Authority

Becoming a Licensed Agent

  • Agent definition: Someone authorized to act on behalf of another.
  • Two basic types of insurance agents:
    • Sales agent: Authority to sell and service insurance policies for an insurer.
    • Adjuster: Authority to make decisions regarding claims against the insurer.
  • Authority is given via a contract, detailing duties, guidelines, and responsibilities.
  • Agents must adhere to the contract, act in the insurer's best interest, use reasonable care, and provide complete client documentation.

Types of Authority Granted to Agents

  • Three types of authority:
    • Express authority
    • Implied authority
    • Apparent authority

Express Authority

  • Specifically granted in writing within the contract.
  • Examples:
    • Writing policies
    • Collecting premiums
    • Canceling policies
    • Offering discounts for bundled services.

Implied Authority

  • Indirect authority; what the public reasonably believes an agent has.
  • Based on the agent representing the insurer.
  • Examples:
    • Actions and words of the agent as representative of the insurer.

Apparent Authority

  • Indirect authority; when an agent leads a third party to believe they have authority, and the insurer doesn't correct it.
  • Insurer becomes accountable if they don't act on the agent's unauthorized actions.
    • Cashing a premium check for a Ferrari when the agent is not allowed to insure it.

Types of Sales Agents

  • Independent insurance sales agent
    • Self-employed, represents multiple companies.
  • Exclusive agent (captive agent)
    • Represents one insurer.
  • General agent
    • Works for one company, trains and supervises exclusive agents.
  • Direct writer
    • Works for one company, salaried employee.

Sales Agent Responsibilities

  • Selling insurance policies
  • Servicing policyholder contracts
  • Collecting premiums
  • Representing the insurer to the public

Customer Representatives

  • Take care of clients, answer questions, and ensure proper coverage.
  • Cannot conduct insurance business for multiple agents or agencies.
  • Can perform insurance transactions in the lines of automobile, watercraft, home, motorcycle, and pet insurance.
  • Appointing agent is ultimately responsible for all of the transactions conducted by the customer representative.

Licensing Requirements for Customer Representatives in Florida

  • Must be licensed by the Florida Department of Financial Services.
  • Requirements:
    • At least 18 years old.
    • Florida resident.
    • U.S. Citizen or legal alien with work authorization.
  • Prerequisites:
    • Completed an approved designation course within the last four years.
    • OR a degree with at least nine academic hours of insurance instruction in property, casualty, and inland marine insurance.

Application Process

  • Complete an online application.
  • Pay the license fee.
  • Get fingerprinted.
  • Receive approval via email and print license.

Continuing Education

  • Required to take continuing education classes to keep license current.
  • Ten hours every two years.
  • One hour must be on premium discounts available on property insurance policies (hurricane mitigation options).

Appointment

  • Must be appointed by an agent.
  • Agent registers the appointment with the Department of Financial Services.
  • Customer representative can only have one appointment at a time.
  • License expires if without an appointment for more than 48 months.

Restrictions

  • Must work within the confines of the agent or agency's office.
  • Cannot be employed by more than one agent or agency.
  • Duties must align with the appointing agent's licensed lines of insurance.
  • Cannot hold multiple licenses simultaneously (e.g., service representative, managing general agent, or agent of any kind).
  • License doesn't cover life insurance or other insurance outside the agent's licensing.
  • Restricted from handling controlled business (more than 50% from immediate family or group members).

Compensation

  • Allowed to receive commissions, but it shouldn't be primarily based on commissions.
  • Commissions cannot exceed 50% of total yearly pay.

Permitted Activities

  • Describing benefits/terms of coverage, premiums/rates of return.
  • Distributing information and soliciting new customers.
  • Making recommendations about insurance products.
  • Giving insurance quotes, completing orders, and taking applications.
  • Comparing insurance products.
  • Advising on insurance matters and interpreting policies/coverages.
  • Must identify as a customer representative and not imply being an agent.

Florida Department of Financial Services

  • Created in 2003, combining multiple departments.
  • Headed by the state's chief financial officer (elected to a three-year term).
    • Also serves as the state fire marshal and a member of the cabinet.
  • Responsibilities encompass various divisions.

Division of Insurance Agent and Agency Services

  • Responsibilities:
    • Overseeing prelicensing courses.
    • Licensing insurance agents, customer representatives, and claims adjusters.
    • Overseeing continuing education and license renewal.
    • Supervising claims activities of insurance companies.
    • Investigating complaints about unfair business practices.
    • Imposing fines, suspending, revoking, or refusing to renew licenses for legal violations.

Fraud Investigation

  • Investigates various types of insurance fraud:
    • PIP fraud
    • Workers compensation fraud
    • Motor vehicle fraud
    • Application fraud
    • Licensee fraud
    • Homeowners fraud
    • Health care fraud

Office of Insurance Regulation

  • Responsibilities:
    • Examining and admitting insurance companies to do business in Florida.
    • Monitoring financial condition of insurance companies.
    • Approving insurance forms and ensuring rate compliance with Florida law.

Insurance Policy Provisions

  • Policy provisions establish the terms of the agreement between the insurer and the insured.
  • Policy changes made by endorsement.

Liberalization Clause

  • Any change to a policy form that broadens coverage without increasing the premium will automatically apply to the issued policies of that type.

Representations Condition

  • Information provided by the insured on the declarations page must be complete and accurate.
  • Material misinformation is enough to void or nullify the policy.

Fraud, Concealment, and Misrepresentation Condition

  • Insurer may deny coverage if the insured conceals or distorts relevant material facts.

Assignment Condition

  • Policyholder cannot transfer the policy to someone else without the insurer's written agreement.
  • Exception: coverage transfers to legal representative upon death of named insured.

Additional Insured Provision

  • Allows the first named insured to add other people or entities to the policy via endorsement.
  • Additional insureds can benefit from the coverage, but they are not allowed to make changes to the policy.