than simply insurance. A life agent applicant may satisfy their knowledge requirement by earning or maintaining one of the following designations in the four years prior to application: 

· Chartered Financial Consultant (ChFC) from the American College of Financial Services;

· Fellow, Life Management Institute (FLMI) from the Life Management Institute

The bill permits a life agent applicant to qualify for licensure if they have completed at least 40 hours of coursework in multiple lines of insurance, including life insurance, annuities, and variable contracts (60 hours for a 2-15 license). The coursework must include instruction in unauthorized insurance entities and three hours of ethics training. The bill also allows those applicants that rely on prior employment with the DFS or the Office of Insurance Regulation (OIR) to claim credit for their employment experience for four years following their separation from employment, rather than only 90 days.
[House of Representatives Final Bill Analysis — June 17, 2015]

HB1133 was approved by the Governor on June 16, 2015, ch. 2015-180, L.O.F., and became effective on July 1, 2015.

Retention of Records by an Agent
 The bill requires agents to retain records for at least five years following policy expiration. [House of Representatives Final Bill Analysis — June 17, 2015]

[HB1133] Recommendations to Surrender Annuities

The bill eliminates DFS rulemaking authority concerning the content of the form used to deliver the required information. The required notice will solely be governed by the standards specified in s. 627.4553,

F.S. The bill requires the notice to be in writing, but does not remove or increase any of the elements already specified in law. Such information shall include, but is not limited to, the amount of any estimated surrender charge, the loss of any minimum interest rate guarantees, the possibility of tax consequences, the amount of any forfeited death benefit, and a description of any other investment performance guarantees being forfeited as a result of the transaction.

The bill requires the agent to maintain a record of the notice that it delivers to the surrendering annuity owner. [House of Representatives Final Bill Analysis — June 17, 2015]


 "Surrender" is defined as “the voluntary surrender, by the owner's request, of the annuity or life insurance policy before its maturity date, in exchange for the policy's current cash surrender value which results in a surrender or termination of the policy or contract. The term excludes any involuntary termination that is otherwise required by the terms of the policy contract and excludes all transactions other than a surrender, such as maturity, policy loan, lapse for nonpayment of premium, or withdrawal of policy or contract values, annuitization, or exercise of reduced-paid-up or extended-term nonforfeiture options.” CS/CS/HB 1133, enrolled, lines 745-755

[HB1133] Email Delivery

Adds email delivery with receipt as an approved method for  agents to notify insured of insurer insolvency notifications to their insured's. 631.341, F.S.



Life Insurance Policies Covering Burial-Related Expenses, §626.785(1)(d), F.S.

The statute change increased the amount of coverage an insurance agent can sell for insurance policies used to cover burial-related expenses. The amended statute increases the policy coverage maximum to $21,000 plus an annual increase based on the Consumer Price Index (CPI), beginning with the 2016 CPI. Effective April 8, 2016. Chapter 2016-202,


In case you were not aware, the CE rule recently changed, and quite significantly. The majority of the rule updates reflect the current processes that have been in use by the Education Unit. However, there were several updates that do in fact change the way in which applications will be processed or the way in which CE credit will be applied to a licensee’s CE transcript.

Please understand, the below list does not cover all of the changes that were made to the CE rule. It is important that you review the entire Rule Chapter 69B-228, F.A.C., which you can find on the Florida Administrative Code & Register website.

1. Self-study word count calculation and exam question requirement:

a. Word count: Divide the total number of words submitted in the course text (excluding images, graphics and examination questions) by 180 (documented average reading time) to get the number of minutes. Divide the number of minutes by 50 to get basic level credit hours. Multiply the number of basic credit hours by 1.25 for an intermediate level course and 1.50 for an advanced level course. Fractional hours rounded up if .50 or above, and rounded down if .49 or less.

b. Exam Questions: A minimum of 10 questions for 1 credit hour with an additional 5 questions for each subsequent credit hour.

2. Instructor qualifications: Instructor applicants can qualify based on a list of single qualifiers or a list of two qualifiers.

3. Course levels: Basic, Intermediate and Advanced course levels no longer determine whether a licensee receives credit for a course: Basic, Intermediate and Advanced course levels determine how many hours
are approved within a course application based on the difficulty level of the course content.
4. Time management, communication and stress management course topics are no longer eligible for CE credit.
5. The timeframe for disqualification of duplicate course credit awarded to a licensee was reduced from 3 years to 2 years.
6. The timeframe for expiration of courses has been reduced from 5 years to 2 years.
7. The timeframe requirement for course offering submissions has been reduced from 30 days to 5 business days.
8. Blended Course study method added – this can be a combination of classroom, self-study correspondence or self-study online but must meet the guidelines for all of the study methods being applied for.
9. Criteria was added to allow satisfaction of deficient CE hours when individual becomes relicensed.
10. Criteria was added for a waiver of CE hours for military duty per 626.2815(2), F.S.
Provider Insights Summer 2017]

HB837 – Insurer Insolvency
The bill amends Florida’s Insurers Rehabilitation and Liquidation Act to include various provisions from the National Association of Insurance Commissioners’ “Insurer Receivership Model Act.”
This bill adds the Insurer Receivership Model Act to a list of acts that extend reciprocity in the treatment of policyholders experiencing receivership. It adds the Florida Health Maintenance Organization Consumer Assistance Plan as well, regarding giving reasonable written notice of hearings by the Department of Financial Services

Insurer Insolvency: Revises Insurers Rehabilitation & Liquidation Act; revises notice requirements, court jurisdiction, filing requirements, procedures, & defenses of delinquency proceedings; authorizes  receiver & DFS, as domiciliary receiver, to perform certain functions; provides delinquency procedures for specified large deductible claims under certain workers' compensation policies; provides certain persons of insolvent insurers are discharged & have no further authority over affairs or assets of insurer; revises priority of claims. Effective Date: July 1, 2017


HB1007—Insurance Fraud
By December 31, 2017, every insurer admitted to do business in Florida who in the previous calendar year, or at any time during that year, had $10 million or more in direct written premiums must:
· Establish and maintain a designated anti-fraud unit or division within the company. Their job is to investigate and report possible fraudulent insurance acts against insureds, including those making claims for services or repairs against policies held by insureds. Insurers may contract with others to investigate and report possible fraudulent insurance acts by insureds or by persons making claims for services or repairs against policies held by insureds.

· Adopt an anti-fraud plan;

· Designate at least one employee with primary responsibility for implementing the requirements of this section electronically

Each insurer’s anti-fraud plan must include:

· An acknowledgement that the insurer has established procedures for detecting and investigating possible fraudulent insurance acts relating to the different types of insurance sold by that insurer.

· A description of the insurer's procedures for detecting and investigating possible fraudulent insurance acts;

· An acknowledgment that the insurer has established a description of the insurer's procedures for the mandatory reporting of possible fraudulent insurance acts to the Division of Investigative and Forensic Services of the department;

· An acknowledgement that the insurer provides the description of the insurer's plan for anti-fraud education and training required by this section to the anti-fraud investigative unit of its claims adjusters or other personnel;

· A description of the required anti-fraud education and training;

· A written description or chart outlining the organizational arrangement of the insurer's anti-fraud investigative unit, including the position titles and descriptions of staffing and personnel who are responsible for the investigation and reporting of possible fraudulent insurance acts;

· The rationale for the level of staffing and resources being provided for the anti-fraud investigative unit which may include objective criteria, such as the number of policies written, the number of claims received on an annual basis, the volume of suspected fraudulent claims detected on an annual basis, an assessment of the optimal caseload that one investigator can handle on an annual basis, and other factors.

Effective January 1, 2018

--- HB 435, a bill that revises rules regarding international banking corporations, including issues related to licensure and record-keeping.

--- HB 437, a bill that is tied to HB 435 and creates public-records exemptions involving the Office of Financial Regulation. The exemptions deal with new entities known as “international trust entities” and “qualified limited service affiliates.” It prohibits the Office of Financial Regulation from releasing such things as personal identifying information of customers or shareholders.

--- SB 800, a bill that requires health insurers and health maintenance organizations to offer “medication synchronization” to customers at least once a year. Under medication synchronization, customers are able to align refill dates of prescriptions.

--- HB 911, a bill that makes a series of changes related to rules and licensure for public insurance adjusters.

The News Service of Florida 01/02/2018


















Chapter 3 Contents



Department Communication
Guaranty Association
Insurance Law &
Pertinent Federal Law Review Pertinent to Florida Licensed Insurance Professionals




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