Definitions
This section will be very important for you in the licensing process. Please be sure to learn and become comfortable with these definitions.
Insurance transaction *****
The term "transacting" is basically anything that needs to be done during the purchase process of an insurance product. It includes:
- solicitation or inducement to purchase insurance (asking for the sale);
- preliminary negotiations toward the sale of insurance (the application, medical exam, quoting a premium, receipts, etc.);
- effectuation of a contract of insurance (issuing a contract after underwriting); and
- transaction of matters subsequent to effectuation of a contract of insurance and arising out of it (delivery of the policy, free-look, additional receipts/disclosures, etc.).
Certificate of authority *****
No person or company is allowed to do anything in the insurance business (act as an insurer, directly or indirectly transacting insurance) in Florida unless that person or company has been authorized by a certificate of authority issued by the Office. Any person who engages in any type of insurance activities without a certificate of authority commits a felony of the third degree.******
Authorized and unauthorized companies/admitted and non-admitted companies****
If an authorized insurer must have a certificate of authority, then obviously an unauthorized insurer is one that does not have a certificate of authority and, based on what you just read, doing insurance business without a certificate of authority is a felony in Florida. There are many names for not having a certificate of authority - such as non-admitted, non-licensed, unapproved - but they all mean the same thing, which is that they are not permitted to do insurance business in Florida.
Unlicensed entities *****
This is starting to get redundant, but that means you really need to know it.
As we've stated, nobody is allowed to act an insurer or assist any insurer not authorized to transact insurance in Florida. What happens when an unauthorized insurer becomes liable for a claim? If the unauthorized insurer fails to pay in full or in part a claim, then any person who knew or reasonably should have known that the contract was entered into illegally is liable to the insured for the full amount of the claim or loss not paid.
Mail order insurance companies fall under the same rules as a normal insurer with regard to being authorized. A mail order insurance company is one that operates by mail for the most part and without personal agents soliciting prospects, and Florida law does not allow unauthorized mail order insurers to solicit in Florida. Even though the company conducts most of its business with consumers via mail, there is still required to be a licensed and appointed agent who is processing the paperwork. Transaction of insurance, including the application for insurance, must be taken by and the policy delivered through a licensed and appointed Florida agent.
Penalties for violation ******
One more time for good measure: Any insurance agent licensed in Florida who knowingly represents or aids an unauthorized insurer commits a felony of the third degree.
