The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Banking and Insurance
BILL: CS/SB 1398
INTRODUCER: Banking and Insurance Committee and Senator DiCeglie
SUBJECT: Consumer Protection
DATE: March 24, 2023
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Moody Knudson BI Fav/CS
2. AEG
3. FP
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/SB 1398 provides the following amendments that address public adjusters, annuity
investments, mortgage loan regulations, and other issues related to consumer protections. The
bill:
Adjusters
Provides that adjusting firms must comply with the requirements that an insurance agency
must comply with regarding firm names;
Restricts a public adjuster’s compensation to 10 percent of the difference between the initial
insurance claim payment offer and the final insurance claim payment.
Further restricts public adjuster compensation to no more than $1,000 when an insurer pays
or agrees to pay the policy limit within 14 days after the date of the reported loss.
Allows the insured or claimant to cancel a contract with a public adjuster that was entered
into based on events that are the subject to a state of emergency for up to 30 days after the
event or 10 days after the date on which the contract is executed, whichever is longer;
Specifies that an insured may cancel a public adjuster’s contract without penalty or
obligation if a written estimate is not received within 60 days, and requires the contract to
provide notice of such right;
Prohibits a public adjuster from contracting with anyone other the named insured with unless
written consent is obtained from the insured;
REVISED: BILL: CS/SB 1398 Page 2
Requires public adjusters to pay third party fees unless the named insured’s consent to
contract is obtained;
Clarifies that the exemption which allows attorneys to participate in the adjustment of any
claim without an adjuster’s license does not apply to certain staff of an attorney or a law
firm;
Requires an independent or public adjuster to post their license in the principal place of
business or have it in the public adjuster’s actual possession in certain circumstances;
Specifies certain records that independent adjusters and public adjusters must retain certain
records for 5 years and requires that such records must be available for inspection by the
Department of Financial Services (“Department”) at all times;
Amends public adjuster contract requirements to include certain contact details and
compensation, amends the font type with respect to certain provisions in the contract and
proof-of-loss statement, and requires initials of the insured to be on each page that does not
contain the insured’s signature;
Provides that a public adjuster must provide the insured with an unaltered copy of the
contract at the time of execution and a copy provided to the insurer within 10 days, and
prohibits a public adjuster from providing services until such copies are remitted, amends the
contacts details required to be included in an affidavit that satisfies this requirement in certain
circumstances;
Requires the public adjuster to provide to and obtain a signed separate disclosure statement
from the insured with specified information;
Provides that a public adjuster contract which does not comply with s. 626.8796, F.S.,
regarding public adjuster contracts, is invalid and unenforceable;
Authorizes the Department to have rulemaking authority to implement s. 626.8796, F.S.; and
Amends the definition of “public adjuster.”
Annuity Investments
Amends s. 627.4554, F.S., to adopt, with minimal exceptions, the National Association of
Insurance Commissioners (NAIC) Suitability in Annuity Transactions Model Regulation
(2020);
Broadens the scope of the section to apply to any sale or recommendation of an annuity;
Amends the duties of insurers and agents to require the agent to act in the consumer’s best
interest which includes satisfying obligations regarding care, disclosure, conflict of interest,
and recordkeeping;
Specifies transactions for which an agent does not have an obligation to a consumer;
Revises an insurer’s obligation to establish a supervision system to provide additional
consumer protections;
Prohibits insurers from dissuading, or attempting to dissuade, a consumer from providing
truthful information, filing complaints, or cooperating with a complaint investigation;
Provides that any sale in compliance with comparable standards satisfies the requirements of
the section, and provides that this provision does not limit an insurer’s care obligation; and
Provides for training requirements for agents who engage in the sale of annuities;
BILL: CS/SB 1398 Page 3
Other Insurance Provisions
Amends the timeframe for which a licensee must notify the Department after the change of
name or other specified contact details to 5 days;
Provides that it is an unfair method of trade for an agent to fail to disclose a third party that
receives certain remuneration for specified marketing practices for policy of health
insurance;
Shortens the timeframe in which the hurricane deductible on an insurance policy can be
applied to a claim, amends the definition of “hurricane” and defines the term “hurricane
deductible;” and
Reduces the underwriting timeframe on property insurance from 90 days to 60 days.
Mortgage Loan Regulations
Expands the options of where a mortgage lender may transact business;
Specifies that a remote location must be operated under the full charge, control, and
supervision of the licensee;
Provides when a licensee may allow loan originators to work from a remote location; and
Amends the definition of “branch office” and defines the term “remote location.”
Conduct of Money Services Businesses
Specifies that a licensee may not cash corporate checks where the aggregate face amount of
all corporate checks cashed for each payee exceeds 200 percent of the payee’s workers’
compensation policy coverage amount during the same policy coverage period; and
Provides that a person who violates this provisions commits a felony of the third degree.
Crowd-funding Campaigns
Requires organizers of crowd-funding campaigns related to a disasters to assemble and
provide accounting of all donations received and expended by the campaign;
Requires the crowd-funding platform to publish all received accountings; and
Defines several terms, including “crowd-funding campaign,” “crowd-funding platform,”
“disaster,” and “organizer.”
Distributed Energy Generation Platform
Adds three disclosures related to the sale or lease of a distributed energy generation system
which must be separate from the agreement between the seller or lessor and buyer and lessee;
and
Requires that a customer contact center phone number for the Department of Business and
Professional Regulation be included in the sale or lease agreement.
Motor Vehicle Service Agreements
Provides that service agreements that maintains a contractual liability insurance policy in lieu
of maintaining unearned premium reserve may have a policy with certain terms. BILL: CS/SB 1398 Page 4
Warranty Associations
Revises the definition of the term “manufacturer” for purposes of part III of ch. 634, F.S., to
exclude a business that maintains outstanding debt obligations, if any, rated in the top four
rating categories by a recognized rating service, and makes conforming changes to s.
634.406, F.S.
Fiscal Impact
See Section V. Fiscal Impact Statement.
Effective Date
The bill, except as otherwise provided, is effective July 1, 2023.
II. Present Situation:
Insurance
In January 2003, the Financial Services Commission (“Commission”) was created within the
Department.
1
The Commission is composed of the Governor, the Attorney General, the Chief
Financial Officer, and the Commissioner of Agriculture.
2
The Commission consists of the Office
of Insurance Regulation (OIR) and the Office of Financial Regulation (OFR).
3
The OIR is responsible for the regulation of activities related to insurers and other risk bearing
entities, including, amongst other things, licensing, rates, policy forms market conduct, claims,
issuance of certificates of authority.
4
A person may not act, advertise, or hold himself or herself
out as an insurance agent,
5
insurance adjuster,
6
or customer representative unless he or she is
1
Section 20.121(3), F.S.
2
Id.
3
Section 20.121(3)(a), F.S.
4
Section 20.121(3)(a), F.S.
5
Section 626.015(3), F.S., defines “agent” as a general lines agent, life agent, health agent, or title agent, or all such agents,
as indicated by context. The term “agent” includes an insurance producer or producer, but does not include a customer
representative, limited customer representative, or service representative. Section 626.015(6), F.S., defines “customer
representative” as an individual appointed by a general lines agent or agency to assist that agent or agency in transacting the
business of insurance from the office of the agent or agency. Section 626.015(13), F.S., defines “limited customer
representative” as a customer representative appointed by a general lines agent or agency to assist that agent or agency in
transacting only the business of private passenger motor vehicle insurance from the office of that agent or agency. Section
626.015(19), F.S., defines “service representative” as an individual employed by an insurer or managing general agent for the
purpose of assisting a general lines agent in negotiating and effecting insurance contracts when accompanied by a licensed
general lines agent.
6
Section 626.015(2), F.S., defines “adjuster” as a public adjuster as defined in s. 626.854, F.S., or an all-lines adjuster as
defined in s. 626.8548, F.S. which defines the term as a person who, for money, commission, or any other thing of value,
directly or indirectly undertakes on behalf of a public adjuster or an insurer to ascertain and determine the amount of any
claim, loss, or damage payable under an insurance contract or undertakes to effect settlement of such claim, loss, or damage.
The term also includes any person who, for money, commission, and any other thing of value, directly or indirectly solicits
claims on behalf of a public adjuster, but does not include a paid spokesperson used as part of a written or an electronic BILL: CS/SB 1398 Page 5
licensed by the Department and appointed by an appropriate appointing entity or person.
7
To
obtain a license, such individuals must comply with certain requirements, including submit an
application which contains specified information such as the applicant’s name, address, and other
contact information.
8
A licensee has an obligation to notify the Department, in writing, within 30
days after a change of name, residence address, principal business street, address, mailing
address, contract telephone numbers, including a business telephone number, or e-mail address.
9
A licensee who failure to notify the Department of such change within the 30 days is subject to a
fine not to exceed $250 for a first offence and a fine of at least $500 or suspension or revocation
of certain licenses for a subsequent offense.
10
Public Adjusters
A public adjuster is any person, except a duly licensed attorney at law as exempted under s.
626.860, F.S., who, for money, commission, or any other things of value, directly or indirectly
prepares, completes, or files an insurance claim for an insured
11
or third-party claimant, or who,
for money, commission, or any other thing of value, acts on behalf of, or aids an insured or third-
party claimant in negotiating for or effecting the settlement of a claim or claims for loss or
damage covered by an insurance contract, or who, advertises for employment as an adjuster of
such claims.
12
The term also includes any person who, for money, commission, or any other
thing of value, directly or indirectly solicits, investigates, or adjusts such claims on behalf of the
public adjuster, as insured, or a third-party claimant.
13
The term excludes several categories of
persons who do not fall within the definition, such as licensed health care providers or employees
thereof who prepares or files health insurance claim forms on behalf of a patient.
14
Prohibited acts
Section 626.854, F.S., prohibits public adjusters from engaging in certain conduct, including
giving legal advice or acting on behalf of any person negotiating or settling certain claims.
15
An
attorney who is licensed to practice law in Florida and in good standing with The Florida Bar is
not required to hold a separate license under ch. 626, F.S., to adjust or participate in the
adjustment of any claim, loss, or damage arising under policies or insurance contracts.
16
Public adjusters are also prohibited from directly or indirectly soliciting an insured or claimant
except for during specified times.
17
A public adjuster or any other person who circulates or
disseminates any advertisement, announcement, or statement containing any assertion,
advertisement or a person who photographs or inventories damaged property or business personal property if such person
does not otherwise adjust, investigate, or negotiate for or attempt to effect the settlement of a claim.
7
Section 626.112(1)(a), F.S.
8
Section 626.171, F.S.
9
Section 626.551, F.S.
10
Id.
11
Section 626.854(4), F.S., defines “insured,” for purposes of this section, as only the policyholder and any beneficiaries
named or similarly identified in the policy.
12
Section 626.854(1), F.S.
13
Id.
14
Section 626.854(2)(a), F.S.
15
Section 626.854(3), F.S.
16
Section 626.860, F.S.
17
Section 626.854(5), F.S. BILL: CS/SB 1398 Page 6
representation, or statement about the business of insurance that is untrue, deceptive, or
misleading commits an unfair and deceptive insurance trade practice, and Florida law sets out
specific statements which are considered deceptive or misleading.
18
Contracts and Disclosures
All contracts for public adjuster services and proof-of-loss statements must be in writing and
include a disclosure relating to injuring, defrauding, or deceiving an insurer or insured and
committing a crime if proof of loss or estimate of claims is based on false, incomplete, or
misleading information.
19
A public adjuster contract for a property and casualty claim must
contain certain information, such as the full name and certain contact details of the public
adjuster and insured.
20
Such contract must state the percentage of compensation for the public
adjuster’s services, type of claim, and signatures of the public adjuster and named insureds.
21
An
unaltered copy of the executed contract must be provided to the insurer within 30 days after the
execution. Public adjusting firms that adjust claims primarily for commercial entities that meet
certain requirements is deemed to comply with these provisions if the public adjusting firm
remits to the insurer a signed affidavit that contains specified information relating to:
The name and contact details of the public adjuster, public adjuster apprentice, and insured;
The name of the public adjusting firm;
An attestation that the compensation will not exceed the limits provided by law; and
The type of claim.
22
An insured or claimant may cancel a contract with a public adjuster without penalty within 10
days after the date on which the contract is executed.
23
The reason for providing the 10 day
period is to allow the consumer to have time to make an informed decision in the wake of a
storm.
24
A public adjuster’s contract must contain the following statement in minimum 18-point
bold type which states:
“You, the insured, may cancel this contract for any reason without penalty or
obligation to you within 10 days after the date of this contract by providing notice
to (name of public adjuster), submitted in writing and sent by certified mail,
return receipt requested, or other form of mailing that provides proof thereof, at
the address specified in the contract.”
25
A public adjuster is required to provide to the insured or claimant a written estimate of the loss to
assist in any claim for insurance proceeds within 60 days after the date of the contract.
26
18
Section 626.854(7), F.S. Section 626.9541, F.S., provides for unfair methods of competition and unfair or deceptive acts or
practices.
19
Section 626.8796(1), F.S.; section 626.8797, F.S.
20
Section 626.8796(2), F.S.
21
Id.
22
Section 626.8796(2), F.S.
23
Section 626.854(10), F.S.
24
The Department of Financial Services, 2023 Legislative Bill Analysis for SB 1398, p. 3, Mar. 16, 2023 (hereinafter cited as
“DFS 2023 Agency Analysis for SB 1398”) (on file with Senate Committee on Banking and Insurance).
25
Section 626.854(6), F.S.
26
Section 626.854(14), F.S. BILL: CS/SB 1398 Page 7
Charges, Fees, and Gifts
Florida law prohibits a public adjuster from charging a fee unless a written contract is entered
into prior to the payment of the claim, and restricts certain fees and charges of a public adjuster
who enter into contracts with an insured or claimant.
27
For instance, a public adjuster’s
compensation may not exceed twenty percent of the amount of insurance claim payments or
settlements for claims that are not based on an emergency, and ten percent based on events that
are based on an emergency.
28
A public adjuster may not give or offer to give a client or
prospective client a loan or advance, or give or offer to give any merchandise worth more than
$25 to any individual for the purpose of advertising or inducing such individual to enter into a
contract.
29
Office and Records
Independent or public adjusters must maintain a place of business in Florida which is accessible
to the public but may be a home office.
30
Such adjusters must keep the “usual and customary
records” relating to the transactions covered under the license. Records related to a specific claim
must be retained in the adjuster’s place of business for not less than 5 years after completion of
the adjustment.
31
An adjuster is not prohibited from returning or delivering certain documents to
the insurer or insured.
32
Annuity Investments
The purpose of s. 627.4554, F.S., annuity
33
investments, is to set out requirements for which
insurers
34
must comply when making recommendations
35
to consumers regarding annuity
products, and to establish a system for supervising such recommendations to ensure that
consumers’ insurance needs and financial objectives are met at the time of the transaction.
36
The
section applies to any recommendation made by an insurer or agent
37
to a consumer to purchase,
27
Section 626.854(10), F.S.
28
Section 626.854(10)(b), F.S.
29
Section 626.854(8) and (9), F.S.
30
Section 626.875(1), F.S.
31
Section 626.875(2), F.S.
32
Id.
33
Section 627.4554, F.S., defines “annuity” as an insurance product under state law which is individually solicited, whether
classified as an individual or group annuity.
34
The term “insurer” has the same meaning as provided in s. 624.03, F.S. Section 627.4554(3)(d), F.S.
35
Section 627.4554(3)(e), F.S., defines “recommendation” as advice provided by an insurer or its agent to a consumer which
would result in the purchase, exchange, or replacement of an annuity in accordance with that advice. Section 627.4554(3)(f),
F.S., defines “replacement” as a transaction in which a new policy or contract is to be purchased and it is known or should be
known to the proposing insurer or its agent that by reason of such transaction an existing policy or contract will be: 1.
Lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer, or otherwise terminated; 2.
Converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value due to the use
of nonforfeiture benefits or other policy values; 3. Amended so as to effect a reduction in benefits or the term for which
coverage would otherwise remain in force or for which benefits would be paid; 4. Reissued with a reduction in cash value; or
5. Used in a financed purchase.
36
Section 627.4554(1), F.S.
37
The term “agent” has the same meaning as provided in s. 626.015, F.S. Section 627.4554(3)(a), F.S. BILL: CS/SB 1398 Page 8
exchange, or replace an annuity which results in the consumer purchasing, exchanging, or
replacing the recommended product.
38
The section, however, does not apply to the following:
Direct-response solicitation where there is no recommendation based on information
collected from the consumer;
Contracts used to fund:
o An employee pension or welfare benefit plan that is covered by the federal Employee
Retirement and Income Security Act;
o Certain plans of the Internal Revenue Code, if established or maintained by an
employer;
39
o A government or church plan,
40
a government or church welfare benefit plan, or a
deferred compensation plan of a state or local government or tax-exempt
organization;
41
o A nonqualified deferred compensation arrangement established or maintained by an
employer or plan sponsor;
o Settlements or assumptions of liabilities associated with personal injury litigation or a
dispute or claim-resolution process; or
o Formal prepaid funeral contracts.
42
When making a recommendation to purchase or exchange an annuity product which results in an
insurance transaction or series of insurance transactions, the insurer or agent must have a
reasonable basis to believe, based on the consumer’s suitability information,
43
that the
recommendation is suitable for the consumer and a reasonable basis to believe all of the
following:
The consumer has been reasonably informed of various features of the annuity;
44
The consumer would benefit from certain features of the annuity;
45
The particular annuity as a whole, underlying subaccounts to which funds are allocated,
riders or similar enhancements are suitable; and, in respect of exchange or replacement, the
transaction as a whole is suitable for the consumer based on his or her suitability information;
An exchange or replacement is suitable after considering whether the consumer:
o Will incur a surrender charge, be subject to a new surrender period, lose existing
benefits, be subject to increased fees;
o Would benefit from product enhancements and improvements; and
38
Section 627.4554(2), F.S.
39
Section 627.4554(4)(b)2., F.S., specifies the plans that are exempt from this section includes s. 401(a), s. 401(k), s. 403(b),
s. 408(k), or s. 408(p) of the Internal Revenue Code.
40
Section 414, I.R.C.
41
Section 457, I.R.C.
42
Section 627.4554(4), F.S.
43
Section 627.4554(3)(g), F.S., defines “suitability information” as information related to the consumer which is reasonably
appropriate to determine the suitability of a recommendation made to the consumer, including the following: 1. Age; 2.
Annual income; 3. Financial situation and needs, including the financial resources used for funding the annuity; 4. Financial
experience; 5. Financial objective; 6. Intended use of the annuity; 7. Financial time horizon; 8. Existing assets, including
investment and life insurance holdings; 9. Liquidity needs; 10. Liquid net worth; 11. Risk tolerance; and 12. Tax status.
44
Section 627.4554(5)(a)1., F.S. provides examples such as the potential surrender period and charge, potential tax liability,
mortality and expense fees, investment advisory fees, potential charges for and features of riders, limitations on interest
returns, insurance and investment components, and market risk.
45
Section 627.4554(5)(a)2., F.S., provides examples such as tax-deferred growth, annuitization, or the death or living benefit. BILL: CS/SB 1398 Page 9
o Has had another annuity exchange or replacement within the preceding 36 months.
46
Before executing a transaction for an annuity resulting from a recommendation, an insurer or its
agent must make reasonable efforts to obtain the consumer’s suitability information.
47
The
information must be collected on a specified form that must be signed by the applicant and
agent.
48
Such form must be in at least 12-point type and be readily understandable by the agent
and consumer.
49
A true and correct copy of the executed form must be provided to the insurer by
the responsible party within 10 days after execution of the form, and must be provided to the
consumer no later than the date of delivery of the contract.
50
An insurer may not issue a recommended annuity to a consumer unless the insurer has
reasonable basis to believe the annuity is suitable based on the consumer’s suitability
information.
51
An insurer’s issuance of an annuity must be reasonable based on all of the
circumstances known at the time of the issuance, but an insurer does not have an obligation to a
consumer under certain provisions of the section if:
A recommendation has not been made;
A recommendation was made and is later found to be based on materially inaccurate
information provided by the consumer;
A consumer refuses to provide relevant suitability information and the annuity transaction is
not recommended; or
A consumer decides to enter into an annuity transaction that is not based on a
recommendation of an insurer or its agent.
52
At the time of the sale, the agent and the agent’s representative must:
Make a record of any recommendation to the consumer;
Obtain the consumer’s signed statement documenting his or her refusal to provide suitability
information, if applicable; and
Obtain the consumer’s signed statement acknowledging that an annuity transaction is not
recommended, if applicable.
Before executing an exchange or a replacement of an annuity contract resulting from a
recommendation, the agent must provide the consumer with a specified form which compares the
difference between the existing annuity contract and the annuity contract being recommended to
determine the suitability and benefits to the consumer.
53
Such form needs to be signed by the
agent and the insured, and must be to the insurer within 10 days after execution of the form and
to the consumer no later than the date of delivery of the contract.
54
46
Section 627.4554(5)(a), F.S.
47
Section 627.4554(5)(b), F.S.
48
Id.
49
Id.
50
Id.
51
Section 627.4554(5)(c), F.S.
52
Section 627.4554(5)(d), F.S.
53
Section 627.4554(5)(f), F.S.
54
Id. BILL: CS/SB 1398 Page 10
An insurer must establish a supervision system that is reasonably designed to ensure the insurer
and agent’s compliance with s. 627.4554, F.S., and must include, but is not limited to:
Maintaining reasonable procedures to inform its agents of the requirements under Florida law
and incorporating them into training manuals;
Establishing standards for agent product training;
Providing product-specific training and training materials that explain all material features of
its annuity products to its agents;
Maintaining procedures for the review of each recommendation before issuance of an annuity
to ensure there is reasonable basis for determining that the recommendation is suitable, such
as review procedures;
Maintaining reasonable procedures to detect recommendations that are not suitable, such as
confirmation of consumer suitability information, systematic customer surveys, and customer
interviews; and
Annually providing a report to senior managers which details a review, along with
appropriate testing to determine the effectiveness of the supervision system, the exceptions
found, and any corrective action taken or recommended.
55
An insurer is not required to include in its supervision system agent recommendations to
consumers of products other than annuities offered by the insurer.
56
An insurer may contract with
a third-party to perform any function required with respect to the supervisory system,
57
but the
insurer must include the supervision of such function as part of the procedures required to be
conducted as part of the system which include, but are not limited to:
Monitoring and, as appropriate, conducting audits to ensure that the contracted function is
properly performed; and
Annually obtaining a certification from a senior manager who has responsibility for the
contracted function that the manager has a reasonable basis for representing that the function
is being properly performed.
58
An insurer is responsible for taking appropriate corrective action and may be subject to penalties
notwithstanding any contract for the performance of a function by a third-party and regardless of
the insurer’s compliance with these provisions in this paragraph regarding contracting with third-
parties to perform functions.
59
An insurer may not dissuade, or attempt to dissuade, a consumer from:
Truthfully responding to an insurer’s request for confirmation of suitability information;
Filing a complaint; or
Cooperating with the investigation of a complaint.
60
Sales made in compliance with Financial Industry Regulatory Authority (FINRA) or a
succeeding agency (FINRA) requirements relating to the suitability and supervision of annuity
55
Section 627.4554(5)(g)1., F.S.
56
Section 627.4554(5)(g)2., F.S.
57
Section 627.4554(5)(g)3., F.S.
58
Section 627.4554(5)(g)3., F.S.
59
Section 627.4554(5)(g)3.b., F.S.
60
Section 627.4554(h), F.S. BILL: CS/SB 1398 Page 11
transactions satisfy the requirements of s. 627.4554, F.S. This applies to FINRA broker-dealer
sales of variable annuities and fixed annuities if the suitability and supervision is similar to those
applied to variable annuity sales.
61
These provisions do not limit the Department’s or OIR’s
ability to investigate or take any enforcement actions against insurers or agents.
62
For this
paragraph to apply, the insurer must:
Monitor the FINRA member broker-dealer using information collected in the normal course
of an insurer’s business; and
Provide to the FINRA member broker-dealer information and reports that are reasonably
appropriate to assist the FINRA member broker-dealer in maintaining its supervision
system.
63
Insurers and agents are required to maintain or be able to make available to the Department or
OIR records of the information collected from the consumer with respect to an annuity insurance
transaction, and other information relied upon in making the recommendation, for 5 years after
the insurance transaction is completed.
64
An insurer may retain records on behalf of its agent.
65
Records may be maintained in various specified forms or by any process that accurately
produces the actual document.
66
An insurer is responsible for compliance with s. 627.4554, F.S., and, if violated because of action
or inaction by the insurer or its agent that causes harm to the consumer, the OIR may order the
insurer to take reasonably appropriate corrective action and may impose appropriate sanctions
and penalties.
67
The Department may order:
An agent to take reasonably appropriate corrective action for a consumer harmed by a
violation, including monetary restitution of penalties or fees incurred by the consumer and
impose appropriate penalties and sanctions;
A managing general agency or insurance agency that employs or contracts with an agent to
sell or solicit the sale of annuities to consumers to take reasonably appropriate corrective
action for a consumer harmed by a violation.
68
The Department must order an agent to pay restitution to a consumer who has been deprived of
money by the agent’s misappropriation, conversion, or unlawful withholding of money
belonging to the consumer, and the amount may not exceed the amount misappropriated,
converted, or unlawfully withheld.
69
This provision does not limit the consumer’s right to seek
other remedies. To the extent that corrective action for the consumer is taken promptly after a
violation is discovered, any applicable penalty under the Florida Insurance Code for a violation
must be reduced or eliminated, as appropriate, according to a schedule adopted by the
Department or OIR.
70
61
Section 627.4554(i), F.S.
62
Id.
63
Id.
64
Section 627.4554(6), F.S.
65
Id.
66
Id.
67
Section 627.4554(7)(a), F.S.
68
Section 627.4554(7)(a)1. and 2., F.S.
69
Section 627.4554(7)(c), F.S.
70
Section 627.4554(7)(d), F.S. BILL: CS/SB 1398 Page 12
In 2003, the National Association of Insurance Commissioners (NAIC) created the Suitability in
Annuity Transactions Model Regulations in 2003 which were revised with updated standards in
2020 (“NAIC Model Regulation”).
71
According to the NAIC, there are 27 states that have
adopted the either the 2003 or 2020 version of the NAIC Model Regulation as of 2022.
72
The
NAIC Model Regulation requires agents to act in the best interest of consumers when making
recommendations regarding annuities, and requires insurers to establish and maintain a system to
supervise procedures to ensure compliance with the regulation.
73
It also contains, amongst other
things, duties for which insurers and agents must comply, training requirements, recordkeeping,
and compliance mitigation provisions.
74
Insurance Agency Firm Name
An insurance agency’s
75
firm name must comply with certain provisions under Florida law.
76
The Department may disapprove the use of any true or fictitious name, except the bona fide
natural name of an individual, by an insurance agency for any of the following reasons:
The name interferes with or is too similar to a name already in use by another agency or
insurer;
The use of the name may mislead the public;
The name states or implies that the agency is an insurer, motor club, hospital service plan,
state or federal agency, charitable organization, or entity that primarily provides advice and
counsel rather than sells or solicits insurance, or is entitled to engage in insurance activities
not permitted under the license held or applied for by the licensee. This provision does not
prohibit the use of the terms “state” or “states,” and use of such terms does not imply that the
agency is a state agency.
The name contains the term “Medicare” or “Medicareid.” An insurance agency whose name
contains such terms and is licensed as of July 1, 2021 may continue to use that name until
June 30, 2023 as long as the license remains valid. Insurance agencies whose names contain
such terms will automatically expire on July 1, 2023, unless the terms are removed from the
name before that date.
77
Notice of Cancellation for Certain Policies
Insurers must inform the first-named policyholder for coverage of property, casualty (except for
mortgage guaranty), surety, or marine insurance (except for certain motor vehicle insurance)
with 45 days’ advance written notice of cancellation or termination with when otherwise
71
Zimmermann, S., NAI Annuity Suitability Training Requirements, Annuity.Org, Feb. 20, 2023, available at: NAIC Annuity
Suitability Training Requirements (last visited Mar. 19, 2023).
72
Silvestrini, E., Annuity Regulations, Annuity.Org, Feb. 20, 2023, available at: Annuity Regulations | State & Federal
Government Involvement (last visited Mar. 19, 2023).
73
The NAIC, Suitability in Annuity Transactions Model Regulation, Spring 2020, available at: MDL-275 (naic.org) (last
visited Mar. 19, 2023).
74
Id.
75
Section 626.015(10), F.S., defines “insurance agency” as a business location at which an individual, firm, partnership,
corporation, association, or other entity, other than an employee of the individual, firm, partnership, corporation, association,
or other entity other than an insurer as defined by s. 624.03, F.S., or an adjuster, engages in any activity or employs
individuals to engage in any activity which by law may be performed only by a licensed insurance agent.
76
Section 626.602, F.S.
77
Id. BILL: CS/SB 1398 Page 13
specified in certain provisions.
78
When cancellation is due to failure to pay a premium, at least 10
days’ written notice of cancellation and the reason for the cancellation must be provided to the
insured.
79
When cancellation or termination occurs during the first 90 days and is not a result of
nonpayment of premium, at least 20 days’ written notice and the reason for cancellation or
termination must be given to the insured except where there has been a material misstatement,
misrepresentation, or failure to comply with the underwriting requirements.
80
After 90 days, no
such policy may be cancelled by the insurer unless there has been a material misstatement, a
failure to pay the premium, a failure to comply with underwriting requirement within a specified
time, or a substantial change in the risk covered by the policy or when cancellation is given for a
class of insureds.
81
With respect to personal lines or commercial residential property insurance policies, such as any
homeowner, mobile home owner, farm owner, condominium association, condominium unit
owner, apartment building, the insurer must give the first-named insured written notice at least
120 days before the effective date of the nonrenewal, cancellation, or termination.
82
Such
insurers must receive 10 days’ advance notice of cancellation for a failure to pay a premium, or
20 days’ notice for a reason other than nonpayment if cancellation occurs within the first 90 days
of coverage.
83
An insurer may not cancel the policy after it has been in effect for 90 days unless
there has been a material misstatement, nonpayment, a failure to comply within underwriting
within a specified time, a substantial change in the risk covered by the policy or unless the
cancellation is for as class of insureds.
84
Unfair Methods of Competition and Unfair or Deceptive Acts
The Unfair Insurance Trade Practices Act
85
provides that no person may engage in any unfair
method of competition or an unfair or deceptive act or practice in relation to the business of
insurance.
86
Section 626.9541, F.S., sets out several acts or practices that constitute unfair
methods of competition and unfair or deceptive acts, such as:
Misrepresentations and false advertising of insurance policies;
False information and advertising;
Defamation;
Boycott, Coercion, and intimidation;
False statements and entries;
Unfair discrimination;
Unlawful rebates; and
Unfair claim settlement practices.
78
Section 627.4133(1)(a), F.S.
79
Section 627.4133(1)(b)1., F.S.
80
Section 627.4133(1)(b)2., F.S.
81
Id.
82
Section 627.4133(2)(b), F.S.
83
Section 627.4133(2)(b)1. and 2., F.S.
84
Section 627.4133(2)(b)3., F.S.
85
Section 626.951(2), F.S.
86
Section 626.9521(1), F.S. BILL: CS/SB 1398 Page 14
Misrepresentations and false advertising of insurance policies means knowingly making, issuing,
circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular,
statement, sales presentation, omission, comparison, or property and casualty certificate of
insurance altered after being issued, which, for instance, misrepresents the benefits, advantages,
conditions, or terms of any insurance policy or is misleading, or is a misrepresentation, as to the
financial condition of any person or as to the legal reserve system upon which any life insurer
operates.
87
Except for specified penalties to the contrary and subject to any other applicable penalties, a
person who violates any the Unfair Insurance Trade Practices Act may be fined an amount not
greater than $5,000 for each nonwillful violation and not greater than $40,000 for each willful
violation.
88
An insurer may not be fined more than an aggregate amount of $20,000 for all
nonwillful violations, or $200,000 for all willful violations, arising out of the same action.
89
Hurricane Deductibles
Residential coverage includes both personal lines residential coverage
90
and commercial lines
residential coverage,
91
and includes policies that provide coverage for particular perils such as
windstorm
92
and hurricane.
93
“Hurricane coverage” is the loss or damage caused by the peril of
windstorm during a hurricane, which includes damage to the interior of a building or to property
inside a building caused by rain, snow, sleet, hail, sand, or dust if the direct force of a windstorm
first damages the building, causing an opening through which rain, snow, sleet, hail, sand, or
dust enters and causes damage.
94
The term “hurricane,” as used in this paragraph, is a storm
system that has been declared to be a hurricane by the National Hurricane Center of the National
Weather Service. The duration of the hurricane includes the time period, in Florida:
Beginning at the time a hurricane watch or hurricane warning is issued for any part of Florida
by the National Hurricane Center of the National Weather Service;
Continuing for the time period during which the hurricane conditions exist anywhere in
Florida; and
Ending 72 hours following the termination of the last hurricane watch or hurricane warning
issued for any part of Florida by the National Hurricane Center of the National Weather
Service.
95
87
Section 626.9541(1)(a), F.S.
88
Section 626.9621(2), F.S.
89
Id.
90
Types of personal lines residential coverage include homeowner, mobile home owner, dwelling, tenant, condominium unit
owner, or cooperative unit owner. Section 627.4025(1), F.S.
91
Types of commercial lines residential coverage includes condominium association, cooperative association, apartment
building, and similar policies, including policies covering the common elements of a homeowners association. Section
627.4025(1), F.S.
92
Section 627.4025(2)(b), F.S., defines “windstorm,” for purposes of defining the term “hurricane coverage,” means wind,
wind gusts, hail, rain, tornadoes, or cyclones caused by or resulting from a hurricane which results in direct physical loss or
damage to property.
93
Section 627.4025(1), F.S.
94
Section 627.4025(2)(a), F.S.
95
Section 627.4025(2)(c), F.S. BILL: CS/SB 1398 Page 15
According to the Insurance Services Office, there has been $159.1 billion in insured losses
caused by hurricanes between 1993 and 2013.
96
In 1992, after Hurricane Andrew hit South
Florida, hurricane deductibles were introduced to deal with the major losses caused by the major
storms.
97
Florida law does not define “hurricane deductible,” but according to the NAIC, a
deductible is the amount of loss for which the policyholder is responsible to pay before any loss
is covered by the insurer.
98
Hurricane deductibles may be a fixed amount but usually are a
percentage of the insured’s home value.
99
Hurricane deductibles are usually higher than other
peril deductibles because of the catastrophic damage caused by hurricanes,
100
and typically range
from between 1% to 10% of the home value.
101
Laws in nineteen states, including Florida, and
the District of Columbia contain to some form of hurricane or storm deductible.
102
Motor Vehicle Service Agreements
A person may not transact, administer, market, or attempt any of these activities with respect to a
service agreement
103
business in Florida without a license.
104
To qualify for and maintain a
license, a service agreement company (“company”) must comply with applicable Florida laws
(including the Florida Insurance Code), rules and charter powers, and comply with specified
requirements, including, in part:
Being a solvent corporation;
Furnishing the OIR with evidence that the management of the company is competent and
trustworthy, and can successfully and lawfully manage its affairs;
Making a deposit required under s. 634.052, F.S.;
Maintaining the requires reserves and the required ratio of liquid assets to the required
reserves;
Having and maintaining net assets of $500,000; and
Establishing and maintaining an unearned premium reserve that meets certain requirements,
including:
96
The NAIC, Hurricane Deductibles, May 11, 2022, available at: Hurricane Deductibles (naic.org) (hereinafter cited as
“NAIC Hurricane Deductible”) (last visited Mar. 19, 2023).
97
Id.
98
Id.
99
The NAIC Hurricane Deductible.
100
The DFS Agency Analysis for SB 1398 at p. 3; The NAIC Hurricane Deductible.
101
The NAIC Hurricane Deductible.
102
Id.; Howard, P., and Gimbel, J., Hurricane Deductibles in 2023: Your State-by-State Guide, Policygenius, Dec. 30, 2022,
available at: Hurricane Deductibles in 2023: Your State-By-State Guide - Policygenius (last visited Mar. 19, 2023)
(summarizing the laws on hurricane deductibles in 19 states).
103
Section 634.011(8), F.S., defines “motor vehicle service agreement” or “service agreement” as a contract or agreement
indemnifying the service agreement holder for the motor vehicle listed on the service agreement and arising out of the
ownership, operation, and use of the motor vehicle against loss caused 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; however, nothing in this part
shall prohibit or affect the giving, free of charge, of the usual performance guarantees by manufacturers or dealers in
connection with the sale of motor vehicles. Transactions exempt under s. 624.125, F.S., are expressly excluded from this
definition and are exempt from the provisions of this part. The term “motor vehicle service agreement” includes any contract
or agreement that provides: (a) for the coverage or protection and which is issued or provided in conjunction with an
addictive produce applied to the motor vehicle that is the subject of such contract or agreement; (b) For payment of vehicle
protection expenses as defined in s. 634.011(8)(b)1.a., F.S.
104
Section 634.031(1), F.S. BILL: CS/SB 1398 Page 16
o The unearned premium reserve consists of unencumbered assets equal to a minimum
of 50 percent of the unearned gross written premium of each service agreement and
must amortize this reserve pro rata over the duration of the service agreement;
o A company utilizing the 50-percent reserve must not allow its ratio of gross written
premium to net assets to exceed 10 to 1; and
o The company must deposit with the DFS securities of the type eligible for deposit by
insurers under s. 625.52, F.S., equal to 15 percent of the unearned premium reserve;
or
Does not establish and maintain an unearned premium reserve if the company secures and
maintains contractual liability insurance in accordance with the following:
o Coverage of 100 percent of the claim exposure is obtained from an insurer approved
by the office which meets certain criteria;
o The contractual liability insurance policy binds its issuer to pay or cause to be paid to
the service agreement holder all legitimate claims and cancellation refunds if the
company does not meet its contractual obligations;
o If the issuer of the contractual liability policy is fulfilling the service agreements
covered by contractual liability policy and the holder cancel the service agreement,
the issuer must make a full refund of the unearned premium to the consumer in
certain circumstances;
o The policy’s cancellation, termination, or nonrenewal is subject to 90 days written
notice by the insurer to the OIR; and
o The company must provide the OIR with the claims statistics.
105
Mortgage Loan Regulations
The OFR is responsible for the regulation of banks, credit unions, other financial institutions,
finance companies, and securities.
106
The OFR has a Division of Consumer Finance which is
responsible for the administration and enforcement of ch. 494, F.S.
107
that licenses and regulates
the individuals and businesses in the mortgage business, including loan originators,
108
mortgage
brokers,
109
and mortgage lenders.
110
A person who acts in any of these capacities must be
licensed.
111
105
Section 634.041, F.S.
106
Section 20.121(3)(a)2., F.S.
107
Section 494.0011(1), F.S.
108
Section 494.001(18), F.S., defines “loan originator” as an individual who, directly or indirectly, solicits or offers to solicit
a mortgage loan, accepts, or offers to accept an application for a mortgage loan, negotiates or offers to negotiate the terms or
conditions of a new or existing mortgage loan on behalf of a borrower or lender, or negotiates or offers to negotiate the sale
of an existing mortgage loan to a noninstitutional investor for compensation or gain.
109
Section 494.001(23), F.S. defines “mortgage broker” as a person conducting loan originator activities through one or more
licensed loan originators employed by the mortgage broker or as independent contractors to the mortgage broker.
110
Section 494.001(24), F.S., defines “mortgage lender” as a person making a mortgage loan or servicing mortgage loan for
others, or, for compensation or gain, directly or indirectly, selling or offering to sell a mortgage loan to a noninstitutional
investor. A mortgage lender may act as a mortgage broker. Section 494.0073, F.S.
111
Sections 494.00312, 494.00321, and 494.00611, F.S. BILL: CS/SB 1398 Page 17
A mortgage broker and mortgage lender who makes loans in Florida must transact business from
a principal place of business.
112
Mortgage brokers and mortgage lenders may separately license
branch offices.
113
A “branch office” is a location, other than a mortgage broker’s or mortgage
lender’s principal place of business:
The address of which appears on business cards, stationary, or advertising used by the
licensee in connection with business conducted under ch. 494, F.S.;
At which the licensee’s name, advertising or promotional materials, or signage suggests that
mortgage loans are originated, negotiated, funded, or services; or
At which mortgage loans are originated, negotiated, funded, or services by a licensee.
114
The OFR must issue a branch office after determining that the mortgage broker or mortgage
lender has submitted a completed branch office application form, which must contain specified
information, and an initial nonrefundable fee of $225.
115
Branch office licenses must be renewed
at the same time as mortgage broker or mortgage lender licenses.
116
Each branch office must be
operated by the “full charge, control, and supervision” of a principal loan originator and branch
manager.
117
Operating a branch office without the required license, designated principal loan
originator, or branch manager is grounds for disciplinary action.
118
Licensees are required to maintain books, accounts, records and documents necessary to
determine compliance with ch. 494, F.S., at their principal place of business,
119
but the OFR may
authorize a licensee to maintain such records at an alternative location.
120
Conduct of Money Services Businesses
Ch. 560, F.S., sets out provisions on the conduct of money services businesses (MSB),
specifying, in part:
A licensee may transact MSB only under the legal name under which the person is licensed;
The payment instrument must be endorsed using the legal name under which the licensee is
licensed in certain circumstances;
A licensee may not accept or cash a payment instrument from a person who is not the
original payee with limited exception; and
A licensee must report all suspicious activity to the OIR.
121
Pursuant to s. 560.310, F.S., the OIR must require a licensee to submit certain information to the
check cashing database or electronic log, before entering into each check cashing transaction for
112
Sections 494.0039 and 494.0067(1), F.S. Section 494.001(31), F.S., defines “principal place of business” as a mortgage’s
broker’s or mortgage lender’s primary business office, the street address, or physical location that is designated on the
application for licensure or any amendment to such application.
113
Sections 494.0036(1) and 494.0066(1), F.S.
114
Section 494.001(3), F.S.
115
Sections 494.0036(2) and 494.0066(2), F.S.
116
Section 494.0036(3) and 494.0066(3), F.S.
117
Sections 494.0035 and 494.00665, F.S.
118
Section 494.00255(1)(q) and (r), F.S.
119
Section 494.0016(1), F.S.
120
Section 494.0016(2), F.S.
121
Section 560.309, F.S. BILL: CS/SB 1398 Page 18
each payment instrument being cashed.
122
A person who knowingly violates this section commits
a felony of the third degree.
123
Crowdfunding Campaigns
Crowdfunding is a recent method used to raise funds online from a large number of people who
are interested in a crowdfunding campaign.
124
Campaigns may support a wide range of ideas and
ventures, and usually share information about the project, cause, or idea to decide whether to
invest in the campaign based on the “collective wisdom of the crowd.”
125
Some of the top
crowdfunding sites include GoFundMe, StartEngine, Indiegogo, and SeedInvest Technology.
126
Florida statutes have limited provisions related to crowdfunding campaigns that relate to
intrastate crowdfunding for securities transactions.
127
There are no other provisions that address
crowdfunding explicitly, but crowdfunding campaigns must comply with all other relevant laws,
such as the Florida Deceptive and Unfair Trade Practices Act (FDUTPA).
128
For instance, it is
unlawful to engage in any unconscionable acts or practices, and unfair or deceptive acts or
practices in the conduct of any trade or commerce.
129
Three are also provisions on unlawful acts
and practices by social media platforms which, if applicable, a crowdfunding campaign organizer
would need to comply.
130
The state attorney in which a violation occurs or affects, or the Department of Legal Affairs if a
violation occurs or affects more than one judicial circuit,
131
has authority to conduct
investigations if certain conditions are met.
132
Such authority may seek specified remedies, such
as a declaratory judgment or an action to enjoin,
133
and a violator may be liable for a civil
penalty of not more than $10,000.
134
Further, an aggrieved party may bring an individual cause
of action in certain circumstances and seek actual damages, plus attorney fees and court costs.
135
122
Section 560.310(2)(d), F.S.
123
Section 560.111(6), F.S. A third degree felony is punishable by up to five years imprisonment and up to a $5,000 fine.
Sections 775.082, 775.083, and 775.084, F.S.
124
The Securities and Exchange Commission, 24D Securities Pub. & Priv. Offerings Appendix C13 (2d ed.), Nov. 2022,
available at: Appendix C13. SEC Crowdfunding Rule | Secondary Sources | National | Westlaw Edge (last visited Mar. 18,
2023).
125
Id.
126
Kearl, M., Crowdfunding Platforms, Investopedia, Dec. 28, 2022, available at: The 6 Best Crowdfunding Platforms of
2023 (investopedia.com) (last visited Mar. 18, 2023).
127
Section 517.0611, F.S.
128
Sections 501.201, F.S. to 501.213, F.S.
129
Section 501.204(1), F.S. “Trade or commerce” is defined as the advertising, soliciting, providing, offering, or distributing,
whether by sale, rental, or otherwise, of any good or service, or any property, whether tangible or intangible, or any other
article, commodity, or thing of value, wherever situated. The terms includes the conduct of any trade or commerce, however
denominated, including any nonprofit or not-for-profit person or activity. Section 501.203(8), F.S. “Thing of value” may
include, without limitation, any moneys, donation, membership, credential, certificate, prize, award, benefit, license, interest,
professional opportunity, or chance of winning. Section 501.203(9), F.S.
130
Section 501.2041, F.S.
131
Section 501.203(2), F.S.
132
Section 501.206, F.S.
133
Section 501.207(1), F.S.
134
Section 501.2075, F.S.
135
Section 501.211(1), F.S. BILL: CS/SB 1398 Page 19
Distributed Energy Generation Systems
A distributed energy generation system (DEGS), such as a solar panel or a wind-turbine,
136
is a
device or system that is used to generate or store electricity, that has an electric delivery capacity,
individually or in connection with other similar devices or systems, of greater than one kilowatt
or one kilowatt-hour; and that is used primarily for on-site consumption.
137
According to the
United States Environmental Protection Agency (EPA), the use of DEGS has increased for
several reasons, for instance because they have become cost-effective.
138
There are benefits to
using DEGS, such as reducing the amount of electricity generated which can reduce the
environmental impact, but it can also have negative impacts, such as a system that involves
combustion.
139
Most solar installations on residences are installed on a roof, and DEGS may be
best suited for new roofs as they can last up to 25 years or longer.
140
In 2017, the Florida Legislature adopted laws related to the retail installment sales of DEGS in
Part II of ch. 520, F.S.
141
The part applies to agreements
142
to sell or lease a DEGS and is
supplemental to the provisions on retail installment contracts contained in Part III, F.S.,
143
and
any sale of a DEGS must comply with applicable safety standards under chs. 489 and 553,
F.S.
144
A written statement, separate from the agreement, must be acknowledged by the buyer or
lessee, and must meet certain minimum requirements and must contain specified information,
including, in part:
The name and certain contact details of the buyer, the person responsible for installing the
DEGS, and the DEGS’s maintenance providers;
A statement indicating whether the DEGS is being purchased or leased;
The total cost to be paid by the buyer or lease;
A payment schedule;
Each state or federal tax incentive or rebate relied upon by the seller;
A description of any roof warranties;
A disclosure notifying the lessee whether the seller will insure a leased DEGS against
damage or loss; and
A prescribed statement about the buyer’s or lessee’s responsibility to obtain insurance.
145
136
United States Environmental Protection Agency, Distributed Generation of Electricity and its Environmental Impacts,
available at: Distributed Generation of Electricity and its Environmental Impacts | US EPA (last visited Mar. 18, 2023)
(hereinafter cited as “EPA Website”).
137
Section 520.20(3), F.S.
138
EPA Website.
139
Id.
140
The DFS 2023 Agency Analysis for SB 1398 at p. 3.
141
Ch. 2017-118, L.o.F.
142
Section 520.20(1), F.S. defines “agreement” as a contract executed between a buyer or lessee and a seller that leases or
sells a DEGS. For purposes of this part, the term includes retail installment contracts. Section 520.20(2), F.S., defines
“buyer” as a person that enters into an agreement to buy a DEGS from a seller. Section 520.20(6), F.S., defines “seller” as a
person who regularly engaged in, and whose business substantially consists of, selling or leasing goods, including DEGS, to
buyers or lessees. A seller that is also an installer must be licensed under ch. 489, F.S. Section 520.20(5), F.S., defines “retail
installment contract” as an agreement executed in this state between a buyer and a seller in which the title to, or a lien upon, a
DEGS is retained or taken by the seller from the buyer as security, in whole or in part, for the buyer’s obligations to make
specified payments over time.
143
Section 520.21, F.S.
144
Section 520.22, F.S.
145
Section 520.23, F.S. BILL: CS/SB 1398 Page 20
This requirement to produce a written statement may be satisfied by the electronic delivery of a
document that contains the requirement information provided that the intended recipient
acknowledges its receipt.
146
A seller who willfully violates the Part II commits a noncriminal
violation punishable by a fine.
147
The owner may recover against certain person specified
charges under the agreement, attorney fees and costs.
148
Warranty Associations
Chapter 634, F.S., provides for the regulation of warranty associations. There are three parts to
the chapter; Part I for motor vehicle service agreement companies; Part II for home warranty
associations; and Part III for service warranty associations.
Service Warranty Associations
A service warranty association is any business other than an authorized insurer that issues service
warranties.
149
A service warranty includes, in return for the payment of a segregated charge by
the consumer, any warranty, guaranty, or maintenance service contract equal to or greater than 1
year in length; an agreement for a specific duration to perform the repair, replacement, or
maintenance of a consumer product; for indemnification for repair, replacement, or maintenance,
for failure due to a defect in materials or workmanship, normal wear and tear, power surge, or
accidental damage from handling.
150
The regulation of the association and the warranties is
administered by the OIR; the regulation of the sales representatives is by the DFS.
151
III. Effect of Proposed Changes:
Public Adjusters
Section 9 amends the definition of public adjuster to apply to any person who acts as a public
adjuster regardless of how that person described or presents his or her services. When entering
into a contract after July 1, 2023, a public adjuster is prohibited from contracting with anyone
other than the named insured unless the insured gives written consent after he or she enters into a
contract for public adjusting services. If a public adjuster contracts with a third party to assist in
settling the claim before obtaining written consent from the insured, the public adjuster is
responsible for the third-party’s fees.
Public Adjuster Compensation
No later than 14 days from the date of the reported loss, if the insurer either pays or commits in
writing to pay the policy limit to the insured, the public adjuster must:
Inform the insured that the loss recovery amount might not be increased by the insurer;
146
Id.
147
Section 520.25(1), F.S.
148
Section 520.25(2), F.S.
149
Section 634.401(14), F.S.
150
Section 634.401(13), F.S.
151
Section 634.402, F.S. BILL: CS/SB 1398 Page 21
Not receive a commission based on a percentage of the total amount timely paid or
committed policy limits; and
Be entitled only up to $1,000 from the insured for the time spent and expenses incurred on
the claim by the public adjuster, until the claim is paid or the insured receives a written
commitment to pay from the insurer.
Except as otherwise provided, if the public adjuster enters into a contract after the insured or
claimant is unsuccessful at negotiating a payment and the public adjuster is successful in
obtaining a higher insurance claim payment, the public adjuster must receive a commission
totaling ten percent of the difference between the initial insurance claim payment offer made to
the insured and the final insurance claim payment.
Right of Rescission
When an insured or claimant enters into a contract with a public adjuster as a result of an
emergency, an insured or claimant may cancel the contract without penalty or obligation within
30 days after the date of the event, or 10 days after the date on which the contract is executed,
whichever is longer. This provision is intended to give time to consumers who may not have
technology, power or other resources that may be appropriate or necessary for decision making
and communication with an insurer.
152
The bill also provides the insured with the authority to cancel the contract without penalty within
45 days if the insured is not provided with the written estimate within the timeframe, subject to
the cancellation notice requirement. The insured may rescind a public adjuster services contract
if the public adjuster has not provided the insurer with a written estimate within 60 days after
executing the contract.
Sections 12 and 13 provides the fraud statement that must be contained in the contract and
proof-of-loss statement must be in a minimum 18-point bold type before the space in the contract
reserved for the insured’s signature.
Public Adjuster Contracts
Section 12 of the bill also provides that all contracts for public adjuster services must be in at
least 12-point font, titled “Public Adjuster Contract.” The provision on public adjuster contracts
relating to property and casualty claims to include the public adjuster’s and insured’s phone
number and e-mail addresses, and requires these details for the affidavit remitted by public
adjusting firms in eligible circumstances. The bill also specifies that the statement regarding
compensation must be in a minimum of 18-point bold type before the space reserved for the
insured’s signature. The bill provides that the insured is required to initial each page that does
not have his or her signature. Further, the bill specifies that the unaltered copy of the contract
must be remitted to the insured at the time of execution and to the insurer within 3 days after
execution. The bill provides that the public adjuster may not provide services until the insured
and the insurer have been provided with the unaltered copies of the executed contract.
152
The DFS Agency Analysis for SB 1398 at p. 6. BILL: CS/SB 1398 Page 22
The notice that must be included in the contract, regarding an insured’s right to cancel the
contract without penalty within 10 days after the date of the contract, must be immediately
before the space reserved for the signature of the insured or claimant in the contract. Further, the
bill amends the content of the notice to include the following additional language:
“If this contract was entered into based on events that are the subject of a
declaration of a state of emergency by the Governor, you may cancel this contract
for any reason without penalty or obligation to you within 30 days after the date
of the event or 10 days after the date on which the contract is executed, whichever
is longer. You may also cancel the contract without penalty or obligation to you if
I, as your public adjuster, fail to provide you and your insurer a copy of a written
estimate within 60 days of the execution of the contract in accordance with s.
626.854(14)(b), Florida Statutes.”
Prior to executing the contract, the public adjuster must provide the insured with a separate
disclosure document on a form adopted by the Department regarding the claim process and must
include information on:
The types of adjusters who may be involved in the claim process;
The public adjuster is not a representative or employee of the insurer;
The insured is not required to hire a public adjuster, but has a right to do so;
An insured has a right to initiate direct communications with the insured’s attorney, the
insurer, the company adjuster, the insurer’s attorney, or any person regarding the settlement
of the insured’s claim;
The public adjuster’s salary, fee, commission, or other consideration to be paid is the
insured’s responsibility;
The public adjuster is required to provide the insured an unaltered copy of the executed
contract at the time of execution;
If the contract was entered into based on events of an emergency, the insured has a right to
rescind the contract within 30 days after the date of the event, or 10 days after the date on
which the contract is executed, whichever is longer; and
The public adjuster must provide an unaltered copy of the executed disclosure document at the
time of execution. A contract that does not comply with these disclosure requirements is invalid
and unenforceable.
Rulemaking
The Department may adopt rules to implement the s. 626.8796, F.S., including rules to adopt
forms required under the section.
Exemption from Public Adjuster Licensure
Section 10 amends s. 626.860, F.S., exempting attorneys from needing a license under ch. 626,
F.S., to adjust claims is amended to clarify that the exemption does not apply to the employees,
interns, volunteers, or contractors of any attorney or law firm.
Display of Adjuster License BILL: CS/SB 1398 Page 23
Section 11 requires an independent or public adjuster to display their license in a conspicuous
place in the license holder’s principal place of business, but carry the license in his or her actual
possession if the licensee is conducting business away from place of business and cannot post the
license.
Adjuster Records Retention
The bill requires the records of specific claims that are required to be retained must be made
available for inspection by the Department at all times, and the bill specifies the documents
which must be maintained for not less than 5 years, including:
Name, address, telephone number, and e-mail address of the insured, and the name of the
attorney representing the insured, if applicable;
The date, location, and amount of the loss;
An unaltered copy of the executed disclosure document required and public adjuster contract;
A copy of the estimate of damages provided to the insurer;
The name of the insurer, the name of the insurer’s claims representative, and the amount,
expiration date, and number of each policy under which the loss is covered;
An itemized statement of recoveries by the insured from the sources known to the adjuster;
An itemized statement of the compensation received by the public adjuster from any source;
and
A register of all money received, deposited, disbursed, and withdrawn in connection with a
transaction with the insured, including fees, transfers, and disbursements in connection with
the loss.
Annuities
Section 17 largely adopts the NAIC Model Regulation with some modifications to synthesize the
provisions with current law. The bill renames the title of s. 627.4554, F.S., to “Suitability in
Annuity Transactions,” and makes the section effective January 1, 2024. The bill amends the
purpose of s. 627.4554(1), F.S., which, unlike current law, requires agents
153
to act in the best
interest of the consumer when making a recommendation
154
about an annuity. The purpose also
requires insurers to establish and maintain a supervisory system to ensure that the insurance
needs and financial objectives of the consumer are effectively, rather than appropriately,
addressed at the time of the transaction. The scope of the section is also amended to apply to any
sale or recommendation of an annuity but is no longer limited to apply to transactions which
result in the purchase, exchange or replacement recommended. The bill modifies the exemptions
provision under current law to state that the exemptions do not apply to s. 627.4554, F.S., “unless
otherwise specifically included.”
153
The definition of “agent” is modified to mean a person or entity required to be licensed under the laws of Florida to sell,
solicit, or negotiate insurance, including annuities. For purposes of this section, the terms include an insurer where no agent is
involved.
154
The bill amends the definition of “recommendation” to mean advice provided by an agent to an individual consumer
which was intended to result or does result in a purchase, an exchange, or a replacement of an annuity in accordance with that
advice. The term does not include general communication to the public, generalized customer services, assistance or
administrative support, general educational information and tools, prospectuses, or other product and sales material. BILL: CS/SB 1398 Page 24
The bill replaces, or amends as specified below, the duties of insurers and agents under current
law to incorporate the best interest standards contained in the NAIC Model Regulation. When
making a recommendation of an annuity, an agent must act in the best interest of the consumer
under the circumstances known at the time the recommendation is made, without placing the
insurer or agent’s financial interest ahead of the consumers’ interests. The bill provides that an
agent has acted in the best interest of the consumer if the agent has satisfied the following
obligations regarding care, disclosure, conflicts of interest, and documentation:
In making a recommendation, the agent must exercise reasonable diligence, care, and skill
(“care obligation”) to:
o Know the customer’s financial situation, insurance needs, and financial objectives;
o Understand the available options after making a reasonable inquiry into options
available to the agent;
o Have a reasonable basis to believe the recommended option effectively addresses the
consumer’s financial situation, insurance needs, and financial objectives over the life
of the product, in light of the consumer’s profile information;
155
and
o Communicate the reason or reasons for the recommendation.
The requirements of the care obligation include:
o Making reasonable efforts to obtain consumer profile information from the consumer
before the recommendation of an annuity;
o Requiring an agent to consider the types of products the agent is authorized and
licensed to recommend or sell which address the consumer’s financial situation,
insurance needs, and financial objectives. An insurer or agent are not required to
analyze or consider products outside the authority and license of the agent or other
possible alternative products or strategies available in the market at the time of the
recommendation. Agents must be held to standards applicable to agents with similar
authority and license; and
o Having a reasonable basis to believe the consumer would benefit from certain
features of the annuity, such as annuitization, death or living benefit, or other
insurance-related features.
The care obligation does not create a fiduciary duty or relationship and only establishes a
regulatory duty.
Consumer profile information, characteristics of the insurer and product costs, rates, benefits,
and features are those factors generally relevant in making a determination whether an
annuity effectively addresses the consumer’s financial situation, insurance needs, and
financial objectives but the level of importance of each factor under the care obligation may
vary depending on the factors and circumstances of a particular case. However, each factor
may not be considered in isolation.
The requirements of the care obligation apply to the particular annuity as a whole and the
underlying subaccounts to which funds are allocated at the time of purchase or exchange of
an annuity, and riders and similar product enhancements, if any.
The care obligation does not require that the annuity with the lowest one-time occurrence
compensation structure or multiple occurrence compensation structure must necessarily be
recommended.
155
The bill deletes the definition of “suitability information” and replaces it with the definition of “consumer profile
information.” BILL: CS/SB 1398 Page 25
The agent does not have ongoing monitoring obligations under the care obligation, although
such obligation may be separately owed under the terms of a fiduciary, consulting,
investment, advising, or financial planning agreement between the consumer and agent.
In a case of an exchange or replacement of an annuity, the agent must consider the whole
transaction, which includes considering whether:
o The consumer will incur a surrender charge, be subject to a new surrender period,
lose existing benefits, be subject to increased fees;
o Would benefit from product enhancements and improvements; and
o Has had another annuity exchange or replacement within the preceding 60 months.
An agent is not required to obtain any license other than an agent license with the appropriate
line of authority to sell, solicit, or negotiate insurance in this state, including, but not limited
to, any securities license, in order to fulfill the duties and obligations contained in this
section; provided, the agent does not give advice or provide services that are otherwise
subject to securities laws or engage in any other activity requiring other professional licenses.
Before the recommendation or sale of an annuity, the agent must prominently disclose to the
consumer on a form substantially similar to the NAIC Model Regulation Appendix A, titled
INSURANCE AGENT (PRODUCER) DISCLOSURE FOR ANNUITIES , including:
o A description of the scope and terms of the relationship with the consumer and the
role of the agent in the transaction.
o An affirmative statement on whether the agent is licensed and authorized to sell the
certain products, including certain types of annuities, life insurance, mutual funds,
stocks and bonds, or certificates of deposits.
o An affirmative statement describing the insurers for which the agent is authorized,
contracted, or appointed, or otherwise able to sell insurance products, using the
following descriptions specified descriptions regarding the number of insurers and, if
two or more, whether the agent is primarily contracted with one insurer.
o A description of the sources and types of cash compensation
156
and noncash
compensation
157
to be received by the agent, including certain information about the
type of compensation received for the sale of a recommended annuity; and
o A notice of the consumer’s right to request additional information regarding cash
compensation.
Upon request of the consumer or the consumer’s designated representative, the agent must
disclose:
o A reasonable estimate of the amount, stated as a range of amounts or percentages, of
cash compensation to be received by the agent.
o Whether the cash compensation is a one-time or multiple occurrence amount; if a
multiple occurrence amount then the disclosure must contain certain information.
Before or at the time of the recommendation or sale of an annuity, the agent must have a
reasonable basis to believe the consumer has been informed, rather than the consumer being
reasonably informed under current law, of various features of the annuity, and additional
156
The bill defines “cash compensation” as any discount, concession, fee, service fee, commission, sales charge, loan,
override, or cash benefit received by an agent from an insurer, intermediary, or directly from the consumer in connection with
the recommendation or sale of an annuity.
157
The bill defines “noncash compensation” as any form of compensation that is not cash compensation, including, but not
limited to, health insurance, office rent, office support, and retirement benefits. BILL: CS/SB 1398 Page 26
features have been added to the specified list, including any annual fees, other options of the
annuity, and potential changes in nonguaranteed elements
158
of the annuity.
The agent must identify and avoid, or reasonably manage and disclose, material conflicts of
interest, including material conflicts of interest related to an ownership interest.
An agent must at the time of the recommendation or sale:
o Make a written record of any recommendation and the basis for the recommendation;
o Obtain a consumer signed statement on a form substantially similar to NAIC Model
Regulation Appendix B, titled CONSUMER REFUSAL TO PROVIDE
INFORMATION:
A customer’s refusal to provide the consumer profile information, if any; or
A customer’s understanding of the ramifications of not providing his or her
consumer profile information or providing insufficient consumer profile
information.
o Obtain a customer signed on a form substantially similar to NAIC Model Regulation
Appendix C, titled Consumer Decision to Purchase an Annuity NOT Based on a
Recommendation, acknowledging the annuity transaction is not recommended, if
applicable.
Any requirement applicable to an agent under this subsection must apply to every agent who
has exercised material control or influence in the making of a recommendation and has
received direct compensation as a result of the recommendation or sale, regardless of whether
the agent has had direct contact with the consumer. Certain activities, such as providing or
delivering marketing or educational materials, are specified as not constituting material
control or influence.
The first sentence of s. 627.4554(5)(d), F.S., relating to the requirement that an insurer’s
issuance of an annuity being reasonable in all of the circumstances, is relocated to a separate
subparagraph, and clarifies that an insurer to does have a care obligation with respect to
specified transactions
An insurer is prohibited from recommending an annuity to a consumer unless there is
reasonable basis to believe that it would effectively address the particular consumer’s
financial situation, insurance needs, and financial objectives based on the consumer’s profile
information.
An insurer must establish and maintain, not only establish as provided under current law, a
supervision system that is reasonably designed to ensure the insurer and agent’s compliance
with s. 627.4554, F.S., and must include, but is not limited to, the insurer must:
o Establish and maintain, not only maintain as provided under current law, reasonable
procedures to inform its agents of the requirements of the section and incorporating
them into training manuals;
o Establish and maintain, not only establish as provided under current law, standards
for agent product training, and establish and maintain reasonable procedures to
require its agent to comply with the training requirements;
o Provide product-specific training and training materials that explain all material
features of its annuity products to its agents;
158
The bill defines the term “nonguaranteed elements” as the premiums; credited interest rates, including any bonus; benefits;
values; dividends; noninterest based credits; charges; or elements of formulas used to determine any of these, that are subject
to company discretion and are not guaranteed at issue. An element is considered nonguaranteed if any of the underlying
nonguaranteed elements are used in its calculation. BILL: CS/SB 1398 Page 27
o Establish and maintain, not only maintain as provided under current law, procedures
for the review of each recommendation before issuance of an annuity to ensure there
is reasonable basis to determine the recommended annuity would effectively address
the particular consumer’s financial situation, insurance needs, and financial
objectives, rather than for determining that the recommendation is suitable;
o Establish and maintain, not only maintain as provided under current law, reasonable
procedures to detect recommendations that are not in compliance with paragraphs (a),
(b), (d), and (e), rather than detecting recommendations that are not suitable. Two
examples of procedures are added to the list in current law which are: agent
interviews and agent statements or attestations;
o Annually providing a report to senior managers which details a review, along with
appropriate testing to determine the effectiveness of the supervision system, the
exceptions found, and any corrective action taken or recommended;
o Establish and maintain reasonable procedures to assess, prior to the issuance or
delivery of the annuity, whether an agent has provided the consumer with required
information, which is not a requirement under current law;
o Establish and maintain reasonable procedures to identify and address suspicious
consumer refusals to provide consumer profile information, which is not a
requirement under current law;
o Establish and maintain reasonable procedures to identify and eliminate any sales
contests, sales quotas, and other noncash compensation that are based on the sales of
specific annuities within a limited period of time. The requirements under this
provision do not prohibit the receipt of health insurance, office rents, office support
and other employee benefits by employees as long as they are not based on the
volume of sales of a specific annuity within a limited period of time;
The bill amends the list of requirements that do not need to be included in an insurer’s
supervision system to add consideration of or comparison to options available to the agents
or compensation relating to those options other than annuities or other products offered by
the insurer.
The bill provides that an insurer may contract for the maintenance of procedures relating to
the supervisory system.
An insurer’s supervision system must include supervision of any contractual performances.
The annual certificate from a senior manager must state that the manager has a reasonable
basis to represent and does represent, rather than just representing as provided under current
law, that the function is being properly performed.
The provision prohibiting an agent from dissuading or attempting to dissuade a consumer
from certain acts to apply to insurers as well.
The provision relating to sales made in compliance with FINRA standards satisfying the
compliance of s. 627.4554, F.S., is amended to apply to recommendations and sales and to
satisfy the requirements of s. 627.4554, F.S., if the transactions are made in compliance with
any comparable standards,
159
not only FINRA. The provision is amended to apply to all
159
The bill defines “comparable standards” as (a) With respect to broker-dealers and registered representatives of broker-
dealers, applicable Securities and Exchange Commission and FINRA rules pertaining to best interest obligations and
supervision of rules pertaining to best interest obligations and supervision of annuity recommendations and sales including,
but not limited to, Regulation Best Interest, 17 C.F.R. s. 240.15101, and any amendments or successor regulations thereto; (b)
With respect to investment advisers registered under federal or state securities laws or investment adviser representatives by
contract or under the Investment Advisers Act 1940 or applicable state securities laws, including, but not limited to, Form BILL: CS/SB 1398 Page 28
financial professionals,
160
not only FINRA broker-dealer. The bill provides that this
provision does not limit the insurer’s obligation to have a reasonable basis to believe the
annuity would effectively address the particular consumer’s financial situation, insurance
needs, and financial objectives, but the bill provides that the insurer may base its analysis on
information received from either the financial professional or the entity supervising the
financial professional. The rest of the paragraph is amended to conform to this change. For
this paragraph to apply, an insurer must monitor relevant conduct of the financial
professional or an entity responsible for supervising the financial professional; and provide to
the entity responsible for supervising the financial professional, information and reports that
are reasonably appropriate to assist such entity in maintaining its supervision system.
The bill adds s. 627.4554(6), F.S., regarding agent training, which provides as follows:
An agent must not solicit the sale of an annuity product unless the agent has adequate
knowledge of the product to recommend the annuity and the agent is in compliance with the
insurer’s standards for product training. An agent may rely on insurer-provided product-
specific training standards and materials to comply the training requirements.
An agent who engages in the sale of annuity products must complete a one-time 4-hour
training course which is not part of the agent’s continuing education requirement in s.
626.2815, F.S. but, if the course provider receives approval from the Department, the course
is eligible for continuing education credit pursuant to s. 626.2815, F.S.
Agents who hold a life insurance line of authority and who desire to sell annuities must
complete the training requirements within 6 months. Individuals who obtain a life insurance
line of authority after the effective date of this act may not engage in the sale of annuities
until the annuity training course has been completed.
The minimum length of training required is 4 hours.
The required training must include information on the following topics:
o The types of annuities and various classifications of annuities;
o Identification of the parties to the annuity;
o How product-specific annuity contract features affect consumers;
o The application of income taxation of qualified and nonqualified annuities;
o The primary uses of annuities; and
o The appropriate standard of conduct, sales practices, replacement, and disclosure
requirements.
Providers of courses intended to comply with this subsection must cover all of these topics
and must not present any marketing information or provide training on sales techniques or
provide specific information about a particular insurer’s products. Additional topics may be
offered in conjunction with and in addition to the required outline.
An agent who has completed an annuity training course prior to the effective date of this act
must, within 6 months after the effective date, complete either:
ADV and interpretations; and (c) With respect to plan fiduciaries or fiduciaries, the duties, obligations, prohibitions and all
other requirements attendant to such status under the Employee Retirement Income Security Act of 1974 of the Internal
Revenue Code and any amendments or successor statutes thereto.
160
The bill defines “financial professional” as an agent that is regulated and acting as: (a) A broker-dealer registered under
federal or state securities laws or a registered representative of a broker-dealer; (b) An investment adviser registered under
federal or state securities laws or an investment adviser representative associated with the federal or state registered
investment adviser; or (c) A plan fiduciary under s. 3(21) of the Employee Retirement Income Security Act of 1974 or
fiduciary under s. 4975(e)(3) of the Internal Revenue Code or any amendments or successor statutes thereto. BILL: CS/SB 1398 Page 29
o A new 4-hour training course; or
o An additional one one training course on appropriate sales practices, replacement, and
disclosure requirements under this subsection.
Annuity training courses may be conducted and completed by classroom or self-study
methods.
Providers of annuity training must issue certificates of completion.
The satisfaction of the training requirements of another state that are substantially similar to
the provisions of this subsection must be deemed to satisfy the training requirements of this
subsection in Florida.
The satisfaction of the training requirements of any course or courses with components
substantially similar to the provisions of this subsection must be deemed to satisfy the
training requirements of the subsection in Florida.
An insurer must verify that an agent has completed the annuity training course before
allowing the agent to sell an annuity product for that insurer.
Change of Contact Details
Section 7 of the bill amends the required timeframe from 30 days, to 5 days, for which a licensee
must notify the Department after a change of name, residence address, principal business street
address, mailing address, contact telephone numbers, or email address.
Insurance Agency Firm Name
Section 8 of the bill expands the provisions that authorize the Department to disapprove
insurance agency firm names to include authority to disapprove adjusting firm names. Further,
names that state or imply an insurance agency or adjusting firm settles claims may also be
disapproved. Finally, the bill repeals the provision authorizing the Department to disapprove
names that contain the terms “Medicare” or “Medicaid” on July 1, 2023, as the grace period
allowed for insurance agencies who were already using the terms in their firm names as of July
1, 2021 expires on June 30, 2023.
Notice of Cancellation of Certain Policies
Section 16 provides that when the policy providing coverage for property, casualty, except for
guaranty, surety, or marine insurance, other than motor vehicle insurance, is cancelled or
terminated within the first 60 days that the policy is in force for reasons other than failure to pay,
the insured must provide at least 20 days’ written notice of cancellation or termination with an
explanation for the reason except in specified circumstances. After such policies have been in
effect for 60 days, instead of 90 days under current law, no policy may be cancelled by the
insurer except when there has been a material misstatement, a nonpayment of premium, a failure
to comply with underwriting requirements by the insurer within 90 days of the effective date of
coverage, a substantial change of risk covered by the policy, or when cancellation is for a class
of insured.
The same provisions relating to personal lines or commercial residential property insurance
policies are also amended to: (1) require 20 days’ written notice for cancellation within 60 days
from the date the policy is in force, and (2) prohibit the policy from being cancelled after 60 days
for such reasons. The bill amends current law to provide that an insurer may not cancel or BILL: CS/SB 1398 Page 30
terminate a contract after a policy or contract has been in effect for more than 60 days, rather
than 90 days, based on credit information available in public records.
These amendments will allow an insurer adequate time to complete underwriting and the
consumer will be subject to lesser accumulation of any increased premium, and free up
additional funds for the policyholder to purchase new insurance coverage within the 20-day
cancellation notice, if applicable.
161
Unfair Methods of Competition and Unfair or Deceptive Acts
Section 14 adds another ground for misrepresentations and false advertising of insurance policies
to include making, issuing, circulating, or causing to be made, issued, or circulated any estimate,
statement, or other specified document that fails to disclose a third party that receives royalties,
referral fees, or other remuneration for sponsorship, marketing, or use of third-party branding for
a policy of health insurance.
162
Hurricane Deductibles
Section 15 amends the definition of “hurricane” to shorten the duration in which a hurricane
deductible may be applied to a claim by modifying the start time of a hurricane to begin at the
time of a hurricane warning and not when a hurricane watch or warning is issued. The bill
removes from the definition “continuing for the time period during which the hurricane
conditions exist anywhere in Florida,” and changes the end of a hurricane to mean 24, rather than
72, hours after the last hurricane watch or warning is issued for any part of Florida.
The bill defines “hurricane deductible” as the deductible applicable to loss caused by a hurricane.
Motor Vehicle Service Agreements
Section 18 of the bill provides that a service agreement company that maintains a contractual
liability insurance policy in lieu of maintaining unearned premium reserve may have a policy
that either pays 100 percent of claims as they are incurred or 100 percent of claims in the event
of the failure of the service agreement company to pay claims when due.
Mortgage Loan Regulations
Section 1 of the bill amends the definition of branch office to include “a remote location,” and
defines the term “remote location” to mean a location other than a principal place of business or
a branch office, at which a loan originator or a licensee may conduct business. The bill provides
that a licensee may allow loan originators to work from remote locations if:
The licensee has written policies and procedures for supervision of loan originators working
from remote locations.
161
The DFS Agency Analysis for SB 1398 at p. 8.
162
Section 624.603, F.S., defines “health insurance,” also known as “disability insurance,” is insurance of human beings
against bodily injury, disablement, or death by accident or accidental means, or the expense thereof, or against disablement or
expense resulting from sickness, and every insurance appertaining thereto. Health insurance does not include workers’
compensation coverage, except as provided in s. 624.406(4), F.S. BILL: CS/SB 1398 Page 31
Access to company platforms and customer information is in accordance with the licensee’s
comprehensive written information security plan.
An in-person customer interaction does not occur at a loan originator’s residence unless such
residence is a licensed location.
Physical records are not maintained at a remote location.
Customer interactions and conversations about consumers will be in compliance with federal
and state information security requirements, including applicable provisions under the
Gramm-Leach-Bliley Act and the Safeguards Rule established by the Federal Trade
Commission, set forth at 16 C.F.R. part 314, F.S., as such requirements may be amended
from time to time.
A loan originator working at a remote location accesses the company’s secure systems,
including a cloud-based system, directly from any out-of-office device such as a laptop,
phone, desktop computer, or tablet, through a virtual private network or comparable system
that ensures secure connectivity and that requires passwords or other forms of authentication
to access.
The licensee ensures that appropriate security updates, patches, or other altercations to the
security of all devices used at remote locations are installed and maintained.
The licensee is able to remotely look or erase company-related contents of any device or
otherwise remotely limit all access to a company’s secure systems.
The registry’s record of a loan originators who works from a remote location designates the
principal place of business as a loan originator’s registered location, or the loan originator
has elected a licensed branch office as a registered location.
Section 2 expands Florida law to authorize mortgage lenders to transact business from a branch
location and remote location, in addition to the principal place of business provided for under
current law. In addition to a principal place of business and branch office, a remote location must
also operate under the full charge, control, and supervision of the licensee.
Conduct of Money Services Businesses
Section 6 of the bill provides that a licensee may not cash corporate checks where the aggregate
face amount of all corporate checks cashed for each payee exceeds 200 percent of the payee’s
workers’ compensation policy coverage amount during the same dates as the workers’
compensation policy coverage period. A person who knowingly and willfully violates this
provision commits a felony of the third degree under s. 560.111(6), F.S.
Crowdfunding
Section 3 of the bill establishes s. 501.2042, F.S., which provides for unlawful acts and practices
by online crowdfunding campaigns, as an online fundraising initiative that is intended to receive
monetary donations from donors and is created by an organizer in the interest of a beneficiary.
An organizer, who arranges an online crowdfunding campaign for a disaster,
163
must produce to
the crowdfunding platform an accounting for all the donations received and all donations
163
“Disaster” means any natural, technological, or civil emergency that occurs in this state and that causes damage of
sufficient severity and magnitude to result in a declaration of a state of emergency by a county, the Governor, or the President
of the United States. BILL: CS/SB 1398 Page 32
expended by the campaign. A crowdfunding platform is an entity doing business in Florida
which provides an online medium for the creation and facilitation of a crowdfunding campaign.
An Organizer means a person who:
Resides or is domiciled in this state;
Has an account on a crowdfunding platform and has created a crowdfunding campaign either
as a beneficiary or on behalf of a beneficiary, regardless of whether the beneficiary or the
crowdfunding campaign has received donations.
A crowdfunding platform must publish the accountings received on its website. An organizer or
crowdfunding platform that fails to comply with these provisions violates FDUTPA.
Distributed Energy Generation System
Section 4 of the bill adds an additional disclosure requirement that must be included in an
agreement to sell or lease a DEGS, including:
The customer contact center phone number for the Department of Business and Professional
Regulation. The purpose of this is to provide consumers with available resources to assist
with any issues or questions related to the installation of the DEGS
164
;
A statement in substantially the following form:
“You should consider the age and remaining life of your roof prior to installing a
distributed energy generation system. Replacement of your roof may require re-
installment of the distributed energy generation system;” and
A statement in substantially the following form:
“Placing a distributed energy generation system on your roof may impact your future
insurance premiums. You are responsible for contacting your insurance carrier, prior to
entering into a purchase or lease agreement, to confirm whether your current policy or
coverage will need to be modified upon installing the distributed energy generation
system onto your dwelling.”
For an electronic delivery of a document containing the required disclosures to satisfy the
requirement that written statement be acknowledged, the bill provides that it must be sent within
24 hours after execution of the written statement.
Warranty Associations
Section 19 amends s. 634.401, F.S., to revise the definition of the term “manufacturer” for
purposes of part III of ch. 634, F.S., to exclude a business that maintains outstanding debt
obligations, if any, rated in the top four rating categories by a recognized rating service.
Section 20 amends s. 634.406, F.S., to conform to the change made by section 19 of the bill.
Section 21 provides, except as otherwise provided, the bill is effective July 1, 2023.
164
The DFS Agency Analysis for SB 1398 at p. 5. BILL: CS/SB 1398 Page 33
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
None.
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
None.
E. Other Constitutional Issues:
None.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
B. Private Sector Impact:
Public adjusters’ compensation may be reduced due to the provisions in the bill.
165
The
ability to utilize to contractual liability insurance policy that will service policies when a
service agreement company fails to do so should reduce the costs of the policy.
166
C. Government Sector Impact:
None.
VI. Technical Deficiencies:
None.
VII. Related Issues:
None.
165
The DFS Agency Analysis for SB 1398 at p. 12.
166
Id. BILL: CS/SB 1398 Page 34
VIII. Statutes Affected:
This bill substantially amends sections 494.001, 494.0067, 520.23, 560.111, 560.309. 626.551,
626.602, 626.854, 626.860, 626.865, 626.875, 626.8796, 626.8797, 626.9541, 627.4025,
627.4133, 627.4554, 634.041, 634.401, 634.406 of the Florida Statutes.
This bill creates sections 501.2042 and 626.8751 of the Florida Statutes.
IX. Additional Information:
A. Committee Substitute – Statement of Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
CS by Banking and Insurance Committee on March 22, 2023:
Clarifies the definition of “branch location” to mean a location other than specified locations,
including a remote location;
Provides that a person who violates s. 560.309, F.S., relating to cashing corporate checks that
exceed certain amounts of workers’ compensation policy coverage amounts, commits a third
degree felony punishable by up to 5 years imprisonment, $5,000 fine, or enhanced penalties
under habitual offender provisions;
Prohibits a licensee from cashing corporate checks where the aggregate face amount for each
payee exceeds 200% of the payee’s workers’ compensation policy coverage amount during
the policy coverage period;
Amends the revocation period for which an insured or claimant may cancel a public
adjuster’s contract without penalty during a state of emergency in certain circumstances from
“within 30 days after the date on which the contract is executed,” to “within 30 days after the
date of the event, or 10 days after the date on which the contract is executed, whichever is
longer,” and makes conforming changes to the notice that must be given to insureds;
Authorizes an insured to cancel a contract with a public adjuster with no additional penalties
if an estimate is not provided within 60 days, rather than 45 days provided in the bill, after
executing the contract; and makes conforming changes to: (a) the notice that must be given to
insureds on this issue and (b) provisions required in public adjuster’s contracts;
Clarifies that, in circumstances when a public adjuster must not receive a commission, it is
based on the amount “timely paid or committed policy limits,” rather than “paid by the
insurer to resolve the claim” that is provided in bill;
Provides public adjusters are entitled to $1,000, instead of “reasonable compensation” from
the insured when an insurer either pays or commits to pay the policy limit within 14 days
from the date of the reported loss;
Removes section 9 relating to public adjuster’s errors and omissions insurance;
Requires the settlement of claims to be made by “payment,” rather than “check,” and
specifies that the first payment must be made “solely” to the public adjuster;
Amends the time within which an unaltered copy of the public adjuster’s executed contract
must be provided to the insurer from 3 days in the bill (30 days in current law) to 10 days
after execution of the contract; BILL: CS/SB 1398 Page 35
Amends the disclosure a public adjuster must provide to an insured to explain that an insured
has 60 days, rather than 30 days provided in the bill, after executing a contract resulting from
a state of emergency to rescind it;
Amends the new provision under FDUPTA, relating to misrepresentations and false
advertising of insurance, for failure to disclose that a third party receives certain remuneration
for sponsorship, marketing, or branding for a “policy of health insurance,” rather than “health
insurance contract”;
Amends the title of s. 627.4554, F.S., from “Annuity Investments” to “Suitability in Annuity
Transactions”;
Clarifies that the provision requiring an agent to exercise reasonable diligence, care, and skill
in making recommendations does “not” require, rather than “does” require, the agent to have
ongoing monitoring obligations;
With respect to an insurer’s supervision system, clarifies that the annual certification obtained
from a senior manager “does represent,” rather than “does not represent,” that the function is
being properly performed;
Deletes from the agent training provisions the requirements:
o To register as a continuing education provider and to comply with the rules and
guidelines provided in s. 626.2815, F.S.;
o That the office approve the specified training courses;
o For classroom or self-study methods, and the issuance of certificates of completion, to be
in accordance with s. 626.2815, F.S.,;
o For compliance with reporting requirements;
Deletes the provision that authorizes an insurer to satisfy the requirement to verify training
compliance in certain ways, such as by obtaining certificates from certain databases;
Amends ss. 634.401 to revise the definition of the term “manufacturer” relating to the
regulation of service warranty associations to exclude a business that maintains outstanding
debt obligations, if any, rated in the top four rating categories by a recognized rating service,
and makes conforming changes in s. 634.406, F.S.;
Amends the effective date to, except as otherwise provided, July 1, 2023;
Makes conforming changes by changing “suitability information” to “consumer profile
information” (which is newly defined to replace “suitability information” in the bill); and
Makes technical amendments.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.