Who Regulates Insurance and Provides Protection to Insurance Consumers in Florida?

The Florida Office of Insurance Regulation (FOIR) under the Department of Financial Services (DFS) regulates all matters relating to insurance Florida Office of Insurance Regulation makes rules, supervises, and monitors the activities of the insurance industry in Florida. The FOIR directs the activities of insurance companies and other entities involved in the risk management business. Its regulatory activities include issues relating to:

• Administrative supervision

• Issuing certificates of authority

• Licensing

• Viatical settlement

• Claims

• Policy forms

• Premium financing

• Solvency

Florida is one of the most complex insurance markets in the world. With its geographical location and long beaches, Florida is a goldmine for property investors and insurers. However, the state is highly susceptible to hurricanes and floods. With an estimated population of 21,538,187 (third behind California and Texas), Florida has a large pool of policyholders and a huge need for insurance coverage.

The United States Federal Emergency Management Authority (FEMA) administers the National Flood Insurance Program (NFIP) for all states, and Florida enforces the NFIP flood policies. However, the Florida Office of Insurance Regulation encourages insurers in Florida to write private flood and hurricane insurance in the marketplace to make more options available to individuals. Though private insurers sell and service flood and hurricane insurance through the NFIP flood and hurricane insurance, write your Own (WYO) program. The NFIP is responsible for the financial protection of policyholders and the payment of claims.

The head of the Florida Office of Insurance Regulation (also known as the Director of the Office of Insurance Regulation) is the insurance commissioner. With an approximate workforce of 250, the FOIR ensures insurance consumers are protected against the fraudulent practices of insurers in Florida. The Commissioner of Insurance is an executive role whose head is an appointee of the financial services commission, comprising the Governor, State Attorney General, and other state executives.

For more information on regulation of insurance in Florida, you can channel your request to:

Office of Insurance Regulation
200 East Gaines Street
Tallahassee, Florida 32399
Phone: (850) 413-3240

What is the Florida Department of Insurance?

The Florida Department of Insurance (also known as the Office of Insurance Regulation) is the state department set up to receive, investigate, research, and attend to consumers' complaints on insurance matters in the state. Apart from educating and providing assistance to insurance consumers, the department settles complaints brought against insurance companies, brokers, agents, and consumers on insurance issues. The Florida Department of Insurance protects the interest of insurance policyholders from fraudulent and unlawful actions of insurance companies. It ensures the companies operate within the confines of the state’s insurance laws.

Some of the responsibilities of the Florida Department of Insurance are to:

• Issue and renew insurance licenses

• Give data statistics

• Give safety consultations

• Take action in cases of violations of safety rules

• Provide public records on insurance

• File cases against fraudulent and unlawful acts

• Provide workers’ compensation forms

• Verify employer coverage

Who Regulates the Florida Department of Insurance?

The Florida Department of Insurance is under the regulation of the Florida Department of Financial Services.

What are the Unfair Trade Practices in Florida?

In Florida, unfair trade practices are actions that confer undue advantages to a company or individual over its competitors. These inducements may come in gift offers, advertisements, or other activities that may influence decision-making. The Florida Deceptive and Unfair Trade Practice Act (FDUTPA) protects individuals and businesses from fraudulent acts carried out by individuals and companies. According to the 2012 Florida Senate Statute (Chapter 501 Section 202), there are three reasons for this Act:

• To protect individuals from fraudulent and deceptive acts in the conduct of trade and commerce,

• To establish consumer protection laws in Florida that conform with federal laws,

• To modernize, simplify and clarify consumer protection laws in Florida, and remove unfair, deceptive, and fraudulent acts from trade and commerce.

Under the Unfair Trade Practices Law, an individual or organization reserves the right to file a civil suit against individuals or businesses engaging in unfair practices to gain an advantage. Deceptive and unfair practices may mislead or influence consumers' decisions when making choices.

In the Florida insurance industry, the Unfair Trade Practice Act is against any action that will influence, misrepresent, or falsely advertise the gains of an insurance policy. The Florida Unfair Trade Practice Act prohibits an insurer from giving the insured or a prospective policyholder more than $25 as a gift in the form of an advertisement. Unfair trade practices in Florida insurance also include:

• Giving false information on benefits, conditions, and terms of a policy

• Misrepresenting the payout or dividend of an insurance policy

• Using false names or titles to represent a policy, thereby misrepresenting its true benefits

• Misleading or false information on the financial status of an insurer

• Intentional misquote of premium to induce a purchase

• Misrepresenting a policy to affect a loan

To be considered an unfair trade practice, the action must be consistent as a business practice in flagrant disregard to the Unfair Trade Practice law.

How to Report Suspected Unfair Trade Practices in Florida?

To report a case of suspected unfair trade practices in Florida, file a complaint with the Office of the State Attorney General. Complaints can be filed online by filling out the Citizen Service Contact Form and immediately getting an electronic confirmation that the message has been received. You can also download, print, fill and mail a complaint form to:

Office of Attorney General
State of Florida
The Capitol PL-01
Tallahassee, FL 32399-1050

It is important to note that the Citizen Service of the Florida Attorney General’s office does not monitor emails on weekends and during off-work hours on weekdays. Emails are responded to between 8:00 a.m. and 5:00 p.m., Mondays to Fridays.

What is the Florida Life and Health Insurance Guaranty Association?

The Florida Life and Health Insurance Guaranty Association (FLAHIGA) is a non-profit organization set up in 1979 by the Florida State Legislature. All licensed providers of life, accident, health insurance, and certain annuity insurance in Florida are members of FLAHIGA. The purpose of FLAHIGA is to provide protection up to the limit of the FLAHIGA Act to policyholders of life, health, accident, and annuity insurance policies of insolvent members. In the event of insolvency of a member insurer, the law stipulates that an insured will be paid to a limit of:

• $100,000 for Life insurance in net cash surrender and withdrawal values,

• $250,000 for Deferred Annuity contracts in net cash surrender and withdrawal values,

• $300,000, including cash values for all other benefits, including Long-term care policies,

• $500,000 for basic hospital expense health insurance policies, basic medical-surgical health insurance policies, or major medical expense health insurance policies. This amount does not include Long-term care policies.

How Does the Florida Life and Health Insurance Guaranty Association Work?

In the event of liquidation of a member due to insolvency by a court, a receiver is set up by the court to assess the liabilities and assets of the insolvent insurer. The FLAHIGA takes up the insurer's responsibilities if it is a member of the organization and provides the necessary services to the insured. The Florida Life and Health Insurance Guaranty Association ensures that policyholders of the insolvent insurer get their benefits when due. The FLAHIGA may cancel or service the policy depending on the court judgment or the policyholder’s preference. If the policy is guaranteed renewable and the insured decides to continue, FLAHIGA will continue to pay out valid claims until they can transfer the policy to a new insurer. To transfer policies of insolvent insurers to new insurance companies, it must be with the state's approval.

• Are all Policies Covered in Full?

No, all policies are not covered in full. The FLAHIGA Act provides coverage for direct individual and group life health insurance policies and individual and allocated annuities issued by members. The FLAHIGA policy coverage only applies to covered claims that meet the requirements. The FLAHIGA Act outlines the coverage policyholders or their beneficiaries will get in the event of liquidation of a member of the association.

• How Much Coverage Does the Florida Life and Health Insurance Guaranty Association Provide?

The coverage limit the Florida Life and Health Insurance Guaranty Association can provide is stated in the FLAHIGA Act. In order to qualify for coverage, a policy must meet the requirements and must be a covered claim. In the event of insolvency of a member, the maximum amounts payable by FLAHIGA are shown in the table below:

• How Fast Does the Florida Guaranty Association Pay?

How fast the Florida Guaranty Association pays varies. The payment process begins immediately after a court judgment liquidates the insolvent insurer and a receiver is appointed. Payments are made upon the completion of the assessment process. However, delays of 30 to 60 days may occur in some cases due to late completion of the assessment.

• Do I Need to Continue Paying Premiums?

It depends on the judgment at the time of liquidation; most liquidations lead to the cancellation of policies. If the court orders that the policies be canceled, you may need to get a new policy from a new insurer. However, if your policy is a guaranteed renewable policy, the coverage continues, and you will need to continue paying premiums. Unless you cancel the policy, premium payment is necessary if you want to retain your coverage. In the event of liquidation of the insurer, premium payments go to the Florida Life and Health Insurance Guaranty Association.

• What If My Claim Exceeds the Amount the Association Can Pay?

Suppose a claim exceeds the amount the FLAHIGA can pay in the event of liquidation and cancellation of the policy. In that case, the excess may be submitted as a policyholder-level claim against the insurance company's assets. The policyholder may qualify for extra payments on the disposal of the company’s assets by the receiver or forgo the excess amount.

• What If I No Longer Live in Florida?

If you relocate from Florida and your insurer is a member of the new state’s guaranty association, you will still have coverage. Guaranty associations provide coverage for individuals resident in a state where the liquidation took place irrespective of where they bought the policy.

• Is My Insurance Company Covered by the Florida Life and Health Insurance Guaranty Association?

Your insurance company is covered by the Florida Life and Health Insurance Association if it is a member. To find out if your insurance company is a member of FLAHIGA, contact the Florida Office of Insurance Regulation at (850) 413-3140 or visit their official website.

• Why Hasn't My Insurance Agent or Company Told Me More About the Florida Life and Health Insurance Guaranty Association?

It is unlawful for an insurance agent or company in Florida to use membership of FLAHIGA or any of the state guaranty associations as a means of influencing decisions. Being a member of the guaranty association should not be seen as a standard of quality of services or coverage.

What is the Florida Insurance Guaranty Association?

The Florida Insurance Guaranty Association (FIGA) is a non-profit corporation created in 1970 by the Florida State Legislature to sort out covered claims of insolvent members. It follows the rule of law in processing covered policies of insolvent insurance companies liquidated by the courts. All insurance companies in Florida are to belong to the Florida Insurance Guaranty Association. The Florida Insurance Guaranty Association gets funds for running its activities by levying members and through monies recovered from selling assets of liquidated members.

The Florida Insurance Guaranty Association has four subdivisions; these are:

• Florida Life and Health Insurance Association (FLAHIGA) - FLAHIGA was created in 1979 by the Florida Senate to protect policyholders of life and health insurance policies of insolvent members. When a member is declared insolvent and ordered to liquidate by a court of jurisdiction, the court appoints a receiver to sort out its assets and liabilities. By law, FLAHIGA automatically inherits the responsibilities of the member to its policyholders. It collects premiums and provides benefits to individuals under the plan’s coverage until they are transferred to a new insurer. However, the association reserves the right to cancel the policy and make payouts for covered claims before liquidation.

• Florida Self-Insurers Guaranty Association - Florida Self-Insurers Guaranty Association is a non-profit association set up by the Florida Statutes Chapter 440 Section 385 to protect workers of insolvent self-insurers in the state. In the event of liquidation, the association ensures that workers of such companies receive their benefits. The Florida Self-Insurers Guaranty Association is run by a nine-member board of directors appointed by the state’s Chief Financial Officer to manage insolvency funds. The board of directors funds payments by using the insolvency fund from the assessment of its members.

• Florida Workers Compensation Insurance Guaranty Association (FWCIGA) - FWCIGA is an association run by an eleven-member board of directors that implements Florida Statutes Sections 631.901 – 631.932 to make payments to workers of insolvent members. It aims to avoid loss and excessive delays in the payment of workers' compensation in the event of the insolvency of a member. FWCIGA investigates compensation claims by workers of its insolvent members. If their claims are valid, the association pays the claims based on available funds. It also makes recommendations to the Office of Insurance Regulation regarding detecting and preventing insolvency among its members.

• Florida Health Maintenance Organization Consumer Assistance Plan (FLHMOCAP) - FLHMOCAP was established by the Florida Statute Chapter 631 Section 815 to protect individuals enrolled under Health Management Organization plans from losses in the event of liquidation. It also offers help to policyholders if an HMO member is insolvent and unable to fulfill its contractual agreements with its enrollees. FLHMOCAP protection is only available to commercial members of employer-provided group HMO and individuals who buy coverage directly from an HMO. HMOCAP does not protect persons who enroll with HMO under Medicaid and Medicare coverage. HMOCAP takes over the responsibility of providing coverage to HMO subscribers in the event of liquidation of the HMO until their contracts are transferred to new insurers. The limits of the organization’s exposure are defined by the terms of the contract and Florida laws.

How Does the Florida Insurance Guaranty Association Work?

In Florida, when a member of the Florida Insurance Guaranty Association goes bankrupt and is declared insolvent by a competent court, the Florida Insurance Guaranty Association (FIGA) steps in. FIGA assumes the insurer's role and makes sure payments are made for covered claims that meet the criteria of the FIGA Act.

If a member of the association files for bankruptcy, the court will appoint a receiver to assess the assets and liabilities of the insurer. The FIGA then comes up with recommendations on how to distribute the assets and submit them to the court for approval. With the court's approval, the guaranty association makes payments for covered losses up to the limits in the FIGA Act. The covered losses must occur before liquidation or within thirty days after the liquidation of the insurer. If there are unearned premiums (upfront premium payments before the liquidation), the policyholder will get a refund.

Except for homeowner and condominium insurance, the Florida Insurance Guaranty Association pays claims between $100 and $300,000. Homeowner and condominium insurance policies have different payment limits. On homeowners’ claims, the homeowner will get an additional $200,000 or less for structural damages and damages to contents. Condominium and homeowners’ association claims have a limit of $200,000 multiplied by the total units in the association.

Policyholders have a statute of limitation of one year to settle a claim after filing a claim with the receivership (Division of Rehabilitation and Liquidation in the Department of Financial Services). Within the stated deadline, a policyholder should settle a claim or file a suit against the FIGA.

• What FIGA is not?

The Florida Insurance Guaranty Association is not an insurance regulatory agency. It does not make laws guiding the insurance industry in Florida. Also, it is not an insurance company and does not sell insurance policies to individuals and corporate entities.

• What does FIGA cover?

The Florida Insurance Guaranty Association covers the insureds and beneficiaries of policies issued by its members in the event of insolvency. It offers insurance coverage for benefits that an insolvent member is supposed to provide to its policyholders. The FIGA accepts covered claims that meet requirements outlined in the insurance policy contract and are made within the statute period.

• At what point does FIGA become responsible for taking on the claims of an insolvent member insurer?

The Florida Insurance Guaranty Association becomes responsible for claims of an insolvent member immediately after the court is liquidated and declares the insurer insolvent

• Am I eligible for coverage by FIGA?

In Florida, you are eligible for coverage under the Florida Insurance Guaranty Association Act if the insurance company is an admitted company. Also, to enjoy FIGA coverage for your claims in the event of liquidation of your insurer, the claim must be a covered claim. The covered event must have occurred before the liquidation or not more than thirty days after.

• Will I get coverage in Florida for my insurer that has gone into insolvency in another state?

Yes, you will get coverage if your insurer is a member of the Florida Insurance Guaranty Association. Some insurance companies have operations in multiple states, and your insurer may have a branch in Florida that is a member of the association. Also, no matter where you are, you have coverage in the state where the insurance company is liquidated if it belongs to that state's Insurance Guaranty Association

• Will I still get all my benefits under the current policy?

No, you may not get all your benefits under your current policy if your insurer is insolvent. The Florida Insurance Guaranty Association has the maximum amount of payouts it can make for claims in the event of liquidation of any member. Unless you belong to a homeowner or condominium association, FIGA pays between $100 and $300,000 per claim. There may be an extra $200,000 or less per unit claim for homeowner or condominium associations. If your claim exceeds the amount payable by FIGA, you may receive additional payments if the receivership disposes of the company’s assets and all covered payments are made. Else, you forgo the excess amount.

• What if I have coverage with another Insurer?

In Florida, if you have two different policies for the same insurable risk, the Florida Insurance Guaranty Association will provide coverage for only one policy in the event of insolvency. The total amount a policyholder will receive in the event of insolvency does not exceed what is stated in the FIGA Act, irrespective of the number of policies. For instance, a policyholder having two similar policies with a maximum payout of $300,000 each will receive a payout of $300,000 and not $600,000.

• Does FIGA protect business owners?

Yes, the Florida Insurance Guaranty Association provides coverage for business owners. A policyholder may also be a business owner; hence, they will get the same coverage as an individual.

• Will FIGA notify me of my claim?

No, Florida Insurance Guaranty Association will not notify you of your claim if your insurer is liquidated. In the event of insolvency and liquidation of an insurance company in Florida, the receiver (the Division of Rehabilitation and Liquidation in the Florida Department of Financial Services) notifies the policyholders.

• Are there deadlines for filing FIGA claims?

Yes, there are deadlines for filing claims after an insurance company is liquidated, and failure to file a claim within this period makes it a late claim. The deadline for submission of the claim is communicated to the policyholders by the receiver in the event of liquidation of the insurance company.

• What does a FIGA proof of claim mean?

A Florida Insurance Guaranty Association proof of claim is a document submitted by a policyholder of an insolvent insurer to substantiate the cost of a loss. It is an official sworn document presented by the insured to the receiver of a liquidated insurer to authenticate the claim for payouts in the event of insolvency of the insurer. In Florida, an insured is required by law to submit a proof of claim on or before the last day of filing a claim as specified in the receiver’s notice.

• Someone filed a claim/lawsuit against me. What should I do?

In Florida, if someone files a lawsuit that requires legal representation by your insolvent insurer, you should contact the Florida Insurance Guaranty Association. The association will determine whether you are entitled to legal counsel and offer all the necessary help you need, just as your insurer would have done.