Unfair, Deceptive Insurance Trade Practice Rules Reviewed at September 20 Florida Department of Financial Services Hearing

 

Certain insurance trade practices defined by Florida law as unfair methods of competition or unfair or deceptive acts or practices involving the business of insurance, along with similar practices relating to title insurance were reviewed during Rule Hearings held by the Florida Department of Financial Services’ (“DFS”) Division of Agents and Agency Services yesterday, September 20, 2010.

 

69B-210.005: Unlawful Inducements, Generally

Amendments to proposed Rule 69B-210.005, entitled “Unlawful Inducements, Generally,” address the applicability of unlawful inducements to Florida’s unfair insurance trade practices statutes.  Examples of such inducements are included in the amendments. 

To view the complete proposed Rule incorporating the amendments, click here.

On hand to testify at yesterday’s hearing, several insurance industry representatives, including those from the Florida Associations of Insurance Agents, expressed concerns with the proposed changes.  These concerns include:

• The definition of “unlawful inducement” in section (1) is overly broad
• The proposed changes may discourage an agent from informing the insured of possible discounts or other benefits
• The examples provided in section (3) could restrict insurers from marketing their products within the existing law
• Application of strict and consistent enforcement likely will be difficult

The DFS officials presiding over the hearing reminded those in attendance that comments generated at the hearing, as well as those submitted in writing, would be considered in the rulemaking process.   The DFS has recognized the need to improve the Rule and is attempting to craft solutions to insurer concerns.   Therefore, another hearing on the proposed Rule would be held to further evaluate the issues raised.

The record for this hearing will remain open until October 1, 2010 for interested parties to submit written comments. 

 

69B-210.010: Unlawful Inducements, Title Insurance

A second public hearing on unlawful inducements was held on September 20 and focused on proposed Rule 69B-210.010, which relates specifically to title insurance.

To view the meeting notice and complete text of proposed Rule 69B-210.010 incorporating the amendments, click here.

At the hearing, several title industry representatives and other interested parties such as home builders and affiliated businesses testified in opposition to the proposed Rule, explaining that, generally, the proposed Rule amendments are ambiguous and overly broad. 

Additional concerns included:

• That the proposed Rule would prohibit certain employees from participating in professional organizations. Also, that the proposed Rule would prohibits employers from providing benefits critical to attracting quality employees.
• That the proposed Rule is problematic for affiliated businesses.  It was suggested that the DFS does not have the statutory authority to impact affiliated businesses through this proposed Rule.
• That section (4) of the proposed Rule seems to curtail insurer marketing by regulating existing practices that could subsequently be construed as illegal incentives

DFS officials stated that free short sales will likely be construed as illegal inducements.

Also, the DFS is considering the elimination of section (4)(r), inasmuch as it is not deemed to add value beyond the statute.

Acknowledging that the proposed Rule is a “work in progress,” DFS officials said they will continue to work with the industry to improve it, and encouraged those in attendance at the hearing to contribute additional suggestions.

The record will remain open until October 1, 2010 for any additional written comments.

 

 

Should you have any comments or questions, please contact Colodny Fass.