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


















Chapter 3 Contents



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




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