United States: Florida Enacts Legislation Substantially Amending Licensure and Regulation of Insurance Agencies and Third Party Administrators

The Florida Legislature recently enacted two bills which will substantially change the way insurance agencies and third party administrators ("TPAs") are licensed and regulated in Florida. The key provisions of those bills are summarized below.

Insurance Agencies

Under current Florida law, an insurance agency is required to be licensed by the Florida Department of Financial Services (the "DFS") only if its owner or another principal in the agency is convicted of a specific crime or has committed certain enumerated violations of law. However, all insurance agencies are required to file a form with the DFS designating a primary agent who is responsible for supervising the agents who work at a particular agency location.

Senate Bill 1912, enacted by the Florida Legislature on May 6, 2005 (the "Agency Act"), repeals the requirement of a designated primary agent and instead requires that insurance agencies be licensed or registered with the DFS. The Agency Act will become a law 15 days after it is presented to Governor Jeb Bush, unless he vetoes it during that 15-day period. Assuming the Agency Act becomes a law, effective October 1, 2006, an individual, firm, partnership, or association shall not act in its own name or trade name, directly or indirectly, as an insurance agency unless it files with the DFS an application for licensure or registration for each place of business at which it engages in any insurance activity. On its face, the Agency Act appears to require all branch offices transacting Florida business to be licensed separately, which may result in a substantial regulatory compliance burden for some large, multi-state agencies.

The Agency Act generally requires all insurance agencies to be licensed, but the following three categories of agencies may submit a registration application in lieu of a license application:

  1. an insurance agency engaged in business in Florida before January 1, 2003, which is wholly owned by licensed and appointed insurance agents;
  2. an incorporated agency whose voting shares are publicly traded; and
  3. an agency whose primary function is offering insurance as a service or member benefit to members of a nonprofit corporation.

A registered insurance agency is required to be licensed by the DFS if the agency ceases to qualify for registration or if an owner or another principal in the agency is convicted of a specific crime or has committed certain enumerated violations of law.

Beginning October 1, 2005, the DFS is required to accept the uniform application for nonresident agency licensure and may adopt appropriate rules. Existing agencies must submit an application to the DFS no later than October 1, 2006. The Agency Act specifies mandatory administrative penalties for an agency that fails to seek licensure (up to $10,000) or registration (up to $5,000). A license must be renewed every three years, but a registration does not appear to expire.

The Agency Act specifies that persons who are currently licensed and appointed do not need to file their fingerprints with the DFS in connection with an application for agency licensure or registration. Publicly traded corporations are exempt from the fingerprint requirements. The DFS is prohibited from requiring credit or character reports to be submitted for persons required to be listed on the agency application.

The Agency Act amends various other provisions of the Florida Insurance Code which will result in licensed insurance agencies being subject to roughly the same regulatory requirements currently applicable to individual licensees. The Agency Act also provides the DFS with the authority to disapprove agency names that are determined to be deceptive or misleading to the public.

Third Party Administrators

Senate Bill 1432, enacted by the Florida Legislature on May 4, 2005 (the "TPA Act"), makes several substantive changes to Part VII of Chapter 626, Florida Statutes, pursuant to which TPAs are required to be licensed as "administrators" by the Florida Office of Insurance Regulation (the "OIR"). According to a legislative staff analysis, the intent of the TPA Act is to amend Florida law to be more consistent with the National Association of Insurance Commissioners ("NAIC") Model Act 090, the NAIC Third Party Administrator Statute (the "NAIC Model Act").

The TPA Act will become a law 15 days after it is presented to Governor Jeb Bush, unless he vetoes it during that 15-day period. Assuming the TPA Act becomes a law, all sections of the TPA Act will take effect on October 1, 2005.

The TPA Act amends the definition of "administrator" to add exemptions from TPA licensure for:

  1. a wholly owned direct or indirect subsidiary of an employer that provides administrative services for the employer or the employer's subsidiaries or affiliated corporations (current law provides only an exemption for the employer, not its subsidiaries);
  2. an entity that is affiliated with an insurer and performs only contractual duties of an "administrator" for the direct and assumed insurance business of an affiliated insurer (except that the insurer is responsible for the acts of the affiliated TPA and for providing the affiliated TPA's books and records to the insurance commissioner upon request);
  3. a nonresident TPA licensed in its state of domicile that administers only a group plan with 100 or fewer Florida residents for all plans that it administers; and
  4. a Florida-licensed managing general agent ("MGA") whose activities are limited exclusively to activities covered under its MGA license.

The TPA Act requires a new TPA applicant to file independent audited financial statements for the two most recent fiscal years preceding the date of the application, and it requires a licensed TPA to file with the OIR independent audited financial statements annually. The TPA Act further requires (i) TPA business plans to provide for sufficient staffing levels in the areas of claims processing, recordkeeping, and underwriting; (ii) TPA agreements to specify the insurer's required procedures regarding benefits, premium rates, underwriting criteria, and claims payment; and (iii) semiannual audits by an insurer of a TPA handling over 100 insurance certificate holders, with one of each semiannual audit being conducted onsite.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions