HB 0779 2004
1	A bill to be entitled
2	An act relating to insurance agents and agencies; amending
3	s. 626.016, F.S.; subjecting insurance agencies to
4	regulation by the Chief Financial Officer; amending s.
5	626.112, F.S.; deleting a contingent requirement for
6	insurance agency licensure; amending s. 626.171, F.S.;
7	specifying licensure application requirements for
8	insurance entities other than insurance agencies; deleting
9	a provision applying to insurance agencies; amending s.
10	626.172, F.S.; revising insurance agency licensure
11	application requirements; amending s. 626.191, F.S.;
12	clarifying repeated application provisions; amending s.
13	626.201, F.S.; clarifying a department-authorized
14	interrogatories provision; amending s. 626.342, F.S.;
15	including insurance agencies under provisions prohibiting
16	furnishing supplies to certain unlicensed agents and
17	imposing civil liability under certain circumstances;
18	amending s. 626.536, F.S.; including insurance agencies
19	under an action-reporting requirement; amending s.
20	626.561, F.S.; including insurance agencies under
21	provisions providing funds reporting and accounting
22	requirements and imposing criminal penalties; amending s.
23	626.572, F.S.; including insurance agencies under
24	provisions prohibiting rebating; amending s. 626.601,
25	F.S.; including insurance agencies under provisions
26	authorizing the department to inquire into improper
27	conduct; creating s. 626.602, F.S.; authorizing the
28	Department of Financial Services to disapprove the use of
29	certain names under certain circumstances; amending s.
30	626.6115, F.S.; providing an additional ground for the
31	department to take compulsory adverse insurance agency
32	license actions; amending s. 626.6215, F.S.; providing an
33	additional ground for the department to take discretionary
34	adverse insurance agency license actions; amending s.
35	626.641, F.S.; providing additional criteria for duration
36	of license suspensions or revocations; amending ss.
37	626.292 and 626.321, F.S.; correcting cross references;
38	providing an effective date.
39
40	Be It Enacted by the Legislature of the State of Florida:
41
42	Section 1. Subsection (1) of section 626.016, Florida
43	Statutes, is amended to read:
44	626.016 Powers and duties of department, commission, and
45	office.--
46	(1) The powers and duties of the Chief Financial Officer
47	and the department specified in this part apply only with
48	respect to insurance agents, insurance agencies,managing
49	general agents, reinsurance intermediaries, viatical settlement
50	brokers, customer representatives, service representatives, and
51	agencies.
52	Section 2. Subsection (7) of section 626.112, Florida
53	Statutes, is amended to read:
54	626.112 License and appointment required; agents, customer
55	representatives, adjusters, insurance agencies, service
56	representatives, managing general agents.--
57	(7)(a)No individual, firm, partnership, corporation,
58	association, or any other entity shall act in its own name or
59	under a trade name, directly or indirectly, as an insurance
60	agency, when required to be licensed by this subsection,unless
61	it complies with s. 626.172 with respect to possessing an
62	insurance agency license for each place of business at which it
63	engages in any activity which may be performed only by a
64	licensed insurance agent.
65	(b) An insurance agency shall, as a condition precedent to
66	continuing business, obtain an insurance agency license if the
67	department finds that, with respect to any majority owner,
68	partner, manager, director, officer, or other person who manages
69	or controls the agency, any person has, subsequent to the
70	effective date of this act:
71	1. Been found guilty of, or has pleaded guilty or nolo
72	contendere to, a felony in this state or any other state
73	relating to the business of insurance or to an insurance agency,
74	without regard to whether a judgment of conviction has been
75	entered by the court having jurisdiction of the cases.
76	2. Employed any individual in a managerial capacity or in
77	a capacity dealing with the public who is under an order of
78	revocation or suspension issued by the department. An insurance
79	agency may request, on forms prescribed by the department,
80	verification of any person's license status. If a request is
81	mailed within 5 working days after an employee is hired, and the
82	employee's license is currently suspended or revoked, the agency
83	shall not be required to obtain a license, if the unlicensed
84	person's employment is immediately terminated.
85	3. Operated the agency or permitted the agency to be
86	operated in violation of s. 626.747.
87	4. With such frequency as to have made the operation of
88	the agency hazardous to the insurance-buying public or other
89	persons:
90	a. Solicited or handled controlled business. This
91	subparagraph shall not prohibit the licensing of any lending or
92	financing institution or creditor, with respect to insurance
93	only, under credit life or disability insurance policies of
94	borrowers from the institutions, which policies are subject to
95	part IX of chapter 627.
96	b. Misappropriated, converted, or unlawfully withheld
97	moneys belonging to insurers, insureds, beneficiaries, or others
98	and received in the conduct of business under the license.
99	c. Unlawfully rebated, attempted to unlawfully rebate, or
100	unlawfully divided or offered to divide commissions with
101	another.
102	d. Misrepresented any insurance policy or annuity
103	contract, or used deception with regard to any policy or
104	contract, done either in person or by any form of dissemination
105	of information or advertising.
106	e. Violated any provision of this code or any other law
107	applicable to the business of insurance in the course of dealing
108	under the license.
109	f. Violated any lawful order or rule of the department.
110	g. Failed or refused, upon demand, to pay over to any
111	insurer he or she represents or has represented any money coming
112	into his or her hands belonging to the insurer.
113	h. Violated the provision against twisting as defined in
114	s. 626.9541(1)(l).
115	i. In the conduct of business, engaged in unfair methods
116	of competition or in unfair or deceptive acts or practices, as
117	prohibited under part IX of this chapter.
118	j. Willfully overinsured any property insurance risk.
119	k. Engaged in fraudulent or dishonest practices in the
120	conduct of business arising out of activities related to
121	insurance or the insurance agency.
122	l. Demonstrated lack of fitness or trustworthiness to
123	engage in the business of insurance arising out of activities
124	related to insurance or the insurance agency.
125	m. Authorized or knowingly allowed individuals to transact
126	insurance who were not then licensed as required by this code.
127	5. Knowingly employed any person who within the preceding
128	3 years has had his or her relationship with an agency
129	terminated in accordance with paragraph (d).
130	6. Willfully circumvented the requirements or prohibitions
131	of this code.
132	(c) An agency required to be licensed in accordance with
133	paragraph (b) shall remain so licensed for a period of 3 years
134	from the date of licensure unless the license is suspended or
135	revoked in accordance with law. The department may revoke or
136	suspend the agency authority to do business for activities
137	occurring during the time the agency is licensed, regardless of
138	whether the licensing period has terminated.
139	(d) Notwithstanding the provisions of this subsection, no
140	insurance agency shall be required to apply for an agency
141	license if such agency can prove to the department that:
142	1. The agency is severing its relationship with each
143	majority owner, partner, manager, director, officer, or other
144	person who managed or controlled such agency and who violated
145	any of the provisions of paragraph (b).
146	2. No such majority owner, partner, manager, director,
147	officer, or other person who managed such agency is to be
148	affiliated with such agency in any capacity for a period of 3
149	years from the date of such severance.
150	Section 3. Section 626.171, Florida Statutes, is amended
151	to read:
152	626.171 Application for license as agent, customer
153	representative, adjuster, service representative, managing
154	general agent, or reinsurance intermediary.--
155	(1) The department or office shall not issue a license as
156	agent, customer representative, adjuster, insurance agency,
157	service representative, managing general agent, or reinsurance
158	intermediary to any person except upon written application
159	therefor filed with it, qualification therefor, and payment in
160	advance of all applicable fees. Any such application shall be
161	made under the oath of the applicant and be signed by the
162	applicant. Beginning November 1, 2002,The department shall
163	accept the uniform application for nonresident agent licensing.
164	The department may adopt revised versions of the uniform
165	application by rule.
166	(2) In the application, the applicant shall set forth:
167	(a) His or her full name, age, social security number,
168	residence address, business address, and mailing address.
169	(b) Proof that he or she has completed or is in the
170	process of completing any required prelicensing course.
171	(c) Whether he or she has been refused or has voluntarily
172	surrendered or has had suspended or revoked a license to solicit
173	insurance by the department or by the supervising officials of
174	any state.
175	(d) Whether any insurer or any managing general agent
176	claims the applicant is indebted under any agency contract or
177	otherwise and, if so, the name of the claimant, the nature of
178	the claim, and the applicant's defense thereto, if any.
179	(e) Proof that the applicant meets the requirements for
180	the type of license for which he or she is applying.
181	(f) Such other or additional information as the department
182	or office may deem proper to enable it to determine the
183	character, experience, ability, and other qualifications of the
184	applicant to hold himself or herself out to the public as an
185	insurance representative.
186	(3) An application for an insurance agency license shall
187	be signed by the owner or owners of the agency. If the agency is
188	incorporated, the application shall be signed by the president
189	and secretary of the corporation.
190	(3)(4)Each application shall be accompanied by payment of
191	any applicable fee.
192	(4)(5)An application for a license as an agent, customer
193	representative, adjuster, insurance agency, service
194	representative, managing general agent, or reinsurance
195	intermediary must be accompanied by a set of the individual
196	applicant's fingerprints, or, if the applicant is not an
197	individual, by a set of the fingerprints of the sole proprietor,
198	majority owner, partners, officers, and directors, on a form
199	adopted by rule of the department or commission and accompanied
200	by the fingerprint processing fee set forth in s. 624.501.
201	Fingerprints shall be used to investigate the applicant's
202	qualifications pursuant to s. 626.201. The fingerprints shall be
203	taken by a law enforcement agency or other department-approved
204	entity.
205	(5)(6)The application for license filing fee prescribed
206	in s. 624.501 is not subject to refund.
207	(6)(7)Pursuant to the federal Personal Responsibility and
208	Work Opportunity Reconciliation Act of 1996, each party is
209	required to provide his or her social security number in
210	accordance with this section. Disclosure of social security
211	numbers obtained through this requirement shall be limited to
212	the purpose of administration of the Title IV-D program for
213	child support enforcement.
214	Section 4. Section 626.172, Florida Statutes, is amended
215	to read:
216	626.172 Application for insurance agency license.--
217	(1) The department may issue a license as an insurance
218	agency to any person only after such person files a written
219	application with the department, qualifies for such license, and
220	pays all applicable fees in advance. If any majority owner,
221	partner, officer, or director of an insurance agency:
222	(a) Has been found guilty of, or has pleaded guilty or
223	nolo contendere to, a felony relating to the business of
224	insurance in this state or any other state or federal court,
225	regardless of whether a judgment of conviction has been entered
226	by the court having jurisdiction of such cases; or
227	(b) Has been denied a license relating to the business of
228	insurance, or has had his or her license to practice or conduct
229	any regulated profession, business, or vocation relating to the
230	business of insurance revoked or suspended, by this or any other
231	state, any nation, any possession or district of the United
232	States, or any court, or any lawful agency thereof;
233
234	the insurance agency and any subsidiary or branch thereof shall
235	obtain a license from the department pursuant to this section.
236	(2) An application for an insurance agency license shall
237	be signed by the owner or owners of the agency. If the agency is
238	incorporated, the application shall be signed by the president
239	and secretary of the corporation.The application for an
240	insurance agency license shall include:
241	(a) The name of each majority owner, partner, officer, and
242	director of the insurance agency.
243	(b) The residence address of each person required to be
244	listed in the application under paragraph (a).
245	(c) The name of the insurance agency and its principal
246	business address.
247	(d) The location of each agency office and the name under
248	which each agency office conducts or will conduct business.
249	(e) The name of each agent to be in full-time charge of an
250	agency office and specification of which office.
251	(f) Fingerprints of each owner of 10 percent or more of
252	voting securities, partner, officer, and director. The
253	fingerprints must be taken by a law enforcement agency or other
254	entity approved by the department and must be accompanied by the
255	fingerprint processing fee specified in s. 624.501. The name of
256	any person to whom subsection (1) applies.
257	(g) Such additional information as the department requires
258	by promulgated rule to ascertain the trustworthiness and
259	competence of persons required to be listed on the application
260	and to ascertain that such persons meet the requirements of this
261	code.
262	Section 5. Section 626.191, Florida Statutes, is amended
263	to read:
264	626.191 Repeated applications.--The failure of an
265	applicant to secure a license upon an application shall not
266	preclude the applicant him or herfrom applying again as many
267	times as desired, but the department or office shall not give
268	consideration to or accept any further application by the same
269	individual for a similar license dated or filed within 30 days
270	subsequent to the date the department or office denied the last
271	application, except as provided in s. 626.281.
272	Section 6. Subsection (1) of section 626.201, Florida
273	Statutes, is amended to read:
274	626.201 Investigation.--
275	(1) The department or office may propound any reasonable
276	interrogatories in addition to those contained in the
277	application, to any applicant for license or appointment, or on
278	any renewal, reinstatement, or continuation thereof, relating to
279	the applicant’s his or herqualifications, residence,
280	prospective place of business, and any other matter which, in
281	the opinion of the department or office, is deemed necessary or
282	advisable for the protection of the public and to ascertain the
283	applicant's qualifications.
284	Section 7. Subsections (1) and (2) of section 626.342,
285	Florida Statutes, are amended to read:
286	626.342 Furnishing supplies to unlicensed life, health, or
287	general lines agent prohibited; civil liability.--
288	(1) An insurer, a managing general agent, an insurance
289	agency,or an agent, directly or through any representative, may
290	not furnish to any agent any blank forms, applications,
291	stationery, or other supplies to be used in soliciting,
292	negotiating, or effecting contracts of insurance on its behalf
293	unless such blank forms, applications, stationery, or other
294	supplies relate to a class of business with respect to which the
295	agent is licensed and appointed, whether for that insurer or
296	another insurer.
297	(2) Any insurer, general agent, insurance agency,or agent
298	who furnishes any of the supplies specified in subsection (1) to
299	any agent or prospective agent not appointed to represent the
300	insurer and who accepts from or writes any insurance business
301	for such agent or agency is subject to civil liability to any
302	insured of such insurer to the same extent and in the same
303	manner as if such agent or prospective agent had been appointed
304	or authorized by the insurer or such agent to act in its or his
305	or her behalf. The provisions of this subsection do not apply to
306	insurance risk apportionment plans under s. 627.351.
307	Section 8. Section 626.536, Florida Statutes, is amended
308	to read:
309	626.536 Reporting of actions.--Each An agent and insurance
310	agencyshall submit to the department, within 30 days after the
311	final disposition of any administrative action taken against the
312	agent by a governmental agency in this or any other state or
313	jurisdiction relating to the business of insurance, the sale of
314	securities, or activity involving fraud, dishonesty,
315	trustworthiness, or breach of a fiduciary duty, a copy of the
316	order, consent to order, or other relevant legal documents. The
317	department may adopt rules implementing the provisions of this
318	section.
319	Section 9. Subsections (1) and (3) of section 626.561,
320	Florida Statutes, are amended to read:
321	626.561 Reporting and accounting for funds.--
322	(1) All premiums, return premiums, or other funds
323	belonging to insurers or others received by an insurance agency,
324	agent, customer representative, or adjuster in transactions
325	under the his or herlicense are trust funds received by the
326	licensee in a fiduciary capacity. An agent or insurance agency
327	shall keep the funds belonging to each insurer for which an
328	agent he or sheis not appointed, other than a surplus lines
329	insurer, in a separate account so as to allow the department or
330	office to properly audit such funds. The licensee in the
331	applicable regular course of business shall account for and pay
332	the same to the insurer, insured, or other person entitled
333	thereto.
334	(3) Any insurance agency,agent, customer representative,
335	or adjuster who, not being lawfully entitled thereto, either
336	temporarily or permanently diverts or misappropriates such funds
337	or any portion thereof or deprives the other person of a benefit
338	therefrom commits the offense specified below:
339	(a) If the funds diverted or misappropriated are $300 or
340	less, a misdemeanor of the first degree, punishable as provided
341	in s. 775.082 or s. 775.083.
342	(b) If the funds diverted or misappropriated are more than
343	$300, but less than $20,000, a felony of the third degree,
344	punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
345	(c) If the funds diverted or misappropriated are $20,000
346	or more, but less than $100,000, a felony of the second degree,
347	punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
348	(d) If the funds diverted or misappropriated are $100,000
349	or more, a felony of the first degree, punishable as provided in
350	s. 775.082, s. 775.083, or s. 775.084.
351	Section 10. Subsections (1) and (2) of section 626.572,
352	Florida Statutes, are amended to read:
353	626.572 Rebating; when allowed.--
354	(1) No insurance agency oragent shall rebate any portion
355	of a his or hercommission except as follows:
356	(a) The rebate shall be available to all insureds in the
357	same actuarial class.
358	(b) The rebate shall be in accordance with a rebating
359	schedule filed by the agent with the insurer issuing the policy
360	to which the rebate applies.
361	(c) The rebating schedule shall be uniformly applied in
362	that all insureds who purchase the same policy through the agent
363	for the same amount of insurance receive the same percentage
364	rebate.
365	(d) Rebates shall not be given to an insured with respect
366	to a policy purchased from an insurer that prohibits its agents
367	from rebating commissions.
368	(e) The rebate schedule is prominently displayed in public
369	view in the agent's place of doing business and a copy is
370	available to insureds on request at no charge.
371	(f) The age, sex, place of residence, race, nationality,
372	ethnic origin, marital status, or occupation of the insured or
373	location of the risk is not utilized in determining the
374	percentage of the rebate or whether a rebate is available.
375	(2) The insurance agency oragent shall maintain a copy of
376	all rebate schedules for the most recent 5 years and their
377	effective dates.
378	Section 11. Subsection (1) of section 626.601, Florida
379	Statutes, is amended to read:
380	626.601 Improper conduct; inquiry; fingerprinting.--
381	(1) The department or office may, upon its own motion or
382	upon a written complaint signed by any interested person and
383	filed with the department or office, inquire into any alleged
384	improper conduct of any licensed insurance agency,agent,
385	adjuster, service representative, managing general agent,
386	customer representative, title insurance agent, title insurance
387	agency, continuing education course provider, instructor, school
388	official, or monitor group under this code. The department or
389	office may thereafter initiate an investigation of any such
390	licensee if it has reasonable cause to believe that the licensee
391	has violated any provision of the insurance code. During the
392	course of its investigation, the department or office shall
393	contact the licensee being investigated unless it determines
394	that contacting such person could jeopardize the successful
395	completion of the investigation or cause injury to the public.
396	Section 12. Section 626.602, Florida Statutes, is created
397	to read:
398	626.602 Insurance agency names; disapproval.--The
399	department may disapprove the use of any true or fictitious name,
400	other than the bona fide natural name of an individual, by any
401	insurance agency on any of the following grounds:
402	(1) The name is an interference with or is too similar to a
403	name already filed and in use by another agency or insurer;
404	(2) The use of the name may mislead the public in any
405	respect;
406	(3) The name states or implies that the agency is an
407	insurer, motor club, or hospital service plan or is entitled to
408	engage in insurance activities not permitted under licenses held
409	or applied for;
410	(4) The name states or implies that the agency is an
411	underwriter. This subsection does not prevent a natural person
412	who is a life agent from describing himself or herself as an
413	underwriter or from using the designation "chartered life
414	underwriter" or who is a general lines agent from using the
415	designation "chartered property and casualty underwriter," if the
416	person is entitled to use such terms to describe himself or
417	herself; or
418	(5) The agency has already filed and not discontinued the
419	use of more than two names including the true name. This
420	subsection does not prevent a licensee who has lawfully purchased
421	or succeeded to the business or businesses of other licensees
422	from using for each such business not more than two additional
423	names, true or fictitious, consisting of names used by the
424	licensee’s predecessors in the conduct of such businesses.
425	Section 13. Section 626.6115, Florida Statutes, is amended
426	to read:
427	626.6115 Grounds for compulsory refusal, suspension, or
428	revocation of insurance agency license.--The department shall
429	deny, suspend, revoke, or refuse to continue the license of any
430	insurance agency if it finds, as to any insurance agency or as
431	to any majority owner, partner, manager, director, officer, or
432	other person who manages or controls such agency, that any
433	either one or bothof the following applicable grounds exist:
434	(1) Lack by the agency of one or more of the
435	qualifications for the license as specified in this code;.
436	(2) Material misstatement, misrepresentation, or fraud in
437	obtaining the license or in attempting to obtain the license; or
438	(3) Denial, suspension, or revocation of a license to
439	practice or conduct any regulated profession, business, or
440	vocation relating to the business of insurance by this state, any
441	other state, any nation, any possession or district of the United
442	States, any court, or any lawful agency thereof.
443	Section 14. Subsection (6) is added to section 626.6215,
444	Florida Statutes, to read:
445	626.6215 Grounds for discretionary refusal, suspension, or
446	revocation of insurance agency license.--The department may, in
447	its discretion, deny, suspend, revoke, or refuse to continue the
448	license of any insurance agency if it finds, as to any insurance
449	agency or as to any majority owner, partner, manager, director,
450	officer, or other person who manages or controls such insurance
451	agency, that any one or more of the following applicable grounds
452	exist:
453	(6) Failure to take corrective action or report a violation
454	to the department within 30 days after an individual licensee's
455	violation is known or should have been known by one or more of
456	the partners, officers, or managers acting on behalf of the
457	agency.
458	Section 15. Subsections (1) and (2) of section 626.641,
459	Florida Statutes, are amended to read:
460	626.641 Duration of suspension or revocation.--
461	(1) The department or office shall, in its order
462	suspending a license or appointment or in its order suspending
463	the eligibility of a person to hold or apply for such license or
464	appointment, specify the period during which the suspension is
465	to be in effect; but such period shall not exceed 2 years. The
466	license, appointment, or eligibility shall remain suspended
467	during the period so specified, subject, however, to any
468	rescission or modification of the order by the department or
469	office, or modification or reversal thereof by the court, prior
470	to expiration of the suspension period. A license, appointment,
471	or eligibility which has been suspended shall not be reinstated
472	except upon request for such reinstatement; but the department
473	or office shall not grant such reinstatement if it finds that
474	the circumstance or circumstances for which the license,
475	appointment, or eligibility was suspended still exist or are
476	likely to recur or if grounds exist to deny the license or
477	appointment pursuant to s. 626.611, s. 626.6115, s. 626.621, or
478	s. 626.6215.
479	(2) No person or appointee under any license or
480	appointment revoked by the department or office, nor any person
481	whose eligibility to hold same has been revoked by the
482	department or office, shall have the right to apply for another
483	license or appointment under this code within 2 years from the
484	effective date of such revocation or, if judicial review of such
485	revocation is sought, within 2 years from the date of final
486	court order or decree affirming the revocation. An applicant for
487	another license or appointment pursuant to this subsection must
488	qualify for licensure in the same manner as a first-time
489	applicant and is subject to denial of the application pursuant
490	to s. 626.611, s. 626.6115, s. 626.621, or s. 626.6215.The
491	department or office shall not, however, grant a new license or
492	appointment or reinstate eligibility to hold such license or
493	appointment if it finds that the circumstance or circumstances
494	for which the eligibility was revoked or for which the previous
495	license or appointment was revoked still exist or are likely to
496	recur; if an individual's license as agent or customer
497	representative or eligibility to hold same has been revoked upon
498	the ground specified in s. 626.611(12), the department or office
499	shall refuse to grant or issue any new license or appointment so
500	applied for.
501	Section 16. Paragraph (c) of subsection (2) of section
502	626.292, Florida Statutes, is amended to read:
503	626.292 Transfer of license from another state.--
504	(2) To qualify for a license transfer, an individual
505	applicant must meet the following requirements:
506	(c) The individual shall submit a completed application
507	for this state which is received by the department within 90
508	days after the date the individual became a resident of this
509	state, along with payment of the applicable fees set forth in s.
510	624.501 and submission of the following documents:
511	1. A certification issued by the appropriate official of
512	the applicant's home state identifying the type of license and
513	lines of authority under the license and stating that, at the
514	time the license from the home state was canceled, the applicant
515	was in good standing in that state or that the state's Producer
516	Database records, maintained by the National Association of
517	Insurance Commissioners, its affiliates, or subsidiaries,
518	indicate that the agent is or was licensed in good standing for
519	the line of authority requested.
520	2. A set of the individual applicant's fingerprints in
521	accordance with s. 626.171(4)(5).
522	Section 17. Paragraph (a) of subsection (2) of section
523	626.321, Florida Statutes, is amended to read:
524	626.321 Limited licenses.--
525	(2) An entity applying for a license under this section is
526	required to:
527	(a) Submit only one application for a license under s.
528	626.171. The requirements of s. 626.171(4)(5)shall only apply
529	to the officers and directors of the entity submitting the
530	application.
531	Section 18. This act shall take effect upon becoming a
532	law.