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 floir.com/office/newsroom.aspx 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.

 

 

INSURANCE LAW AND UPDATES

 

New Florida Law Updates

 

2019 UPDATES

HB 29
Active Military Members, Veterans, and Their Spouses
House Bill 29 waives the prelicensing education requirement for active
military members, veterans, and their spouses who are currently in good
standing with the military or have been honorably discharged. These
individuals are also exempt from license application fees if they are
currently in good standing with the military or have been honorably
discharged within 24 months of application.
[Sec. 626.171, 732, 7851, 8311, 8417, 927 F.S.; effective July 1, 2018]

HB483—Advertising and Promotional Gifts
This bill modifies Florida’s unfair trade practices law regarding advertising
and promotional gifts.
Insurers and agents may give insureds, prospective insureds, and others
merchandise, gift cards, event tickets, or other items valued at $100 or less
per individual in any calendar year. For title insurance agents and agencies,
a $25 limit applies. Insurers and agents may also make charitable
contributions on behalf of insureds or prospective insureds of up to $100
per individual in any calendar year. [Sec. 626.9541 F.S.; effective July 1,
2018]

 

2020 UPDATES

HB 7065 – Assignment Of Benefits Reform
Provides for substantial changes in the way insurance benefits may be assigned to third parties. Defines “assignment agreement” and establishes requirements for the execution, validity, and effect of such an agreement; Transfers certain pre-lawsuit duties under the insurance contract to the assignee and shifts the burden to the assignee to prove that any failure to carry out such duties has not limited the insurer’s ability to perform under the contract; Requires each insurer to report specified data on claims paid in the prior year under assignment agreements by Jan. 30, 2022, and each year thereafter; allows an insurer to make available a policy prohibiting assignment, in whole or in part, under certain conditions; Revises the state’s one-way attorney fee statute to incorporate an attorney fee structure in determining the fee amount awarded in suits by an assignee against an insurer; requires service providers to give an insurer and the consumer prior written notice of at least 10 business days before filing suit on a claim.  Takes Effect: July 1, 2019

2021 UPDATES

SB 292: Insurance Claims Data

Defining the terms “loss run statement” and “provide”; requiring authorized insurers to provide insureds a loss run statement within 15 days after receipt of the insured’s written request and provide notice to the agent of record. No fees can be charged for providing this information once, annually.
This section defines a loss runs statement as a report that contains the following information about an insurance policy:
· The policy number
· The period of coverage
· The number of claims
· The paid losses on all claims
· The date of each loss

Loss run statements do not include supporting claim file documentation such as the following:
· Copies of claim files
· Investigation reports
· Evaluation statements
· Insureds’ statements
· Documents protected by a common law or statutory privilege

The loss run statement that will be given to an insured is required to contain a claims history with the insurer that covers the past five years or the complete claims history if it is less than five years. Insurers are not required to provide loss reserve information. Effective Date: 1/1/2021

 

SB 1606: Insurance Administration

This bill:
--prohibits the DFS and the Office of Insurance Regulation (OIR) from disseminating aggregated information if it contains trade secret information that can be individually extrapolated;
--requires authorized insurers to file with the Department of Financial Services (DFS) the name and email address of the person who will receive civil remedy notices and requires the DFS to provide civil remedy notices to the designated e-mail address;
--changes the amount of time the applicable statute of limitations for statutory bad faith actions is tolled pursuant to the civil remedy notice from 65 days after mailing of the notice to 60 days after the insurer receives the notice from the DFS. Effective Date:  July 1, 2020.

 

2022 UPDATES

HB 1209 - Department of Financial Services
The bill modifies several areas regulated by the Department of Financial Services including:

- Division of Public Assistance Fraud: establishes DPAF as a criminal justice agency.
-Changes the mandatory continuing education (CE) update course for all insurance agents, customer representatives, and insurance adjusters from a five-hour course every two years to a four-hour course every two years. This language does not change the total number of CE hours that insurance agents, customer representatives, and adjusters must obtain every two years during their compliance period. This provision is effective for compliance periods that end January 1, 2022, or later, and for any agent/customer representative with such a compliance period who has already taken the five-hour course, credit will be given for the four-hour course plus one hour of elective credit.
-Protecting Proprietary Business Information: prohibits a person from requiring an insurance agent or agency to provide the replacement cost estimator or other proprietary underwriting information as a condition to extending credit secured by real property, nor may an insurance agent or agency provide this information.
Effective Date: July 1, 2021.

Senate Bill 1598 - Agency Package - PROTECTING INSURANCE POLICYHOLDERS

-Requires an entity that is licensed or issued a certificate of authority by the Department of Financial Services (DFS) or the Florida Office of Insurance Regulation (OIR) to respond to document requests from the DFS Division of Consumer Services.
-Revises the Licensing Procedures Law's prohibition against unlicensed activity to include knowingly aiding or abetting an unlicensed person in transacting insurance or otherwise engaging in insurance activities in this state without a license. A person who does so commits a thirddegree felony.
-Authorizes DFS to suspend, revoke, or refuse to issue the license of an insurance agent, adjuster, customer representative, service representative, or managing general agent that makes a consumer's personal financial or medical information available to the public, or initiates in-person or telephone solicitation with a prospective customer
after 9 p.m. or before 8 a.m., unless the customer requests otherwise.
-Prohibits the sale of industrial life insurance policies, effective July 1, 2021.
-Expands the definition of sliding, a practice that violates the Unfair Insurance Trade Practices.
-Requires insurance agencies whose name contains the word “Medicare” or Medicaid” to delete those words from the agency name no later than June 30, 2023.
Effective Date: Upon becoming law (06/16/2021, unless otherwise noted).

Senate Bill 1120 - PUSHING BACK AGAINST UNSOLICITED TELEMARKETNG

-Requires all sales telephone calls, text messages, and direct-to-voicemail transmissions to have the receiving consumer's prior express written consent if the call will be made using an automated machine to dial the recipient's phone number or will play a recorded message upon connection with the recipient.
-Amends the Florida Telemarketing Act to prohibit telephone sellers or salespersons from calling consumers outside of the hours between 8 a.m. and 8 p.m. in the consumer's time zone and prohibits telephone sellers or salespersons from contacting consumer on the same subject matter more than three times in a 24-hour period. The bill also clarifies that calls made through an automated dialer or recorded message are subject to the same prohibitions. Effective Date: July 1, 2021

 

UPDATES 2023

SB-156 – Loss Run Statements
Reduces from 5 years to 3 years the claims history that must be included within a loss run statement; requires an admitted and a non-admitted personal lines insurer to provide loss run statements within 15 days of an insureds request after first providing information on how to obtain a loss run statement from a consumer reporting agency; excludes admitted and non-admitted life insurers from the requirement to provide a loss run statement.
Effective June 24, 2022

UPDATES 2024

House Bill 1185 - Consumer Protection
HB 1185 is a legislative bill focused on revising and enhancing consumer protection laws in the state of Florida. The bill, sponsored by the Commerce Committee, and the Insurance and Banking Subcommittee, seeks to address a variety of areas related to consumer rights and regulations. This summary provides an overview of the key provisions within the bill and their implications for consumers and various industries.

Annuity Investments:
CS/CS/HB1185 covers regulations related to annuity investments. The bill adopts the National Association of Insurance Commissioners (NAIC) Suitability in Annuity Transactions Model Regulation (2020), which broadens the scope of requirements for sales or recommendations of annuities. The bill places a duty on insurers and agents to act in the best interest of consumers, emphasizing care, disclosure, conflict of interest, and recordkeeping. Certain exceptions are provided, and the bill introduces training requirements for agents involved in annuity sales.

CS/CS/HB 487 - Department of Financial Services

CS/CS/HB 487 is a legislative bill aimed at revising various programs and provisions within the Florida Department of Financial Services (DFS). The bill encompasses a wide range of changes that impact different aspects of financial regulation, insurance, and related areas. This summary provides an overview of the key provisions within the bill and their implications.

Investigations and Prosecutions:

The bill amends existing provisions to empower the Division of Investigative and Forensic Services (DIFS) within the DFS to conduct investigations when there is reason to believe a violation of Florida or federal criminal law has occurred. This expansion includes the authority to initiate investigations, rather than merely conduct them. Moreover, it extends the jurisdiction of the Chief Financial Officer (CFO) and State Fire Marshal to initiate investigations. Additionally, the DFS gains the authority to refer both state and federal criminal violations for prosecution.

Anti-Fraud Reward Program:

The bill expands the list of insurance fraud violations for which the DFS can offer rewards of up to $25,000. The expanded list includes violations related to nursing homes, forgery, racketeering, theft, false insurance claims, money laundering, and more. Importantly, the bill eliminates the requirement for a conviction to award a reward under this program, potentially encouraging more individuals to report fraudulent activities.

CS/CS/HB 487 includes multiple modifications related to the licensure of insurance agents and agencies. It eliminates certain application filing fees, changes the rules for taking fingerprints of applicants, and empowers the DFS to adopt rules for specific violations and penalties. The bill also revises definitions, adds license categories, and alters grounds for disciplinary actions against insurance representatives.

Insurer Insolvency? Rehabilitation and Liquidation:

CS/CS/HB 487 provides the DFS with authority in receivership proceedings to transfer an insolvent insurer's book of business to a solvent assuming insurer and allows the sharing of records with prospective assuming insurers.

 

UPDATES 2025

House Bill 1093 titled Florida Uniform Fiduciary Income and Principal Act is a Committee Substitute bill that revised the provisions of the "Florida Uniform Principal and Income Act governing trusts, estates, life estates, and other term interests."

Multiple sections of Florida Statute F.S. chapter 738 are amended by HB 1093; however, only sections will be described below that may relate or be applicable to a general category of insurance. Here are the following descriptions of the enactments to F.S. chapter 738 as a result of HB 1093.

Section 738.302 specifies the applicability of certain specified provisions and outlines exemptions regarding the apportionment of receipts and disbursements when a decedent dies or income interest begins. It authorizes the conversion of an income trust to a unitrust and restricts certain provisions to trusts that are beneficiaries of an estate. It provides that a fiduciary acting in good faith is not liable to a person affected by a certain action or inaction.

Section 738.501 amends the wording in relation to Principal receipt to specify how a fiduciary must make disbursements from income. Among other requirements, a fiduciary must disburse from income a premium on insurance covering loss of a principal asset or income from or use of the asset.

Section 738.602 regarding Payments from deferred compensation plans, annuities, retirement plans or accounts; provides that certain beneficiaries of non-unitrusts are entitled to receive a specified share of net income. It outlines the process for determining each beneficiary's share of net income based on their fractional interest in the principal assets immediately before the distribution date. It specifies that a beneficiary's fractional interest is reduced by certain factors, including any liabilities of the estate or trust. It further provides for the method for handling disproportionate distributions, the maintenance of records for undistributed income, and other matters.

Section 738.203 speaks to a fiduciary's power to adjust between income and principal if the adjustment assists in administering the trust or estate impartially. It provides that a fiduciary is not liable to another for an adjustment, or failure to adjust, between income and principal made in good faith. It requires the fiduciary to consider certain relevant factors when considering an adjustment and prohibits a fiduciary from exercising or considering an adjustment if certain conditions exists. It authorizes the appointment of a co-fiduciary to exercise the adjustment power under specified circumstances and outlines requirements and powers for any releases and delegations. It clarifies the applicability of certain provisions and adds new accountability procedures including certain reporting requirements.

Section 738.407 regarding a fiduciary's requirement regarding allocation to principal the proceeds of a life insurance policy or other contract received by the fiduciary as beneficiary, including a contract that insures against damage to, destruction of, or loss of title to an asset. The fiduciary must allocate dividends on an insurance policy to income to the extent that premiums on the policy are paid from income and to principal to the extent premiums on the policy are paid from principal. Proceeds from contracts insuring the fiduciary against loss of occupancy or other use by a current income beneficiary, income, or profits from a business must be allocated to income.

Section 738.409 regarding deferred compensation, annuity, or similar payment; defines terms. It specifies the way a fiduciary may determine incomes of separate funds and provides that a fiduciary is not liable for good faith reliance upon any valuation supplied by the person or persons in possession of the fund. It outlines the duties of a fiduciary of a marital trust and other trusts and requires a fiduciary of a non-separate fund to calculate internal income in a specified manner.

Effective on January 1, 2025.

Pertinent Federal Law Review Pertinent to Florida Licensed Insurance Professionals

 

Each state’s insurance director manages most insurance issues and products at the state level. There are, however, instances in which the state and federal governments work together, for example, Medicaid is a state and federally funded program.

State and Federal Relationship

There is a relatively new (3-years) Federal Insurance Office (FIO) that was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA), which, so far, has allowed states the same freedoms as before creation of the FIO.

The fall of the economy, during which we endured the exposure of an insurance industry debacle, played a significant role in Title V of the DFA. It created the FIO and appointed a director who had previously been the acting Insurance Director in Illinois, and an officer for the NAIC. This appointment allowed a voice for the state-run industry and, as the director said during his first press conference, the FIO has refrained from stepping into state lines. He can, however, intervene if a reasonable request is made. The FIO authorities extend to all lines of insurance except health and LTC insurances (except those lines of insurance included with life or annuity components).

 

Although the FIO states, “authority extends to all lines except health … “ we can hardly call the Affordable Care Act “health insurance without federal input!” We have been virtually hit over the head with volumes of Affordable Care Act documentation, rules, policies, and dates. The Act is set to run on a rolling calendar, which results in yearly changes to the rules you become accustomed, each time January 1st rolls around.

 

Registration for Index-Linked Annuities Act

This bill requires the Securities and Exchange Commission (SEC) to create a new form for the registration of index-linked annuities to ensure that a purchaser can make a knowledgeable decision.

The bill defines a registered index-linked annuity as an annuity that is deemed a security, that must be registered with the SEC, and that is issued by an insurance company subject to state supervision. Furthermore, the returns of these annuities:

1. are based on the performance of a specified benchmark index or rate, and
2. may be subject to a market value adjustment if amounts are withdrawn early.

 

 

 

 

 

 

 

 

 

 

 

 

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Chapter 3 Contents

 

 

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

 

 

 

Course Contents                 Contact an Instructor

Course Contents                 Contact an Instructor

 please be sure to complete this chapter’s  STUDY REVIEW

 

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