FLORIDA S NEW INSURANCE AGENCY REGISTRATION & LICENSING LAW Q & A

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1 FLORIDA S NEW INSURANCE AGENCY REGISTRATION & LICENSING LAW Q & A What needs to happen by October 1, 2006? All insurance agencies conducting business in Florida must apply for Registration or Licensure prior to October 1, Where can the application for the registration and licensure be found? The application process for agency registration and licensure is completely automated. The online application can be found on the Department of Financial Services (Department) website at NEW! Can the Department delay the October 1, 2006, deadline for filing for licensure or registration? While the Department does not have the authority to extend the October 1, 2006, statutory deadline for filing applications for insurance agency licensure or registration, the department was granted discretion concerning the imposition of administrative fines relating to late filed applications. Although the department has successfully received thousands of applications in recent months many insurance agencies are only now attempting to file their applications. This heightened application activity at or near the October 1st deadline has resulted in an extremely high volume of callers seeking guidance and direction concerning the online application process and other compliance issues. In order to provide the best possible customer service and address the extremely high volume of telephone calls we are receiving, the department has made the decision to forego the imposition of administrative fines until November 1, Accordingly, the department strongly encourages all insurance agencies required to file applications for licensure or registration and have not done so, to submit their applications before November 1, 2006, in order to avoid administrative penalties. What is the difference between Registration and Licensure? Registration - A Registration is provided to agencies that were in business prior to January 1, 2003, and which qualify as one of the following: Any agency wholly owned by insurance agents currently licensed and appointed under Chapter 626. An incorporated agency whose voting shares are traded on a securities exchange. An agency whose primary function is offering insurance as a service or member benefit to members of a nonprofit organization. A Registration is perpetual and does not have to be renewed. A registered agency is not subject to compulsory or discretionary refusal, suspension, or revocation as described in ss and However, if any of the principals of the

2 registered agency are found to have violated any part of the insurance code, the agency must obtain an agency license. Licensure - A license is obtained by the agencies that were in business on or after January 1, 2003, or the agencies that were in business prior to January 1, 2003, and do not meet the criteria listed above for Registration. A licensed agency is subject to compulsory or discretionary refusal, suspension, or revocation as described in ss and An agency license is valid for three years and must be renewed. There is no fee associated with the issuance or renewal of the license. If a licensed and appointed agent has been the sole owner of an insurance agency since 1998, will the agency need to apply for Registration or Licensure? The agency qualifies for Registration. However, if the agency should choose to have a license rather than a Registration, an application must be submitted for Licensure rather than for Registration. If an agency registers and then decides it would be more beneficial to be licensed, how could it make this change? The agency must submit an application to the Department via the automated licensing system. Fingerprints will not be required if all agents have maintained their licenses and at least one active appointment each. If an agency qualifies for Registration but chooses to apply for Licensure, can it later file for Registration? No. Once an agency has obtained Licensure, it cannot be registered. An insurance agency with two owners has been in business since One of the owners is a licensed and appointed agent but the other owner is not. Will the agency qualify for Registration? No. If both owners are not licensed and appointed, the agency cannot qualify for Registration. The owners of the agency are both licensed and appointed and have owned the agency since July 2004, can this agency be registered? No. The agency must have been in business prior to January 1, 2003, to qualify for Registration. The owners of the agency are both licensed and appointed and have owned an agency since January However, one owner is selling his share of the business to an unlicensed person. Since the agency has already received the Registration, can the agency retain this Registration? No. The law is specific that the registered agency must remain wholly owned by licensed and appointed agents. Therefore, the registered agency must apply for an agency license. (This does not apply to publicly traded companies.)

3 What is the time-line required to obtain the agency license once the agency loses its qualification for the Registration? The agency must apply for a license within 30 days from date of sale. If an agency is registered and the agent loses all of his/her appointments, may the agency retain the Registration? While the statute requires both Licensure and appointment for Registration, DFS will handle the loss of appointments by an owner/agent on a case-by-case basis. If the appointments are lost through oversight of companies, the inadvertent error procedure will apply. In all cases the owner/agent will be provided an opportunity to explain the circumstances surrounding the loss of appointments. What if an agency has locations in more than one state, could the agency hold both a resident and non-resident agency license? Yes. Since each agency location is being licensed, the resident or non- resident license will be determined by the specific location. Therefore, an agency could hold both a resident license for a location and a non-resident license for another location. The license for the non-resident location would be required only if the agency was conducting business in Florida. Since the primary agent law has been repealed, is it necessary for an agency to have a designated licensed and appointed agent in charge of each location? When the agent in charge changes must the Department be notified of the change? Yes. Section F.S., states each agency must have a licensed and appointed agent in full-time charge of each location. It is no longer required for the agency to file the primary agent form with the Department. The full-time agent may not be in charge of more than one location. It is not required for the agent in charge to be an officer or director of the agency. When the agent in charge changes, the Department must be notified of the change within 30 days. Are agencies required to be appointed? No. Agencies are not appointed. However, individuals who transact insurance business within the agency must obtain a license and appointment. Will agencies be issued lines of authority such as Life? No. Agencies will not be issued lines of authority. However, agencies may transact business only for the lines of authority for which their agents are licensed and appointed. If an agency does not apply for Registration or Licensure by October 1, 2006, will any action be taken against the agency? Yes. If an agency qualifies for Registration and fails to file an application within the designated time-line, the Department will impose an administrative penalty on the agency in an amount of up to $5, If an agency does not qualify for Registration and fails to file an application for Licensure within the designated time-line, the Department will impose an administrative penalty on the agency in an amount of up to $10,

4 Will the agency appoint the agents working for that agency? An agency may not appoint its agents. Agents must be appointed by an insurer or insurers. What is the Department s procedure if an agency s application for Registration is not approved? The Department will advise the agency that the application for Registration was denied. The agency has 30 days from receipt of notification to submit an application for Licensure or 21 days to request an appeal. When applications are submitted for Licensure, are there exemptions for filing fingerprints? Yes. The exemptions are as follows: An individual currently licensed and appointed as an insurance agent at the time application is submitted. Directors or officers of a corporation whose voting shares are traded on a securities exchange. What criteria will be used to disapprove the name of an agency? An agency name will be disapproved if it appears that use of the proposed name may mislead or cause harm to the public in any way. Some reasons that will be used to disapprove a name will be terms in a name such as: senior citizen, insurance company, motor club, hospital service plan, state or federal agency, charitable organization, or a name indicating an entity that provides advise and counsel rather than solicits and sells insurance. If the agency has a name that does not meet the Department s criteria for approval, but the agency has had the name for many years, will the Department approve the name? The Department will evaluate the severity of name infraction and make a determination regarding the approval of the name. If the name is disapproved, the agency will be contacted and provided an opportunity to change the name. If an agency violates any part of the insurance code and the violation results in administrative action by the Department, will the Department take action against all of that agency s locations? No. The administrative action will be taken only against the location where the violation occurred. Will a carrier be required to have on file a copy of the Agency's license or Registration in order to pay them commissions after October 1, 2006? No, however, carriers are reminded that they must continue to comply with longstanding provisions of the Florida Insurance Code regarding the payment and sharing of commissions. Those provisions can be found at ss , and , Florida Statutes.

5 If the agent is appointed for an insurer and contracted to receive commissions paid to their individual name and social security number only, is there any reason the insurer would need to confirm their agency Registration/license status? No, however, the reminder to carriers set out in the preceding question also applies in this situation. In general, does the insurer have the responsibility to make sure that the agencies they do business with in Florida have a valid Agency Registration/license? No, compliance with the insurance agency Licensure law currently rests with individuals, firms, partnerships, corporations, associations or other entities engaging in insurance agency activities. If I own an agency in New York and my agency transacts business in Florida, do I have to get Florida Non-Resident Agency Registration/license? Yes. Since the agency location is in New York, a Florida Non-Resident Agency Registration/license. Are adjusting firms now required to obtain a license? No. Only an adjusting firm that has been directed to obtain Licensure through a disciplinary action by the Department is required to be licensed.

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