Volume 6, No. 5 - May 2017

Compliance Corner

This section has been created to assist you in keeping your insurance business in compliance. The items are intended as reminders only. Note: Division publications may include references to the Florida Statutes and/or the Florida Administrative Code. The laws noted in our publications are/were in effect at the time of publication but may have been repealed, amended or replaced and new laws may have been enacted subsequently.

Compliance Topic of the Month: Preparing Your Agency And Customers For Hurricane Season

Unless you are very new to Florida, you are aware that Florida's Hurricane Season starts June 1st. Most people are careful to make important plans to protect their personal safety, homes and belongings by developing a "Hurricane Plan". Take time to consider the plans you've made to protect your business and consumer records in the event a storm approaches Florida.

Preparations agencies and agents may want to consider:

  • Is your agency adequately insured? Do you have the appropriate amount and types of coverage? Do you have or need business continuation coverage? Now is the time to review your own coverage as we head into the "Mean Season".
  • Protecting consumer records - many insurers have specific guidelines related to the protection of consumer records by agents and agencies. Are you aware of those requirements? Many agencies are moving away from maintaining paper records in favor of the ease and protection of electronic data storage. However, if your computers are destroyed without a back-up, you'll lose the advantage electronic records provide. You may want to discuss off-site computer storage with your Internet Service Provider or an insurer, which may be able to suggest solutions.
  • Emergency plans for the agency and its members - if you have a lease, what restrictions, if any, apply to your business' premises in the event of a natural disaster? Will you have access to your records, furnishings and possessions?
  • Where and how will you continue to operate if your business premises are uninhabitable? Do you have a plan to notify your customers should it be necessary to work from another location?

If your business premises are damaged during a storm and cannot be accessed by your customers, please notify the Department and provide your temporary address, phone and fax numbers. You can do this by notifying our Division of Consumer Services. When consumers can't reach their agent, they may call the Department and this will allow us to provide your contact information to them.

After you have taken steps to protect your business and customer records, you may want to reach out to your customers before a storm strikes. Visit the Department's "Protect Your Homebase", for information on many topics related to disaster preparedness by clicking on this icon:

Protect Homebase

Remind your customers that Hurricane Season is approaching and consider:

  • Asking your customers to review their insurance policies to make sure the coverage type and amount will adequately protect them in the event of a storm. They can contact you for more information or to request additional coverage. You may already conduct annual reviews of your customer's policies, but this will involve them in the process.
  • Remind them that many policies offer limited or no coverage for items such as cash, art, jewelry, furs, firearms, etc. The average consumer may not realize that coverage is limited or unavailable and may require adding a rider to an existing policy or purchasing a specialty policy.
  • While it's not pleasant to think about, storms take lives every year. Are your customer's lives adequately insured?
  • Urge your customers to conduct an inventory of their home and the items within it. Both a written inventory, with receipts when available, along with photos or video are extremely helpful at the time of a claim.
  • Perhaps most important, be on the lookout for the lapse of property coverage and take steps to reinstate or rewrite the coverage.
  • Encourage your customer's to visit our web page Disaster Preparedness for helpful tools and information.

In the event a storm threatens Florida, the Department will communicate valuable information to its licensees and the public. We're prepared to assist our licensees and the citizens of Florida should disaster strike.

Editor's note: This article was originally published in the May 2016 Insurance Insights,

Real Estate Commission Disbursements

We have received several inquiries recently about whether it is lawful to disburse real estate commissions at a closing. Under s.475.42, Florida Statutes, a real estate agent is not to be paid commissions as part of the real estate transaction. However, if the title agency wants to assist the real estate broker by disbursing the commissions of the agents working for the broker, then they can do so by entering into a separate transaction.

The separate transaction would be for the disbursement of the funds received by the real estate broker in payment for the sale of the property that was closed by the title agent or agency. The real estate broker would either endorse the check back to the title agency, or the broker would cash the commissions check and write a new check to the title agency.

The agency would then distribute the real estate commissions as directed by the real estate broker. This would not be considered a part of the real estate closing conducted by the title agency.

The Florida Real Estate Commission (FREC) issued a declaratory statement concerning this issue. The statement concludes that the title agency may disburse the commissions directly to the real estate agent if certain conditions are met:

  • The real estate broker has provided written authorization to the title agency to disburse the commissions directly to their real estate agents.
  • The authorization is to identify the specific transaction, identify the specific real estate agents, and disclose the exact amount of commissions each real estate agent is to receive.
  • The written authorization must be signed by the office manager of the real estate brokerage firm.
  • The disbursement will occur only after the transaction has closed.

The last requirement is a little tricky in that the case also explains that the funds would not be available to be disbursed if the transaction did not close. This is because the loan proceeds are technically not received by the title agency until the transaction closes, so any disbursement made that fits the description above would be automatically considered to have been made after the transaction closed.

The key component of lawful disbursement by the title agency is written authorization from the real estate broker to disburse the commissions to the named real estate agents in the amounts authorized by the real estate broker.

Title Agency Data Call 2017

Title insurance agencies are required to submit information to the Florida Office of Insurance Regulation (OIR) under the data call required by section 627.782(8), Florida Statutes. Title agencies have until June 1, 2017 to make their submission to the OIR. The OIR has sent an email to each licensed title agency in Florida to remind them of the new law with instructions on how to complete the process accurately.

The Title Agency Data Call is performed by the title agency by first downloading the template from the OIR website to complete offline. To do this, the agency will need to create an account and subscribe to your agency in the Data Collection and Analysis Modules (DCAM) used by the OIR, which is located at https://apps8.fldfs.com/DCAM/Logon.aspx.
(The user's guide for DCAM is located at: https://apps8.fldfs.com/DCAM/Help/DCAMUserGuide.pdf)

Once the agency's data template form is completed and the agency is ready to certify it is accurate, the agency must upload the form to the OIR before the deadline, June 1, 2017.

The data template has seven tabs or worksheets:

  1. Version: includes the OIR contact information and reporting date reminder
  2. Instructions: data template must be downloaded from DCAM for the purpose of reporting information
  3. Report_Lines: Two columns extend down a series of questions and required responses (enter either text or numeric in the two columns, as shown)
  4. Schedule A: Additional agency information
  5. Schedule B: Agent activities
  6. Schedule C (Residential): Title agent statistical information submission for 1-4 residential units
  7. Schedule C (Commercial): Title agent statistical information submission for commercial units

Each agency's submission must contain a Filing Certification signed by an agency officer (electronic signature accepted), stating the information provided is accurate to the best of their knowledge and belief. A sample copy is available on the OIR's website at: www.floir.com/siteDocuments/CertificationOfTitleDataSubmissionExample.pdf

The agency may include a cover letter, but this is an optional component for the filing.

Each agency is encouraged to include any additional or optional information that is deemed important to the overall submission. These optional items may be uploaded as PDF documents under the "Other Information/Documents" component.

It is important to know that the agency's submission is not considered to be complete until the agency receives an email receipt showing the agency's file log number.

If you have any questions regarding this filing process, please contact the OIR's Market Data Collections Unit at 850-413-3147 or via email: TitleAgencyReporting@floir.com.

Compliance Information

Department licensees and consumers can access compliance information at the Division of Insurance Agent and Agency Services' web page Compliance Information. Additional information is available by type of license at our Frequently Asked Questions web page.

 

Note: Some information in archived articles may now be out-of-date or superseded by changes in Florida law. Please be sure you refer to the most current law.