Key Takeaways
- The Florida Insurance Code prohibits misrepresentation, false advertising, and unfair claims practices
- Rebating is prohibited in Florida with limited exceptions for certain items of nominal value
- Twisting and churning are prohibited practices subject to license revocation and fines
- Florida requires acknowledgment of claims within 14 days and payment within 20 days of settlement
- Unfair discrimination in underwriting is prohibited except for actuarially justified factors
Unfair Trade Practices
The Florida Insurance Code prohibits various unfair or deceptive practices in the P&C insurance industry.
Misrepresentation
Producers and insurers are prohibited from:
False Statements
- Making false statements about policy terms or benefits
- Misrepresenting the financial condition of an insurer
- Using misleading policy illustrations
- Making false statements about competitors
- Misrepresenting the nature of insurance transactions
Examples of Misrepresentation
| Prohibited Statement | Why It's Misrepresentation |
|---|---|
| "This policy covers everything" | No policy covers all losses |
| "Hurricane coverage is included" | May require separate wind coverage |
| "Your rates are guaranteed" | Rates can change |
| "Citizens is just as good as private" | Coverage and assessments differ |
| "Sinkhole damage is always covered" | CGCC vs. sinkhole coverage differ |
False Advertising
Florida prohibits deceptive insurance advertising:
- Ads must be truthful and not misleading
- Must clearly identify as insurance advertisement
- Cannot use testimonials that are not genuine
- Cannot imply government endorsement
- Must include insurer's name
- Cannot guarantee claims payment beyond policy terms
Rebating
Rebating is offering inducements not specified in the policy:
Prohibited
- Returning part of premium to insured
- Offering gifts of more than nominal value
- Paying for referrals
- Sharing commission with non-licensed persons
- Any valuable consideration not in the contract
Florida Exceptions
Unlike some states with strict no-rebating rules:
- Items of nominal value may be permitted
- Educational materials
- Legitimate filed discounts
- Dividends specified in policy
Exam Tip: Florida has limited exceptions to rebating. Items of nominal value may be allowed, but significant gifts or premium refunds are prohibited.
Twisting and Churning
Twisting
Making misrepresentations to induce replacement:
- Falsely claiming existing policy is inadequate
- Misrepresenting policy values
- Hiding costs of replacement
- Exaggerating benefits of new policy
Churning
Excessive replacement of policies to generate commissions:
- Multiple replacements for same client
- Pattern of replacements in book of business
- Ignoring client's best interests
Penalties
| Violation | Potential Penalty |
|---|---|
| First offense | Warning to suspension |
| Per violation | Significant fines |
| Pattern of violations | License revocation |
| Consumer harm | Restitution required |
Unfair Claims Practices
Florida has specific claims handling requirements:
Claims Timeline Requirements
| Action | Timeframe |
|---|---|
| Acknowledge claim | 14 days |
| Begin investigation | Within 10 working days |
| Pay or deny | 90 days after proof of loss |
| Pay settled claims | 20 days after settlement |
Prohibited Claims Practices
- Misrepresenting policy provisions to claimants
- Failing to acknowledge claims promptly
- Failing to communicate claim decisions
- Denying claims without reasonable investigation
- Offering substantially less than reasonable value
- Delaying payment to force settlement
- Not attempting good faith settlement when liability clear
- Failing to promptly provide explanation of denial
Unfair Discrimination
Florida prohibits unfair discrimination in P&C insurance:
Prohibited Factors
Cannot discriminate based on:
- Race
- Color
- Religion
- National origin
- Marital status
- Sex (with exceptions)
Permitted Underwriting Factors
- Driving record
- Claims history
- Credit score (with disclosures)
- Territory
- Building characteristics
- Hurricane mitigation features
Within how many days must a Florida insurer acknowledge receipt of a P&C claim?
Within how many days must a Florida insurer pay a settled P&C claim?