The Issue Whether Respondent failed to maintain general liability insurance coverage as required by Section 493.6110, Florida Statutes, and, if so, what penalty should be imposed on his Class "A" Private Investigative Agency License and his Class "C" Private Investigator License.
Findings Of Fact Respondent currently holds a Class “A” Private Investigative Agency License, having been issued License No. A96- 00005 pursuant to Chapter 493, Florida Statutes, effective June 15, 1996, and expiring on June 15, 1998. Respondent currently holds a Class “C” Private Investigator License No. C94-00709, issued pursuant to Chapter 493, Florida Statutes, effective January 23, 1997, and expiring on December 7, 1998. As of June 28, 1996, Respondent had general liability insurance coverage relative to his Class “A” license through Scottsdale Insurance Company, West Palm Beach, Florida. This insurance policy expired on June 28, 1997. Respondent currently has insurance coverage relative to his Class “A” license through Costanza Insurance Agency, Inc., Dallas, Texas. The effective period of this insurance coverage is from August 5, 1997, through August 5, 1998. Respondent did not file Form LC2E018, Certificate of Insurance, with the Department as required to evidence that his agency, Jon Bowdoin and Associates, had insurance coverage in force during the period beginning June 29, 1997, through August 4, 1997. Respondent had no insurance coverage relative to his Class “A” license for the period June 29, 1997, through August 4, 1997. Respondent’s Class “A” Private Investigative Agency License was not in an inactive status during the period June 29, 1997, through August 4, 1997.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department enter a final order (1) finding that Respondent committed the violation alleged in the Administrative Complaint filed herein; (2) imposing an administrative fine of $700.00; and (3) placing Respondent's Class "A" Private Investigative Agency License on one year non- reporting probation. DONE AND ENTERED this 16th day of June, 1998, in Tallahassee, Leon County, Florida. CAROLYN S. HOLIFIELD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 16th day of June, 1998. COPIES FURNISHED: Michelle Guy Assistant General Counsel Department of State, Division of Licensing The Capitol, Mail Station Four Tallahassee, Florida 32399-0250 Jon Bowdoin, Owner Jon Bowin and Associates 3323 U. S. Highway 19 Suite 901 Palm Harbor, Florida 34684 Don Bell, General Counsel Department of State The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0250 Honorable Sandra B. Mortham Secretary of State The Capitol Tallahassee, Florida 32399-0250
The Issue The issue is whether respondent's license as a life and health insurance agent should be disciplined for the reasons stated in the administrative complaint.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: At all times relevant hereto, respondent, Thomas Keith McOwen, was licensed and eligible for licensure as a life and health insurance agent by petitioner, Department of Insurance and Treasurer (Department). When the events herein occurred, respondent was a sales representative for Western and Southern Life Insurance Company (WSLIC), an insurance firm having headquarters in Cincinnati, Ohio. Respondent's contractual agreement with WSLIC began on April 18, 1988. Under the agreement, respondent was required to account for and remit all premiums collected and received on behalf of WSLIC. On March 3, 1993, WSLIC terminated respondent's appointment as a sales representative, thereby cancelling his agent's contract. In August 1988, Ruth Houston, a/k/a Tracy Houston, purchased a WSLIC life insurance policy from respondent. In 1991, respondent collected around $440.00 in cash from Houston as premium payments but remitted only $128.00 to WSLIC. In an affidavit given to petitioner's investigator, respondent acknowledged that he failed to account for the remaining $312.00 and had converted it to his own personal use.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty of violating Subsections 626.561(1), 626.611(4), (7), (9), (10) and (13), and 626.621(2), Florida Statutes, and that his licenses and eligibility for licensure be revoked. The charge as to Subsection 626.611(8), Florida Statutes, should be dismissed. DONE AND ENTERED this 13th day of March, 1995, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of March, 1995. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-4189 Petitioner: 1-4. Partially accepted in finding of fact 1. 5. Partially accepted in finding of fact 2. 6-8. Partially accepted in finding of fact 3. NOTE: Where a finding has been partially adopted, the remainder has been rejected as being irrelevant, unnecessary, cumulative, subordinate, not supported by the evidence, or a conclusion of law. COPIES FURNISHED: Honorable Bill Nelson Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300 Lisa S. Santucci, Esquire Department of Insurance 612 Larson Building Tallahassee, FL 32399-0300 Daniel Y. Sumner, Esquire General Counsel Department of Insurance The Capitol, Plaza Level Tallahassee, FL 32399-0300 Mr. Thomas Keith McOwen 2913 Langley Ave., #107 Pensacola, FL 32504
Findings Of Fact Respondent holds a property and casualty insurance license, life and health insurance license, and life insurance license for the State of Florida. She has held her property and casualty license for about 20 years. In 1976, she was employed as an agent for the Orlando office of Commonwealth insurance agency, which she purchased in 1977 or 1978. She continues to own the Commonwealth agency, which is the agency involved in this case. Respondent has never previously been disciplined. In 1979 or 1980, Respondent was appointed to the board of directors of the Local Independent Agents Association, Central Florida chapter. She has continuously served on the board of directors of the organization ever since. She served as president of the association until September, 1991, when her term expired. During her tenure as president, the local association won the Walter H. Bennett award as the best local association in the country. Since May, 1986, Commonwealth had carried the insurance for the owner of the subject premises, which is a 12,000 square foot commercial block building located at 923 West Church Street in Orlando. In July, 1987, the insurer refused to renew the policy on the grounds of the age of the building. Ruth Blint of Commonwealth assured the owner that she would place the insurance with another insurer. Mrs. Blint is a longtime employee of the agency and is in charge of commercial accounts of this type. Mrs. Blint was a dependable, competent employee on whom Respondent reasonably relied. Mrs. Blint contacted Dana Roehrig and Associates Inc. (Dana Roehrig), which is an insurance wholesaler. Commonwealth had done considerable business with Dana Roehrig in the past. Dealing with a number of property and casualty agents, Dana Roehrig secures insurers for the business solicited by the agents. Dana Roehrig itself is not an insurance agent. In this case, Dana Roehrig served as the issuing agent and agreed to issue the policy on behalf of American Empire Surplus Lines. The annual premium would be $5027, excluding taxes and fees. This premium was for the above- described premises, as well as another building located next door. The policy was issued effective July 21, 1987. It shows that the producing agency is Commonwealth and the producer is Dana Roehrig. The policy was countersigned on August 12, 1987, by a representative of the insurer. On July 21, 1987, the insured gave Mrs. Blint a check in the amount of $1000 payable to Commonwealth. This represented a downpayment on the premium for the American Empire policy. The check was deposited in Commonwealth's checking account and evidently forwarded to Dana Roehrig. On July 31, 1987, Dana Roehrig issued its monthly statement to Commonwealth. The statement, which involves only the subject policy, reflects a balance due of $3700.86. The gross premium is $5027. The commission amount of $502.70 is shown beside the gross commission. Below the gross premium is a $25 policy fee, $151.56 in state tax, and a deduction entered July 31, 1987, for $1000, which represents the premium downpayment. When the commission is deducted from the other entries, the balance is, as indicated, $3700.86. The bottom of the statement reads: "Payment is due in our office by August 14, 1987." No further payments were made by the insured or Commonwealth in August. The August 31, 1987, statement is identical to the July statement except that the bottom reads: "Payment is due in our office by September 14, 1987." On September 2, 1987, the insured gave Commonwealth a check for $2885.16. This payment appears to have been in connection with the insured's decision to delete the coverage on the adjoining building, which is not otherwise related to this case. An endorsement to the policy reflects that, in consideration of a returned premium of $1126 and sales tax of $33.78, all coverages are deleted for the adjoining building. The September 30 statement shows the $3700.86 balance brought forward from the preceding statement and deductions for the returned premium and sales tax totalling $1159.78. After reducing the credit to adjust for the unearned commission of $112.60 (which was part of the original commission of $502.70 for which Commonwealth had already received credit), the net deduction arising from the deleted coverage was $1047.18. Thus, the remaining balance for the subject property was $2653.68. In addition to showing the net sum due of $944.59 on an unrelated policy, the September 30 statement contained the usual notation that payment was due by the 12th of the following month. However, the statement contained a new line showing the aging of the receivable and showing, incorrectly, that $3700.86 was due for more than 90 days. As noted above, the remaining balance was $2653.68, which was first invoiced 90 days previously. Because it has not been paid the remaining balance on the subject policy, Dana Roehrig issued a notice of cancellation sometime during the period of October 16-19, 1987. The notice, which was sent to the insured and Commonwealth, advised that the policy "is hereby cancelled" effective 12:01 a.m. October 29, 1987. It was the policy of Dana Roehrig to send such notices about ten days in advance with two or three days added for mailing. One purpose of the notice is to allow the insured and agency to make the payment before the deadline and avoid cancellation of the policy. However, the policy of Dana Roehrig is not to reinstate policies if payments are received after the effective date of cancellation. Upon receiving the notice of cancellation, the insured immediately contacted Mrs. Blint. She assured him not to be concerned and that all would be taken care of. She told him that the property was still insured. The insured reasonably relied upon this information. The next time that the insured became involved was when the building's ceiling collapsed in June, 1988. He called Mrs. Blint to report the loss. After an adjuster investigated the claim, the insured heard nothing for months. He tried to reach Respondent, but she did not return his calls. Only after hiring an attorney did the insured learn that the cancellation in October, 1987, had taken effect and the property was uninsured. Notwithstanding the cancellation of the policy, the October 31 statement was identical to the September 30 statement except that payment was due by November 12, rather than October 12, and the aging information had been deleted. By check dated November 12, 1987, Commonwealth remitted to Dana Roehrig $3598.27, which was the total amount due on the October 30 statement. Dana Roehrig deposited the check and it cleared. The November 30 statement reflected zero balances due on the subject policy, as well as on the unrelated policy. However, the last entry shows the name of the subject insured and a credit to Commonwealth of $2717 plus sales tax of $81.51 minus a commission readjustment of $271.70 for a net credit of $2526.81. The record does not explain why the net credit does not equal $2653.68, which was the net amount due. It would appear that Dana Roehrig retained the difference of $125.87 plus the downpayment of $1000 for a total of $1125.87. It is possible that this amount is intended to represent the earned premium. Endorsement #1 on the policy states that the minimum earned premium, in the event of cancellation, was $1257. By check dated December 23, 1987, Dana Roehrig issued Commonwealth a check in the amount of $2526.81. The December 31 statement reflected the payment and showed a zero balance due. The record is otherwise silent as to what transpired following the issuance of the notice of cancellation. Neither Mrs. Blint nor Dana Roehrig representatives from Orlando testified. The only direct evidence pertaining to the period between December 31, 1987, and the claim the following summer is a memorandum from a Dana Roehrig representative to Mrs. Blint dated March 24, 1988. The memorandum references the insured and states in its entirety: Per our conversation of today, attached please find the copy of the cancellation notice & also a copy of the cancellation endorsement on the above captioned, which was cancelled effective 10/29/87. If you should have any questions, please call. Regardless of the ambiguity created by the monthly statements, which were not well coordinated with the cancellation procedure, Mrs. Blint was aware in late March, 1988, that there was a problem with the policy. She should have advised the insured, who presumably could have procured other insurance. Regardless whether the June, 1988, claim would have been covered, the ensuing litigation would not have involved coverage questions arising out of the cancellation of the policy if Mrs. Blint had communicated the problem to the insured when she received the March memorandum. Following the discovery that the policy had in fact been cancelled, the insured demanded that Respondent return the previously paid premiums. Based on advice of counsel, Respondent refused to do so until a representative of Petitioner demanded that she return the premiums. At that time, she obtained a cashiers check payable to the insured, dated June 1, 1990, and in the amount of $2526.81. Although this equals the check that Dana Roehrig returned to Commonwealth in December, 1987, the insured actually paid Commonwealth $1000 down and $2885.16 for a total of $3885.16. This discrepancy appears not to have been noticed as neither Petitioner nor the insured has evidently made further demands upon Respondent for return of premiums paid. The insured ultimately commenced a legal action against Commonwealth, Dana Roehrig, and American Empire. At the time of the hearing, the litigation remains pending.
Recommendation Based on the foregoing, it is hereby recommended that the Department of Insurance and Treasurer enter a final order finding Respondent guilty of violating Sections 626.561(1) and, thus, 626.621(2), Florida Statutes, and, pursuant to Sections 626.681(1) and 626.691, Florida Statutes, imposing an administrative fine of $1002.70, and placing her insurance licenses on probation for a period of one year from the date of the final order. If Respondent fails to pay the entire fine within 30 days of the date of the final order, the final order should provide, pursuant to Section 626.681(3), Florida Statutes, that the probation is automatically replaced by a one-year suspension. RECOMMENDED this 5th day of February, 1992, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of February, 1992. COPIES FURNISHED: Hon. Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300 Bill O'Neil, General Counsel Department of Insurance The Capitol, Plaza Level Tallahassee, FL 32399-0300 James A. Bossart Division of Legal Affairs Department of Insurance 412 Larson Building Tallahassee, FL 32399-0300 Thomas F. Woods Gatlin, Woods, et al. 1709-D Mahan Drive Tallahassee, FL 32308
Findings Of Fact Introduction At all times relevant hereto, respondent, Charles Lee Anderson, was licensed as a general lines insurance agent by petitioner, Department of Insurance and Treasurer. Respondent presently resides at 2291 Northwest 12th Court, Pompano Beach, Florida. He has been licensed by petitioner since 1968, and, prior to this proceeding, had no blemishes on his record. When the events herein occurred, Anderson was the president and director of Payless and Save Insurance Underwriters Corporation (Payless), an insurance agency located and doing business at 2401 Northwest 21st Avenue, Fort Lauderdale, Florida. Anderson was also the general lines agent of record for the corporation. Count I In early January, 1984 Anderson was working from midnight until 8:00 a.m. as a security guard. Because of this, he hired one Mamie Baugh as an independent contractor to operate his insurance agency. Anderson authorized Baugh to sell policies and sign his name on insurance applications and other documents. Anderson would drop by his office two or three times a week to "check on (Baugh)" and "look at the paperwork." On or about January 3, 1984 Blanche Jones went to Payless to purchase an automobile insurance policy. She chose Payless because it was located just around the corner from her home in Fort Lauderdale, and was more convenient than her former insurance agent in Hallandale. Because Anderson was not present, Jones met with Baugh and discussed her insurance needs. Baugh filled out an application on behalf of Jones for automobile insurance with Industrial Fire and Casualty Insurance Company (Industrial) in Hollywood, Florida. Anderson was a licensed agent with Industrial, and authorized to act as a brokering agent for that company. Baugh signed Anderson's name on the application as brokering agent. Jones then gave Baugh a check for $456 as payment for the policy and was given a receipt. In February Jones had not received her policy or any evidence that she was insured. Her husband decided to visit the Payless office and obtain an insurance identification card in the event they had an accident. He met with Anderson who promised to give him a card. The following day, Anderson went to Jones' house and dropped off a business card. 1/ While there, Jones told Anderson she had paid for a policy but had never received anything. Anderson promised to "check into the particulars." After not hearing from Anderson for two months, Jones' husband went to Payless' office and found it closed. Jones thereafter went to her old insurance agent in Hallandale, and then to Public Insurance Agency (Public) in Hollywood. Public was the managing general agent for Industrial, the insurance company with whom Jones thought she had a policy. Public had no record of having received Jones' application or the $456 premium paid to Anderson. It also had no record of Anderson having telephoned Public on its "application telephone", a procedure that Anderson should have followed in order to have a binder issued on the policy. Consequently, Public never issued a policy insuring Jones. In late 1985 Jones was reading a copy of the Hollywood Sun Tattler, a local newspaper, and noticed an article about Anderson, who was then running for chief of police in Dania. She contacted the reporter who wrote the story who in turn contacted Anderson. Respondent telephoned Jones the next day and promised to return her money. A week later (January 10, 1986) Jones received a $456 money order from Anderson. A representative of Public established that Anderson was given a copy of an underwriting guide which contained explicit instructions on how to bind coverage and fill out applications. Among other things, the guide required that Anderson, and not his surrogate, sign all applications. Therefore, he was not authorized to allow Baugh to sign in his stead. Count II On or about December 20, 1983 Joseph V. Baxter visited Payless for the purpose of purchasing insurance coverage on various rental properties he owned. Baxter met with Anderson who prepared six "Homeowners Application for Quotation Only" with International Bankers Insurance Company (IBIC). Baxter gave Anderson a check for $818 as payment for the coverage. Anderson later endorsed the check. On January 11, 1984 Baxter returned to Payless and made application for a seventh insurance policy on another rental property. He gave Anderson a $318 check which Anderson subsequently endorsed. At that time Baxter was given a certificate of insurance indicating coverage with Great Southwest Fire Insurance Company (GSFIC). Several months later Baxter received a telephone call from a representative of the lending institution which held the mortgages on his property. Baxter then instructed Anderson to contact the institution and certify that Baxter had coverage on his properties. Anderson telephoned the institution in Baxter's presence and told the representative that Baxter was insured. Sometime later Baxter was again contacted by the mortgagee concerning his insurance coverage. Baxter attempted to visit Anderson but found Payless had closed its offices and gone out of business. Baxter then filed a complaint with petitioner. He never received insurance policies from IBIC or GSFIC. On January 10, 1986 Anderson repaid Baxter $1,136, the amount received by Anderson some two years earlier. A representative of IBIC established that Anderson never remitted the premiums or mailed the six quotation forms to the home office. It was further established that although GSFIC quoted a rate for Anderson on Baxter's seventh piece of property, it never received the follow-up application or premium. Respondent's Case Respondent blamed the Jones mishap on Baugh, who he claimed may have misplaced the application and taken the money. According to Anderson, she now lives in California and was unable to attend the hearing. However, he had no explanation for failing to follow up on Baxter's applications. Anderson said he closed his business in February, 1984 after a series of break- ins at his office, and left a note on the door giving a telephone number where he could be reached. However, he made no effort to personally contact those persons who held policies. Anderson further stated that he was unaware of the Jones and Baxter complaints until contacted by the newspaper reporter and petitioner, and then promptly repaid all monies due.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty of the violations set forth in the Conclusions of Law portion of this order, and that his license and eligibility for licensure be REVOKED. DONE and ORDERED this 10th day of September, 1986, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of September, 1986.
The Issue The issue in the case is whether Petitioner is entitled to a Resident Independent All-Lines Insurance Adjuster license.
Findings Of Fact On July 24, 1999, Petitioner was involved in a physical altercation in her driveway, defending herself against a female neighbor. Shortly after the altercation, Petitioner was arrested for Aggravated Battery. On January 12, 2000, a Criminal Information was filed against Petitioner charging her with Aggravated Battery Causing Great Bodily Harm. On August 15, 2000, Petitioner pled no-contest to Felony Battery and was placed on two-years' probation. Adjudication of guilt was withheld. Fourteen months later, on October 18, 2001, Petitioner's probation was terminated early without any violations. On March 11, 2002, Petitioner applied for licensure as a Resident Independent All-Lines Insurance Adjuster and provided the prior arrest information in her application. On May 24, 2002, Respondent denied Petitioner's application for licensure on the basis of her single arrest and subsequent plea. On June 18, 2002, Petitioner submitted a timely Election of Proceedings form requesting a formal hearing. Respondent's licensing review committee, composed of the Bureau Chief of Licensing Division, Licensing administrators, the Assistant Division Director of Agent and Agency Services, and a Department attorney, reviewed Petitioner's application and determined that she was unfit and untrustworthy to hold a license. The review committee's decision was based strictly on Petitioner's prior criminal plea and the limited time between her completion of probation and application for licensure. The evidence presented at hearing, however, demonstrated Petitioner's fitness and trustworthiness to hold a license. Petitioner, an African-American, lives in a 50-house subdivision containing approximately three African-American families. On July 24, 1999, Petitioner attempted to enter her driveway but was blocked by a car that was parked in front of her driveway. A Caucasian woman was parked in front of Petitioner's driveway and was reading mail that she had retrieved from the community mailbox located in Petitioner's front yard. Despite having experienced the woman's similar rude behavior 2-weeks prior, Petitioner politely "tooted" her horn to encourage the woman to move her van forward and patiently waited. Shortly thereafter, Petitioner again beeped her horn. In response, the woman glanced at Petitioner, looked away, and refused to move. Thereafter, Petitioner placed her car in park, approached the driver's side of the woman's car, knocked on her window, and said, "I want to go in my driveway." Again, the woman ignored her request and continued to read her mail. Petitioner stated that after further knocking, she opened the woman's door and said, "I don't know you and you don't know me. I want to go into my driveway and I need you to move your van." In response the woman said to Petitioner, "You need to move. I want to close my door." Immediately thereafter, and without warning, the woman pushed Petitioner to the ground, got out of her car and attacked Petitioner. After being repeatedly struck by the woman, Petitioner bit the woman's shoulder in self-defense. Within seconds, the altercation, which Petitioner alleges was racially motivated, ended and the woman drove away. Petitioner ran into her house and relayed the events to her teenage children. Prior to calling 911, Petitioner called her uncle for advice. While on the telephone with her relative, the police arrived at Petitioner's home and she was arrested. Petitioner retained a lawyer to contest the charge. Upon her attorney's advice, Petitioner reluctantly agreed to plead no-contest to the charge, accept two years of probation, and receive a withholding of an adjudication of guilt. Petitioner's probation was terminated after 14 months without incident. Petitioner has never been arrested nor convicted of any crime prior to this incident. Since 1987, Petitioner has been working in the insurance industry in various capacities including claims examiner. She is currently entrusted with large sums of money, successfully works in customer service, and routinely deals with difficult customers in an appropriate and professional manner. Petitioner has been praised by her employers and co-workers and possesses an excellent demeanor. Petitioner has been offered a position as an adjustor trainee with Zurich Insurance Company contingent upon obtaining an adjustor's license. On June 21, 2001, approximately nine months before Petitioner submitted her application, Respondent repealed its law enforcement waiting period rule which outlined the length of time an applicant was required to wait, following a felony plea, in order to qualify for licensure. While Respondent adopted a new law enforcement waiting period rule pursuant to Section 626.207, Florida Statutes, on October 17, 2002, approximately five months after Petitioner submitted her application, Respondent stipulates that the new rule does not apply to Petitioner. In fact, at the time Petitioner submitted her application in March 2002, Respondent stipulates that it operated strictly under Sections 626.611 and 626.621, Florida Statutes. Consequently, Petitioner applied at a time when Respondent admittedly used only the statutes as a basis for denial. Waiting periods were not applied to applications for licensure during March 2002. While Petitioner's Notice of Denial contains a typographical error as to the date on the first page of the letter, the Agent Personal Data Inquiry correctly shows that Petitioner was officially denied on May 24, 2002.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent issue a Final Order approving Petitioner's application for licensure as a Resident Independent All-Lines Insurance Adjuster. DONE AND ENTERED this 19th day of March, 2003, in Tallahassee, Leon County, Florida. WILLIAM R. PFEIFFER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of March, 2003. COPIES FURNISHED: Ladasiah Jackson, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Maria N. Neal 5639 Breckenridge Circle Orlando, Florida 32818-1377 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue Should Petitioner impose discipline against Respondent's insurance licenses as a Life and Health (2-18) and General Lines Agent (2-20)?
Findings Of Fact Stipulated Facts: Respondent is currently licensed in Florida as a Life and Health (2-18) and General Lines Agent (2-20), having (been assigned) license number A189702. At all times pertinent to the dates and occurrences referred to in the Administrative Complaint, Respondent was licensed in Florida to transact property and casualty insurance. The Department has jurisdiction over Respondent's insurance licenses and appointments. Respondent was never an appointed agent with ASI. Respondent's husband, Ferdinand Naughton II, was appointed as an insurance agent for ASI. At all times pertinent to the allegations in the Administrative Complaint, Respondent was employed at Morrow Insurance of Monticello. Respondent signed the name of her husband to the insurance application at issue. Additional Facts: The house upon which the insurance application was completed by Respondent had approximately 3,500 square feet of heated and cooled space. The home had an additional 1,500 square feet of porches and carports. The core of the house had been made of pine. It was constructed in the 1830s in Georgia and later transported from Georgia to Jefferson County, Florida. The balance of the residence was constructed in the mid-1970s. The newer construction was a frame house. The new portion was constructed not long after the original structure had been moved from Georgia to Florida. George Carswell, the applicant for the subject insurance and his wife Caroline Carswell, owned the property upon which the house was located at the time the application was made. The property had been deeded to the husband and wife about one year before the insurance application date. It was deeded by Virginia Carswell, George Carswell's mother, concerning the mother's life estate in the property. Aside from the life estate, George Carswell had purchased the property upon which the residence was found sometime in the early 1970s. The total acreage owned by George Carswell where the house was located consisted of four hundred-plus acres. At the time the application for insurance was made on the home, Virginia Carswell held a mortgage and note from George and Caroline Carswell for $225,000.00. The residence in question had an internal burglar alarm system in which doors to the residence were monitored and an audible sound was emitted if the space was violated. The power to operate the burglar detection system was through electric power provided to the house. In addition, two smoke detectors were installed in the house that were battery operated. No devices to detect fires or burglars were installed and monitored off-site. The Monticello Volunteer Fire Department is located approximately 4.8 miles from the residence related to the subject insurance application. At the time the policy was applied for, the Carswells were not living in the home. The home was being painted and other improvements made. From January 2001 until sometime prior to April 6, 2001, George Carswell had spent between $20,000.00 and $25,000.00 in the refurbishment of the home. As recently as the period August 2, 1996 through August 2, 1997, the Morrow Insurance Agency of Monticello had written a basic coverage policy through Allstate Insurance Company on the subject residence for the benefit of Virginia Carswell. The amount of the basic coverage was $225,000.00 reflecting the year the home was built as 1976. The Allstate coverage for Virginia Carswell on the home in question was not written by Respondent. Respondent was aware that the property had been insured by Allstate through the Morrow Agency in the amount stated with Virginia Carswell, policyholder. Respondent knew that Virginia Carswell held the mortgage on the property in question that has been described. Respondent was personally familiar with the home in question, having visited the home three to four times, as recently as March 8, 2001, for a birthday party. While attending the birthday party at the home, Respondent observed beautiful oriental rugs in the home and antique furniture. Respondent was not aware of the value of the oriental rugs and antique furniture that she saw. She did not observe any on-going construction in the rooms that she saw on that visit. From what Respondent saw the kitchen had not been redone. The downstairs bathroom had not been redone, nor the dining room. The roof had not been replaced. The back porch had not been glassed-in or the carport closed-in. Respondent did observe that the kitchen cabinets had been refinished. On December 1, 2000, George Carswell made an application with Affiliated Insurance Agency in Tallahassee, Florida, another ASI agent, to insure the subject property for a period from that date through December 1, 2001. The total premium quoted was $6,668.00. Pertinent data in the application indicated, consistent with reality, that fire protection offered in the home was by a smoke alarm locally placed and that the distance to the fire department was five miles or less. The type of policy being quoted was an HO3 for a frame-construction home. The year of the construction was stated to be 1950. The value of the house was stated as $500,000.00, for purposes of the insurance quotation related to basic coverage. Subsequently, George Carswell made another application, the application at issue, through the Morrow Insurance Agency as agent for ASI, which was prepared by Respondent. Respondent was aware that George and Caroline Carswell were not living in the subject home on the date the policy period commenced through the application with Morrow Insurance Agency. The policy period commenced March 7, 2001, and ended on March 7, 2002, according to the application. Respondent prepared the application notwithstanding her lack of appointment as agent for ASI. The arrangement for business between ASI and the Morrow Insurance Agency was one in which F.E. Naughton, II, alone was the agency principal and registered agent. More specifically, ASI had an agency arrangement with Morrow Insurance of Monticello, Inc., through F.E. Naughton, II. The application for contract had been made by F.E. Naughton, II, on January 18, 2001. On January 21, 2001, ASI Underwriters Corp. established the broker agreement with direct billing between ASI and Morrow Insurance of Monticello. In that document, F.E. Naughton, II, signed as agent as of January 18, 2001. The agreement was confirmed by a vice-president with ASI, through a signature dated January 21, 2001. There was an addendum to the agreement, which set the commission's schedule, effective January 21, 2001, as executed by F.E. Naughton, II, and the ASI vice-president on January 18, 2001, and January 21, 2001, respectively. The agreement between ASI and Morrow Insurance Agency in the person of F.E. Naughton, II, concerning the opportunities and responsibilities of F.E. Naughton, II, as the registered agent for ASI stated in pertinent part: AUTHORITY OF AGENT The Broker grants to the Agent the usual insurance agency authority subject specifically to the limitations and other terms and conditions of this Agreement to: *Receive and accept proposals for insurance only as permitted within the classes and lines of business shown in the Commission Schedule and within limits and underwriting guidelines established by ASI; *Countersign and deliver policies, endorsements, and binders of insurance; *Collect and receive premiums due ASI for such insurance; and *Bind risks, limited to the authority provided in the ASI binding guidelines and certain limitations that might be established at times to limit catastrophic loss potential. All of the foregoing authority and powers shall be subject at all times to restrictions placed upon Broker and Agent by the laws or legally enforceable rules and regulations of the authorities of the state or states in which Agent is authorized by Broker to write insurance and to the terms and conditions of this Agreement hereinafter set forth. * * * 5. FIDUCIARY RESPONSIBILITY OF AGENT Agent shall perform faithfully its duties as Agent in compliance with all-applicable state statutes and regulations, instructions of Broker, and shall protect and further at all times the best interests of Broker. All premiums received by Agent and due Broker, shall be held by Agent as trustee for Broker until delivered to Broker. . . . Nothing about these terms contemplates the opportunity for Respondent to take the application from George Carswell for the subject property and to bind an insurance policy in substitution for her husband F.E. Naughton, II, the true agent for ASI. Respondent realized that she had not been appointed by ASI to serve as agent; instead, ASI had made an arrangement with her husband to be its agent. At hearing, Respondent admitted that the fact that she was not appointed meant, "I shouldn't sign an application." Moreover, she admitted that she could not bind the policy with ASI, not being appointed as its agent whatever the specifics of the risk contemplated by the application. Joint Exhibit 2 identified as the Division of Fraud Investigative Report is constituted of a synopsis of facts about this case and refers to an e-mail on January 4, 2002, to Phil Fountain, Bureau Chief, Agency and Agency Investigations, Florida Department of Insurance, in which Mr. Fountain is said to have advised, "Unfortunately, it is often true and perhaps 'accepted practice' in the industry for one licensed agent to sign another's name to an application as producing agent, especially when you have a husband/wife situation." This report goes on to say "Mr. Fountain did believe that the Division of Agent and Agency could pursue this case filed administratively." Assuming Mr. Fountain made these remarks and the submission of the Joint Exhibit 2 for consideration, supports that assumption, taken out of context, it is unclear what Mr. Fountain meant. Did he mean that a husband or wife can sign another's name to an application as producing agent when both the husband and wife have been recognized by the insurance company as agent? It would be hard to imagine that his remarks can properly be understood to allow what has transpired in this case where Respondent has signed the George Carswell application for insurance on the subject property as F.E. Naughton, when in fact the husband did not take the application, and by the terms of the agreement between ASI and the Morrow Insurance Agency, Respondent would not be allowed to take the application for him, not being an agent for ASI. F.E. Naughton, II, had never asked Petitioner if it would be permissible for Respondent to sign his name on a policy application with ASI. In the end, Respondent may not rely on the remarks made by Mr. Fountain as a means to defend her action in executing the application from George Carswell and signing her husband's name when submitting the application for insurance to ASI. Moreover, the division of labor within the Morrow Insurance Agency in which F.E. Naughton, II, sold commercial insurance, Respondent sold homeowners and mobile home insurance and Ellen Kline, another agent in the agency, sold automobile insurance, does not create the opportunity for Respondent to take the application and sign her husband's name in the George Carswell matter. F.E. Naughton, II's, permission for his wife to fill out the application and sign his name does not legitimize the activity. Even if Respondent has made a habit of signing her husband's name to applications for insurance over 25 years, this does not justify signing his name on this occasion. On March 16, 2001, George Carswell signed the application for insurance from ASI. The day the application was signed by George Carswell, F.E. Naughton, II, was not in the office. F.E. Naughton, II, the agent for ASI, did not see the George Carswell application before it was signed. He was aware only that George Carswell was talking to Respondent about insuring the dwelling. Respondent signed the name F.E. Naughton on the line for the agency signature under George Carswell's signature. While anyone in the office may complete an application for insurance, such as in the George Carswell case, only the agent may sign the application. Respondent in trying to explain the reason why the application for insurance was signed by George Carswell on March 16, 2001, but was reflected as effective March 7, 2001, stated, "I didn't really back date it. We started on 3/7. We did not finish that application until the day he signed it. That was when it was completed." Respondent did not believe that the different dates of March 7, 2001, and March 16, 2001, had any effect on the issuance of the policy where she commented that "It was not bound so you don't have to have it in 72 hours." This explanation does not effectively explain the discrepancy in the application concerning the date upon which the application was signed March 16, 2001, and the date described as commencing the policy period, March 7, 2001. When the application was completed, in the blocks related to the issue of whether the policy was bound or not bound, no choice was made by checking the appropriate box. On March 23, 2001, the application was received by the customer service department for ASI. The ASI form application indicated that the policy was bound effective March 14, 2001, at 12:01 a.m. The premium amount was $5,159.00 of which $1,431.75 was paid at the time of the application. Respondent also sent pictures of the house from the outside front and back with the application. As alluded to before, Respondent in consultation with George Carswell, executed the details within the application, having some knowledge of the house to be insured. The application reflected that Virginia Carswell held the mortgage on the property. The application filled out by Respondent indicated that the dwelling had 1,900 square feet. The reason Respondent gave for putting 1,900 square feet instead of 3,500 square feet, which is the true number within the dwelling, is her contention that what is called for in the application she executed for George Carswell is the ground floor total square footage. The house has two floors. She compares the experience with ASI, for whom she had no authority to act as agent, to that of other companies wherein she states, "All the other companies I have require [sic] you to put in the ground square foot, the ground floor square foot, so that's what I put down, the ground floor square foot." She holds that view, recognizing that both the upstairs and downstairs are being insured and are part of the heated and cooled space. She also acknowledges that the dwelling being described in the application is the total dwelling, not the first floor. In filling out the application, she acknowledges that it does not call for square footage of the ground floor as opposed to the square footage of the overall dwelling. Respondent's explanation for describing the square footage as 1,900, not the actual 3,500, is unpersuasive. Respondent misstated the square footage in the application. The application completed by Respondent erroneously stated that the dwelling had fire protection reporting to a central station and burglar protection reporting to a central station. In an earlier statement concerning the fire alarms and burglar alarms reporting to a central station, Respondent said, "Well, I'm the one who did this. But, I didn't put in [sic] there. More likely, I just didn't know mark that one [sic] . . . was marked. It would've been alright." Then at hearing Respondent testified that George Carswell had told Respondent that the fire alarms were in the house in every room and that the application referenced to a central system, ". . . it should not have been that, it should have been just the fire alarm," referring to an internal system, not one connected to a central station. Concerning the burglar alarm system, Respondent, in her testimony at hearing stated, "I couldn't understand what he was saying. He was saying 'oh, you know those alarms'. Well, no and he never . . . that's all he ever told me was alarms, fire alarms." This was taken to mean that the George Carswell never told Respondent that there was a burglar alarm system reporting to a central station. On the whole, Respondent is found to have filled out the application to falsely reflect that fire protection and burglar protection were available in the dwelling reporting to a central station with a consequence that the applicant was given a substantial discount in the insurance premium that was unauthorized. In the application, Respondent separately valued the dwelling at $775,000.00, when by contrast the BOECKH Residential Valuation Process performed by Respondent listed the value as $259,000.00. This is compared with the amount of basic coverage on the dwelling when Virginia Carswell was the insured in the period August 2, 1996 through August 2, 1997, amounting to $225,000.00. In an attempt to explain the difference between the BOECKH value and the much larger amount in the application pertaining to general coverage for the dwelling, Respondent, in a statement given prior to hearing, refers to a letter from Maddog Construction in which that builder indicated that the replacement cost for the house approached $200 per square feet. Respondent describes the letter where she states, "If the you read the letter from the builder, $200 is square foot times 3,500 feet . . . ." By extension of the Respondent's view that would mean the value would be $700,000.00, not $775,000.00, accepting George Carswell's representations that the overall square footage in the house is 3,500 square feet. In her statement made before hearing concerning valuation, Respondent stated, "What I do know about the house is that its all hand-done. The wood has been cut. The floors were out of pine, antique floors. The baseboards were 12 inches high hand-cut. Um, the wood, the wood paneling was hand-cut, laid and carved." Respondent acknowledges that none of these features in the house were part of the application. Respondent refers to some conversation with an unnamed person in an unnamed location concerning the difference in the price of the BOECKH value and the higher general coverage information for the dwelling, whereas in the statement made before hearing, Respondent says, "This is what, this is what we were trying to tell some lady when we called about the differences. And, she said not to worry about it. That when the inspector came, he would see all of this and it would be okay. Just send it on in." This inspector is taken to mean an inspector from ASI. No inspector ever came to reconcile the difference between the BOECKH value and the higher general coverage information for the dwelling as submitted by Respondent in the application. In another place in the statement made by Respondent prior to hearing in response to a question concerning what would make the house worth $775,000.00, Respondent said, "Because of the woodwork in it." Respondent refers in her statement before hearing to the coverage from Allstate when Virginia Carswell had insured the dwelling at $225,000.00, compared to the request for coverage in the amount of $775,000.00 in the application at issue. The difference is attributable to the Maddog replacement value letter wherein through the earlier statement made, Respondent says, "Then I asked George for some sort of a appraisal to go with it and, when he got the appraisal from the builder, the one that had done it, he was the one that increased the value of it." Then in her statement made prior to hearing, Respondent refers to the cost of $200 a square foot value and the subject dwelling where she says, "I used $200 because the newer houses in Tallahassee that are very nice homes today, are being built for $200 a square foot. And they are not fancy homes." Later in that statement, she says, "We have general contractors. We have one who just finished his home and it was $200 a square feet [sic]. Westminster Oaks is building little brick houses and ten years ago they were charging $200 a square foot." When confronted with the fact that $200 a square foot multiplied by 3,500 and equals $700,000.00 not $775,000.00 in the application, Respondent then indicated in her earlier statement in explaining how the $775,000.00 was arrived at, "Well, George told me the bank wanted $775,000." When asked what bank, Respondent stated, "Whoever it was. I don't know. So, that's what I did, and he knew it too, that when it was inspected, if this was not corrected, he would have to come down to whatever the inspector said." Ultimately, Respondent indicated in her earlier statement that the insured value went from $230,000.00 to $775,000.00 "because I had the letter from Maddog." At hearing, in her testimony, when asked if she had a problem with placing $775,000.00 coverage value on it, she said, "Yes I did, yes I did." Nonetheless, she indicated she was duty-bound to pass the application along to the insurance company. She explained that duty to be associated with the belief that an ASI inspector would inspect the home to make certain the valuation was correct. At hearing Respondent testified that she told George Carswell several times that the policy would probably not be approved for the amount of $750,000.00. Having considered Respondent's explanations, there was no reasonable basis for filling out the application indicating that the dwelling was worth $775,000.00 in relation to insurance coverage. In the application, Respondent stated that the year that the dwelling was constructed was 1975. While additions were made to the home around that time, Respondent knew that the core of the home was constructed in the 1800s. In explaining the reason why she indicated that the year of construction of the dwelling was 1975, in her statement prior to hearing, Respondent said, "That's when it was put there and re-plumbed, rewired, re-roofed. The whole thing was redone. So, according to the book, you count that as the age." The book referred to was from "ASI." Respondent commented in the statement prior to hearing, "It was completely rebuilt." Further she said, "Yeah. I mean, they came in, and there it was with the walls, no porches on it, no wiring in it. They had to replace everything in it just like building a new house from the ground up." In testimony at hearing, Respondent refers to George Carswell's father and the changes made around 1975 to the dwelling where she stated, "When he brought the house in, he had it completely fixed. They added bedrooms on. They added porches, carports, and things, and a big deck in the back--- not a deck, but a brick area in the back to overlook the lake." She refers also to the provision of central heat and air. Later in the hearing testimony, Respondent refers to the reason for stating that the house was built in 1975 as that date being "When they did all the additions, they added over 60 percent to the house." Contrary to Respondent's representations concerning the expectation of the ASI Home Owner's Program Manual, in identifying the age of the dwelling, the dwelling in question would not be considered as constructed in 1975. The manual states in reference to the age of the dwelling: Age is determined by subtracting the year in which construction of the residence was completed from the year in which the policy is effective. If acceptable documentation demonstrates that a residence has been totally renovated, the year in which the total renovation began may be used as the date of construction. Total renovation will require totally new electrical, plumbing (above the slab), heating and A/C, roof and window systems, and must be verified by a certified inspector based on an onsite inspection. Submit Prior to Binding. Whatever the nature of the additions and improvements at the dwelling, they were not verified by a certified inspector based on an onsite inspection as Respondent reports the facts. Such information from a certified inspector based on an onsite inspection was not submitted prior to the binding of the policy. Therefore, the age of the dwelling could not be considered as 1975. The plan code for issuing the policy established by Respondent in the application was HO3. The ASI Homeowner's Program Manual calls for the policy to be written as an HO8 because under that manual it would be considered a home greater than 30 years old. Respondent would have realized the need to prepare the application under Plan Code HO8 had she properly utilized the manual. In the application related to underwriting information on the line to describe the prior insurance carrier, Respondent indicated that the applicant for insurance, "just purchased home." This was not true. When asked whether Respondent was aware of the date upon which George Carswell had been deeded an interest in the property, Respondent revealed that she was not aware of it at the time she filled out the application. That omission made it inappropriate for her to say that the property was just purchased when filling out the application. Concerning underwriting information as to prior claims by the applicant George Carswell, Respondent indicated that there were no prior claims when completing the application. Respondent perceived this question on the application as pertaining to homeowner losses only. In a prior statement before hearing, when asked whether Respondent had inquired of George Carswell about any prior claims, Respondent stated, "Not for homeowners I didn't because I know him. He's not had any homeowner's claims. I'm insuring the home period, I'm not insuring a car. I'm not insuring him a boat. I'm insuring his home." When asked whether the application being completed was specifically in relation to homeowner claims, in the earlier statement given by Respondent she said, "No, but if that's what I'm providing, then that's what I'm going to insure. That's what I'm interested in. I'm not interested in if he's had a car claim. I'm not interested in if he's had a boat claim. I'm interested in if he's had a homeowner's claim." In the testimony at hearing, Respondent continued to hold to the view that the question in the application concerning prior losses was "just dwellings." But Respondent knew that George Carswell had sustained other fire losses unrelated to dwellings. What exact knowledge Respondent had of other forms of losses suffered by George Carswell not for a home was not specifically identified in the record. The Homeowner's Program Manual for ASI addresses loss history where it states: Risk with one previous property claim within the last three years may be bound based on agent's judgment. Risks with any previous personal liability claims and/or two or more property claims should be referred to company before binding. Whether George Carswell's other property losses, not pertaining to a home, may have allowed this policy to be bound by Respondent or referred to the company for binding was not established. But this uncertainty in the record does not justify Respondent indicating that there were no prior claims by George Carswell. In completing the application, Respondent, in describing general coverage information, listed the property as Protection Class 09. In accordance with the ASI's Homeowners' Program Manual, description of eligibility for underwriting purposes, homes located on more than five acres and located in Protection Class 09, are ineligible risks. Respondent, in testimony at hearing, stated "Mr. Carswell told me his mother had deeded him the house and from five to seven acres, more or less. The rest of the property was owned--was family." To the contrary, George Carswell, in his written statement, indicated that the property in question was on seven acres when his mother and father had insured the property, but denies that he would have told Respondent or her husband that the property being insured on this occasion was limited to seven acres. Having considered George Carswell's statement and Respondent's testimony, it is not accepted that Respondent was told by George Carswell that the property upon which the house was located was of five or less acres, making it an eligible risk for underwriting purposes according to the Homeowners' Program Manual. On March 23, 2001, the application for insurance on the George Carswell property was received by ASI, indicating on its face that the property was bound effective March 14, 2001. No indication was made on the signature page concerning whether the coverage was bound or not bound by checking the appropriate box. In a subsequent submission of the application to ASI faxed by the Morrow agency on April 6, 2001, the signature page indicated that the policy had not been bound by a check mark in that box, while the lead page to the application continued to say that the policy was bound effective March 14, 2001. Respondent had checked the "not bound" box with the resubmission of the application faxed April 6, 2001. According to the ASI Homeowners' Program Manual, an agent could bind coverage for a maximum of $350,000.00, assuming that the risk met other eligibility/underwriting guidelines. As discussed, those guidelines were not met and yet the application was prepared and signed by Respondent, a person not appointed by ASI to write coverage, with some indication that the policy was bound. As a result of the application prepared and submitted by Respondent, ASI issued the insurance as evidenced by the homeowners' declaration page in which the dwelling was insured for $775,000.00, effective March 7, 2001 through March 7, 2002. The ultimate decision to issue the policy made by ASI has not been explained in this record. It is without question that Respondent promoted the application leading to the issuance of a policy to George Carswell. On or about April 6, 2001, the George Carswell home was destroyed by fire of undetermined origin. As a result of the fire, ASI deemed it necessary to pay the mortgage balance to Virginia Carswell in the amount of $225,268.49, constituted of $212,485.00 in principal plus interest related to the George Carswell mortgage and promissory note secured by the home.
Recommendation Based on the facts found and the conclusions of law reached, it is RECOMMENDED: That a final order be entered finding the violations referred to and suspending Respondent's licenses in Life and Health (2-18) and General Lines (2-24) for one year. DONE AND ENTERED this 20th day of June, 2003, in Tallahassee, Leon County, Florida. CHARLES C. ADAMS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 20th day of June, 2003. COPIES FURNISHED: David J. Busch, Esquire Department of Financial Services Division of Legal Services 200 East Gaines Street 645A Larson Building Tallahassee, Florida 32399-0333 David W. Collins, Esquire Post Office Box 541 Monticello, Florida 32345 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Financial Services The Capitol, Lower Level 11 Tallahassee, Florida 32399-0300
The Issue Whether or not Petitioner's application for examination as a general lines agent should be approved.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, documentary evidence received, and the entire record compiled herein, I hereby make the following relevant factual findings: On or about September 2, 1989, Petitioner, Kimberly L. Strayer, formerly known as Kimberly Lindsay, filed an application for examination as a general lines agent with Respondent, Department of Insurance. Since January 1988, Petitioner has been the sole owner and president of Central Florida Insurance Agency (Central). On or about December 28, 1989, Respondent informed Petitioner, by letter, that her application for examination as a general lines agent was denied for the following reasons: Petitioner operated Central Florida Insurance Agency without a licensed general lines agent in the full-time active charge of that agency from January 1, 1988 through August 31, 1988. During January 1988 Petitioner accepted applications and down payments from the following insureds: Robert Smallwood, Annelle Jones, Mickey Lawson, Donald Johnson, Thomas Jones, Manning O'Callahan and Christopher Stevens. Petitioner issued a binder and an automobile identification card for each insured indicating that coverage was bound with State Farm Mutual Insurance Company, as servicing carrier for the Florida Joint Underwriting Association (FJUA). At the time Petitioner had no authority to accept either applications or premiums on behalf of State Farm. Petitioner failed to forward such applications and premiums to the insurer until April 12, 1988. During January 1988, Petitioner accepted an application and premium payment of $274.00 from Tammy Clay. Petitioner issued a binder indicating that coverage was bound with State Farm and Union American Insurance Companies. Petitioner failed to forward either the application or the premium payment to any insurer. Petitioner issued a fictitious policy number to Ms. Clay and after nearly four months, submitted a money order to State Farm payable to Tammy Clay, on or about May 1989. At the hearing, Petitioner admitted that she did not have a licensed general lines agent in full-time active charge of her agency; that she accepted applications and premium payments from the above-named insureds for auto insurance to be bound with State Farm Mutual Insurance Company and that she accepted an application for premium payment for automobile insurance from Tammy Clay in the amount of $274.00 for coverage to be bound by State Farm Mutual Insurance Company. Petitioner was first employed in the insurance sales industry during the summer of 1987. At the time, she was only seventeen years old and had completed the eleventh grade. Petitioner's first employment in the insurance industry was with Friendly Auto Insurance (Friendly) which had several offices throughout Polk County, Florida. Friendly was owned by Petitioner's now husband, Larry Lindsay when she was hired. Petitioner formed Central during late 1987 and began operating Central on or about January 1, 1988. Petitioner received her supervision and training while employed with Friendly, primarily through on the job experiences. During late 1987, Petitioner's husband encountered problems with one of his business partners which resulted in strained relations. The resultant strained relations prompted Petitioner to organize Central. Central purchased several of Friendly's agencies of which her now husband had an interest, with Petitioner paying a nominal amount for the "book of business" that Friendly had generated. When Central commenced operations during January of 1988, Bob Seese was the licensed insurance agent who was authorized under the rules of the FJUA to accept applications and bind coverage through one of the FJUA servicing carriers, State Farm. Friendly and its successor, Central, generated a substantial volume of so-called high risk auto insurance business for drivers who could not obtain insurance through the regular market. Bob Seese had been associated with and served as the licensed agent for the Friendly agency in Lakes Wales which Central purchased in January 1988. At the time Petitioner commenced operating Central, she hired Bob Seese as the licensed general lines agent. She considered that Central was authorized to accept applications and continue to bind FJUA insurance coverage through State Farm. Petitioner forwarded all of the FJUA insurance applications which were bound by Bob Seese to State Farm within a period ranging from one week to approximately one month. State Farm refused to accept the applications submitted by Petitioner based on its contention that initially, Bob Seese was not authorized to bind coverage through Central, as he had not transferred his license to Central and Seese could only operate out of the Friendly agency of Lake Wales. 1/ Bob Seese was formally authorized by State Farm to conduct business through Central during February 1988. As a result of that authorization, all of the above-named insureds obtained insurance and none of the insureds suffered any monetary loss as a result of Seese's belated authorization. All of the premium payments that Petitioner received were, in time, forwarded to the respective carriers. Petitioner properly gave new insureds binder numbers which were serially dispensed in the order that premium payments were received. During January 1988, Petitioner accepted an application and premium payment for auto insurance from Tammy Clay for coverage to be bound by State Farm. Petitioner submitted Clay's application and premium payment to State Farm and it was returned on one occasion based on the fact that a facsimile stamp was used by the purported licensed agent (Seese). Petitioner resubmitted it and State Farm again returned it based on State Farm's contention that Seese was not authorized to conduct business through Central. Petitioner has now completed the required formal educational courses to demonstrate her eligibility to sit for the general lines agent's examination. Petitioner is now knowledgeable about insurance matters and is aware of the proper procedures for operating as a general lines agent. When Petitioner formed Central, she had less than one year's experience in the insurance business and was ineligible to sit for the general lines agent exam as she was not of majority age.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: Respondent enter a Final Order granting Petitioner's application for examination as a general lines insurance agent. DONE and ENTERED this 31st day of October, 1990, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of October, 1990.
