2.4 Disciplinary Grounds, Penalties and Reinstatement
Key Takeaways
- F.S. § 626.611 lists mandatory grounds on which the department shall deny, suspend, revoke or refuse to renew a license, including misappropriation of funds, fraud in obtaining the license, and a felony or moral turpitude conviction.
- F.S. § 626.621 lists discretionary grounds on which the department may act, including violating any code provision or order, failing to obey a subpoena, unfair claims settlement practices, and failing to report a plea or conviction within 30 days.
- An administrative fine under F.S. § 626.681 may not exceed $500 per violation, or $3,500 where the department finds willful misconduct, and is unavailable on a second offense or where suspension or revocation is mandatory.
- Probation under F.S. § 626.691 may not exceed 2 years, a suspension under F.S. § 626.641 may not exceed 2 years, and a revocation bars reapplication for 2 years with requalification as a first-time applicant.
- Knowingly transacting insurance without a license is a third-degree felony under F.S. § 626.112(10), and acting as an unlicensed public adjuster is separately a third-degree felony under F.S. § 626.8738.
Disciplinary Grounds: Mandatory vs. Discretionary Sanctions
The Florida Legislature established explicit statutory criteria governing when the Department of Financial Services must act versus when it may exercise administrative discretion regarding license sanctions. Mastering this distinction is critical for the exam: the operative word in § 626.611 is shall, and the operative word in § 626.621 is may.
Mandatory Grounds (F.S. § 626.611)
Under F.S. § 626.611, the department shall deny, suspend, revoke, or refuse to renew an adjuster's license if it finds that one or more of the following exist. (The statute contains a proviso for criminal-history grounds, which are handled under § 626.207's waiting-period rules.)
- Lack of Qualifications: Lack of one or more of the qualifications for the license or appointment as specified in the Florida Insurance Code.
- Material Misstatement / Fraud: Material misstatement, misrepresentation, or fraud in obtaining the license or appointment.
- Cheating on an Examination: Demonstrated lack of fitness or trustworthiness, including cheating on a licensure examination.
- Misappropriation of Funds: Misappropriation, conversion, or unlawful withholding of moneys belonging to insurers, insureds, beneficiaries, or others and received in the conduct of business.
- Fraudulent or Dishonest Practices: Fraudulent or dishonest practices in the conduct of business under the license or appointment.
- Willful Failure to Comply: Willful failure to comply with, or willful violation of, any proper order or rule of the department, or willful violation of any provision of the Insurance Code.
- Felony Conviction: Conviction of, or a plea of guilty or nolo contendere to, a felony or a crime punishable by imprisonment of 1 year or more under the law of the United States or any state, or a crime involving moral turpitude, without regard to whether adjudication was withheld.
- Demonstrated Incompetence: Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license.
Discretionary Grounds (F.S. § 626.621)
Under F.S. § 626.621, the department may deny, suspend, revoke, or refuse to renew a license on grounds that are serious but do not compel automatic action:
- Any § 626.611 Ground: A violation of any provision for which the department could have acted under § 626.611 in the first place.
- Violation of the Code or an Order: Violation of any provision of the Insurance Code or of any lawful order or rule of the department, the commission, or the office.
- Failure to Obey a Subpoena: Refusal or failure to comply with a lawful subpoena, or refusal to testify or produce records.
- Unfair Claims Settlement Practices: Engaging in unfair methods of competition or unfair or deceptive acts under F.S. § 626.9541, including the unfair claims settlement practices in § 626.9541(1)(i).
- Failure to Report a Plea or Conviction: Failure to inform the department in writing within 30 days after pleading guilty or nolo contendere to, or being convicted or found guilty of, any felony or crime punishable by imprisonment of 1 year or more.
- Out-of-State Discipline: Suspension, revocation, or other disciplinary action against the licensee's insurance license by another state, territory, or federal agency.
- Rebating or Improper Inducements: Paying or accepting anything of value as an inducement in connection with insurance transactions.
Exam Trap: "Shall" vs. "May"
Exam items usually present a fact pattern and ask whether the department must or may act. Anchor on the source of the misconduct. Money taken from an insured, a felony plea, or fraud in obtaining the license lands in § 626.611 — mandatory. Ignoring a subpoena, failing to report an out-of-state suspension, or committing an unfair claims practice lands in § 626.621 — discretionary. Also remember that a mandatory ground removes the department's option to substitute an administrative fine under § 626.681.
Reinstatement and Re-Application After Discipline
- A suspension under F.S. § 626.641 may not exceed 2 years, and the license does not come back automatically: the licensee must file an application for reinstatement, and on a second suspension must also complete department-prescribed continuing education. Reinstatement is denied if the circumstances that caused the suspension still exist or are likely to recur.
- A revocation bars any new license or appointment application for 2 years from the effective date of revocation (or from the date of a final court order affirming it). The applicant must then qualify in the same manner as a first-time applicant.
- Adjusters must also remember that the department can pursue several remedies at once — for example, an administrative fine under § 626.681 combined with probation under § 626.691 — because those statutes operate "in lieu of or in addition to" suspension and revocation.
Penalties and Sanctions Matrix
| Penalty Type | Legal Basis | Scope / Severity |
|---|---|---|
| Administrative Fine | F.S. § 626.681 | Up to $500 per violation, or up to $3,500 where the department finds willful misconduct or a willful violation. Not available on a second offense or where suspension/revocation is mandatory, and it may be augmented by any commissions earned on the transaction |
| Probation | F.S. § 626.691 | Licensee placed under departmental monitoring for a period not to exceed 2 years, on terms the department specifies |
| License Suspension | F.S. § 626.641 | Temporary withdrawal of adjusting authority for up to 2 years; licensee cannot adjust claims or receive commissions |
| License Revocation | F.S. § 626.641 | Complete termination of license; individual cannot reapply for at least 2 years (and never if permanently barred for major fraud) |
| Unlicensed Adjusting | F.S. § 626.112(10); § 626.8738 | Third-degree felony. § 626.112(10) reaches anyone who knowingly transacts insurance without a license or aids an unlicensed person; § 626.8738 separately criminalizes acting or holding out as a public adjuster without a license and appointment, and makes each act a separate offense. Third-degree felonies carry up to 5 years in state prison and a $5,000 fine under ss. 775.082 and 775.083 |
Under Florida Statutes Section 626.611, which of the following actions constitutes a MANDATORY ground requiring the Department of Financial Services to refuse, suspend, or revoke an adjuster's license?
An individual who does not possess an adjuster license or appointment solicits and negotiates property damage settlements for flood victims following a coastal hurricane. What legal penalty applies to this act of unlicensed claims adjusting under Florida law?