Penalties & Enforcement Efforts — Chapter 2 — Florida Agent Ethics

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Florida’s 2002 Enforcement Law

Effective October 1, 2002, Florida-licensed insurance agents who sell unlicensed insurance could face a felony charge and lose their license under a new law enacted in the 2002 legislative session. To make agents aware of the problems caused by unauthorized insurers, the new law requires a discussion of unauthorized entities in all insurance education courses.

Florida’s Unauthorized Entities law enhanced the penalty for selling unauthorized insurance from a second-degree misdemeanor to a third-degree felony, punishable by up to five years in prison and a $5,000 fine per count. In addition, Florida law requires anyone who solicits, negotiates, or sells an insurance contract for an unauthorized insurer to be held financially responsible for unpaid claims.

30,000+

Floridians left with unpaid claims

$6M+

In unpaid claims from shut-down entities

$25,000

Reward offered for tips leading to conviction

In the recent past, the Department of Financial Services has shut down several entities selling unlicensed health insurance plans and two entities selling unauthorized medical malpractice insurance to health care providers. In conjunction with barring these entities from doing business in Florida, the department is investigating dozens of licensed agents for selling unauthorized insurance.

While investigating unlicensed entities, department regulators have determined that operators of unauthorized entities would not have been able to reach potential buyers without the assistance of licensed agents. Both employers and agents have been enticed by the low premiums unlicensed entities charge, but the rates are often not actuarially sound and money is not set aside for reserves.

Because unlicensed entities do not participate in a state guaranty fund, policyholders in unlicensed plans are usually left with unpaid claims when the businesses fold. The Department usually becomes aware of a plan’s termination when policyholders begin complaining about slow or no payment of claims — but by that time, there is little the Department can do to protect the “policyholders.”

Florida’s 2025 Enforcement Law Addition

Penalty for representing unauthorized insurer — §626.902

In addition to any other penalties provided in the insurance code:

(a) Licensed Insurance Agent

Any insurance agent licensed in this state who knowingly represents or aids an unauthorized insurer in violation of §626.901 commits a:

Felony Third Degree Felony

Prison Up to 5 years — §775.082

Fine Up to $5,000 — §775.083

(b) Any Other Person

Any person other than a licensed insurance agent who in this state represents or aids an unauthorized insurer in violation of §626.901 commits a:

Felony Third Degree Felony

Prison Up to 5 years — §775.082

Fine Up to $5,000 — §775.083

Any person who commits a subsequent violation of this section commits a:

Felony Second Degree Felony

Prison Up to 15 years — §775.082

Fine Up to $10,000 — §775.083

Enforcement Resources

The department has dedicated substantial resources to combating unauthorized insurance:

Bureau of Agent and Agency Investigations — 60 investigators available to look into potential violations and take appropriate administrative action against an agent’s license
Division of Insurance Fraud — more than 100 sworn law-enforcement investigators who can file criminal charges
Unauthorized Entities Section — dedicated to tracking and taking civil action against phony plans

The Department offers a reward of up to $25,000 for information leading to a conviction of those operating unauthorized insurance entities.

Summary of Consequences

Acting as an Insurer Without a Proper License

Conviction of a third-degree felony Florida Statutes §624.401
Liability for all unpaid claims Florida Statutes §626.901(2)
Suspension or revocation of all insurance licenses Florida Statutes §626.621, .611 and .6215

Aiding and Abetting an Unauthorized Insurer

Conviction of a third-degree felony Florida Statutes §626.902(1)
Liability for all unpaid claims Florida Statutes §626.901(2)
Suspension or revocation of all insurance licenses Florida Statutes §626.621, .611 and .6215

Complete the Chapter 2 Study Review

You have reached the end of Chapter 2. Please complete the study review before proceeding to Chapter 3.

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