Insurance remained at the top of the legislative agenda thisspring as the Florida Legislature debated everything from thefuture of no-fault auto insurance to making it easier forFloridians to protect their homes from hurricanes. In the process,the lawmakers also approved some measures to make life easier forinsurance agents to do their jobs and protect their livelihoodsfrom unlicensed workers. But perhaps the most important event was abill that did not pass.

In the final weeks of session, the Florida Association ofInsurance and Financial Advisors and the Florida Association ofInsurance Agents helped block a move by a group of non-agents toamend the Florida Insurance Code that would have authorized abroker-like exemption for so-called “unaffiliated insuranceconsultants.”

As spelled out in a draft amendment, the Department of FinancialServices would have had to recognize and register so-calledunaffiliated insurance consultants. The consultant would be definedas a person not affiliated with any insurer who chooses to practiceas an independent insurance consultant providing “objective” adviceto the buyers of insurance. These consultants would have beenallowed to approach group health accounts or property insuranceclients to discuss the clients' current insurance coverage.Non-agents allowed to perform these functions could have included aperson with an academic degree from an accredited college oruniversity in risk management or insurance, an attorney who is amember of the Florida Bar, or anyone else DFS deemed proper. Theconsultant would not be required to maintain a life and healthagent's license, and would not require an appointment by anyinsurer.

While the amendment was pitched as a means to create consumeradvocates that would help policyholders avoid being taken advantageof by insurers, agents insisted it would introduce a class ofunqualified advisors that could steer consumers in the wrongdirection. They also charged it could create a situation wherebythese unaffiliated consultants could actually be used as a backdoorto solicit business on the behalf of some insurers as a means toget around using agents. The amendment also left unclear whatrecourse a consumer would have if the consultant ended up takingadvantage of them.

“Blocking this broker bill was one of the most significantevents of the legislature, said Tim Meenan, lobbyist for FAIFA. Itremains unclear what groups favored the bill, though Meenan said heexpects other such efforts to be attempted in the future. “Thiskind of bill would have undermined the authority that licensedagents bring to the table.”

Agents Gain Flexibility

On a more positive note, the legislature did pass several billsimportant to agents. One was a bill that will make it easier forlicensed agents to work at more than one location. The billauthorizes a licensed insurance agent in charge of an insuranceagency to be the agent in charge of one or more branch insurancelocations, so long as an unlicensed person does not conductinsurance business when the agent in charge is not present. “Thisbill will give many agents the flexibility to work out of differentlocations,” said Tom Ashley, FAIFA senior vice president.

Agencies with multiple locations will still need to get each ofthem licensed as a branch agency, but they will no longer need tomaintain a full time agent at those locations. The bill initiallyonly referred to banks but the insurance agent lobby made sure itapplied to insurance agencies. “The amendment levels the playingfield regarding branch insurance office activities relative toagent activities to ensure that we have the same exemption asbanks, brokers, and funeral homes for our branch offices,” Ashleysaid. The multiple branch bill also allows the DFS to approvecorrespondence courses offered by independent programs of study assatisfying the pre-licensing education requirements for obtaining alife or health insurance agent license.

The legislature made it easier for agents who call on schoolteachers and administrators in different counties. A bill that waspassed allows agents to submit for fingerprint-based backgroundscreening in just one county rather than doing it for each countythey work in. In other words, if an agent passes a backgroundscreening in Duval County, the agent does not need to go throughthe process again to do business in Nassau County.

“No one questions the need to do background screening for thesafety of students, but this removes some unnecessary hurdles toour agents working in multiple counties,” Meenan said. “There'snothing wrong with going through the screening once, but to do itfive or six times a year can be a hassle.”

The bill requires state and federal criminal history checks tobe performed at least every five years. The bill requires anon-instructional contractor such as an agent, to inform a schooldistrict that he or she has had a criminal history check in anotherschool district within the last five years. A contractor who hasbeen convicted of a disqualifying offense (any offense that wouldrequire registration as a sex offender, murder, terrorist,kidnapper, among others) is prohibited from being on school groundswhen students are present, unless he or she has received a fullpardon or had civil rights restored. Violation of this prohibitionis a third degree felony.

Other Changes

In another victory for agents, the legislature passed a measurethat gives agents immunity from the insolvency of reciprocalinsurance arrangements, condo association self insurance funds andother non traditional risk funds formed as a result of an expandedFlorida Hurricane Catastrophe Fund. The provision was importantbecause agents' “errors and omissions” insurance policies would notcover these new types of funds.

New rules that allow the formation of condo self insurance fundsprohibit these funds from favoring one agent over another whilespecifying that any applicant can retain or choose any licensedagent. While these self-insured condo funds are still a newconcept, they are expected to become a more popular way for condoassociations to hold down their liability coverage.

Finally, as part of the revamping of Citizens Property InsuranceCorporation, the legislature made it easier for agents to compareprivate company policies with Citizens by drafting a definition ofcomparable coverage when comparing rates. It also removed the10-day waiting period to sign up an applicant for a Citizenspolicy. “This bill will make life easier for agents and theircustomers,” said Scott Johnson, executive vice president of theFlorida Association of Insurance Agents.

Overall, Johnson said agents had a “pretty good” legislativesession. During the session, former head of Citizens, Bob Ricker,agreed to work as a consultant to FAIA. “He will help agents betterwork with Citizens,” Johnson said.

Not all agent groups were happy about some of the changes madeby lawmakers. Surplus lines agents were particularly unhappy aboutchanges in Citizens that is making the insurer competitive with theprivate market. Under approved legislation this spring, agentsselling surplus lines insurance covering personal residentialproperty risks must notify their customers, in writing, thatcoverage may be available and may be less expensive from Citizensand to provide notices that Citizens assessments may be higher.

Surplus lines agents strongly doubt that consumers will dolittle more than glance over the possible assessment especiallygiven the changes in Citizens' rates. Florida InsuranceCommissioner Kevin McCarty issued an order rescinding Citizensapproved rates that would have become effective January 1, 2007,and ordered Citizens to rollback rates to December 31, 2006 levels.Further legislation during the regular session extended that freezeto January 2009. Insurers warn the rate freeze will have the effectof making Citizens more appealing to consumers and ending its roleas the market of last resort. Already Citizens is the largestinsurance company in Florida with some 1.3 million policyholders,almost half in South Florida.

Although it remains to be seen how the Citizens changes willaffect the market, and most agents agree it will pull consumersaway from the surplus lines market. “What it comes down to is thestate of Florida has turned to Citizens as the salvation to all ourproblems. I think that is despicable,” says Steven A. Firestone,president of Firestone Agency of Florida, a major excess &surplus lines broker in Coral Springs.

Meenan agrees that the state still appears unwelcoming to newplayers given the many restrictions place on the industry. On apositive note, four new domestic carriers are entering the market.American Keystone Insurance Co., is planning to write homeowners'coverage for high-valued properties that have a worth of between$250,000 and $3 million. Homeowners Choice Property and CasualtyInsurance Co., has announced it is planning to acquire 15,000 to20,000 policies from Citizens, while Olympus Insurance Co., hasstated plans to start offering properties later this year. ModernUSA Insurance Co., also plans to start offering homeowners'coverage later this year.