Financial Services Regulation
My name is Osa Winter, and I am the Marketing Director for the Florida School of Insurance. I will be walking you through these law chapters and explaining the concepts in a way that I hope will make the information more approachable. Please keep in mind that my personal contact information can be located from our homepage and I will be happy to assist you individually if you have additional questions.
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Before digging into the hierarchy of regulation in detail, let's put the first part of this chapter in everyday language that's easier to digest. We have already discussed the fact that the insurance industry is state regulated, but what does that look like?
Basically, when we say that insurance is state regulated, we mean that it is regulated by the Office of Insurance Regulation, or OIR, which is run by the Commissioner. Often, the title "insurance commissioner" is used in everyday language, but in the context of the licensing process we use the long form, which is the Commissioner of the Office of Insurance Regulation.
It is also worth noting that the OIR is an office within the Department of Financial Services. The Department of Financial Services is headed by the Chief Financial Officer (CFO), and the Department has within it many different divisions and offices that all play a part in regulating insurance. However, for this licensing process we are primarily concerned with the OIR (as previously mentioned) and the Office of Financial Regulation (OFR). The OIR is concerned, of course, with insurance companies - so things like issuing certificates of authority to insurance companies, premium regulation, reserves, marketing, etc. The OFR, then, is concerned with other financial institutions, such as banks, credit unions, and the securities industry.
Therefore, the insurance industry is overseen by both the Commissioner of the Office of Insurance Regulation and the CFO. You may recall from chapter 2 that the CFO has the authority to investigate insurance companies and producers, issue cease and desist orders, impose penalties, and seek a court injunction. In this chapter you will learn that the Office of Insurance Regulation audits insurance companies within the state, although an audit will be called a market conduct examination. You will also learn in this chapter that the OFR has the authority to issue cease and desist orders in certain cases, as well as seek a court injunction and make investigations inside and outside Florida.
A final piece of the hierarchy will involve enforcement of insurance laws within the state, which in the pages that follow will be called "administration". You will see shortly that the insurance laws in Florida are administered (or enforced) by the CFO, the Commissioner of the OIR and the Financial Services Commission. Further, it will be important to remember that the
Financial Services Commission is composed of
- the Governor,
- the CFO,
- the Attorney General and
- the Commissioner of Agriculture.
All of these pieces of the bureaucratic puzzle will be expounded on shortly.
Remember, these few paragraphs have been intended to be a broad overview. It is important to keep in mind, though, that the detail contained in the following pages is extremely important. Please note that we have identified key pieces of information with bold, italicized and underlined text as well as asterisks***.
Chief Financial Officer (CFO) ***
The position of Chief Financial Officer (CFO) is an independently elected state office. As part of his duties he is a member of the Financial Services Commission (so helps enforce insurance laws), as well as the head of the Department of Financial Services which, along with the Commissioner of the Office of Insurance Regulation, oversee the insurance industry.
To put that more plainly, the CFO is:
- head of the Department of Financial Services, and
- a member of the Financial Services Commission.
There are also 15 divisions and offices that are directly overseen by the CFO, including:
- a Division of Accounting & Auditing (Bureau of Unclaimed Property)*****
- a Division of Insurance Agent and Agency Services,
- a Division of Insurance Fraud,
- a Division of Consumer Services, and
- the Office of the Insurance Consumer Advocate
All of the divisions and offices overseen by the CFO have a role in regulating insurance.
The CFO also administers:
- regulation of insurance agents (licensing, etc),
- insurance fraud, and
- insurance consumer protection.
Remember that the word "administers" in this context basically means enforcement, and the next set of bullet points will use this word as well.
The insurance laws are administered by:******
- The Chief Financial Officer (CFO),
- the Financial Services Commission, and
- the Commissioner of the Office of Insurance Regulation.
Financial Services Commission****
What is the Financial Services Commission? It's basically the Governor and the Cabinet. It is composed of:
- the Governor,
- the Chief Financial Officer (CFO),
- the Attorney General, and
- the Commissioner of Agriculture.
Let's bring this all together: Since the Financial Services Commission helps enforce the state insurance laws, that means that the Governor, CFO, Attorney General and the Commissioner of Agriculture all help enforce or administer the state insurance laws. It's interesting to note that the Commissioner of the Office of Insurance Regulation is not included in the Financial Services Commission. So although the Commissioner of the OIR does help administer or enforce insurance laws, he is not a member of the Cabinet.
Office of Financial Regulation
The Office of Financial Regulation (OFR) is responsible for the regulation of:
- banks,
- credit unions,
- other financial institutions,
- finance companies, and
- the securities industry.
The head of the OFR is the Commissioner of the Office of Financial Regulation. In the next few pages we will talk about the duties and powers of the OFR in detail. For now, it's worth knowing that the OFR includes a Bureau of Financial Investigations that investigates suspected wrongdoing, both inside and outside of Florida, and may refer suspected violations to state or federal law enforcement or prosecutorial agencies. In this way, you could say the OFR acts as a whistle-blower of sorts.
Office of Insurance Regulation
The OIR is responsible for all activities pertaining to the regulation of insurers and other risks-bearing entities. We have already identified that the Commissioner is the head of the Office of Insurance Regulation, and the authority of this office will be discussed in the next couple pages. Generally, the specific duties of the office include the following:
- Rate-making supervision
- Policy forms approval
- Market conduct investigation
- Issuing insurer certificates of authority
- Assessing insurer solvency
- Regulating viatical settlements
- Regulating premium financial arrangements
- Administrative supervision
