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 Fiscal Policy
BILL: CS/CS/SB 1398
INTRODUCER: Appropriations Committee on Agriculture, Environment, and General Government;
Banking and Insurance Committee; and Senator DiCeglie
SUBJECT: Consumer Protection
DATE: April 24, 2023
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Moody Knudson BI Fav/CS
2. Sanders Betta AEG Fav/CS
3. Moody Yeatman FP Pre-meeting
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/CS/SB 1398 revises consumer protection laws, including, but not limited to, those related to
public adjusters, annuity investments, and mortgage loan regulations.
As it relates to adjusters, the bill:
Provides adjusting firms must comply with the same requirements an insurance agency must
comply with regarding firm names, and repeals the grace period for using the terms
“Medicare” or “Medicaid” that expires on July 1, 2023;
Removes a provision providing public adjuster responsibility and a provision setting the
commission rate that may be charged on the difference between the settlement offer and the
actual settlement amount;
Modifies a public adjuster’s compensation to no more than one percent, rather than up
to $1,000, of payments or commitments to pay a claim made within a specified time that is
equal to or greater than the policy limit;
Prohibits a public adjuster from charging any percentage of the amount of insurance claim
payments or settlements paid to the insured where the payment or written agreement to pay
occurs before the public adjuster contract is executed;
When entering into public adjuster services after July 1, 2023, prohibits a public adjuster
from collecting a fee for services or contracting with third parties on behalf of the named
REVISED: BILL: CS/CS/SB 1398 Page 2
insured unless certain conditions are met, and requires a public adjuster to pay third party
fees in specified circumstances;
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
loss or 10 days after the date on which the contract is executed, whichever is longer;
Specifies an insured may cancel a public adjuster’s contract without penalty or obligation if a
written estimate is not received within 60 days unless the failure to provide the estimate is
caused by factors beyond the control of the public adjuster and provides that the cancellation
period ceases on the date the estimate is provided, and requires the contract to provide notice
of such right;
Provides that a public adjuster who contracts with anyone other than the named insured must
pay the fees of the third party and such charges may not be charged back to the named
insured;
Requires public adjusters to pay third party fees if the public adjuster does not first obtain the
insured’s written consent;
Clarifies 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 independent adjusters and public adjusters must retain certain records for five years
and requires such records must be available for inspection by the Department of Financial
Services (“Department”) within specified 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 or insurer’s
representative within seven days, after execution;
Provides a public adjuster may not receive compensation for services before the date the
insured receives an unaltered copy of the executed contract or the date the contract is
submitted to the insurer, and requires the public adjuster retain proof of receipt by the insured
and proof of submission to the insurer for not less than five years;
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.”
As it relates to annuity investments, the bill:
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; BILL: CS/CS/SB 1398 Page 3
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 any sale in compliance with comparable standards satisfies the requirements of the
section, and provides this provision does not limit an insurer’s care obligation; and
Provides for training requirements for agents who engage in the sale of annuities;
As it relates to other insurance provisions, the bill:
Provides 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;”
Reduces the underwriting timeframe on property insurance from nine days to 60 days;
Provides Citizens Property Insurance Corporation (“Citizens”) may cancel certain policies
within 90 days or less for misrepresentation or failure to comply with underwriting
requirements established before the effectuation of coverage; and
Provides notice of claims made under s. 627.714, F.S., must be given to the insurer in
accordance with the terms of the policy within three years of the date of loss.
As it relates to mortgage loan regulations, the bill:
Expands the options of where a mortgage lender may transact business;
Specifies 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.”
As it relates to money services businesses, the bill:
Specifies 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 a person who violates this provision commits a felony of the third degree.
As it relates to crowd-funding campaigns, the bill:
Requires organizers of crowd-funding campaigns related to disasters to take certain steps
relating to collecting and retaining certain information, disclosing specified information,
cooperating with law enforcement, and displaying and directing donors to certain fundraisers;
Requires an organizer to attest to the accuracy and completeness of specified information;
Defines several terms, including “crowd-funding campaign,” “crowd-funding platform,”
“disaster,” and “organizer.” BILL: CS/CS/SB 1398 Page 4
As it relates to distributed energy generation platform, the bill:
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 a sale or lease agreement to include the customer contact center phone number for
the Department of Business and Professional Regulation.
The bill provides motor vehicle service agreements that maintain a contractual liability insurance
policy in lieu of maintaining unearned premium reserve may have a policy with certain terms.
The bill 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.
The bill creates a new third degree felony, which is punishable by a term of imprisonment not to
exceed five years,
1
a fine not to exceed $5,000,
2
or in the case of a habitual offender, a term of
imprisonment not to exceed ten to fifteen years.
3
The new third degree felony may increase state
court revenues and expenditures. In addition, the bill may have an indeterminate negative state
prison bed impact. The Criminal Justice Impact Conference, which provides the final, official
estimate of the prison bed impact, if any, of legislation, has not yet reviewed the bill.
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 of Financial Services (Department).
4
The Commission is composed of the Governor,
the Attorney General, the Chief Financial Officer, and the Commissioner of Agriculture.
5
The
Commission consists of the Office of Insurance Regulation (OIR) and the Office of Financial
Regulation (OFR).
6
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.
7
A person may not act, advertise, or hold himself or herself
1
Section 775.082, F.S.
2
Section 775.083, F.S.
3
Section 775.084, F.S.
4
Section 20.121(3), F.S.
5
Id.
6
Section 20.121(3)(a), F.S.
7
Section 20.121(3)(a), F.S. BILL: CS/CS/SB 1398 Page 5
out as an insurance agent,
8
insurance adjuster,
9
or customer representative unless he or she is
licensed by the Department and appointed by an appropriate appointing entity or person.
10
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.
11
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.
12
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.
13
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
14
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.
15
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.
16
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.
17
8
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.
9
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
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.
10
Section 626.112(1)(a), F.S.
11
Section 626.171, F.S.
12
Section 626.551, F.S.
13
Id.
14
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.
15
Section 626.854(1), F.S.
16
Id.
17
Section 626.854(2)(a), F.S. BILL: CS/CS/SB 1398 Page 6
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.
18
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.
19
Public adjusters are also prohibited from directly or indirectly soliciting an insured or claimant
except for during specified times.
20
A public adjuster or any other person who circulates or
disseminates any advertisement, announcement, or statement containing any assertion,
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.
21
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.
22
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.
23
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.
24
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 the compensation will not exceed the limits provided by law; and
The type of claim.
25
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.
26
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
18
Section 626.854(3), F.S.
19
Section 626.860, F.S.
20
Section 626.854(5), F.S.
21
Section 626.854(7), F.S. Section 626.9541, F.S., provides for unfair methods of competition and unfair or deceptive acts or
practices.
22
Section 626.8796(1), F.S.; Section 626.8797, F.S.
23
Section 626.8796(2), F.S.
24
Id.
25
Section 626.8796(2), F.S.
26
Section 626.854(10), F.S. BILL: CS/CS/SB 1398 Page 7
storm.
27
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.”
28
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.
29
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.
30
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.
31
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.
32
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.
33
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 five years after completion
of the adjustment.
34
An adjuster is not prohibited from returning or delivering certain documents
to the insurer or insured.
35
27
The Department of Financial Services, 2023 Legislative Bill Analysis for SB 1398, p. 3 (Mar. 16, 2023) (on file with Senate
Committee on Banking and Insurance).
28
Section 626.854(6), F.S.
29
Section 626.854(14), F.S.
30
Section 626.854(10), F.S.
31
Section 626.854(10)(b), F.S.
32
Section 626.854(8) and (9), F.S.
33
Section 626.875(1), F.S.
34
Section 626.875(2), F.S.
35
Id. BILL: CS/CS/SB 1398 Page 8
Annuity Investments
The purpose of s. 627.4554, F.S., annuity
36
investments, is to set out requirements for which
insurers
37
must comply when making recommendations
38
to consumers regarding annuity
products, and to establish a system for supervising such recommendations to ensure consumers’
insurance needs and financial objectives are met at the time of the transaction.
39
The section
applies to any recommendation made by an insurer or agent
40
to a consumer to purchase,
exchange, or replace an annuity which results in the consumer purchasing, exchanging, or
replacing the recommended product.
41
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;
42
o A government or church plan,
43
a government or church welfare benefit plan, or a
deferred compensation plan of a state or local government or tax-exempt organization;
44
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.
45
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,
46
the
36
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.
37
The term “insurer” has the same meaning as provided in s. 624.03, F.S. Section 627.4554(3)(d), F.S.
38
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.
39
Section 627.4554(1), F.S.
40
The term “agent” has the same meaning as provided in s. 626.015, F.S. Section 627.4554(3)(a), F.S.
41
Section 627.4554(2), F.S.
42
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.
43
Section 414, I.R.C.
44
Section 457, I.R.C.
45
Section 627.4554(4), F.S.
46
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; BILL: CS/CS/SB 1398 Page 9
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;
47
The consumer would benefit from certain features of the annuity;
48
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
o Has had another annuity exchange or replacement within the preceding 36 months.
49
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.
50
The
information must be collected on a specified form that must be signed by the applicant and
agent.
51
Such form must be in at least 12-point type and be readily understandable by the agent
and consumer.
52
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.
53
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.
54
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.
55
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.
47
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.
48
Section 627.4554(5)(a)2., F.S., provides examples such as tax-deferred growth, annuitization, or the death or living benefit.
49
Section 627.4554(5)(a), F.S.
50
Section 627.4554(5)(b), F.S.
51
Id.
52
Id.
53
Id.
54
Section 627.4554(5)(c), F.S.
55
Section 627.4554(5)(d), F.S. BILL: CS/CS/SB 1398 Page 10
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 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.
56
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.
57
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.
58
An insurer is not required to include in its supervision system agent recommendations to
consumers of products other than annuities offered by the insurer.
59
An insurer may contract with
a third-party to perform any function required with respect to the supervisory system,
60
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 the contracted function is
properly performed; and
56
Section 627.4554(5)(f), F.S.
57
Id.
58
Section 627.4554(5)(g)1., F.S.
59
Section 627.4554(5)(g)2., F.S.
60
Section 627.4554(5)(g)3., F.S. BILL: CS/CS/SB 1398 Page 11
Annually obtaining a certification from a senior manager who has responsibility for the
contracted function that the manager has a reasonable basis for representing the function is
being properly performed.
61
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.
62
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.
63
Sales made in compliance with Financial Industry Regulatory Authority (FINRA) or a
succeeding agency requirements relating to the suitability and supervision of annuity 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.
64
These provisions do not limit the Department’s or the OIR’s ability to
investigate or take any enforcement actions against insurers or agents.
65
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.
66
Insurers and agents are required to maintain or be able to make available to the Department or
the 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 five
years after the insurance transaction is completed.
67
An insurer may retain records on behalf of
its agent.
68
Records may be maintained in various specified forms or by any process that
accurately produces the actual document.
69
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
61
Section 627.4554(5)(g)3., F.S.
62
Section 627.4554(5)(g)3.b., F.S.
63
Section 627.4554(h), F.S.
64
Section 627.4554(i), F.S.
65
Id.
66
Id.
67
Section 627.4554(6), F.S.
68
Id.
69
Id. BILL: CS/CS/SB 1398 Page 12
insurer to take reasonably appropriate corrective action and may impose appropriate sanctions
and penalties.
70
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.
71
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.
72
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 the OIR.
73
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”).
74
According to the NAIC, as of 2022, 27 states have
adopted either the 2003 or 2020 version of the NAIC Model Regulation.
75
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.
76
It also contains, amongst other
things, duties for which insurers and agents must comply, training requirements, recordkeeping,
and compliance mitigation provisions.
77
70
Section 627.4554(7)(a), F.S.
71
Section 627.4554(7)(a)1. and 2., F.S.
72
Section 627.4554(7)(c), F.S.
73
Section 627.4554(7)(d), F.S.
74
Zimmermann, S., NAI Annuity Suitability Training Requirements, Annuity.Org, Feb. 20, 2023, available at
https://www.annuity.org/annuities/regulations/naic/training/ (last visited April 13, 2023).
75
Silvestrini, E., Annuity Regulations, Annuity.Org, Feb. 20, 2023, https://www.annuity.org/annuities/regulations/ (last
visited April 13, 2023).
76
The NAIC Model Laws, Regulations, Guidelines and Other Resources – Spring 2020, Suitability in Annuity Transactions
Model Regulation, Spring 2020, available at https://content.naic.org/sites/default/files/inline-files/MDL-275.pdf (last visited
April 13, 2023).
77
Id. BILL: CS/CS/SB 1398 Page 13
Insurance Agency Firm Name
An insurance agency’s
78
firm name must comply with certain provisions under Florida law.
79
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 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 the
agency is a state agency.
The name contains the term “Medicare” or “Medicaid.” 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.
80
Notice of Property Insurance Claim
Section 627.70132, F.S., currently requires insureds to notify an insurer of a claim or reopened
claim,
81
within one year after the date of loss.
82
Notice of a supplemental claim
83
must be given
to the insurer within 18 months after the date of loss or such claim is barred.
Residential Condominium Loss Assessments
Loss assessment coverage is insurance coverage for condominium unit owners that provides
protection for situations where the owner of a condominium unit, as the owner of shared
property, is held financially responsible for:
Deductibles owed when a claim is made under a condominium association’s property
insurance policy;
78
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.
79
Section 626.602, F.S.
80
Id.
81
Section 627.70132(1)(a), F.S., defines “reopened claim” as a claim that an insurer has previously closed, but that has been
reopened upon an insured’s request for additional costs for loss or damage previously disclosed to the insurer.
82
Section 627.702(3), F.S., provides that the date of loss for claims resulting from specified and other weather-related events,
such as hurricanes and tornadoes, is the date that the hurricane made landfall or the other weather-related event is verified by
the National Oceanic and Atmospheric Administration.
83
Section 627.70132(1)(b), F.S., defines “supplemental claim” as a claim for additional loss or damage from the same peril
which the insured has previously adjusted or for which costs have been incurred while completing repairs or replacement
pursuant to an open claim for which timely notice was previously provided to the insurer. BILL: CS/CS/SB 1398 Page 14
Damage that occurs to the condominium building or the common areas of a condominium
property; or
Injuries that occur in the common areas of a condominium property.
84
Florida law requires that property insurance policies held by condominium unit owners include a
minimum property loss assessment coverage of $2,000 for all assessments made as a result of the
same direct loss to the condominium property.
85
The law further establishes the maximum
amount of any unit owner’s coverage that can be assessed for any loss is an amount equal to the
unit owner’s loss assessment coverage limit in effect one day before the date of an occurrence,
but it does not specify exactly what occurrence is referenced.
86
A condominium unit owner’s
insurance policy must state that the coverage afforded by the policy is excess coverage over the
amount recoverable under any policy covering the same property.
87
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
specified in certain provisions.
88
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.
89
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.
90
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.
91
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.
92
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.
93
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
84
Araujo, Mila, The Balance, Loss Assessment Explained for Condo Insurance, https://www.thebalancemoney.com/loss-
assessment-explained-for-condo-insurance-4060435 (last visited March 9, 2023).
85
Section 627.714(1), F.S.
86
Section 627.714(2), F.S.
87
Section 627.714(4), F.S.
88
Section 627.4133(1)(a), F.S.
89
Section 627.4133(1)(b)1., F.S.
90
Section 627.4133(1)(b)2., F.S.
91
Id.
92
Section 627.4133(2)(b), F.S.
93
Section 627.4133(2)(b)1. and 2., F.S. BILL: CS/CS/SB 1398 Page 15
within a specified time, a substantial change in the risk covered by the policy or unless the
cancellation is for a given class of insureds.
94
Unfair Methods of Competition and Unfair or Deceptive Acts
The Unfair Insurance Trade Practices Act
95
provides 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.
96
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.
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.
97
Except for specified penalties to the contrary and subject to any other applicable penalties, a
person who violates any provision of the Unfair Insurance Trade Practices Act may be fined an
amount not greater than $5,000 for each non-willful violation and not greater than $40,000 for
each willful violation.
98
An insurer may not be fined more than an aggregate amount of
$20,000 for all non-willful violations, or $200,000 for all willful violations, arising out of the
same action.
99
Hurricane Deductibles
Residential coverage includes both personal lines residential coverage
100
and commercial lines
residential coverage,
101
and includes policies that provide coverage for particular perils such as
94
Section 627.4133(2)(b)3., F.S.
95
Section 626.951(2), F.S.
96
Section 626.9521(1), F.S.
97
Section 626.9541(1)(a), F.S.
98
Section 626.9521(2), F.S.
99
Id.
100
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.
101
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. BILL: CS/CS/SB 1398 Page 16
windstorm
102
and hurricane.
103
“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.
104
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.
105
According to the Insurance Services Office, there has been $159.1 billion in insured losses
caused by hurricanes between 1993 and 2013.
106
In 1992, after Hurricane Andrew hit South
Florida, hurricane deductibles were introduced to deal with the major losses caused by the major
storms.
107
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.
108
Hurricane deductibles may be a fixed amount but usually are a
percentage of the insured’s home value.
109
Hurricane deductibles are usually higher than other
peril deductibles because of the catastrophic damage caused by hurricanes,
110
and typically range
from between one percent to 10 percent of the home value.
111
Laws in nineteen states, including
Florida, and the District of Columbia contain to some form of hurricane or storm deductible.
112
102
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.
103
Section 627.4025(1), F.S.
104
Section 627.4025(2)(a), F.S.
105
Section 627.4025(2)(c), F.S.
106
The National Association of Insurance Commissioners (NAIC), Hurricane Deductibles, May 11, 2022, available at
https://content.naic.org/cipr-topics/hurricane-deductibles (hereinafter cited as “NAIC Hurricane Deductible”) (last visited
April 14, 2023).
107
Id.
108
Id.
109
The NAIC Hurricane Deductible.
110
The Department of Financial Services, 2023 Legislative Bill Analysis for SB 1398, p. 3 (Mar. 16, 2023) (on file with
Senate Committee on Banking and Insurance); The NAIC Hurricane Deductible.
111
The NAIC Hurricane Deductible.
112
Id.; Howard, P., and Gimbel, J., Hurricane Deductibles in 2023: Your State-by-State Guide, Policygenius, Dec. 30, 2022,
available at https://www.policygenius.com/homeowners-insurance/hurricane-deductible-guide/ (last visited April 14, 2023)
(summarizing the laws on hurricane deductibles in 19 states). BILL: CS/CS/SB 1398 Page 17
Motor Vehicle Service Agreements
A person may not transact, administer, market, or attempt any of these activities with respect to a
service agreement
113
business in Florida without a license.
114
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 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 required 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:
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 one; 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 OIR 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 cancels 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
113
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.
114
Section 634.031(1), F.S. BILL: CS/CS/SB 1398 Page 18
o The company must provide the OIR with the claims statistics.
115
Mortgage Loan Regulations
The OFR is responsible for the regulation of banks, credit unions, other financial institutions,
finance companies, and securities.
116
The OFR has a Division of Consumer Finance which is
responsible for the administration and enforcement of ch. 494, F.S.
117
that licenses and regulates
the individuals and businesses in the mortgage business, including loan originators,
118
mortgage
brokers,
119
and mortgage lenders.
120
A person who acts in any of these capacities must be
licensed.
121
A mortgage broker and mortgage lender who makes loans in Florida must transact business from
a principal place of business.
122
Mortgage brokers and mortgage lenders may separately license
branch offices.
123
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.
124
The OFR must issue a branch office license 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.
125
Branch office licenses must be
renewed at the same time as mortgage broker or mortgage lender licenses.
126
Each branch office
must be operated by the “full charge, control, and supervision” of a principal loan originator and
115
Section 634.041, F.S.
116
Section 20.121(3)(a)2., F.S.
117
Section 494.0011(1), F.S.
118
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.
119
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.
120
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.
121
Sections 494.00312, 494.00321, and 494.00611, F.S.
122
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.
123
Sections 494.0036(1) and 494.0066(1), F.S.
124
Section 494.001(3), F.S.
125
Sections 494.0036(2) and 494.0066(2), F.S.
126
Section 494.0036(3) and 494.0066(3), F.S. BILL: CS/CS/SB 1398 Page 19
branch manager.
127
Operating a branch office without the required license, designated principal
loan originator, or branch manager is grounds for disciplinary action.
128
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,
129
but the OFR may
authorize a licensee to maintain such records at an alternative location.
130
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.
131
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
each payment instrument being cashed.
132
A person who knowingly violates this section commits
a felony of the third degree.
133
Crowd-funding Campaigns
Crowd-funding is a recent method used to raise funds online from a large number of people who
are interested in a campaign.
134
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.”
135
Some of the top crowd-funding sites
include GoFundMe, StartEngine, Indiegogo, and SeedInvest Technology.
136
Florida statutes have limited provisions related to crowd-funding campaigns that relate to
intrastate crowd-funding for securities transactions.
137
There are no other provisions that address
127
Sections 494.0035 and 494.00665, F.S.
128
Section 494.00255(1)(q) and (r), F.S.
129
Section 494.0016(1), F.S.
130
Section 494.0016(2), F.S.
131
Section 560.309, F.S.
132
Section 560.310(2)(d), F.S.
133
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.
134
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
March 18, 2023).
135
Id.
136
Kearl, M., Crowdfunding Platforms, Investopedia, Dec. 28, 2022, https://www.investopedia.com/best-crowdfunding-
platforms-5079933 (last visited April 14, 2023).
137
Section 517.0611, F.S. BILL: CS/CS/SB 1398 Page 20
crowd-funding explicitly, but crowd-funding campaigns must comply with all other relevant
laws, such as the Florida Deceptive and Unfair Trade Practices Act (FDUTPA).
138
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.
139
Three are also provisions on unlawful acts
and practices by social media platforms which, if applicable, a crowd-funding campaign
organizer would need to comply.
140
The state attorney in the judicial circuit which a violation occurs or affects, or the Department of
Legal Affairs if a violation occurs or affects more than one judicial circuit,
141
has authority to
conduct investigations if certain conditions are met.
142
Such authority may seek specified
remedies, such as a declaratory judgment or an action to enjoin,
143
and a violator may be liable
for a civil penalty of not more than $10,000.
144
Further, an aggrieved party may bring an
individual cause of action in certain circumstances and seek actual damages, plus attorney fees
and court costs.
145
Distributed Energy Generation Systems
A distributed energy generation system (DEGS), such as a solar panel or a wind-turbine,
146
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.
147
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.
148
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.
149
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.
150
138
Sections 501.201, F.S. to 501.213, F.S.
139
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.
140
Section 501.2041, F.S.
141
Section 501.203(2), F.S.
142
Section 501.206, F.S.
143
Section 501.207(1), F.S.
144
Section 501.2075, F.S.
145
Section 501.211(1), F.S.
146
United States Environmental Protection Agency, Distributed Generation of Electricity and its Environmental Impacts,
https://www.epa.gov/energy/distributed-generation-electricity-and-its-environmental-impacts (last visited April 14, 2023)
(hereinafter cited as “EPA Website”).
147
Section 520.20(3), F.S.
148
EPA Website.
149
Id.
150
The Department of Financial Services, 2023 Legislative Bill Analysis for SB 1398, p. 3 (Mar. 16, 2023) (on file with
Senate Committee on Banking and Insurance). BILL: CS/CS/SB 1398 Page 21
In 2017, the Florida Legislature adopted laws related to the retail installment sales of DEGS in
Part II of ch. 520, F.S. (Part II)
151
Part II applies to agreements
152
to sell or lease a DEGS and is
supplemental to the provisions on retail installment contracts contained in Part III, F.S.,
153
and
any sale of a DEGS must comply with applicable safety standards under chs. 489
and 553, F.S.
154
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.
155
This requirement to produce a written statement may be satisfied by the electronic delivery of a
document that contains the requirement information provided the intended recipient
acknowledges its receipt.
156
A seller who willfully violates the Part II commits a noncriminal
violation punishable by a fine.
157
The owner may recover against certain person specified
charges under the agreement, attorney fees and costs.
158
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.
151
Ch. 2017-118, Laws of Fla.
152
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.
153
Section 520.21, F.S.
154
Section 520.22, F.S.
155
Section 520.23, F.S.
156
Id.
157
Section 520.25(1), F.S.
158
Section 520.25(2), F.S. BILL: CS/CS/SB 1398 Page 22
Service Warranty Associations
A service warranty association is any business other than an authorized insurer that issues service
warranties.
159
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
one 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.
160
The regulation of the association and the warranties is
administered by the OIR; the regulation of the sales representatives is by the DFS.
161
III. Effect of Proposed Changes:
Public Adjusters
Section 9 amends s. 626.854, F.S., by revising 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:
Collecting a fee for services on payments made to the insured unless the public adjuster and
the named insured or the named insured’s legal representative have entered into a written
contract; and
Contracting with a third party on behalf of the named insured unless the named insured gives
written consent to procure these services and he or she gives such consent after entering 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.
If a public adjuster represents anyone other than the named insured in a claim, the public adjuster
fees must be paid by the third party and may not be charged back to the named insured.
Public Adjuster Compensation
A public adjuster may not charge more than: One percent of the amount of insurance claim
payments or settlements paid to the insured by the insurer for any coverage part of the policy
where the claim payment or written agreement by the insurer to pay is equal to or greater
than the policy limit for that part of the policy, if the payment or written commitment to pay
is provided within 14 days from the date of the reported loss or 10 days after the date on
which the public adjusting contract is executed, whichever is later; and
Zero percent of the amount of insurance claim payments or settlements, paid to the insured
by the insurer for any coverage part of the policy where the claim payment or written
agreement by the insurer to pay occurs before the date on which the public adjusting contract
is executed.
.
159
Section 634.401(14), F.S.
160
Section 634.401(13), F.S.
161
Section 634.402, F.S. BILL: CS/CS/SB 1398 Page 23
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 loss, or 10 days after the date on which the contract is executed,
whichever is longer. The public adjuster’s contract to adjust must contain the following language
in a minimum 18-point bold type immediately before the space reserved in the contract for the
signature of the insured or claimant:
“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. 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 the written estimate within 60 days of the
execution of the contract, unless the failure to provide the estimate within
60 days is caused by factors beyond my control, in accordance with
s. 626.854(14)(b), Florida Statutes. The 60-day cancellation period for
failure to provide a written estimate shall cease on the date I have
provided you with the written estimate.”
The insured may cancel a public adjuster services contract with no additional penalties or fees
charged by the public adjuster if the public adjuster has not provided the insurer with a written
estimate within 60 days after executing the contract, unless the failure to provide the estimate
within 60 days is caused by factors beyond the control of the public adjuster. The cancellation
period must cease on the date the public adjuster provides the written estimate to the insured.
Sections 11 and 12 amend ss. 626.8796 and 626.8797, F.S., respectively, and 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 11 amends s. 626.8796, F.S., and provides all contracts for public adjuster services must
be in at least 12-point font, and be titled “Public Adjuster Contract.” The provision on public
adjuster contracts relating to property and casualty claims must 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 specifies contract language must
state the percentage of compensation in a minimum of 18-point bold type before the space
reserved for the insured’s signature. The bill provides the insured is required to initial each page
that does not have his or her signature. Further, the bill specifies the unaltered copy of the
contract must be remitted to the insured at the time of execution and to the insurer within seven,
rather than 30, days after execution, and clarifies that the unaltered copy may be provided to the
insurer’s representative.
BILL: CS/CS/SB 1398 Page 24
The bill provides the public adjuster may not receive compensation for services provided prior to
the date the insured receives unaltered copies of the executed contract or the date the executed
contract is submitted to the insurer. Proof of receipt by the insured and proof of submission must
be retained by the public adjuster for not less than five years.
Furthermore, an insured may rescind the contract for public adjuster services if the public
adjuster has not submitted a written estimate to the insurer within 60 day after executing the
contract, unless the failure is caused by factors beyond the public adjuster’s control. The
cancellation period for failure to provide a written estimate terminates on the date the estimate is
provided.
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:
Define the type of adjusters who may be involved in the claim process as either a company
adjuster, independent adjuster, and public adjuster;
Explain the public adjuster is not a representative or employee of the insurer;
Explain the insured is not required to hire a public adjuster, but has a right to do so;
Explain 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;
Explain the public adjuster’s salary, fee, commission, or other consideration to be paid is the
insured’s responsibility;
Explain the public adjuster is required to provide the insured an unaltered copy of the
executed contract at the time of execution;
Explain if the contract was entered into based on events subject to a declaration of a state of
emergency, the insured has a right to rescind the contract within 30 days after the date of the
loss, 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
Section 11 also provides the Department with authority to adopt rules to implement
s. 626.8796, F.S., including rules to adopt forms required under the section.
Exemption from Public Adjuster Licensure
Section 9 amends s. 626.860, F.S., to clarify that the exemption for attorneys from needing a
license under ch. 626, F.S., to adjust claims does not apply to the employees, interns, volunteers,
or contractors of any attorney or law firm.
Display of Adjuster License
Section 10 amends s. 626.875, F.S., and 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 BILL: CS/CS/SB 1398 Page 25
the license in his or her actual possession if the licensee is conducting business away from their
place of business and cannot post the license.
Adjuster Records Retention
The bill requires records of specific claims or losses, that are required to be retained by the
adjuster, must be retained in the adjuster’s place of business for a period of not less than five
years and must be made available for inspection by the Department between the hours of
8:00 a.m. and 5:00 p.m., Monday through Friday, excluding state holidays. The bill further
specifies documents which must be maintained for a period not less than five 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 16 amends s. 627.4554, F.S., and largely adopts the National Association of Insurance
Commissioners (NAIC) Model Regulation with some modifications to synthesize the provisions
with current law. The Department and Financial Services Commission (Commission) is
authorized to adopt by rule the forms prescribed in the NAIC Suitability in Annuity Transaction
Model Regulation Appendix A – Insurance Agent (Producer), Appendix B – Consumer Refusal
to Provide Information, and Appendix C – Consumer Decision to Purchase an Annuity Not
Based on a Recommendation.
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 to act in the best interest of the consumer when
making a recommendation 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 the
exemptions do not apply to s. 627.4554, F.S., “unless otherwise specifically included.”
The bill defines, deletes or revises the following terms: BILL: CS/CS/SB 1398 Page 26
“Agent” is revised, from the same meaning as provided in s. 626.015, F.S., 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;
“Cash compensation” means 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;
“Consumer profile information” means information that is reasonably appropriate to
determine whether a recommendation addresses the consumer’s financial situation, insurance
needs, and financial objectives, including, at a minimum, the following:
o Age;
o Annual income;
o Financial situation and needs, including debts and other obligations;
o Financial experience;
o Insurance needs;
o Financial objectives;
o Intended use of the annuity;
o Financial time horizon;
o Existing assets or financial products, including investment, annuity, and insurance
holdings;
o Liquidity needs;
o Liquid net worth;
o Risk tolerance, including, but not limited to, willingness to accept nonguaranteed
elements in the annuity;
o Financial resources used to fund the annuity; and
o Tax status.
“Intermediary” means an entity contracted directly with an insurer or with another entity
contracted with an insurer to facilitate the sale of the insurer’s annuities by agents;
“Material conflict of interest” means a financial interest of the agent in the sale of an annuity
which a reasonable person would expect to influence the impartiality of a recommendation.
The term expressly does not include cash compensation or noncash compensation;
“Noncash compensation” means any form of compensation that is not cash compensation,
including, but not limited to, health insurance, office rent, office support, and retirement
benefits;
“Nonguaranteed elements” means 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, which 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;
“Recommendation” is revised 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. New language was added to
specify 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/CS/SB 1398 Page 27
“Replacement” is revised to mean a transaction in which a new annuity is to be purchased
and it is known or should be known to the proposing agent, or to the proposing insurer
whether or not an agent is involved, that by reason of such transaction an existing annuity or
other insurance policy has been or is to be any of the criteria contained in the
subsection (l)1- 5 of the bill;
“SEC” means the United States Securities and Exchange Commission;
“Suitability information” is deleted and replaced with the definition of “consumer profile
information”;
“Comparable standard” means, for purposes of paragraph 4.a., with respect to:
o 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;
o 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 ADV and interpretations; and
o 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; and
“Financial professional” means, for purposes of paragraph 4.a., 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.
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.
Provides 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; and
o Communicate the reason or reasons for the recommendation.
The requirements of the care obligation include: BILL: CS/CS/SB 1398 Page 28
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,
162
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.
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 that posted on the OIR’s website as Appendix A,
relating to an insurance agent 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;
162
Annuitization is the process of converting investment into a series of periodic income payments. Investopedia.com,
Annuitization Definition, https://www.investopedia.com/terms/a/annuitization.asp (last visited April 14, 2023). BILL: CS/CS/SB 1398 Page 29
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 and noncash compensation
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
features have been added to the specified list, including any annual fees, other options of the
annuity, and potential changes in nonguaranteed elements 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 that posted on the
OIR’s website as Appendix B, related to a consumer’s 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 that posted on the OIR’s
website as Appendix C, related to a consumer’s 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. BILL: CS/CS/SB 1398 Page 30
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;
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; and
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.
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.
Provides 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; BILL: CS/CS/SB 1398 Page 31
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.
Provides neither an agent nor an insurer shall dissuade or attempt to dissuade a consumer
from certain acts including recommendation and sales of annuities made by financial
professionals in compliance with FINRA standards, even if such standard would not
otherwise apply to the product or recommendation at issue.
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.
o The insurer:
May base its analysis on information received from either the financial professional
or the entity supervising the financial professional and is amended to conform to this
change;
Must monitor relevant conduct of the financial professional or an entity responsible
for supervising the financial professional; and
o 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 creates s. 627.4554(6), F.S., relating to agent training. This section provides:
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 four hour
training course, which is not part of the agent’s continuing education requirement in
s. 626.2815, F.S., however, if the course provider submits and 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 on January 1, 2024, and who desire to sell
annuities must complete the training requirements by July 1, 2024. 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 four 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. BILL: CS/CS/SB 1398 Page 32
An agent who has completed an annuity training course before January 1, 2024, must, by
July 1, 2024 complete either:
o A new four hour training course; or
o An additional one hour 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.
Insurance Agency Firm Name
Section 7 amends s. 626.602, F.S., to expand the Department’s authority to disapprove, under
certain circumstances, the use of any true or fictitious name, other than a bona fide natural name
of an individual, by an adjusting firm. Finally, this section repeals the provision on the grace
period allowed for insurance agencies who were already using the terms “Medicare” or
“Medicaid” in their firm names as of July 1, 2021, that expires on June 30, 2023.
Notice of Property Insurance Claim
Section 17 amends s. 627.70132, F.S., to provide that for loss assessment claims made by
residential condominium unit owners, the notice of claim must be given to the insurer within
three years from the date of loss.
Notice of Cancellation of Certain Policies
Section 15 amends s. 627.4133, F.S., relating to notice of cancellation, nonrenewal or renewal
premium, to revise the cancellation or termination timeframe from 90 to 60 days. After such
policies have been in effect for 60 days, 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 60 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
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.
BILL: CS/CS/SB 1398 Page 33
With respect to policies that were most recently insured by an insurer that has been placed in
receivership under ch. 631, F.S., Citizens, in underwriting risks, is authorized to immediately
cancel a policy that is in effect for 90 days or less for any material misrepresentation or failure to
comply with underwriting requirements established before the effectuation of coverage.
Unfair Methods of Competition and Unfair or Deceptive Acts
Section 13 amends s. 626.9541, F.S., to provide another ground for misrepresentations and false
advertising of insurance policies to include failure 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.
163
Hurricane Deductibles
Section 14 amends s. 627.4025, F.S., to revise 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 hours, 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 amends s. 634.041, F.S., to provide 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 amends s. 494.001, F.S., relating to definitions. The section 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 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;
Access to company platforms and customer information is in accordance with the licensee’s
comprehensive written information security plan;
163
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/CS/SB 1398 Page 34
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 or
documents, 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; and
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 amends s. 494.0067, F.S., to expand 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 amends s. 560.309, F.S., to provide 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.
Section 5 amends s. 560.111, F.S., relating to prohibited acts, to provide anyone who knowingly
or willfully commits a violation of s. 560.309(11), F.S., commits a third degree felony.
Crowd-funding
Section 3 creates s. 501.2042, F.S., to provide for unlawful acts and practices by online crowd-
funding campaigns. The section provides the following definitions:
“Crowd-funding campaign” means 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.
“Crowd-funding platform” means an entity doing business in this state which provides an
online medium for the creation and facilitation of a crowd-funding campaign. BILL: CS/CS/SB 1398 Page 35
“Disaster” has the same meaning as s. 252.34(2), F.S. Under this provision, disaster means
any natural, technological, or civil emergency 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. Under s. 252.34(2), F.S., disaster is further categorized as
either catastrophic, major or minor.
“Organizer” means a person who resides or is domiciled in this state and has an account on a
crowd-funding platform and has created a crowd-funding campaign either as a beneficiary or
on behalf of a beneficiary, regardless of whether the beneficiary or the crowd-funding
campaign has received donations.
When an organizer arranges a crowd-funding campaign related to or arising out of a declared
disaster, a crowd-funding platform must:
Collect and retain, for one year after the date of the declared disaster, the name, email
address, phone number, and state of residence of the organizer;
Require the organizer to indicate, on the crowd-funding campaign, the state in which they are
located;
Cooperate with any investigation by or in partnership with law enforcement; and
Clearly display and direct donors to fundraisers that comply with the crowd-funding
platform’s terms of service.
When an organizer arranges a crowd-funding campaign related to and arising out of a declared
disaster, the organizer must attest that:
All information provided in connection with a crowd-funding campaign is accurate,
complete, and not likely to deceive users; and
All donations contributed to the crowd-funding campaign will be used solely as described in
the materials the organizer posts or provides on the crowd-funding platform.
Distributed Energy Generation System
Section 4 amends s. 520.23, F.S., relating to disclosures, to add an additional disclosure
requirement and statements 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;
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.”
BILL: CS/CS/SB 1398 Page 36
The bill specifies such statements may be satisfied by electronic delivery of a document 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.
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.
164
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.
165
164
The Department of Financial Services, 2023 Legislative Bill Analysis for SB 1398, p. 12 (Mar. 16, 2023) (on file with
Senate Committee on Banking and Insurance).
165
Id. BILL: CS/CS/SB 1398 Page 37
C. Government Sector Impact:
The bill creates a new third degree felony, which is punishable by a term of imprisonment
not to exceed five years,
166
a fine not to exceed $5,000,
167
or in the case of a habitual
offender, a term of imprisonment not to exceed ten to fifteen years.
168
The new third
degree felony may increase state court revenues and expenditures. In addition, the bill
may have an indeterminate negative state prison bed impact. The Criminal Justice Impact
Conference, which provides the final, official estimate of the prison bed impact, if any, of
legislation, has not yet reviewed the bill.
VI. Technical Deficiencies:
None.
VII. Related Issues:
None.
VIII. Statutes Affected:
This bill substantially amends the following sections of the Florida Statutes: 494.001, 494.0067,
520.23, 560.111, 560.309, 626.551, 626.602, 626.854, 626.860, 626.875, 626.8796, 626.8797,
626.9541, 627.4025, 627.4133, 627.4554, 627.70132, 634.041, 634.401, and 634.406.
This bill creates section 501.2042 of the Florida Statutes.
IX. Additional Information:
A. Committee Substitute – Statement of Substantial Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
CS/CS by Appropriations Committee on Agriculture, Environment, and General
Government on April 18, 2023:
The committee substitute:
Clarifies a licensee may allow a loan originator to work from a remote location if
such originator has access to documents, as well as the company’s system, directly
from any out-of-office device through a vital private network or system;
Revises the definition of “disaster” to have the same meaning as in s. 252.34(2), F.S.;
Revises an organizer’s responsibilities relating to a crowd-funding platform for
campaigns related to and arising out of a declared disaster;
When entering into public adjuster services after July 1, 2023, a public adjuster is
prohibited from collecting a fee for services or contracting with third parties on behalf
of the named insured unless certain conditions are met, and requires a public adjuster
to pay third party fees in specified circumstances;
166
Section 775.082, F.S.
167
Section 775.083, F.S.
168
Section 775.084, F.S. BILL: CS/CS/SB 1398 Page 38
Removes a provision providing public adjuster responsibility and a provision setting
the commission rate that may be charged on the difference between the settlement
offer and the actual settlement amount;
Modifies a public adjuster’s compensation to no more than one percent, rather than up
to $1,000, of payments or commitments to pay a claim made within a specified time
that is equal to or greater than the policy limit;
Prohibits a public adjuster from charging any percentage of the amount of insurance
claim payments or settlements paid to the insured where the payment or written agree
to pay occurs before to the public adjuster contract is executed;
Provides the Department of Financial Services (Department) may inspect a public
adjuster’s records relating to a particular claim or loss Monday through Friday,
8:00 a.m. – 5:00 p.m., excluding state holidays;
Amends the provision which requires an unaltered copy of the public adjuster
contract to be provided to the insurer within 10 days, to within seven days, after
execution, and clarifies that the unaltered copy may be provided to the insurer’s
representative;
Provides a public adjuster may not receive compensation for services prior to the date
the insured receives an unaltered copy of the executed contract or the date the
contract is submitted to the insurer. Requires the public adjuster to maintain proof of
receipt by the insured and proof of submission to the insurer for not less than five
years;
Allows an insured to rescind a public adjuster contract if a written estimate has not
been provided to the insurer within 60 days after execution of the contract for
services, unless such failure was caused by factors beyond the public adjuster’s
control, and provides the cancellation period for failure to provide a written estimate
terminates on the date such estimate is provided; requires the notice that must be
included in the public adjuster services contracts to be updated to include these
provisions;
Provides Citizens Property Insurance Corporation, may cancel certain policies within
90 days or less for misrepresentation or failure to comply with underwriting
requirements established before the effectuation of coverage;
Removes the amendment to the time period for which insurance agents must inform
the Department of change of name or specified contact information, and retains
current law that requires the notification be submitted within 30 days after such a
change;
Repeals the provision on the grace period for using the terms “Medicare” or
“Medicaid” in insurance agency firm names;
Provides notice of claims made under s. 627.714, F.S., must be given to the insurer in
accordance with the terms of the policy within three years of the date of loss; and
Makes technical and conforming changes.
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 BILL: CS/CS/SB 1398 Page 39
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 percent 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 three days in the bill (30 days in current
law) to 10 days after execution of the contract;
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.; BILL: CS/CS/SB 1398 Page 40
o That the OIR 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 s. 634.401, F.S., 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.