This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0749a.IBS
DATE: 1/21/2022
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/HB 749 Fraud Prevention
SPONSOR(S): Insurance & Banking Subcommittee, Clemons and others
TIED BILLS: IDEN./SIM. BILLS: CS/SB 1292
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee 16 Y, 0 N, As CS Fortenberry Luczynski
2) State Administration & Technology
Appropriations Subcommittee
3) Commerce Committee
SUMMARY ANALYSIS
The bill makes the following changes to existing law to help prevent insurance fraud:
Electronic Insurance Verification – requires that, in addition to driver licenses and identification cards,
the Department of Highway Safety and Motor Vehicle’s electronic credentialing system display vehicle
registration and insurance information, provide a driver with notification of any lapse in insurance
coverage, and allow the driver to update policy information in the system; requires DHSMV to provide
the Legislature with recommendations regarding electronic verification of drivers’ compliance with
financial responsibility laws.
Service Contracts and Agreements –
o Contracts – establishes that sellers of service contracts that include automatic renewal
provisions must allow consumers to cancel these contracts in the same manner and by the
same means as the consumers entered the contracts;
o Agreements – expands the advertising violations for which a service agreement company or
salesperson can be subject to licensure discipline or criminal penalties; requires a service
agreement company’s or salesperson’s disclosures in written advertisements meet certain
requirements; requires such company or salesperson disclose the full name of the company or
salesperson in radio or television advertisements; requires that a service agreement
salesperson must identify his or her full legal name and license number when beginning a
solicitation call and his or her telephone number when ending such a call.
Public Adjusters and Public Adjuster Apprentices – establishes a new maximum fine amount, not to
exceed $20,000 per act, for a public adjusters or public adjuster apprentices who commit certain
prohibited acts during a state of emergency declared by the Governor; implements the same penalties
for unlicensed individuals who engage in these prohibited acts.
Investigation by the Division of Investigative and Forensic Services (DIFS) and the State Fire
Marshal (SFM) – removes language that makes it a misdemeanor for a person who violates the statute
regarding investigation of fraudulent insurance claims and crimes related to a fire or explosion loss;
establishes that the Department of Financial Services may fine an insurer up to $2,000 per day if the
insurer fails or refuses to comply with the investigation of a fraudulent insurance act by DIFS, or a fire or
explosion by the SFM.
Prosecution of False and Fraudulent Insurance Claims – replaces the word “and” with the word “or”
so that violations of certain statutes are separate crimes, and criminal prosecution for violation of either
section must begin within five years of the violation; allows an insurer that has been damaged by a false
or fraudulent insurance act to recover investigation and litigation expenses, including attorney fees, if
the insurer has reported the false or fraudulent act to DIFS and there has been a criminal adjudication of
guilt.
The bill has no impact on state or local government revenues or local government expenditures. It has an
indeterminate negative impact on state expenditures and may have an indeterminate negative direct economic
impact on the private sector.
The bill as effective upon becoming law except as otherwise provided within the bill. STORAGE NAME: h0749a.IBS PAGE: 2
DATE: 1/21/2022
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Electronic Insurance Verification
Current law requires that the Department of Highway Safety and Motor Vehicles (DHSMV)
establish a secure and uniform electronic credentialing system (system) for displaying driver
licenses
1
and identification cards. The system is defined as “a computer system accessed
using a computer, a cellular telephone, or any other personal device which queries” DHSMV’s
driver license and identification card records, displays or transmits digital proof of driver
licenses and identification cards, and verifies the authenticity of driver licenses and
identification cards.
2
Effect of the Bill
The bill requires that, in addition to driver licenses and identification cards, the system must
display vehicle registration and insurance information, provide a driver with notification of any
lapse in insurance coverage needed to meet financial responsibility requirements, and allow
the driver to update policy information in the system. The bill also requires DHSMV to provide
the Legislature with recommendations regarding electronic verification of drivers’ compliance
with financial responsibility laws.
Service Contracts and Agreements
A service contract is a written contract for the performance of services over a fixed time period
or for a specific duration of time.
3
A service agreement is a contract or agreement indemnifying
the agreement holder for the motor vehicle listed on the agreement and arising out of the
ownership, operation, and use of the motor vehicle against loss cause by failure of any
mechanical or other component part, or any mechanical or other component part that does not
function as it was originally intended.
4
Cancellation of Service Contracts
A consumer may enter a service contract in a variety of ways. Sometimes entering a service
contract is accomplished easily by a consumer, but the consumer may have difficulty
cancelling the contract because the service contract requires cancellation by a different
method.
5
Any seller that sells or offers to sell a service contract to a consumer that has an
automatic renewal provision must “disclose the automatic renewal provision clearly and
conspicuously in the contract or contract offer.”
6
However, current law does not require that a
service contract or offer for a contract to provide a specific method of contract cancellation.
7
1
S. 322.032, F.S.
2
S. 322.032(c), F.S.
3
S. 501.165(1)(d), F.S. This statute does not apply to warranty associations licensed under ch. 634, F.S.
4
S. 634.011(8), F.S.
5
Department of Financial Services, Agency Analysis of 2022 House Bill 749, p. 1 (Dec. 16, 2021).
6
S. 501.165(2)(a), F.S.
7
DFS, supra, note 3, at 1. STORAGE NAME: h0749a.IBS PAGE: 3
DATE: 1/21/2022
Effect of the Bill
The bill establishes that sellers of service contracts that include automatic renewal provisions
must allow consumers to cancel these contracts in the same manner and by the same means
as the consumers entered into the contracts.
Advertising Disclosures by Service Agreement Companies and Salespersons
Current law provides that a service agreement company or salesperson that engages in
certain acts is subject to denial, suspension, revocation, or refusal to renew or continue any
appointment or license, or is guilty of a second-degree misdemeanor.
8
These acts include
limited violations of advertising requirements.
9
Effect of the Bill
The bill expands the advertising violations for which a service agreement company or
salesperson can be subject to licensure discipline or criminal penalties. The bill requires that a
service agreement company or salesperson make disclosures in written advertisements in at
least 12-point, boldface type. Such written advertisements must include a Florida Company
Code, in addition to the name and address of the company. The bill requires that a service
agreement company or salesperson disclose the full legal name of the company or
salesperson in radio or television advertisements. Additionally, the bill requires that a service
agreement salesperson must identify his or her full legal name and license number when
beginning a solicitation call and his or her telephone number when ending such a call. The bill
specifies that the phone number may be either the telephone number on file with the
Department of Financial Service (DFS) or another number at which the salesperson may be
reached. Violation of any of these requirements by a company or a salesperson may result in
the denial, suspension, revocation, or refusal to renew or continue an appointment or license,
or a second-degree misdemeanor. These portions of the bill are effective January 1, 2023.
Public Adjusters and Public Adjuster Apprentices
Public adjusters and public adjuster apprentices are prohibited from engaging in a list of
practices in current law and can be fined up to $10,000 per act for engaging in these practices
at any time, including a declared state of emergency.
10
Any person who engages in the same
acts, but is not a public adjuster or public adjuster apprentice, and who is not otherwise
exempt from licensure, is guilty of the unlicensed practice of public adjusting and may also be
subject to the same fines.
11
Effect of the Bill
The bill establishes a new maximum fine amount, not to exceed $20,000 per act, for a public
adjusters or public adjuster apprentices who commit certain prohibited acts during a state of
emergency declared by the Governor through an executive order or proclamation. The bill
implements the same penalties for individuals who engage in these prohibited acts, but are not
public adjusters or public adjuster apprentices, and are not otherwise exempt from licensure.
8
S. 634.095, F.S.
9
S. 634.095(3), F.S.
10
S. 626.854(22), F.S.
11
S. 626.854(22)(c), F.S. STORAGE NAME: h0749a.IBS PAGE: 4
DATE: 1/21/2022
Investigations by the Division of Investigative and Forensic Services (DIFS) and the
State Fire Marshal (SFM)
Statutes require insurers to report knowledge of fraudulent insurance acts or any other act or
practice which constitutes a crime to DIFS
12
and knowledge that an intentional act resulted in a
fire or explosion loss to its insured’s real or personal property.
13
However, these statutes do
not provide consequences for an insurer’s failure to report this knowledge.
Effect of the Bill
The bill specifies that DFS may fine an insurer up to $2,000 per day, until it deems the insurer
to be compliant, if an insurer fails or refuses to comply with the DIFS’s investigation of a
fraudulent insurance act or SFM’s investigation of a fire or explosion, including the requirement
to report fraudulent acts to DFS. The bill removes language that makes it a misdemeanor for a
person who violates the statute regarding investigation of fraudulent insurance claims and
crimes related to a fire or explosion loss.
Prosecution of False and Fraudulent Insurance Claims and Crimes
Criminal Charges for Insurance Fraud
Section 775.15(11), F.S., specifies that felony violations of two specific statutes
14
regarding
criminal insurance fraud must be commenced within five years after the violation is committed.
However, the present statutory construction could be interpreted to mean that someone must
violate both of these statutes before they are prosecuted for a felony violation of s. 775.15(11),
F.S.
Effect of the Bill
The bill replaces the word “and” with the word “or” between two statutory sections to clarify
that violations of either section are separate crimes, and that criminal prosecution for violation
of either section must begin within five years of the violation of that section.
Recovery of Costs by Insurers
Section 817.234, F.S., provides criminal penalties for any person who commits insurance
fraud by engaging in certain acts with intent to injure, defraud, or deceive any insurer. An
insurer that has been damaged as a result of a violation of this statute has a cause of action to
recover compensatory damages, plus reasonable investigation and litigation expenses,
including attorney fees, at a trial or appellate court, if the violation has resulted in a criminal
adjudication of guilt.
15
Effect of the Bill
In addition to the requirement under existing law that there has been a criminal adjudication of
guilt, the bill adds the requirement that, in order to recover reasonable investigation and
12
S. 626.989(6), F.S.
13
S. 633.126(2), F.S.
14
See ss. 440.105 and 817.234, F.S.
15
S. 817.235(5), F.S. STORAGE NAME: h0749a.IBS PAGE: 5
DATE: 1/21/2022
litigation expenses, including attorney fees when it has been damaged due to a false or
fraudulent insurance claim, an insurer must report the false or fraudulent claim to DIFS.
B. SECTION DIRECTORY:
Section 1. Creates s. 324.252, F.S., relating to electronic insurance verification.
Section 2. Amends s. 501.165, F.S., relating to automatic renewal of service contracts.
Section 3. Amends s. 626.854, F.S., relating to “public adjuster” defined; prohibitions.
Section 4. Amends s. 626.989, F.S., relating to investigation by department or Division of
Investigative and Forensic Services; compliance; immunity. Confidential
information; reports to division; division investigator’s power of arrest.
Section 5. Amends s. 633.126, F.S., relating to Investigation of fraudulent insurance claims
and crimes; immunity of insurance companies supplying information.
Section 6. Amends s. 634.095, F.S., relating to prohibited acts.
Section 7. Amends s. 775.15, F.S., relating to time limitations; general time limitations;
exceptions.
Section 8. Amends s. 817.234, F.S., relating to false and fraudulent insurance claims.
Section 9. Provides that the bill is effective upon becoming law except as otherwise provided.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
The changes to the DHSMV system to require that it verify drivers’ registration and
insurance information will have an indeterminate impact on state government
expenditures.
16
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
16
As of Jan. 21, 2022, DHSMV has indicated that it is working to determine the internal cost of these changes,
as well as the cost passed onto them by the vendor that is developing the DHSMV system. STORAGE NAME: h0749a.IBS PAGE: 6
DATE: 1/21/2022
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
To the extent that the DHSMV system updates result in additional tickets or fines issued to
drivers, the bill could have an indeterminate negative impact on the private sector.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill requires DIFS to adopt rules to administer the statutory sections regarding
investigation of fraudulent insurance acts and fire or explosion claims or crimes, but the bill
provides DIFS with the authority necessary to adopt these rules.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
On January 19, 2022, the Insurance & Banking Subcommittee considered the bill, adopted a strike-all
amendment, and reported the bill favorably as a committee substitute. The strike-all amendment
contained the substance of the bill as originally filed and made the following modifications and
clarifications:
Requires the Department of Highway Safety and Motor Vehicles’ (DHSMV) electronic
credentialing system (system) to display vehicle registration and insurance information,
provide a driver with notification of any lapse in insurance coverage needed to meet
financial responsibility requirements, and allow the driver to update policy information by
the system.
Requires DHSMV to provide the Legislature with recommendations regarding electronic
verification of drivers’ compliance with financial responsibility laws.
Removed the sections of the bill that change the definition of “active” so that the current
definitions of “active” investigations by the Department of Financial Services’ Division of
Forensic and Investigative Services and State Fire Marshal will remain unchanged.
Made various formatting and minor technical wording changes for clarity.
The analysis is drafted to the committee substitute as passed by the Insurance & Banking
Subcommittee.