Findings Of Fact The Respondent, Russell Lynn Tull, became licensed in this state as a general lines agent on January 21, 1989. At the time of the events which gave rise to the Administrative Complaint, the Respondent was not licensed as an insurance agent. At all times pertinent to the Administrative Complaint, the Respondent was employed by Cecil Powell and Company of Jacksonville, Florida, in its surety bond department. Cecil Powell and Company was authorized to underwrite performance surety bonds on behalf of Transamerica Insurance Company. On or about September 20, 1988, Embry/Burney, Inc. (hereafter E/B) of Fernandina Beach, Florida, entered into a construction contract with C and W Systems of Jacksonville, (hereinafter C and W), pursuant to which C and W agreed to build certain improvements for E/B within a development located in Nassau County, Florida. The construction contract provided that E/B, as owner, would pay C and W, as contractor, the sum of $765,668 upon completion of the project, and further that C and W would provide a performance bond in the amount of the contract. On or about September 20, 1988 and pursuant to contract, E/B provided a check in the amount of $15,232 payable to C and W as full payment on the premium for the performance bond on the construction project. On or about October 20, 1988, E/B received a performance bond from C and W in the amount of $765,668 to ensure completion of the construction contract. The performance bond was received by W. H. Burney, Jr., in behalf of E/B. The performance bond listed William Whiddon, Paul Chauncey, and the Respondent as personal sureties on the performance bond. Whiddon and Chauncey were the principals in C and W Contracting. When W. H. Burney, Jr. received the personal surety bond he asked Chauncey and Whiddon where they had obtained it. Burney was told by Chauncey that it was obtained through Cecil Powell and Company. Chauncey also told Burney that the Respondent was a Vice-President with Cecil Powell and Company. (The preceding is a hearsay statement included in these findings to explain the state of mind of W. H. Burney, Jr. as stated below.) C and W gave the check provided by E/B for the performance bond to the Respondent who deposited the $15,232 to his personal account. C and W presented the personal surety bond to the local government to meet its requirements for participation. W. H. Burney, Jr. knew that the surety bond which he received was a personal surety bond from Whiddon, Chauncey, and the Respondent; however, Burney thought that their personal obligations had been re-insured by Transamerica based upon statements he received from Chauncey. W. H. Burney, Jr., never spoke to the Respondent in person. All of his conversations with the Respondent were by telephone. Burney testified that the Respondent told him that the re-insurance was through Transamerica Insurance Company; however, his testimony on this point was not deemed to be credible. (Not accepted as Finding of Fact.) 1/ Subsequently, W. H. Burney, Jr. received a letter on the stationery of Cecil Powell and Company, Petitioner's Exhibit No. 5, which reinforced Burney's misconception that Chauncey, Whiddon, and Tull had re-insured the project through Transamerica Premier Insurance Company. Neither Transamerica nor any other company wrote any insurance guarantying the performance of the contract by C and W. On or about April 13, 1988, C and W failed to complete the work as required by the contract, and the contract was declared in default. After the default on the contract, Joel E. Embry contacted the Respondent at Cecil Powell and Company and discussed with him the default, the need to activate the bond, and the need to hire a new contractor to complete the work. Embry suggested two contractors to the Respondent which the Respondent indicated were acceptable. Embry hired a contractor to complete the work, and provided a copy of the new contract to Cecil Powell and Company. When the new contractor submitted a bill for completion of a portion of the work, he submitted these bills to Cecil Powell. When the bills were not paid, Embry made arrangements to meet with the Respondent and with Fitzhugh Powell. Embry met with Fitzhugh Powell at Cecil Powell and Company to discuss the nonpayment of the bills. At that meeting, Embry presented Fitzhugh Powell a copy of the letter from Cecil Powell and Company referencing Transamerica's insurance of the project (Petitioner's Exhibit 5). Fitzhugh Powell investigated internally and determined that neither Cecil Powell and Company nor Transamerica had provided any surety on the contract. Fitzhugh Powell's investigation revealed that the Respondent had received the monies paid for the surety bond, and had, with Chauncey and Whiddon, become a personal surety upon the contract. It was the opinion of Fitzhugh Powell, a licensee with over 30 years of experience in the insurance business and principal officer of a major insurance agency, that the Respondent had not insured the contract by agreeing to act as personal surety on the contract. However, Powell discharged the Respondent for acting as personal surety on the C and W contract. When Tull, Whiddon, and Chauncey were unable to cover the losses on the contract, E/B suffered significant financial losses which resulted in a loss of business reputation.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED: That the Department take no action against the Respondent's license. DONE and ENTERED this 14th day of December, 1992, in Tallahassee, Florida. STEPHEN F. DEAN 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 14th day of December, 1992.
The Issue This is a license discipline proceeding in which the Petitioner seeks to take disciplinary action against the Respondent on the basis of allegations of misconduct set forth in an Administrative Complaint. The violations charged in the Administrative Complaint relate primarily to alleged mishandling of funds received on behalf of an insurer.
Findings Of Fact The Respondent, Louis Iannucci, is currently eligible for licensure and is licensed in this state as a life insurance agent, life and health insurance agent, and health insurance agent, and was so eligible and so licensed at all times relevant to these proceedings. At all times pertinent to these proceedings the Respondent was an officer and director of Certified Insurance Associates, Inc., an incorporated insurance agency doing business in Fort Lauderdale, Florida. At all times pertinent to these proceedings, the Respondent was a duly appointed agent in this state under contract with United American Insurance Company. At all times relevant to these proceedings, Respondent was the sole authorized signatory on his business bank account with Capital City Bank, now known as Union Planters Bank. On or about February 12, 1997, Respondent received a check from Gretchen Smith of Titusville, Pennsylvania, in the amount of $1,833.00 and made payable to United American Insurance Company. This sum was intended as the renewal premium payment of Mrs. Smith's United American Medicare supplement insurance policy. Respondent endorsed this check and deposited it into his business bank account on February 18, 1997. Even though the premium was due on or before March 1, 1997, the Respondent waited until April 14, 1997, to remit only $486.00 of the money received from Gretchen Smith to United American Insurance Company in payment of a quarterly premium on her policy. Respondent retained the remainder of the funds for his own use and benefit. A short while later it was brought to the attention of United American Insurance Company that Gretchen Smith had paid an annual, not quarterly, premium for the policy. United American Insurance Company wrote to Mrs. Smith and requested a copy of her cancelled check for $1,833.00 that she had given to the Respondent. Upon receiving Gretchen Smith's response and a copy of her premium check, the insurance company credited her account with payment of an annual premium and reversed out the quarterly payment that had been posted to her account. The Respondent was charged for the difference of $1,347.00. On or about September 6, 1996, Respondent received a check from Mr. and Mrs. Lew Kisver of Plantation, Florida, in the amount of $3,666.00 and made payable to United American Insurance Company. This sum was intended as the renewal premium payments of Mr. and Mrs. Kisvers' United American Medicare supplement insurance policies. Respondent endorsed this check and deposited it into his business account. The Respondent, on or about September 25, 1996, remitted only $1,894.00 of the money received from Mr. and Mrs. Kisver to United American Insurance Company in payment of a semi-annual premium on each Kisver policy. Respondent retained the remainder of the funds for his own use and benefit. On or about March 7, 1997, it was brought to the attention of United American Insurance Company by Mr. and Mrs. Kisver that they had paid an annual, not semi-annual, premium for each of their policies. United American requested Mr. and Mrs. Kisver to provide a copy of their cancelled check or receipt for their payment of the premium. In response, the Kisvers mailed to the insurance company a copy of their cancelled check for $3,666.00 that they had given to the Respondent to pay their policy premiums. Upon receiving the Kisvers' response and copy of their premium check, the insurance company credited their account with payment of annual premiums and reversed out the semi-annual payments that had been posted to their accounts. The Respondent was charged the difference of $1,894.00. By coincidence, at this same time in March 1997, Respondent remitted $1,894.00 to the insurance company in payment of the next semi-annual premium due on the Kisver policies. The insurance company subsequently credited the money to Mr. Iannucci's account as he had already been charged for the premiums. The Respondent's agency contract then in effect with United American Insurance Company provided in relevant part: The Agent shall immediately remit to the Company all premiums collected by the Agent or sub-agents in excess of the Agent's initial commission thereon. In addition, the contract limited the agent's authority to collect premiums by specifically providing that the Agent shall not "collect or receipt for premiums other than initial premiums with applications for insurance." At all times material, the United American Insurance Company had on file at the Capital Bank a letter of authorization. The letter of authorization read as follows, in pertinent part: This letter will authorize the captioned General Agent of United American Insurance Company [the Respondent] to endorse and deposit to the General Agent's account with your bank checks made payable to the United American Insurance Company for premiums collected at the time of application for insurance with this Company. The General Agent may also withdraw or disburse any such funds so deposited. Pursuant to both the agency contract and the letter of authorization on file with the bank, the Respondent lacked authority to deposit and cash checks received from customers in payment of their renewal premiums. Similarly, the Respondent lacked authority to hold premium funds in his bank account for lengthy periods of time. The Respondent was aware, or should have been aware, of these limitations on his authority. Between September 1996 and April 1997, the balance of Respondent's business bank account with Capital City Bank at the end of each month was less than the amount of the premium funds that Respondent had received from the Kisvers and Gretchen Smith but had not remitted to the insurance company. At the end of September and October 1996, Respondent's bank account had an ending balance of $1,659.91, and $1,589.82 respectively. At this time he should have been holding $1,894.00 of unremitted funds in trust on behalf of the Kisvers and the insurance company. In February 1997, the end of the month balance of the business account was only $71.19, even though Respondent should have been holding not only the $1,894.00 previously received from the Kisvers but also the $1,347.00 received from Gretchen Smith on February 12, 1997, but not remitted to the insurance company. Respondent had apparently applied the insurance premium payments received from the insureds for his own use and benefit, even though the funds were fiduciary in nature and were held in trust. At all times material to this case, it was the practice of United American Insurance Company to forward monthly statements to the Respondent. If the Respondent had a credit balance, the statement would be accompanied by a check in the amount of the credit balance. If the Respondent had a debit balance, the statement would request that the Respondent make "payment in full by return mail." Although the United American Insurance Company debited the Respondent's account for the portions of the Smith and Kisver funds that were not promptly forwarded to the insurance company, there is no clear and convincing evidence that the United American Insurance Company ever made demand on the Respondent to pay those specific amounts. There is no clear and convincing evidence that the Respondent had any fraudulent or dishonest intent in connection with his handling of the Smith and Kisver funds discussed above. The Respondent's handling of those funds does, however, demonstrate a lack of fitness to engage in the business of insurance as well as a lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by his license.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a Final Order to the following effect: Concluding that the Respondent violated Sections 626.611(7), 626.611(8), and 626.611(10), Florida Statutes, as charged in Count One and in Count Two of the Administrative Complaint; Concluding that the allegations that the Respondent violated Sections 626.611(9) and 626.621(4), Florida Statutes, should be dismissed for lack of clear and convincing evidence to establish those violations; and Imposing a penalty consisting of a suspension of the Respondent's License for a period of six months. DONE AND ENTERED this 18th day of November, 1998, in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH 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 18th day of November, 1998.
Conclusions THIS CAUSE, arising under Florida’s “Agricultural License and Bond Law” (Sections 604.15-604.34), Florida Statutes, came before the Commissioner of Agriculture of the State of Florida for consideration and final agency action. On August 26, 2009, the Petitioner, Dixie Growers, Inc., an Agent for producers of Florida agricultural products as defined by Section 604.15(10), Florida Statutes, timely filed an administrative claim pursuant to Section 604.21, Florida Statutes, to collect $176,869.20 (including the $50 claim filing fee) for strawberries they sold to Respondent, a licensed dealer in agricultural products. Respondent’s license for the time in question was supported by a surety bond required by Section 604.20, Florida Statutes, written by Lincoln General Insurance Company in the amount of $100,000. On September 2, 2009, a Notice of Filing of an Amended Claim was mailed to Respondent and Co-Respondent. The September 2, 2009 certified claim mailing to the Respondent was returned by the United States postal service on October 5, 2009 marked “UNCLAIMED”. A second certified mailing was sent by the Department to the Respondent at another address of record on October 9, 2009 and it was received by the Respondent on October 23, 2009. On November 10, 2009, the Respondent filed an ANSWER OF RESPONDENT with an attachment to the Department and requested a hearing. Accordingly, this case was referred to the Division of Administrative Hearings (“DOAH”) for a administrative hearing in accordance with the provisions of Section 120.57(1), Florida Statutes. DOAH issued a NOTICE OF HEARING on December 2, 2009 for a hearing to be held on February 25, 2010. The hearing was held with DOAH on February 25, 2010 and the Administrative Law Judge (the “ALJ”) entered her RECOMMENDED ORDER (“R.O.”) on March 24, 2010, a copy of which is attached hereto as Exhibit “A”, to which neither party filed written exceptions with this Department. Upon the consideration of the foregoing and being otherwise fully advised in the premises, it is ORDERED: The Department adopts the ALJ’s R.O. in toto including the following technical corrections to the R.O.: 1. In the caption on page one (1) of the R.O. the Respondent is shown as America Growers, Inc. and it should read American Growers, Inc. 2. On page one (1), paragraph (1) of the R.O., it states Counsel for Respondent, the witness and court reporter appeared ... . It should read Counsel for Petitioner, the witness and court reporter appeared ... . 3. On page two (2) under PRELIMINARY STATEMENT, paragraph (2), it states Petitioner filed a response on the Department’s form titled, .... It should read Respondent filed a response on the Department’s form titled ... . 4. On page three (3) under FINDINGS OF FACT, paragraph number one (1), it states; Petitioner, Dixie Growers, Inc., is a producer of agricultural products in Florida, i.e.., strawberries. It should read; Petitioner, Dixie Growers, Inc., is an Agent for the Producer(s) of agricultural products in Florida, i.e., strawberries. 5. On page five (5), paragraph eleven (11), under CONCLUSIONS OF LAW, it states; Petitioner is a “producer” of agricultural products as defined in subsection 604. 15(9), Florida Statutes. It should read; Petitioner is a “producer’s agent” for the producer(s) of agricultural products as defined in subsection 604.15(10), Florida Statutes. The ALJ’s recommendation that the Respondent, American Growers, Inc., pay Petitioner, $176,819.20 and the $50 filing fee is hereby adopted. For purposes of this Final Order consistent with the requirements of Sections 604.21(7) and (8), Florida Statutes, the ALJ’s recommendation is modified to include that payment shall be made within fifteen (15) days after this Final Order is adopted. In the event Respondent fails to pay Petitioner $176,869.20 within fifteen (15) days of the Final Order, Lincoln General Insurance Company, as Surety for Respondent, is hereby ordered to provide payment under the conditions and provisions of the Bond to CHARLES H. BRONSON, COMMISSIONER OF AGRICULTURE AND CONSUMER SERVICES, as Obligee on the Bond. The Department will notify the Surety in the event it (the Surety) is required to pay. This Order is final and effective on the date filed with the Agency Clerk of the Department. Any party to these proceedings adversely affected by this Final Order is entitled to seek review of this Final Order pursuant to Section 120.68, Florida Statutes (2002) and Rule 9.110, Florida Rules of Appellate Procedure (2003). Review proceedings must be instituted by filing a petition or notice of appeal with the Agency Clerk, 5" Floor, Mayo Building, Tallahassee, FL 32399-0800. A copy of the petition for review or notice of appeal, accompanied by the filing fees prescribed by law must also be filed with the appropriate District Court of Appeal within thirty (30) days of the date this Final Order was filed with the Agency Clerk. = DONE AND ORDERED this27_ day of Frrnach , 2010. TERRY L.’RHODES Assistant Commissioner of Agriculture WA. Filed with Agency Clerk this”? _ day of Bel , 2010. Agency Clerk COPIES FURNISHED TO: Judge Carolyn S. Holifield Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (Certified Receipt No. 7160 3901 9848 8028 7649) Mr. Glenn C. Thomason, Registered Agent American Growers, Inc. P. O. Box 1207 Loxahatchee, FL 33470 (Certified Receipt No. 7160 3901 9848 8028 7656) Ms. Rene Herder, Surety Bond Claims Lincoln General Insurance Company 4902 Eisenhower Blvd., Suite 155 Tampa, FL 33634 (Certified Receipt No. 7160 3901 9848 8028 7663) Mr. John Northrop, Surety Bond Claims Lincoln General Insurance Company 4902 Eisenhower Blvd., Suite 155 Tampa, FL 33634 (Certified Receipt No. 7160 3901 9848 8028 9230) Gregg E. Hutt, Attorney for Petitioner Dixie Growers, Inc. TRENAM, KEMKER, SCHARF, BARKIN, FRYE, O’NEILL & MULLIS, P.A. 101 East Kennedy Boulevard, Suite 2700 P. O. Box 1102 Tampa, FL 33601-1102 (Certified Receipt No. 7160 3901 9848 8028 9247) Ms. Linda Terry Lawton, Vice President Dixie Growers, Inc. P. O. Box 1686 Plant City, FL 33564-1686 (Certified Receipt No. 7160 3901 9848 8028 9254) Steven Hall, Attorney Florida Department of Agriculture and Consumer Services, Suite 520 Mayo Building, M-11 Tallahassee, FL 32399-0800 Mr. Mark Moritz and Mr. Brad Robson, Field Representatives
The Issue Whether the licensure and eligibility for licensure as an insurance agent in Florida held by Respondent Michael David Garrett should be disciplined based on the allegations of the Administrative Complaint filed against him and, if so, the extent of such discipline.
Findings Of Fact Petitioner is the state agency that is responsible for the regulation of insurance agent conduct and licensure. Respondent is currently eligible for licensure as an insurance agent and is licensed in this state as a life, variable annuity and health agent, life and health agent, and health agent. The Association for Independent Managers (AIM) is an entity that was founded in 1979 for the purpose of providing educational and other services or benefits to a membership base that is comprised primarily of small businesses. In February 2002, Jack Winebrenner, AIM’s chief executive officer, desired to secure health insurance benefits for AIM’s members. On or about February 7, 2002, Winebrenner delivered applications for health insurance and a cashier’s check in the amount of $23,920.77 to Respondent. The pertinent applications were intended to secure health insurance with an entity known as Mutual Service Life Insurance Company and/or an entity known as United States Life Insurance Company. Winebrenner agreed to gather the applications on behalf of AIM and to forward them to Respondent and Respondent’s company, known as Eastwich Re, Inc. Respondent had represented that he was a licensed insurance agent. The identifying number of the $23,920.77 cashier’s check referred to hereinabove that was delivered to Respondent is 381524555. Respondent’s company, Eastwich Re, Inc., had a business checking account at Flagship National Bank (Flagship) in Sarasota, Florida. On February 12, 2002, the $23,920.77 check that Winebrenner had delivered to Respondent was deposited into Eastwich Re’s Flagship account. Respondent was a signatory on Eastwich Re’s Flagship account. Respondent did not secure health insurance from United States Life Insurance Company or Mutual Service Life Insurance Company or any other company for any of the AIM applicants. Respondent did not forward any premium moneys in the year 2002 to United States Life Insurance Company or Mutual Service Life Insurance Company for the purpose of securing health insurance for any of the AIM applicants. Respondent returned only $10,000.00 from the amount that Winebrenner gave to him in the $23,920.77 cashier’s check. Winebrenner testified that he requested several times of Respondent that the full amount ($23,920.77) of the cashier’s check be returned, once it was clear that no health insurance had been secured for any AIM applicants. AIM engaged private counsel to seek return of the entire $23,920.77 amount, but the efforts of private counsel were not successful. No reason was offered for Respondent only returning $10,000.00. On September 19, 1991, Respondent’s licenses and appointments as an insurance agent were surrendered as part of a Consent Order into which he entered with the Department of Insurance. In 1996, Respondent’s application for licensure as an insurance agent was denied. Respondent’s application for licensure was denied based on information “indicating that Respondent transacted insurance in 1992, in violation of the September 19, 1991 Consent Order which resulted in the surrender of all licenses and appointments held by Respondent . . . [and] had the same force and effect as a revocation.” Respondent was again granted a license as an insurance agent in 1997. Respondent was a licensed insurance agent in Florida at the relevant times that are material to the Administrative Complaint that is the basis for the instant action.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order finding Michael David Garrett guilty of violating the provisions of Section and Subsections 626.561(1); 626.611(7), (9), (10), and (13); 626.621(6); 626.9521; and 626.9541(1)(o)1., Florida Statutes. As penalty for these violations, it is recommended that Petitioner (1) revoke Respondent's insurance licenses and eligibility for licensure; (2) that Respondent be required to pay an administrative fine of $20,000.00; and (3) that Respondent be required to pay restitution to AIM for the benefit of the defrauded insurance applicants in the amount of $13,920.77. DONE AND ENTERED this 28th day of June, 2005, in Tallahassee, Leon County, Florida. S JEFF B. CLARK 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 28th day of June, 2005.
Findings Of Fact The Petitioner, Florida Department of Insurance (hereinafter referred to as Department) is the state agency authorized to regulate and enforce the provisions of Chapter 629, Florida Statutes. Nautical Management Reciprocal Insurers, Respondent, is a licensed domestic commercial reciprocal insurer, subject to the jurisdiction and regulation of the Department, pursuant to Chapter 629, Florida Statutes. The Department conducted a detailed review of Respondent's 1989 Annual Statement, and certain other information prior to issuing the Order to Show Cause. On October 17, 1985, Respondent submitted its Plan of Operations to the Department for its first three years of business in connection with its application for a certificate of authority as a domestic reciprocal insurer under Section 629.081, Florida Statutes, with the purpose of seeking its initial business in the area of ship/boat coverage and other related marine coverage, such as seafood cargo. On August 19, 1986, Respondent converted its Section 629.081 reciprocal application into a limited commercial reciprocal insurer application pursuant to Section 629.50 and reaffirmed its October 17, 1985 Plan of Operations to the Department. In Respondent's Plan of Operations, the insurer stated the objective of Respondent is "to provide a stable, reasonable (insurance) marketplace for the commercial marine members . . . . In summary, Florida should have the first insurance program in the nation whereby the commercial fishing industry can look forward to direct (member) advisory committee involvement (in Nautical Management)." Respondent is an unincorporated aggregation of subscribers operating individually and collectively through an attorney-in-fact that is organized for, and the primary activities of which consist of assuming and spreading all or any portion of the commercial property or commercial casualty exposure of its subscribers. On January 6, 1987, Respondent was granted a certificate of authority as a licensed domestic limited commercial reciprocal insurer "ocean marine" pursuant to Section 629.50(1), Florida Statutes. Respondent was authorized to transact the business of ocean marine insurance on a restricted basis for the purpose stated in its application. The application's stated purpose was to pool and spread the commercial property or casualty marine liabilities of Respondent's commercial fishing industry subscribers. Respondent's certificate of authority requires that the ocean marine insurance business written by Respondent as a domestic limited commercial reciprocal insurer shall only be for those owners/operators of commercial fishing vessels domiciled in the State of Florida that engage in commercial marine businesses. The terms "ocean marine" and "pleasure craft" are not defined by the Insurance Code or Department rules. The term "private pleasure vessel" is not synonymous with the term "commercial marine vessel." Respondent, during 1989, covered private pleasure craft in addition to commercial vessels under policies of insurance. The Respondent clearly disclosed on its annual and quarterly reports filed with the Department that it was engaged in underwriting pleasure craft. At no time did Respondent conceal or mislead the Department regarding its writing policies of insurance covering pleasure craft in addition to commercial vessels. Since on or about October 15, 1987, Respondent has made periodic inquiries of the Department regarding the capital surplus and other requirements necessary to convert its certificate of authority to that of a "full" reciprocal insurer. Additionally, Respondent has engaged in other direct correspondence with members of Petitioner's staff regarding, among other things, reinsurance, the identity of its subscribers, and has submitted certain collateral pledge agreements and debentures to determine their sufficiency as capital surplus. On May 22, 1990, the Department received the cover sheet which showed the distinction between pleasure and commercial vessels. In May, 1990, the Department determined that as of December 31, 1989, Respondent had insured a total of 1,693 vessels of various types. Of those 1,693 vessels, 1,615 or 95.4% were private pleasure vessels, and only 78 or 4.6% were commercial vessels. Based upon its 1989 gross premiums recorded in its Annual Statement, Respondent's estimated total gross written premium volume for year 1990 will be $1,381,171.32 on its 1,615 covered private pleasure vessels and only $355,717.85 on its 78 commercial vessels. Respondent has a ratio of premiums written or projected to surplus as to policyholders that exceeds 4 to 1. Respondent is in an impaired or insolvent financial condition. Although Respondent's officers and directors were not certain they would be allowed to write marine private pleasure boats under Section 629.50, Florida Statutes, they proceeded to write pleasure boat insurance prior to receiving Department approval. Respondent contends that the classification for "ocean marine insurance" means "marine insurance on anything that operates on navigable waterways". There are several lines of insurance under the ocean marine classification which differentiates between the lines of insurance for commercial vessels and pleasure craft. Respondent did not amend its Plan of Operations to indicate that it intended to insure any risks other than the commercial vessels indicated in the Plan of Operations as filed with the Department. A limited commercial reciprocal insurer must maintain a minimum surplus of at least $100,000 pursuant to Section 629.50, Florida Statutes. A general reciprocal insurer must maintain a minimum surplus of $250,000, and in addition to this, when first authorized, needs a minimum expendable surplus of $750,000 pursuant to Sections 629.071(1) and (2), Florida Statutes. At the time of its initial application, Respondent was unable to meet the financial requirements for authorization as a general reciprocal insurer and had to convert its application to that of a limited commercial reciprocal insurer. The commercial marine industry is a highly volatile industry with few insurers over whom these risk are spread. Respondent may not now meet or may not be able to meet in the future all its financial obligations toward members of the general insurance buying public it has insured and/or it has entered into business relationships with in the State of Florida. If so, these persons would suffer irreparable financial injury.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED as follows: Respondent, Nautical Management Reciprocal Insurers, be found guilty of: Using methods and practices in the conduct of its business as to render its further transaction of insurance in this state hazardous or injurious to its policyholders or the public, in violation of Section 624.418(1)(d), Florida Statutes (1989); No longer meeting the requirements for the authority originally granted, in violation of Section 624.418(2)(a), Florida Statutes (1989); and Violating a lawful order or rule of the Department or any provision of the Insurance Code, in violation of Section 624.418(2)(a), Florida Statutes. Respondent, Nautical Management Reciprocal Insurers, be found not guilty of being composed of management offices or directors which are incompetent or untrustworthy or so lacking in insurance experience, ability and standing as to jeopardize the reasonable promise of successful insurer operations. [Sections 624.404(3)(a) and 624.404(3)(b), Florida Statutes (1989)]. Respondent, Nautical Management's certificate of authority be suspended for a period of one year. The imposition of the penalty shall be abated upon compliance with the following conditions: Respondent cease and desist immediately the solicitation and underwriting of all new subscribers who are owners of pleasure craft; That policies of insurance for present subscribers who are owners of pleasure craft may only be renewed for a period not to exceed six months; and That within a reasonable time not to exceed six months, as determined by the Commission Respondent comply with all requirements necessary to convert its Certificate Authority to that of a full reciprocal, pursuant to Section 629.081, Florida Statutes (1989). Such other and additional reasonable conditions as the Commissioner may require. DONE AND ENTERED this 1st day of March, 1991, in Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE 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 1st day of March, 1991. APPENDIX TO RECOMMENDED ORDER The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on findings of fact submitted by the parties. Petitioner's proposed findings of fact: Accepted in substance: Paragraphs 1,2,3,4,5,6,7,8,9,10,11,12,14,16,17,18,19,20,21,22. Rejected as not proven by clear and convincing evidence: Paragraphs 13,15. Respondent's proposed findings of fact: Accepted in substance: Paragraphs 1,2,3 (in part), 4,5,6,7 (in part), 8. Rejected as against the greater weight of the evidence: Paragraph 3 (in part). Rejected as irrelevant: Paragraphs 7 (in part), 9. COPIES FURNISHED: Michael C. Godwin, Esquire Elizabeth Gregovits, Esquire Department of Insurance Division of Legal Services 412 Larson Building Tallahassee, FL 32399-0300 William E. Powers, Jr., Esquire Powers and Ferris 2544 Blairstone Pines Drive Suite A Tallahassee, FL 32301 Bill O'Neil General Counsel Department of Insurance and Treasure The Capitol, Plaza Level Tallahassee, FL 32399-0300 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300
