Florida Statutes, Rules and Regulations Common to All Lines

Who regulates what: the CFO, DFS, the Commission, OIR and OFR

Florida splits insurance regulation between two offices and one collegial body, and the 2-20 bank tests the split over and over.

The Department of Financial Services (DFS) is headed by the Chief Financial Officer, an elected member of the Cabinet (s. 20.121(1), F.S.). DFS regulates the people. It licenses, appoints and disciplines agents, agencies, customer representatives, adjusters and adjusting firms through its Division of Insurance Agent and Agency Services, and it takes consumer complaints through its Division of Consumer Services.

The Financial Services Commission is the Governor, the Attorney General, the Chief Financial Officer and the Commissioner of Agriculture sitting as a collegial body (s. 20.121(3), F.S.). Commission action is by majority vote consisting of at least three affirmative votes. The Commission is the agency head for two offices, and it appoints or removes each director by at least three affirmative votes with both the Governor and the Chief Financial Officer on the prevailing side.

The Office of Insurance Regulation (OIR) regulates the companies. Its jurisdiction is all activities concerning insurers and other risk-bearing entities, including licensing of insurers, rates, policy forms, market conduct, claims, issuance of certificates of authority, solvency, viatical settlements, premium financing and administrative supervision. Its director is the Insurance Commissioner, who is appointed by the Commission, not elected.

The Office of Financial Regulation (OFR) regulates banks, credit unions, other financial institutions, finance companies and the securities industry. On this exam it exists almost entirely as a wrong answer.

The hook that decides most of these items:

• OIR regulates the companies. DFS regulates the people.
• Certificate of authority, rate filing, form approval, solvency, market conduct: OIR.
• Agent or agency license, appointment, discipline, consumer complaint: DFS.
• Insurance Commissioner: appointed by the Commission. Chief Financial Officer: elected.

One deadline out of this section is heavily tested and it changed recently. Any person licensed, issued a certificate of authority, or made an eligible surplus lines insurer by the department or the office must respond in writing or electronically to the Division of Consumer Services within 14 days after receiving a written request for documents and information concerning a consumer complaint (s. 624.307(10)(b), F.S.). The response must address the issues and allegations raised and include the requested documents that are not privileged. The division may impose an administrative penalty of up to $5,000 per violation on a licensed entity and up to $1,000 per violation on a licensed individual.

Until July 1, 2023 the same paragraph gave 20 days, applied only to persons licensed or holding a certificate of authority, and capped penalties at $2,500 per violation for an entity with a tiered $250, then $500, then up to $1,000 for an individual. Chapter 2023-172, Laws of Florida, shortened the clock and raised the money. If your manual says 20 days, it predates that change.

Transacting insurance, certificates of authority, and the two ways to label an insurer

Start with the verb, because half the unlicensed-activity questions turn on it. Under s. 624.10(5), F.S., transact with respect to insurance includes solicitation or inducement, preliminary negotiations, effectuation of a contract of insurance, and the transaction of matters subsequent to effectuation and arising out of the contract.

Each of those is listed independently. Solicitation alone is transacting. Nothing has to be signed, no premium has to change hands, and nobody has to be paid. That is why an unlicensed person who describes benefits, compares products, makes a recommendation or completes an application has already transacted insurance, and why s. 626.112(1)(b), F.S., spells out those same acts as requiring a license.

Knowingly transacting insurance without a license, or knowingly aiding an unlicensed person in doing so, is a felony of the third degree (s. 626.112(10), F.S.).

Insurers get labeled on two entirely separate axes, and mixing them up is a designed trap.

Domicile is where the insurer was formed and it never changes (s. 624.06, F.S.):

• Domestic: formed under the laws of this state.
• Foreign: formed under the laws of any other state, district, territory or commonwealth of the United States.
• Alien: an insurer that is neither domestic nor foreign, which in practice means formed outside the United States.

Authorization is whether OIR has issued a certificate of authority (s. 624.09, F.S.). An authorized insurer holds a subsisting certificate of authority issued by the office; an unauthorized insurer is one that does not. A Georgia carrier writing lawfully in Florida is foreign and authorized at the same time. Alien does not mean unauthorized, and foreign does not mean out of the country.

No person may act as an insurer or transact insurance in Florida except as authorized by a subsisting certificate of authority (s. 624.401(1), F.S.). The criminal grading has two layers that candidates routinely collapse into one:

• Section 624.401(4)(a), F.S., makes a violation of subsection (1) a felony of the third degree, flat.
• Section 624.401(4)(b), F.S., displaces that flat grade for a person who acts as an insurer without a valid certificate, and grades by the premium collected: less than $20,000 is a third-degree felony with a mandatory minimum of 1 year; $20,000 or more but less than $100,000 is a second-degree felony with a mandatory minimum of 18 months; $100,000 or more is a first-degree felony with a mandatory minimum of 2 years.

On the producer side, s. 626.901(1), F.S., forbids acting as agent for, representing or aiding an insurer not then authorized to transact that insurance in Florida. The prohibition reaches solicitation, negotiation, dissemination of coverage or rate information, forwarding applications, delivering policies, inspecting risks, fixing rates, adjusting claims and collecting premium.

The consequence is personal and it is measured by the customer's loss, not by your commission. If the unauthorized insurer fails to pay a claim in whole or in part, any person who knew or reasonably should have known the contract violated the section and who solicited, negotiated, took the application for, or effectuated it is liable to the insured for the full amount of the claim or loss not paid (s. 626.901(2), F.S.). The contract itself is not rendered invalid (s. 626.901(3), F.S.), and the office or department may issue an immediate final order to cease and desist (s. 626.901(5), F.S.). Surplus lines business written under the Surplus Lines Law, ss. 626.913-626.937, F.S., is the recognized exception, along with independently procured coverage under s. 626.938, F.S.

One related trap sits in s. 626.342, F.S. An insurer, managing general agent, insurance agency or agent may not furnish blank forms, applications, stationery or other supplies to an agent for a class of business for which that agent is not licensed and appointed. If supplies are furnished and business is then accepted, the insurer is subject to civil liability to the insured to the same extent as if that person had actually been appointed. Florida protects the applicant by treating the placement as authorized rather than unwinding the coverage.

Getting the 2-20 license: qualifications, prelicensing, exam and temporary licenses

Section 626.731(1), F.S., sets the personal qualifications for a general lines agent. The department may not license anyone it finds untrustworthy or incompetent, and beyond that the applicant must be a natural person at least 18 years of age; a United States citizen or a legal alien with work authorization and a bona fide resident of this state; have a place of business located in Florida and be actively engaged in the business of insurance; not be seeking the license chiefly to write controlled business in violation of s. 626.730, F.S.; be qualified as to knowledge, experience or instruction under s. 626.732, F.S.; and have passed any examination required under s. 626.221, F.S. A resident license held in another state has to be cleared.

The knowledge requirement in s. 626.732, F.S., is three alternative paths, and all of them must be satisfied within the 4 years immediately preceding the application:

• Taught or successfully completed 200 hours of department-approved coursework in property, casualty, surety, health and marine insurance, 3 of those hours on the subject matter of ethics.
• Completed at least 1 year in responsible insurance duties as a substantially full-time bona fide employee in all lines of property and casualty insurance, with no coursework required.
• Completed at least 1 year of responsible insurance duties as a licensed and appointed customer representative, service representative or personal lines agent, plus 40 hours of approved coursework in the same subjects.

All of the coursework must include instruction on unauthorized entities engaging in the business of insurance. A person who holds the Chartered Property and Casualty Underwriter designation is not subject to s. 626.732, F.S., and the section also carries an exemption for qualifying servicemembers, veterans and their spouses on proper documentation.

Examination is required unless one of the exemptions in s. 626.221, F.S., applies. The ones that matter here: an applicant for a general lines agent, personal lines agent or all-lines adjuster license who holds the CPCU designation from the American Institute for Chartered Property Casualty Underwriters is exempt; an applicant with a qualifying insurance degree from an accredited institution is exempt; renewal applicants are exempt; temporary license applicants are exempt. The CLU designation supports an exemption on the life and health side, not for general lines. Even where an exemption applies, the department may still require an examination on the provisions of the Florida Insurance Code.

What the license lets you sell is defined by s. 626.311(1), F.S. A general lines agent qualifies for all property, marine, casualty and surety lines except bail bonds, which need a separate license under chapter 648, F.S. The same subsection adds a sentence candidates keep missing: the license of a general lines agent also covers health insurance. You do not need a 2-15 to write health as a 2-20. You do still need an appointment from the health insurer, because no agent may transact any class for which no appointment is in force of record with the department.

Temporary licensing under s. 626.175, F.S., is nonrenewable and runs for a period not to exceed 6 months. For general lines, it may be issued to an employee, a family member, a business associate or a personal representative of an agent who has died or who has become unable to perform because of military service, illness or other physical or mental disability. It terminates early when the absent agent returns to active conduct of the agency, when the affairs of the agency or estate are wound up, or when the temporary licensee qualifies for a regular license. The department may limit the authority of a temporary licensee, but nothing extends the 6 months and nothing converts the temporary license into a permanent one automatically.

Appointment: the half of your authority that is not the license

Section 626.112(1)(a), F.S., is the sentence the whole domain hangs on. No person may be, act as, or advertise or hold himself or herself out to be an insurance agent, insurance adjuster or customer representative unless he or she is currently licensed by the department and appointed by an appropriate appointing entity or person.

Two requirements, joined by and. A license is the state's permission to hold yourself out as an agent. An appointment is a specific insurer's or appointing entity's authorization to represent it. Neither substitutes for the other, and there is no grace period that lets a newly licensed agent write first and be appointed afterward.

Appointments do not expire on a fixed calendar. Under s. 626.381(1), F.S., an appointment continues in force until suspended, revoked or otherwise terminated, but it is subject to a renewal request filed by the appointing entity in the appointee's birth month as to natural persons, or the month the original appointment was issued as to entities, and every 24 months thereafter, accompanied by the renewal fees.

Read who does the filing. The appointing entity renews the appointment, not the licensee. That is the single most common wrong answer on renewal items, and it is often bundled with a correct 24-month cycle to make it look right.

A renewal request received before expiration takes effect without penalty. The department may in its discretion accept a late filing if the appointment, late filing, continuation and reinstatement fee accompanies the request, and s. 626.381(4), F.S., adds the detail that decides the harder items: late filing fees are paid by the appointing entity and may not be charged to the appointee.

Termination has three separate clocks and the exam mixes them deliberately.

• Notice to the agent: an appointing entity that intends to terminate must give the appointee at least 60 days' advance written notice, by personal service, mail or e-mail (s. 626.471(1), F.S.). Two things switch that off: a ground that would subject the appointee to suspension or revocation under s. 626.611 or s. 626.621, F.S., and a contrary term in the contract between the parties.
• Notice to the department: within 30 days after terminating the appointment, the appointing entity files written notice with the department together with a statement that it gave the appointee the notice required by subsection (1) (s. 626.471(2), F.S.).
• Reasons and facts: filed under s. 626.511, F.S. Where the appointment was terminated, the statement of reasons and facts is filed within 10 days after the notice of termination is filed; where the appointment simply was not continued or renewed, it is filed within 30 days after that notice.

Information, documents, records or statements furnished to the department under s. 626.511, F.S., are confidential and exempt from the public records disclosure requirement of s. 119.07(1), F.S. The appointee may also terminate the appointment on written or electronic notice, and the department or its administrator terminates the appointment on receiving notice (s. 626.471(4) and (5), F.S.).

Agencies, branch offices, the agent in charge, and who may do what in the office

An insurance agency is licensed in its own right. Section 626.112(7)(a), F.S., requires each place of business at which insurance is transacted by an agency to be licensed as an insurance agency under s. 626.172, F.S. The narrow exemption is for an agency owned and operated by a single licensed agent who does not employ others to transact insurance. Operating an unlicensed agency exposes the entity to an administrative penalty of up to $10,000 (s. 626.112(7)(c), F.S.).

A branch does not need its own agency license if three conditions hold under s. 626.112(7)(b), F.S.: it transacts business under the same name and federal tax identification number as the licensed agency, an agent in charge is designated for that location, and the address and telephone number of the branch are on file with the department within 30 days after insurance transactions begin there. Agency licensing is a DFS function, never an OIR function.

The agent in charge rules in s. 626.0428(4), F.S., generate a lot of questions:

• Each place of business must be in the active full-time charge of a licensed and appointed agent holding the required agent licenses to transact at least two of the lines of insurance being handled at that location. If only one line is handled there, the agent in charge must hold the license for that line.
• One licensed agent may be the agent in charge of additional branch locations, but only if no insurance activity requiring an agent's license occurs at a location when an agent is not physically present, and unlicensed employees there do not engage in activity requiring an agent or customer representative license.
• The agency files the agent in charge's name, license number and physical address with the department at its designated website. A change of designation is effective on notification, which must be provided within 30 days after the change.
• The agent in charge is responsible for supervising every individual at that location, and is accountable for misconduct or code violations by persons under his or her supervision. There is no criminal liability unless the agent in charge personally committed the act or knew or should have known of it and of the facts constituting the violation.
• If the designated agent in charge ends the affiliation and the agency fails to designate a replacement within the 30 days, and that failure continues for 90 days, the agency license automatically expires on the 91st day from the date the agent in charge ended the affiliation.

Unlicensed staff live inside a narrow exemption. Section 626.0428(1), F.S., says an individual employed by an agent or agency on salary who devotes full time to clerical work, with incidental taking of applications or quoting or receiving premiums on incoming inquiries in the office, is not deemed an agent or customer representative, provided the compensation includes no commission on that business and is not related to production. Two hard limits sit next to it: an employee or authorized representative at a designated branch may not bind coverage unless licensed and appointed (subsection (2)), and may not initiate contact with any person for the purpose of soliciting insurance unless licensed and appointed (subsection (3)). Answering the phone is inside the exemption. Calling a competitor's expiration list is not.

A customer representative is a licensed role with its own fence, in s. 626.7354, F.S. The license does not cover life insurance or any kind of insurance for which the appointing agent or agency is not then licensed. The customer representative must be a salaried employee whose compensation is not primarily based on commissions or the production of applications, insurance or premiums. He or she may not transact insurance outside the office of the appointing agent or agency. All business is transacted in the name of that agent or agency, which is responsible and accountable for acts within the scope of the appointment. Note the exact wording of the pay rule: compensation may not be primarily commission-based, which is why limited commission sharing under s. 626.753, F.S., is still possible.

Two more filings belong here. Under s. 626.541, F.S., a licensee using a firm, corporate or business name other than his or her own individual name files a written statement of that name, the address of each office using it, and the name and social security number of each officer and director, within 30 days after the initial transaction under that name; changes are reported within 30 days; and a licensed agency notifies the department of any change to its s. 626.172 application information within 30 days. A registration with the Division of Corporations does not satisfy the Insurance Code, and the department receives the filing rather than pre-approving the name.

Incorporating does not build a shield. Under s. 626.734, F.S., a general lines agent who is an officer, director or stockholder of an incorporated general lines insurance agency remains personally and fully liable and accountable for wrongful acts, misconduct or code violations committed by that licensee or by anyone under his or her direct supervision and control while acting on behalf of the corporation. The same section limits the exposure: no criminal liability and no disciplinary proceeding unless the person personally committed the act or knew or should have known of it.

Staying licensed: continuing education, notices, reports and records

Continuing education under s. 626.2815(3), F.S., is built as an update course plus electives, and the elective count is tiered by years licensed.

• Every licensee except a title insurance agent completes a 4-hour update course every 2 years that is specific to a license held, developed and offered by a department-approved provider. A licensee holding multiple licenses completes an update course specific to at least one of them.
• Standard tier: 20 hours of elective continuing education every 2 years, so 24 hours total.
• Licensed 6 or more years: a minimum of 16 elective hours, so 20 hours total.
• Licensed 25 years or more and a CLU or a CPCU, or holding a Bachelor of Science degree or higher in risk management or insurance with evidence of 18 or more semester hours in insurance-related courses: a minimum of 6 elective hours, so 10 hours total.
• A customer representative who is not a licensed life or health agent: a minimum of 6 hours every 2 years.

Compliance with the continuing education requirement is a condition precedent to the issuance, continuation, reinstatement or renewal of any appointment (s. 626.2815(4), F.S.). Failure to comply is not a small thing: it is what keeps the appointment alive.

The update course used to be 5 hours, with 19 electives standard, 15 at the six-year tier and 5 at the long-service tier. Chapter 2019-140, Laws of Florida, cut the update course to 4 hours and moved one hour into the elective column. The totals did not change: 24, 20 and 10. If your manual says a 5-hour law and ethics update, the total it prints is probably still right and the split is wrong.

Section 626.551, F.S., requires a licensee to notify the department in writing within 30 days after a change of name, residence address, principal business street address, mailing address, contact telephone numbers including a business telephone number, or e-mail address. Two things about this rule get tested. The duty runs from the licensee directly to the department and cannot be delegated to an appointing insurer that keeps its own producer records. And the list expressly includes the e-mail address, because that is where DFS sends official correspondence. Failure to notify draws a fine of up to $250 for the first offense; for a subsequent offense, a fine of not less than $500 or suspension or revocation under ss. 626.611, 626.6115, 626.621 or 626.6215, F.S. The same section adds an unconditional consequence: a licensee who has moved both principal place of residence and principal place of business from this state has the license and all appointments immediately terminated by the department. Qualifying later as a nonresident under s. 626.741, F.S., is a separate application, not an exception.

Section 626.536, F.S., requires a licensee to submit a copy of the order, consent to order, or other relevant legal documents to the department within 30 days after the final disposition of an administrative action taken against the licensee by a governmental agency or other regulatory agency in this or any other state or jurisdiction, relating to the business of insurance, the sale of securities, or an activity involving fraud, dishonesty, trustworthiness or breach of a fiduciary duty. Out-of-state matters count. Securities matters count. It is owed whether or not the Florida license is affected, the clock runs from final disposition rather than from the date the order was entered, and the report goes to DFS, not OIR. Failing to report is itself a discretionary ground for discipline.

Criminal matters have their own reporting duty: failure to inform the department in writing within 30 days after pleading guilty or nolo contendere to, or being convicted or found guilty of, a felony or a crime punishable by imprisonment of 1 year or more is a discretionary ground under s. 626.621(10), F.S.

Records carry two different clocks and the exam pairs them on purpose.

• Section 626.748, F.S.: every agent transacting an insurance policy must maintain in the office, or have readily accessible by electronic or photographic means, for at least 5 years after policy expiration, the records of policies transacted, including daily reports, applications, change endorsements and documents signed or initialed by the insured, so that policyholders and the department can obtain all necessary information. Five years, measured from expiration, not from issuance.
• Section 626.561(2), F.S.: books, accounts and records pertaining to a premium payment are preserved for at least 3 years after the payment. Three years, different record set, different starting point.

Fiduciary duty: premium money, trust accounts, controlled business and commissions

Section 626.561(1), F.S., is the fiduciary rule. All premiums, return premiums or other funds belonging to insurers or others received by an agent, insurance agency, customer representative or adjuster in transactions under the license are trust funds received by the licensee in a fiduciary capacity. The licensee must account for and pay them to the insurer, insured or other person entitled to them in the applicable regular course of business.

Read the phrase in the applicable regular course of business. The statute does not set a fixed remittance deadline in days, so an answer choice that gives you a clean number of days for remitting premium is almost always a fabricated number.

The same subsection requires that funds belonging to each insurer for which the agent is not appointed, other than a surplus lines insurer, be kept in a separate account so that the funds are not commingled with the agent's own money and the department can properly audit them.

Three things follow that candidates get wrong:

• The breach happens the moment fiduciary money is used for something else. Paying agency rent out of the premium trust account is a violation on the day it happens.
• Intent to repay is not a defense, and repaying later does not undo it.
• Books, accounts and records pertaining to a premium payment must be preserved for at least 3 years after the payment (s. 626.561(2), F.S.).

Section 626.561(3), F.S., grades the criminal exposure for diverting or misappropriating fiduciary funds by amount:

• $300 or less: misdemeanor of the first degree.
• More than $300 but less than $20,000: felony of the third degree.
• $20,000 or more but less than $100,000: felony of the second degree.
• $100,000 or more: felony of the first degree.

License discipline runs on a separate track from the criminal case. Misappropriation, conversion or unlawful withholding of moneys belonging to insureds, insurers, beneficiaries or others received in a fiduciary capacity is a mandatory ground under s. 626.611(1)(j), F.S. Merely failing to pay over money belonging to an insurer, without the misappropriation element, is the discretionary ground in s. 626.621(4), F.S. And under s. 626.692, F.S., where any ground exists for suspension, revocation or refusal, the department may order the licensee to pay restitution to any person deprived of money by the licensee's misappropriation, conversion or unlawful withholding, capped at the amount misappropriated, converted or unlawfully withheld. Restitution is compensatory only; it is not doubled, and the department can order it administratively without going to court.

Controlled business is the second fiduciary-adjacent limit. Section 626.730, F.S., says the purpose of the license is to let the licensee actively and in good faith engage in the insurance business, not to be used chiefly to write controlled business. The test is a 12-month percentage: the license is deemed to be used chiefly for controlled business if, during any 12-month period, aggregate commissions or other compensation from insurance on the applicant's or licensee's own property and risks, or those of family members and businesses in which he or she has an interest, exceed 50 percent of the aggregate commissions and compensation on all coverages procured by or through the licensee.

Two details decide the items. Writing some controlled business is lawful; only passing the halfway mark breaks the rule. And the measure is commissions and compensation, not the number of policies. Controlled business is also a mandatory discipline ground under s. 626.611(1)(l), F.S., and a revocation resting on it carries a permanent bar on any new license under s. 626.641(2), F.S.

Commission money has its own fence in s. 626.753, F.S. An agent may divide or share commissions only with other agents appointed and licensed to write the same kind or kinds of insurance, or with a customer representative, and a customer representative may share in commissions with an agent. A licensee may not share a commission with any corporation unless that corporation is an insurance agency; written disclosure to the insurer does not cure that. Renewal commissions, deferred commissions and pensions may still be paid to individuals who no longer hold licenses and to incorporated agencies whose stockholders have ceased to be licensed. The penalty is unusually hard: in addition to other penalties, the license of any licensee violating or participating in a violation of the section shall be revoked.

Related and distinct: s. 626.112(8), F.S., bars an agent, agency or other licensee from paying any fee or other consideration to an unlicensed person, other than an insurance agency, for the referral of prospective purchasers where the payment is in any way dependent upon whether the referral results in the purchase of an insurance product. The defect is the contingency, not the dollar amount, and there is no threshold that makes a success-based referral fee acceptable.

The unfair methods of competition list and the two rebating rules

Part IX of chapter 626, F.S., is the Unfair Insurance Trade Practices Act. Section 626.9521(1), F.S., prohibits engaging in any trade practice defined in the part as an unfair method of competition or an unfair or deceptive act or practice involving the business of insurance, and s. 626.9541(1), F.S., is the list. The ones the 2-20 bank actually uses:

• Paragraph (a), misrepresentations and false advertising of insurance policies, and paragraph (b), false information and advertising generally.
• Paragraph (c), defamation: knowingly making, publishing, disseminating or circulating a statement that is false, or maliciously critical of or derogatory to a person, and calculated to injure that person.
• Paragraph (d), boycott, coercion and intimidation: entering into any agreement to commit, or by any concerted action committing, any act of boycott, coercion or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance. A concerted refusal to deal aimed at driving a competitor out is the textbook case, and note that the wrong is the agreement itself, not any publication.
• Paragraph (g), unfair discrimination, which is about distinctions drawn between insureds in the same actuarial class, not about conduct aimed at a competitor.
• Paragraph (h), unlawful rebates.
• Paragraph (i), unfair claim settlement practices.
• Paragraph (l), twisting.
• Paragraph (m), advertising and promotional gifts and charitable contributions permitted.
• Paragraph (o), illegal dealings in premiums and excess or reduced charges.
• Paragraph (x), refusal to insure.
• Paragraph (z), sliding.
• Paragraph (aa), churning.
• Paragraph (ee), fraudulent signatures on an application or policy-related document.

Three of these are constantly confused with each other. Twisting under paragraph (l) is defined by the misrepresentation: knowingly making misleading representations, incomplete or fraudulent comparisons, or fraudulent material omissions about policies or insurers to induce a person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on or convert a policy, or to take out a policy in another insurer. Churning under paragraph (aa) is defined by the funding source: values already inside an existing policy are used, directly or indirectly, to purchase another policy with the same insurer, to earn additional compensation, without an objectively reasonable basis for believing the purchase will result in an actual and demonstrable benefit. Sliding under paragraph (z) is defined by what was added: representing that a specific ancillary coverage or product is required by law when it is not, representing that coverage is included at no charge when a charge is made, charging for a coverage or product the applicant did not knowingly request, or binding without the owner's informed consent.

One scope limit makes churning items easy on a property and casualty exam. Florida's churning definition reaches policy values in an existing life insurance policy or annuity contract, including cash, loan or dividend values and values in riders. Churning cannot be committed with a homeowners or commercial auto policy. Twisting carries no such limit and can involve any line.

Rebating has two rules that sit next to each other and the exam wants both. Paragraph (h) makes it an unfair method of competition to knowingly permit, offer, make, pay, allow or give any rebate of premium, or any special favor, advantage, valuable consideration or inducement not specified in the policy, as an inducement to insurance. Section 626.572, F.S., then allows an agent to rebate a portion of the commission if every condition is met: the rebate is available to all insureds in the same actuarial class; a rebate schedule is filed with the insurer and is uniformly applied so that all insureds who buy the same policy for the same amount of insurance receive the same percentage; the schedule is prominently displayed in public view at the agent's place of business with free copies available on request; the schedule is maintained for 5 years; the insurer does not prohibit rebating; and the rebate is not based on age, sex, place of residence, race, nationality, ethnic origin, marital status or occupation, and is not given as an inducement to purchase other insurance or other business products.

Gifts are a different rule again, and the number in most manuals is stale. Paragraph (m) permits giving insureds, prospective insureds or others an article of merchandise, goods, wares, store gift cards, gift certificates, event tickets, anti-fraud or loss mitigation services or other items having a total value of $100 or less per insured or prospective insured in any calendar year, and permits charitable contributions on their behalf up to the same $100 per insured per calendar year. The $25 figure is still real, but it is the cap for title insurance agents, title insurance agencies and title insurers only. Note the measuring period as well: per calendar year, not per policy or per policy term. Because paragraph (m) is a permission, a gift inside the limit is not an unlawful rebate under paragraph (h).

Unfair claim settlement practices under paragraph (i) have a structure worth memorizing. Subparagraph 1 covers settling on the basis of an altered application or other material document. Subparagraph 2 covers making a material misrepresentation to an insured to settle on less favorable terms than the policy provides. Subparagraph 3 lists acts that are violations only when committed with such frequency as to indicate a general business practice, including failing to adopt and implement standards for the proper investigation of claims, misrepresenting pertinent facts or policy provisions, failing to acknowledge and act promptly upon claim communications, denying claims without conducting reasonable investigations, failing to affirm or deny full or partial coverage and, as to partial coverage, the dollar amount or extent of coverage, or failing to provide a written statement that the claim is being investigated, upon the written request of the insured within 30 days after proof-of-loss statements have been completed, failing to promptly give a reasonable written explanation of a denial or compromise offer, and failing to pay personal injury protection claims within the time periods required by s. 627.736(4)(b), F.S. Subparagraph 4 is separate and has no frequency element: failing to pay undisputed amounts of partial or full benefits owed under first-party property insurance policies within 60 days after the insurer receives notice of a residential property insurance claim, determines the amounts, and agrees to coverage, unless prevented by factors beyond its control as defined in s. 627.70131(5), F.S.

Two pieces of paragraph (i) changed recently. That 60-day figure in subparagraph 4 was 90 days until SB 2-A, the December 2022 special session rewrite, ch. 2022-271, Laws of Florida. And subparagraph 3 gained a new item, sub-subparagraph j., in 2023 under ch. 2023-172: altering or amending an insurance adjuster's report without providing a detailed explanation of the changes, a complete listing of the changes and the identity of every person who ordered them, or without retaining all versions of the report.

Finally, a lender rule that reads like a banking topic but is squarely in this part. Section 626.9551, F.S., makes it an unfair method of competition for a person to require, as a condition of lending money or extending credit, that the borrower negotiate any policy of insurance through a particular insurer, agent or broker; to reject a policy solely because it was issued or underwritten by a person not associated with a financial institution; or to require a separate charge in connection with handling a required insurance policy or substituting one insurer's policy for another. The lender may still insist that the coverage be adequate and the insurer financially sound, but its standards for disapproval must be based solely on reasonable standards, uniformly applied.

Discipline: 626.611 shall, 626.621 may, and what happens after

Two lists, one verb apart.

Under s. 626.611(1), F.S., the department shall deny an application for, suspend, revoke, or refuse to renew or continue the license or appointment, and shall suspend or revoke eligibility to hold one, if any of the listed grounds is found. It has no discretion. The grounds include lack of one or more of the qualifications for the license (a); material misstatement, misrepresentation or fraud in obtaining the license (b); failure to pass a required examination (c); willful use of the license to circumvent the code (d); willful misrepresentation of an insurance policy or annuity contract or willful deception about it (e); material misrepresentation to an insured about claim settlement (f); demonstrated lack of fitness or trustworthiness (g); demonstrated lack of reasonably adequate knowledge and technical competence (h); fraudulent or dishonest practices in the conduct of business (i); misappropriation, conversion or unlawful withholding of moneys belonging to insurers, insureds, beneficiaries or others and received in a fiduciary capacity (j); unlawful rebating or unlawful division of commissions (k); using the license chiefly for controlled business (l); willful failure to comply with, or willful violation of, a department order or rule or a code provision (m); and disqualifying convictions or pleas (n).

Section 626.611(2), F.S., adds a step that surprises people. On receipt of information or an indictment, the department shall immediately temporarily suspend a license or appointment when the licensee is charged with a felony enumerated in s. 626.207(2), F.S., and that suspension continues if the licensee is found guilty or pleads guilty or nolo contendere, regardless of whether a judgment of conviction is entered, during a pending appeal. Charged, not convicted.

Under s. 626.621, F.S., the department may act in its discretion. The grounds include any cause that would have supported refusal had it existed at the time of application (1); violating any provision of the code or any lawful order or rule (2) and (3); failing to pay over money belonging to an insurer (4); twisting (5); unfair competition or an unfair or deceptive practice (6); willful overinsurance (7); cheating on a licensure examination (9); failure to inform the department within 30 days of a felony plea, conviction or finding of guilt (10); knowingly aiding a code violation (11); adverse action by a court or agency involving securities or commodities (12); child-support noncompliance (13); accepting compensation for referring a property inspector (14); denial, suspension or revocation of a license in another regulated profession or in another state (15); making a consumer's financial or medical information publicly accessible (16); initiating an in-person or telephone solicitation after 9 p.m. or before 8 a.m. local time of the prospective customer unless the customer requested it (17); and cancellation of a resident license in another state (18).

When a fact pattern hits both lists, the mandatory outcome controls. If a question asks whether the department must act, you are in s. 626.611, F.S. Parallel sections do the same job for licensed agencies: s. 626.6115, F.S., is the mandatory list, and s. 626.6215, F.S., the discretionary one.

Once discipline lands, s. 626.641, F.S., governs what it means:

• The department must specify the period of suspension in its order, and that period may not exceed 2 years.
• A suspended license is not reinstated except upon the filing and approval of an application for reinstatement, and on a second suspension the department may require completion of prescribed continuing education. Simply waiting out the stated period restores nothing.
• No person whose license, appointment or eligibility has been revoked may apply for another license or appointment under the code within 2 years from the effective date of the revocation, or within 2 years from the date of the final court order or decree affirming the revocation if judicial review was sought.
• During suspension or revocation the former licensee may not engage in or attempt to profess to engage in any transaction or business for which a license or appointment is required, and may not be employed by any agent, agency, adjuster or adjusting firm. Servicing existing accounts is still engaging in the licensed activity.
• Three permanent bars sit in the same section. The department shall refuse to grant a new license where the revocation rested on the controlled-business ground in s. 626.611(1)(l), F.S. Where an individual's agent or customer representative license or eligibility has been revoked on two separate occasions, the department may not thereafter issue that individual any license under the code. The same permanent bar applies where the revocation resulted from the solicitation or sale of an insurance product to a person 65 years of age or older.

Money penalties against individual licensees come from s. 626.681, F.S. In lieu of or in addition to suspension, revocation or refusal, and except on a second offense or where the action is mandatory, the department may impose an administrative penalty of up to $500, or up to $3,500 where it has found willful misconduct or a willful violation. The penalty may be augmented by an amount equal to any commissions received by or accruing to the credit of the licensee in connection with the transaction, so the real exposure can exceed the cap. Section 626.681(2), F.S., sets a different ceiling of up to $10,000 per violation for an insurance agency. Under s. 626.681(3), F.S., the department may allow a reasonable period not exceeding 30 days to pay, and if the penalty is not paid in full within that period the license, appointment or approval stands suspended, revoked or refused.

Criminal history is graded separately under s. 626.207, F.S. Five categories carry a permanent bar from licensure: a felony of the first degree; a capital felony; a felony involving money laundering; a felony embezzlement; or a felony directly related to the financial services business. No elapsed time cures those, and the last category is broad, since a felony directly related to the financial services business triggers the bar whether or not fraud was an element. Outside the permanent bar, felonies involving moral turpitude carry a 15-year disqualifying period; all other felonies carry 7 years; and misdemeanors directly related to the financial services business or to any violation of the Florida Insurance Code carry 7 years. The disqualifying periods begin on the applicant's final release from supervision or completion of the criminal sentence, not on the conviction date, and all fines and restitution must be paid. Once the period runs, the applicant carries the burden of demonstrating rehabilitation, fitness and trustworthiness.

One more enforcement tool: the department or office may issue a cease and desist order under s. 626.9581, F.S., and under s. 626.9601, F.S., a person who violates such an order while it is in effect, after notice and hearing, is subject to a monetary penalty of not more than $50,000 as to all matters determined in the hearing, plus suspension or revocation of the certificate of authority, license or eligibility.

Penalties, insurance fraud, and the civil remedy after the 2022 and 2023 rewrites

Unfair trade practice fines under s. 626.9521(2), F.S., are the numbers most study material gets wrong, because they were raised by ch. 2023-172, Laws of Florida, effective July 1, 2023.

• Current: not greater than $12,500 for each nonwillful violation and not greater than $100,000 for each willful violation. Fines under that subsection imposed against an insurer may not exceed an aggregate of $50,000 for all nonwillful violations arising out of the same action or $500,000 for all willful violations arising out of the same action.
• Before July 1, 2023: $5,000 nonwillful and $40,000 willful, with insurer aggregates of $20,000 and $200,000.

Read the aggregate language narrowly. It is written as a limit on fines imposed against an insurer, so a non-insurer person is capped per violation with no aggregate under subsection (2).

Subsection (3) carries its own higher numbers, and they also moved in 2023:

• Twisting or churning: a misdemeanor of the first degree, plus an administrative fine of not greater than $12,500 for each nonwillful violation and not greater than $187,500 for each willful violation, where the willful figure requires fraudulent conduct (s. 626.9521(3)(a), F.S.). The old figures were $5,000 and $75,000.
• Willfully submitting fraudulent signatures on an application or policy-related document under s. 626.9541(1)(ee), F.S.: a felony of the third degree, plus an administrative fine of not greater than $187,500 for each violation (s. 626.9521(3)(b), F.S.).
• A violation of part IX related to a covered loss or covered claim caused by an emergency for which the Governor declared a state of emergency under s. 252.36, F.S.: not greater than $25,000 for each nonwillful violation and $200,000 for each willful violation, with insurer aggregates of $100,000 nonwillful and $1 million willful arising out of the same action (s. 626.9521(3)(c), F.S.).
• Fines under paragraphs (a) and (b) may not exceed an aggregate of $125,000 nonwillful or $625,000 willful arising out of the same action (s. 626.9521(3)(d), F.S.). Those aggregates were $50,000 and $250,000 before 2023.

Insurance fraud under s. 817.234, F.S., is graded by the value of the property involved, not by what the claimant demanded and not by whether the insurer paid. Under subsection (11), less than $20,000 is a felony of the third degree; $20,000 or more but less than $100,000 is a felony of the second degree; $100,000 or more is a felony of the first degree. There is no misdemeanor tier for a knowingly false claim.

The warning printed on the forms is a different rule and it names only the floor. Section 817.234(1)(b), F.S., requires all claim forms and applications for insurance to contain a statement approved by the Office of Insurance Regulation, substantially to the effect that any person who knowingly and with intent to injure, defraud or deceive any insurer files a statement of claim or an application containing any false, incomplete or misleading information is guilty of a felony of the third degree. It reaches applications as well as claim forms, which is why it appears above the applicant's signature line, and reinsurance contracts and transactions are excepted.

The civil remedy in s. 624.155, F.S., was reshaped twice in eighteen months and candidates lose points on the parts that did not change.

The condition precedent survived. A claimant must give the department and the authorized insurer 60 days' written notice of the violation on the department's form (s. 624.155(3)(a), F.S.). The notice must state the specific statutory provision violated, the facts and circumstances, the names of the persons involved, and the policy language relied on. Service works through the department: the claimant files the civil remedy notice with the department, which transmits it to the e-mail address the insurer designated under s. 624.422, F.S. No action lies if, within 60 days after the insurer receives that notice from the department, the damages are paid or the circumstances giving rise to the violation are corrected. Under paragraph (3)(f) a civil remedy notice may not be filed within 60 days after appraisal is invoked by any party in a residential property insurance claim.

What 2022 and 2023 added:

• Section 624.1551, F.S., created in the May 2022 special session and amended in the December 2022 special session, bars any claim for extracontractual damages under s. 624.155(1)(b), F.S., arising from a property insurance policy until the insured has established, through an adverse adjudication by a court of law, that the insurer breached the contract and a final judgment or decree has been rendered against it. Acceptance of an offer of judgment under s. 768.79, F.S., and payment of an appraisal award do not count as that adverse adjudication.
• Chapter 2023-15, Laws of Florida, added s. 624.155(4), F.S.: in a liability insurance claim, no bad faith action lies if the insurer tenders the lesser of the policy limits or the amount demanded by the claimant within 90 days after receiving actual notice of the claim accompanied by sufficient evidence to support the amount.
• The same act added s. 624.155(5), F.S.: mere negligence alone is insufficient to constitute bad faith, and the insured, claimant and their representatives have their own duty to act in good faith, which the trier of fact may weigh to reduce damages.
• The same act repealed the one-way attorney fee statutes, s. 627.428 and s. 626.9373, F.S. Both are gone from the Florida Statutes. The narrow replacement, s. 86.121, F.S., awards reasonable attorney fees to a named insured, omnibus insured or named beneficiary who obtains a declaratory judgment on coverage after a total coverage denial, expressly does not apply to any action arising under a residential or commercial property insurance policy, and treats a defense offered under a reservation of rights as not a coverage denial. Manuals printed before March 2023 still teach the repealed sections as live law, and that is one of the easiest points to lose.

Note what did not change. Section 624.155(1)(a), F.S., still lets a person sue for a violation of s. 626.9541(1)(i), (o) or (x), or s. 626.9551, F.S., among others, and the statute expressly says the frequency requirement built into s. 626.9541(1)(i)3. does not have to be met to pursue the civil remedy. Section 624.155(7), F.S., still awards damages, court costs and reasonable attorney fees to a plaintiff on an adverse adjudication under this section, so the repeal of the one-way fee statutes did not strip fees from a successful statutory bad faith action.

One small deadline that shows up on its own item: under s. 627.4265, F.S., where a person and an insurer have agreed in writing to settle a claim, the insurer must tender payment according to the terms of the agreement no later than 20 days after the settlement is reached. Payment not tendered by then bears interest at 12 percent per year from the date of the agreement. Tender may be conditioned on execution of a mutually agreeable release, and where it is, interest does not begin to accrue until the executed release is tendered to the insurer. The sanction is statutory interest, not a per-day fine.