Penalties & Enforcement Efforts Effective October 1, 2002, Florida-licensed insurance agents who sell unlicensed insurance could face a felony charge and lose their license under a new law enacted in the 2002 legislative session. To make agents aware of the problems of caused by authorized insurers, the new law requires a discussion of unauthorized entities in all insurance education courses. In the recent past, the
Department of Financial Services has shut down several entities selling unlicensed health insurance plans and two entities that were selling unauthorized medical malpractice insurance to health care providers. These entities have left at least 30,000 Floridians with more than $6 million in unpaid claims. In conjunction with barring these entities from doing business in Florida, the department is investigating dozens of licensed agents for selling unauthorized insurance. Florida's
Unauthorized Entities law enhanced the penalty for selling unauthorized insurance from a second-degree misdemeanor to a third-degree felony, punishable by up to five years in prison and a $5,000 fine per count. In addition, Florida law requires anyone who solicits, negotiates or sells an insurance contract for an unauthorized insurer to be held financially responsible for unpaid claims. While investigating unlicensed entities, department regulators have determined that the operators of
unauthorized entities would not have been able to reach potential buyers without the assistance of licensed agents. Both employers and agents have been enticed by the low premiums unlicensed entities charge, but the rates are often not actuarially sound and money is not set aside for reserves. Because unlicensed entities do not participate in a state guaranty fund (a fund designed to cover unpaid claims in the event of bankruptcy), policyholders in unlicensed plans are usually left with unpaid
claims when the businesses fold. The Department usually become aware of a plan's termination when policyholders began complaining about slow or no payment of claims -- but by that time, there is little the Department can do to protect the "policyholders". The Department offers a reward of up to $25,000 for information leading to a conviction. The department's Bureau of Agent and Agency Investigations has 60 investigators available to look into potential
violations and take appropriate administrative action against an agent�s license. The Division of Insurance Fraud has more than 100 sworn law-enforcement investigators who can file criminal charges. Further, the department has created an Unauthorized Entities Section dedicated to tracking and taking civil action against these phony plans. To summarize, possible consequences for acting as an insurer without a proper license: conviction of third-degree felony [Florida Statutes Section 624.401]liability for all unpaid claims [Florida Statutes Section 626.901(2) ]suspension or revocation of all insurance licenses [ [Florida Statutes Section 626.621, .611 and .6215] Consequences for aiding and abetting an unauthorized insurer: 
- 626.901 - Representing Or Aiding Unauthorized Insurer Prohibited.
(1) No person shall, from offices or by personnel or facilities located in this state, or in any other state or country, directly or indirectly act... - 626.902 - Penalty For Representing Unauthorized Insurer.
(1) In addition to any
other penalties provided in the insurance code:(a) Any insurance agent licensed in this state who in this state knowingly represents or aids... - 626.903 - Suits By Unauthorized Insurers Prohibited.
As to transactions not permitted under s. 624.402, no unauthorized insurer shall institute, file, or maintain, or cause to be instituted, filed, or maintained, any... - 626.904 - Unauthorized Insurers Process Law; Short Title; Interpretation.
(1) Sections 626.904-626.912 may be cited as the “Unauthorized Insurers Process Law.”(2) Such law shall be so interpreted as to effectuate its general purpose to make uniform... - 626.905 - Purpose Of Unauthorized Insurers Process Law.
The
purpose of the Unauthorized Insurers Process Law is to subject certain insurers and persons representing or aiding such insurers to the jurisdiction of courts... - 626.906 - Acts Constituting Chief Financial Officer As Process Agent.
Any of the following acts in this state, effected by mail or otherwise, by an unauthorized foreign insurer, alien insurer, or person representing or aiding... - 626.907 - Service Of Process; Judgment By Default.
(1) Service of process upon an insurer or person representing or aiding such insurer pursuant to s. 626.906 shall be made by delivering to and leaving... - 626.908 - Defense Of Action By Unauthorized Insurer Or Person Representing Or Aiding Such Insurer; Damages And
Attorney Fee.
(1) Before an unauthorized insurer or person representing or aiding such insurer files or causes to be filed any pleading in any action or proceeding instituted... - 626.909 - Jurisdiction Of Office And Department; Service Of Process On Secretary Of State.
(1) The Legislature hereby declares that it is a subject of concern that the purpose of the Unauthorized Insurers Process
Law as expressed in s. 626.905... - 626.910 - Penalty For Violation By Unauthorized Insurers And Persons Representing Or Aiding Such Insurers.
Any unauthorized insurer or person representing or aiding such insurer transacting insurance in this state and subject to service of process as referred to in... - 626.911 - Attorney’s Fee.
In any action against an unauthorized foreign insurer, alien insurer, or person representing or aiding such an insurer, upon a contract of insurance issued or... - 626.912 - Exemptions From Ss. 626.904-626.911.
The provisions of ss. 626.904-626.911 do not apply to any action, suit, or
proceeding against any unauthorized foreign insurer, alien insurer, or person representing or... - 626.913 - Surplus Lines Law; Short Title; Purposes.
(1) Sections 626.913-626.937 constitute and may be referred to as the “Surplus Lines Law.”(2) It is declared that the purposes of the Surplus Lines Law are to... - 626.914 - Definitions.
As used in this Surplus Lines Law, the term:(1) “Surplus lines agent” means an individual licensed as provided in this part to handle the placement of... - 626.915 - Surplus Lines Insurance Authorized.
If certain insurance coverages of subjects resident, located, or to be performed in this
state cannot be procured from authorized insurers, such coverages, hereinafter designated... - 626.916 - Eligibility For Export.
(1) No insurance coverage shall be eligible for export unless it meets all of the following conditions:(a) The full amount of insurance required must not be procurable,... - 626.917 -
Eligibility For Export; Wet Marine And Transportation, Aviation Risks.
(1) Insurance coverage of wet marine and transportation risks, as defined in this code in s. 624.607(2), or aviation risks, including airport and products liability incidental... - 626.918 - Eligible Surplus Lines Insurers.
(1) A surplus lines agent may not place any coverage with any unauthorized insurer which is not
then an eligible surplus lines insurer, except as permitted... - 626.9181 - Levy Upon Deposit.
No judgment creditor or other claimant of a surplus lines insurer shall have the right to levy upon any of the assets or securities held... - 626.919 - Withdrawal Of Eligibility; Surplus Lines Insurer.
(1) If
at any time the office has reason to believe that any unauthorized insurer then on the list of eligible surplus lines insurers is insolvent... - 626.9201 - Notice Of Cancellation Or Nonrenewal.
(1) An insurer issuing a policy providing coverage for property, casualty, surety, or marine insurance must give the first named insured at least 45 days’ advance... - 626.921 - Florida Surplus Lines Service Office.
(1) There is hereby created a nonprofit association to be known as the Florida Surplus Lines Service Office. The Legislature hereby finds and declares that the... - 626.922 - Evidence Of The Insurance; Changes; Penalty.
(1) Upon placing a surplus lines coverage, the
surplus lines agent shall promptly issue and deliver to the insured evidence of the insurance consisting either of... - 626.923 - Filing Copy Of Policy Or Certificate.
A surplus lines agent shall, within 30 days after the date of a request by the department or the Florida Surplus Lines Service Office, furnish... - 626.924 - Information Required On Contract.
(1) Each surplus lines agent through whom a surplus lines coverage is procured shall write or print on the outside of the policy and on any... - 626.925 - Surplus Lines Insurance Valid.
Insurance contracts procured as surplus lines coverages from unauthorized insurers
in accordance with this law shall be fully valid and enforceable as to all parties... - 626.926 - Liability Of Insurer As To Losses And Unearned Premiums.
(1) If an unauthorized insurer or a person authorized by it has bound the risk as to a surplus lines coverage placed under this Surplus Lines... - 626.927 -
Licensing Of Surplus Lines Agent.
(1) Any individual while licensed and appointed as a resident general lines agent as to property, casualty, and surety insurances, and who is deemed by the... - 626.9271 - Temporary License; Death, Disability, Absence Of Surplus Lines Agent.
(1) The department may, in its discretion, issue a temporary license and appointment as a surplus lines agent to a
licensed surplus lines agent’s employee, family... - 626.9272 - Licensing Of Nonresident Surplus Lines Agents.
(1) The department may, upon written application and the payment of the fees specified in s. 624.501, issue a nonresident surplus lines agent license to a... - 626.929 - Origination, Acceptance,
Placement Of Surplus Lines Business.
(1) A general lines agent while licensed and appointed as a surplus lines agent under this part may originate surplus lines business and may accept surplus... - 626.9295 - Corporations, Liability Of Agent.
Any surplus lines insurance agent who is an officer, director, stockholder, or employee of an incorporated surplus lines insurance agency shall remain
personally and fully... - 626.930 - Records Of Surplus Lines Agent.
(1) Each surplus lines agent shall keep in his or her office in this state, or in the agent’s state of residence for a nonresident who... - 626.931 - Agent Affidavit And Insurer Reporting Requirements.
(1) Each surplus lines agent shall
on or before the 45th day following each calendar quarter file with the Florida Surplus Lines Service Office an affidavit,... - 626.932 - Surplus Lines Tax.
(1) The premiums charged for surplus lines coverages are subject to a premium receipts tax of 5 percent of all gross premiums charged for such insurance.... - 626.9325 - Service Fee.
(1) The premiums charged for surplus lines insurance are subject to a service fee as provided in s. 626.921(3)(f). The surplus lines agent shall collect from... - 626.933 - Collection Of Tax And Service Fee.
If the tax or service fee payable by a surplus lines agent under the Surplus
Lines Law is not so paid within the time prescribed,... - 626.934 - Accounting For Funds; Contingent Commissions.
The following sections also apply as to surplus lines agents:(1) Section 626.561.(2) Section 626.581.(3) Section 626.591.History.—s. 373, ch. 59-205; s. 2, ch. 81-318; ss. 318, 807, ch. 82-243;... - 626.935 - Suspension, Revocation, Or Refusal Of Surplus Lines Agent’s License.
(1) The department shall deny an application for, suspend, revoke, or refuse to renew the appointment of a surplus lines agent and all other licenses and... - 626.936 - Failure To File Reports Or Pay Tax Or Service Fee; Administrative
Penalty.
(1) Any licensed surplus lines agent who neglects to file a report or an affidavit in the form and within the time required or provided for... - 626.9361 - Failure To File Report; Administrative Penalty.
Any eligible surplus lines insurer who fails to file a report in the form and within the time required or provided for in the Surplus... - 626.9362 - Cooperative Reciprocal Agreement Authorized For Collection And Allocation Of Certain Nonadmitted Insurance Taxes.
(1) The Department of Financial Services and the Office of Insurance Regulation may enter into a cooperative reciprocal agreement with another state or group of states... - 626.937 - Actions
Against Insurer; Service Of Process.
(1) An unauthorized insurer may be sued upon any cause of action arising in this state under any surplus lines insurance contract issued by it or... - 626.9371 - Payment Of Premiums And Claims.
(1) The premiums for surplus lines insurance contracts issued on or after October 1, 2009, in this state or covering risks located in this state shall...
- 626.9372 - Disclosure Statement Of Certain Information Required; Liability Claims.
(1) Each insurer that provides or may provide liability insurance coverage to pay all or a portion of any claim that might be made under surplus... - 626.9373 - Attorney’s Fees.
(1) Upon the rendition of a judgment or
decree by any court of this state against a surplus lines insurer in favor of any named or... - 626.9374 - Liability Of Insureds; Deductible And Coinsurance.
(1) Any surplus lines, personal lines residential property insurance policy issued on or after October 1, 2009, containing a separate hurricane or wind deductible must on... - 626.938 - Report And Tax Of Independently Procured Coverages.
(1) Every insured who in this state procures or causes to be procured or continues or renews insurance from another state or country with an unauthorized... - 626.939 - Records Produced On Order.
(1) Every person by or as to whom insurance is procured
or placed in an unauthorized insurer, upon the order of the department, shall produce for...
Last modified: September 23, 2016
Which entity would be considered an unauthorized insurer?
An unauthorized insurer is an insurance company that is operating without the permission or oversight of its state insurance regulator.
Which is used by unauthorized insurance entities to give the appearance of legitimacy?
Use of licensed insurance agents and third-party administrators are two commonly used covers used by fraudulent health insurance schemes to disguise their true identities.
What is the penalty for intentionally representing an unauthorized insurer in Florida?
(a) Any insurance agent licensed in this state who in this state knowingly represents or aids an unauthorized insurer in violation of s. 626.901 commits a felony of the third degree, punishable as provided in s. 775.082, s.
What are unauthorized entities?
Unauthorized Person or Entity means any individual or entity who or which has not signed an appropriate secrecy or confidentiality agreement with the Xxxxxx Entities, or is not a current or target customer with whom Confidential Information is shared in the mutual interest of that person or entity and the Xxxxxx ...
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