The Florida Senate

“Gross written premiums” means the total amount of premiums paid by the consumer for the entire period of the legal expense insurance contract, including commissions.

“Insurer” means any person authorized to conduct a life or casualty insurance business in this state or a legal expense insurance corporation authorized under ss. 642.011-642.049.

“Legal expense insurance” means a contractual obligation to provide specific legal services, or to reimburse for specific legal expenses, in consideration of a specified payment for an interval of time, regardless of whether the payment is made by the beneficiaries individually or by a third person for them, but does not include the provision of, or reimbursement for, legal services incidental to other insurance coverages.

Retainer contracts made by attorneys at law with individual clients with fees based on estimates of the nature and amount of services to be provided to the specific client and similar contracts made with a group of clients involved in the same or closely related legal matters.

Any lawyer referral service authorized by The Florida Bar.

The furnishing of legal assistance by labor unions or other employee organizations to their members in matters relating to employment or occupation.

The furnishing of legal assistance to members, or their dependents, by a church, cooperative, educational institution, credit union, or organization of employees, in which the organization contracts directly with a lawyer or law firm for the provision of legal services and the administration and marketing of such legal services are conducted wholly by the organization.

Employee welfare benefit plans to the extent that state laws are superseded by the Employee Retirement Income Security Act of 1974, 29 U.S.C. s. 1144, provided evidence of exemption from state laws is shown to the office.

Any number of corporations or adult natural persons may organize a legal expense insurance corporation under the law of this state relating to corporations generally.

The articles of incorporation shall conform to the requirements applicable to corporations, and, in addition:

It is unlawful for any person to engage in a legal expense insurance business in this state without a valid certificate of authority issued by the office, pursuant to ss. 642.011-642.049, except that a domestic, foreign, or alien insurer authorized to transact life or casualty insurance in this state may transact legal expense insurance provided it complies with the applicable provisions of ss. 642.011-642.049. A certificate of authority under ss. 642.011-642.049 may be issued only to a legal expense insurance corporation.

The corporation shall file with the office an application for a certificate of authority upon a form adopted by the commission and furnished by the office, which shall include or have attached the following:

Copies of the documents filed pursuant to paragraphs (f) and (i) of subsection (2) shall be filed with The Florida Bar within 5 days after filing with the office.

The office shall issue a certificate of authority only to a legal expense insurance corporation, provided it is satisfied that:

To assure the faithful performance of its obligations in the event of insolvency, each legal expense insurance corporation, prior to the issuance of its certificate of authority, shall deposit and maintain with the department securities of the type eligible for deposit by insurers under s. 625.52, which securities shall be held in trust and shall have at all times a market value in the amount specified. Whenever the market value of the securities deposited with the department is less than 95 percent of the amount of the deposit required, the insurer shall deposit additional securities or otherwise increase the deposit to the amount required. The initial deposit for a corporation shall be in the amount of $50,000 for at least the first full year of operation. The amount of the initial deposit shall be adjusted annually thereafter on October 1 as follows:

In lieu of any deposit of securities required under subsection (1) and subject to the approval of the office, a legal service insurance corporation may file with the office a surety bond issued by an authorized surety insurer. The bond shall be for the same purpose as the deposit in lieu of which it is filed. The office may not approve any bond under the terms of which the protection afforded against insolvency is not equivalent to the protection afforded by those securities provided for in subsection (1).

Securities or bonds deposited pursuant to this section shall be for the benefit of, and subject to, action thereon by any person sustaining an actionable injury due to the failure of the corporation to faithfully perform its obligations to its insureds in the event of insolvency or impairment of any legal expense insurance corporation.

The state shall be responsible for the safekeeping of all securities deposited with the department under ss. 642.011-642.049. Such securities are not, on account of being in this state, subject to taxation, but shall be held exclusively and solely to guarantee the performance by the legal expense insurance corporation of its obligations to its insureds.

Such deposit or bond shall be maintained unimpaired as long as the legal expense insurance corporation continues to do business in this state. Whenever the corporation ceases to do business in this state and furnishes proof satisfactory to the office that it has discharged or otherwise adequately provided for all its obligations to its insureds in this state, the office and department shall release the deposited securities to the parties entitled thereto, on presentation of the receipts of the department for such securities, or shall release the bond filed with it in lieu of such deposit.

The office, upon written request of the legal expense insurance corporation, may reduce the amount of deposit or bond required under subsection (1) if it finds that the policyholders and certificateholders of the corporation are adequately protected by:

The office may at any time enter an order modifying the amount of the deposit or bond specified under subsection (1) or subsection (2) if it finds that there has been a substantial change in the facts on which the determination was based.

Legal expense insurance may be written as individual, group, blanket, or franchise insurance. Each contractual obligation for legal expense insurance shall be evidenced by a policy. Each person insured under a group policy shall be issued a certificate of coverage.

No policy or certificate of legal expense insurance may be issued in this state unless a copy of the form has been filed with and approved by the office pursuant to s. 627.410.

The office shall not approve any policy or certificate form which does not meet the following requirements:

The office may disapprove a policy or certificate form if it finds that the form:

Ten thousand dollars; or

Ten percent of the applicant’s total liabilities.

Ten thousand dollars; or

Ten percent of the insurer’s total liabilities.

Contracts made between the insurer and participating attorneys, management contracts, or contracts with providers of other services covered by the legal expense insurance policy shall be filed with and approved by the office.

An insurer shall annually report to the office the number and geographical distribution of attorneys and providers of other services covered by the legal expense insurance policy with whom it maintains contractual relations and the nature of the relations. The office may require more frequent reports from an insurer or group of insurers.

Every legal expense insurance corporation must pay to the office the following fees:

For any service not described in subsection (1), the fee is that prescribed in s. 624.501.

Chapter 624, administration and general provisions.

Chapter 625, accounting, investments, and deposits.

Chapter 626, part IX, unfair insurance trade practices.

Chapter 627, part I, rates and rating organizations, and part II, the insurance contract.

Section 628.4615, specialty insurers; acquisition of controlling stock, ownership interest, assets, or control; merger or consolidation.

Chapter 631, insurer insolvency; guaranty of payment.

The certificate of authority of an insurer, whether issued pursuant to this chapter or the insurance code, may be revoked or suspended, or the office may refuse to renew a certificate of authority, if the office determines that the insurer:

The office may, pursuant to s. 120.60, in its discretion and without advance notice or hearing thereon, immediately suspend the certificate of any insurer, whether such certificate was issued pursuant to this chapter or the insurance code, if it finds that one or more of the following circumstances exist:

Suspension or revocation of a certificate of authority of an insurer shall be by order of the office mailed to the corporation by registered or certified mail. The office also shall promptly give notice of such suspension or revocation to the sales representatives in this state of the corporation who are of record in the office of the office. The insurer shall not solicit or write any new contracts in this state during the period of any such suspension or revocation.

In its discretion, the office may cause notice of the revocation or suspension to be published in one or more newspapers of general circulation published in this state.

Suspension of an insurer’s certificate of authority shall be for such period, not to exceed 1 year, as is fixed in the order of suspension, unless such suspension or the order upon which the suspension is based is modified, rescinded, or reversed.

During the period of suspension, the insurer shall file its annual statement and pay fees as required under this chapter as if the certificate of authority had continued in full force.

Upon expiration of the period of suspension, if within such period the certificate of authority has not otherwise terminated, the certificate of authority shall automatically be reinstated, unless the causes of the suspension have not been removed or the insurer is otherwise not in compliance with the requirements of this chapter.

Upon reinstatement of an insurer’s certificate of authority following suspension, the authority of the sales representatives in this state to represent the insurer shall be reinstated.

If the office finds that one or more grounds exist for the revocation or suspension of a certificate of authority issued under this chapter, the office may, in lieu of such suspension or revocation, impose a fine upon the insurer.

With respect to any nonwillful violation, such fine shall not exceed $1,000 per violation. In no event shall such fine exceed an aggregate amount of $5,000 for all nonwillful violations arising out of the same action. When an insurer discovers a nonwillful violation, the insurer shall correct the violation and, if restitution is due, make restitution to all affected persons. Such restitution shall include interest at 12 percent per year from either the date of the violation or the date of inception of the affected person’s policy, at the insurer’s option. The restitution may be a credit against future premiums due provided that the interest on the restitution will accumulate until the premiums are due. If the amount of restitution due to any person is $50 or more and the insurer wishes to credit it against future premiums, the insurer shall notify such person that it wishes to do so but that the person may receive a check instead of a credit. If the credit is on a policy which is not renewed, the insurer shall pay the restitution to the person to whom it is due.

With respect to any knowing and willful violation of an order or rule of the office or commission or a provision of this chapter, the office may impose a fine upon the insurer in an amount not to exceed $5,000 for each such violation. In no event shall such fine exceed an aggregate amount of $25,000 for all knowing and willful violations arising out of the same action. In addition to such fines, such insurer shall make restitution when due in accordance with the provisions of subsection (2).

The failure of an insurer to make restitution when due as required under this section constitutes a willful violation of this chapter. However, if an insurer in good faith is uncertain as to whether any restitution is due or as to the amount of such restitution, it shall promptly notify the office of the circumstances, and the failure to make restitution pending a determination thereof will not constitute a violation of this chapter.

All funds belonging to an insurer or other person received by a sales representative in transactions under his or her license and appointment shall be trust funds so received by such representative in a fiduciary capacity; and the representative, in the applicable regular course of business, shall account for and pay the same to the insurer or other person entitled thereto.

Any sales representative who, not being entitled thereto, diverts or appropriates such funds or any portion thereof to his or her own use commits theft as provided in s. 812.014.

Material misstatement, misrepresentation, or fraud in obtaining or attempting to obtain a license or appointment.

The license or appointment is willfully used, or to be used, to circumvent any of the requirements or prohibitions of ss. 642.011-642.049.

Willful misrepresentation of any legal expense contract or willful deception with regard to any such contract, performed either in person or by any form of dissemination of information or advertising.

In the adjustment of claims, material misrepresentation to a contract holder or other interested party of the terms and coverage of a contract, with the intent and for the purpose of settling such claim on less favorable terms than those provided in and contemplated by the contract.

Demonstrated lack of fitness or trustworthiness to engage in the business of legal expense insurance.

Demonstrated lack of adequate knowledge and technical competence to engage in the transactions authorized by the license or appointment.

Fraudulent or dishonest practices in the conduct of business under the license or appointment.

Misappropriation, conversion, or unlawful withholding of moneys belonging to an insurer or other person and received in the conduct of business under the license or appointment.

Unlawfully rebating, or attempting to unlawfully rebate, or unlawfully dividing, or offering to divide, his or her commission with another.

Willful failure to comply with, or willful violation of, any proper order or rule of the office, commission, or department or willful violation of any provision of ss. 642.011-642.049.

Being found guilty of, or pleading guilty or nolo contendere to, a felony or a crime punishable by imprisonment of 1 year or more under the law of the United States of America or any state thereof or under the law of any other country which involves moral turpitude, without regard to whether a judgment of conviction has been entered.

Any cause for which granting of the license or appointment could have been refused had it been known to the department at the time of application.

Violation of any provision of ss. 642.011-642.049, or of any other law applicable to the business of legal expense insurance in the course of dealings under the license or appointment.

Violation of any lawful order or rule of the office, commission, or department.

Failure or refusal to pay over, upon demand, to any insurer he or she represents, or has represented, any money which belongs to the insurer.

In the conduct of business under the license or appointment, having engaged in unfair methods of competition or in unfair or deceptive acts or practices, as such methods, acts, or practices are defined under part IX of chapter 626, or having otherwise shown himself or herself to be a source of injury or loss to the public or detrimental to the public interest.

Having been found guilty of, or having pled guilty or nolo contendere to, a felony or a crime punishable by imprisonment of 1 year or more under the law of the United States of America or any state thereof or under the law of any other country, whether or not a judgment of conviction has been entered.

If any sales representative is convicted by a court of a violation of any provision of ss. 642.011-642.049, the license and appointment of such individual shall thereby be deemed to be immediately revoked without any further procedure relative thereto by the department.

Whenever it appears that any licensed insurance agent has violated the provisions of ss. 642.011-642.049, or if any grounds listed in s. 642.041 or s. 642.043 exist as to such agent, the department may take such action as is authorized by the insurance code for a violation of the insurance code by such agent, or such action as is authorized by this chapter for a violation of this chapter by a sales representative.

If, pursuant to procedures provided for in ss. 642.011-642.049, it is found that one or more grounds exist for the suspension or revocation of, or refusal to renew or continue, any license or appointment issued under ss. 642.011-642.049, and except when such suspension, revocation, or refusal is mandatory, an order may be entered imposing upon the licensee or appointee, in lieu of such suspension, revocation, or refusal, an administrative penalty for each violation in the amount of $100 or, in the event of willful misconduct or willful violation on the part of the licensee or appointee, an administrative fine of $500. The administrative penalty may be augmented in amount by an amount equal to any commissions received by or accruing to the credit of the licensee or appointee in connection with any transaction to which the grounds for suspension, revocation, or refusal related.

The order may allow the licensee or appointee a reasonable period not to exceed 30 days, within which to pay to the department or office the amount of the penalty so imposed. If the licensee or appointee fails to pay the penalty in its entirety to the department or office within the period so allowed, the license or appointment of the licensee or appointee shall stand suspended or revoked, or renewal or continuation may be refused, as the case may be, upon expiration of such period and without any further proceedings.

Any person damaged by a violation of the provisions of this chapter may bring a civil action against a person violating such provisions in the circuit court of the county in which the alleged violator resides, or has his or her principal place of business, or in the county wherein the alleged violation occurred. Upon adverse adjudication, the defendant shall be liable for actual damages or $500, whichever is greater, together with court costs and reasonable attorney’s fees incurred by the plaintiff.

No punitive damages may be awarded under this section unless the acts giving rise to the violation occur with such frequency as to indicate a general business practice and these acts are:

Any person who pursues a claim under this subsection shall post in advance the costs of discovery. Such costs shall be awarded to the insurer if no punitive damages are awarded to the plaintiff.

As a condition precedent to bringing an action under this section, the department and the person against whom the action is to be brought shall be given notice of the violation. The notice shall state with specificity the facts which allegedly constitute the violation and the law which the plaintiff is relying upon. No action shall lie if, within 30 days thereafter, the damages are paid or the circumstances giving rise to the violation are corrected.

This section shall not be construed to authorize a class action suit against a legal expense insurance corporation or a civil action against the department, commission, or office or their employees.