Findings Of Fact The Respondent is a licensed insurance agent licensed in the State of Florida as a general lines agent. He was the primary agent of Emerald Coast Insurance Agencies, Inc. (Agency) for Pensacola, Florida. The agency at all times pertinent to the events and times treated in the Amended Administrative Complaint was a general lines insurance agency incorporated under the laws of the State of Florida. The Petitioner is an agency of the State of Florida charged with regulating and licensing the entry of insurance agents into the profession of insurance and regulating the practice of agents and other insurance professionals already licensed by the State of Florida, including the imposition of disciplinary measures. The Respondent had been an insurance agent, as of the time of the hearing, for approximately four years. During that time, he has typically written 50-60 applications for automobile insurance and related coverage per week. The owner of the Agency would not allow the Respondent to issue checks from the Respondent's own office. All processing of insurance application files was completed at the Tallahassee, Florida office. The files with client information for insurance applicants, whose business was initiated by the Respondent, was sent by UPS to the Tallahassee, Florida office on the morning following the taking of the applications. The forms, which the Respondent was required to have completed and asked customers to sign, were pre-printed and issued from the Tallahassee, Florida office. The Respondent had no part in the creation of these forms as to content, format, and the disclosures depicted on their face. The Respondent inquired of the Department's local office as to whether the forms comported with pertinent statutes and regulations, and the Department expressed no objection to them. Indeed, the forms in question do make disclosures of the coverage or products which the customer is purchasing and contain an acknowledgment, which the customer is required to sign, indicating that the coverage has been explained to the customer. In particular, the motor club product is depicted on the relevant form as being an optional product and that it has been explained to the customer, with a blank after that pertinent statement for the customer to sign an acknowledgment of that fact. The issue in this case does not involve whether the customer paid for such a product without executing any consent but, rather, whether the customer was misled or whether the products sold were actually, in fact, explained fully to them; whether they were misled in making a decision to buy such coverage in the belief that it was required in order to obtain the insurance they knew they needed. THE TRANSACTIONS AT ISSUE No evidence was submitted as to Count I, concerning Cheryl Ginsterblum nor Count VIII, concerning Joseph Shelton. Therefore, no findings of fact can be made and these counts should be dismissed. Pam Shivers of Gulf Breeze, Florida, required insurance coverage for her 1988 Dodge Caravan. Because the van was still financed with a lender, "full coverage" was required, that is, she needed personal injury protection (PIP), property damage (PD) coverage, comprehensive risk coverage, and collision damage coverage. On March 8, 1993, she went to the Respondent's Agency, and the Respondent handled the requested insurance transaction. She requested "full coverage", and the transaction was handled while she was standing at the counter, in just a few minutes. PIP and PD insurance was placed with Security Insurance Company of Hartford (Security). Comprehensive and collision coverage was placed with Florida International Indemnity Company (FIIC). The premium for Security was $350.00, and the premium for FIIC was $399.00. The purchase of this coverage was financed so that Ms. Shivers would not have to pay the entire $749.00 premium for all of the coverage at one time. In return for the premium financing arrangement, a $187.00 down payment was required for the insurance coverage. During the transaction, Ms. Shivers was quickly presented with approximately six documents to sign. Included in those documents was a document containing a disclosure that the motor club product which she purchased was optional, that is, not required by law; that she had been offered to purchase automobile insurance by the Agency without an optional motor club and chose to purchase that optional coverage of her own free will at an additional cost of $150.00; that she examined the benefits being offered, and that it was her decision to request enrollment as a member of the motor club association. It is true that Ms. Shivers signed these acknowledgments and disclosures, which on their face, would indicate that she had been informed about the nature of the motor club product or coverage and its cost, including the fact that it was not required by law and was optional. In fact, however, her apparent consent was not an actual, knowing and informed consent. She was presented with the six documents to sign hurriedly, with the places to sign simply marked for her to make quick signatures. She did not, in the course of the transaction, have significant time to read the documents or reflect on what she was signing, what her signatures obligated her for, and what specific products she was purchasing. She was not, in actual fact, informed that she was purchasing a motor club membership. She did not request that product, and the Respondent did not give her any actual explanation about it. She was not informed that she had any choice in whether or not to take that product. She later discovered that the product was optional and that it was, therefore, not an integral, unseverable part of the insurance coverage she did want to purchase. Moreover, Ms. Shivers was confused about the $749.00 premium quote and the amount she was actually required to pay. Her confusion involved the $749.00 premium for insurance quoted to her because of the fact that she was actually required to pay an $899.00 purported "premium". The receipt issued at the end of the purchase transaction indicated a total "premium" of $899.00. In fact, however, the actual cost of the insurance was $749.00. The additional $150.00 was for a motor club membership which was hidden in the receipt amount and what was represented on the receipt as a "total premium". The down payment of $337.00 quoted to her was also deceptive because actually, only $187.00 of that was the down payment on the actual insurance coverage premium. This is shown by the premium finance agreement in evidence. The Respondent had concealed the cost of the motor club membership within what was purported to be the total insurance premium amount reflected on the receipt and included the entire $150.00 charge for that membership within the down payment, simply and misleadingly calling the down payment of $337.00 as the down payment on insurance coverage. Thereafter, on March 21, 1993, Ms. Shivers went back to the Agency to cancel her insurance, related to the fact that her vehicle had been involved in an accident. Upon doing that, she left thinking that her insurance had been effectively cancelled. Later, she received notices from the premium finance company but was told by the Respondent to ignore them. On May 7, 1993, however, the Respondent informed her that she had to come back to the Agency and fill out a cancellation request. Thus, 47 days after she had attempted to cancel her coverage, her request was finally processed by the Agency. In the meantime, she was apparently being charged for premiums on the coverage she thought she had cancelled. Thus, from January 21, 1994, the premium finance company turned an amount it claimed was due of $43.26 over to its attorney for collection purposes, which impinged on Ms. Shivers' credit standing. She had already paid the Respondent $190.00 in premiums under the premium financing agreement, with her down payment, but did not receive any returned unearned premium representing the period after she thought she had cancelled her policy but, instead, was billed the additional $43.26 directly due to the Respondent's 47-day delay in processing her cancellation request. Count III In June, 1993, Laura O'Donohue of Pensacola, Florida, purchased her first vehicle, a 1993 Chevrolet Cavalier. The automobile dealership, where she purchased the vehicle, gave her a card for the Respondent's insurance agency. Therefore, never having established a relationship with an insurance agency, she went to that Agency to purchase insurance. Her mother, Lynn O'Donohue, accompanied her to the Agency. Before coming to the Agency while at the automobile dealership, she had received a quote for the insurance she wanted from the Agency. When she arrived at the Agency, she informed Donald Grubb, an employee of the Agency and the Respondent, that she just wanted "basic coverage". This was the first time she had purchased insurance, and she relied entirely for her decisions regarding that upon the representations of the Respondent and his colleague. Therefore, in a transaction, which took approximately 20 minutes, the Respondent and/or Mr. Grubb assisted her in filling out the paperwork required to place the insurance coverage she requested. During the course of the brief insurance purchase transaction, Ms. O'Donohue learned that she would be required to pay a higher premium amount than the quote she had received from the Agency while she was at the automobile dealership earlier that day. This is consistent with the Agency's custom and practice, established by former agent, James Self's, testimony to the effect that motor club coverage was typically added to the normal insurance coverage requested by customers, which resulted in higher purported "premium" quotes and charges than had initially been quoted to the customer, typically by telephone, before a customer came to the Agency office. When Ms. O'Donohue and her mother arrived at the Agency after having received the lower quote earlier, they were thus not prepared to pay the higher amount of the so-called premium. Ms. O'Donohue did not need a motor club because, through her mother, she was covered by AAA Motor Club for towing and other benefits. She had no knowledge that she had purchased a motor club product from the Respondent. All of the documents were presented to her, in response to her request for just basic insurance coverage, in the context that this was what the law required her to have and what she needed. She totally relied, as did her mother, upon the representations of the Respondent and his agent or employee, Mr. Grubb, concerning what the law required and what she needed in the way of insurance coverage. The testimony of Ms. O'Donohue's mother, Lynn O'Donohue, confirms the fact that they had no intent to purchase towing coverage or "auto club" because they already had a membership with AAA and wanted to pay nothing extra other than the basic insurance coverage. The Respondent or his agent or employee, Mr. Grubb, indicated, as shown on page 91 of the transcript, that "towing was all part of it", that is, they meant that the basic insurance package sought by Ms. O'Donohue included towing as part of its coverage. In fact, that was not the case, and the motor club product was clearly optional, at extra cost, and not legally required. Ms. O'Donohue purchased it unknowingly, based upon the representations and business practice used by the Respondent in connection with her transaction, in spite of the presence of her signatures on the disclosure portion of the application documents for the reasons referenced with regard to the Shivers transaction. The insurance requested was placed with two insurance companies. The PIP and PD were issued by Security at a premium of $223.00. The comprehensive and collision coverage was placed with General Insurance Company (General) at a premium of $411.00. Thus, the premiums for actual insurance coverage, which is all Ms. O'Donohue wanted, totaled $634.00. That was financed by the ETI Premium Finance Company (ETI) on periodic installment payments, with a required down payment of $127.00. The Respondent, however, required Ms. O'Donohue to make a down payment of $277.00 on a purported total premium due of $784.00. This amount, unbeknownst to Ms. O'Donohue, happened to include a motor club purchase (Atlantic Travel Association), which cost $150.00, thus, the difference between the $634.00 actual insurance premium and the $784.00 purported premium due. The $150.00 fee for motor club benefits was concealed in the "total premium" amount falsely represented to the customer by the Respondent. The deceptive and misleading nature of this transaction is further pointed out by the form of the receipt issued to Ms. O'Donohue upon consummating the transaction. That receipt indicates that the "total premium" is $784.00. Actually, the cost of the insurance was only $634.00, as referenced above, and the additional $150.00 of that purported total premium amount was the motor club fee. Likewise, the down payment quoted to her of $277.00 was deceptive because only $127.00 of that was applied to the actual insurance coverage. The remaining amount was the motor club fee which the agent collected in its entirety at the beginning of the transaction, as part of the down payment, while the insurance premiums, in excess of the $127.00 actual down payment for insurance, were financed through ETI. The Respondent did this because, by collecting all of the motor club fee in a lump sum at the outset of the transaction, he could get his entire commission immediately. His motor club sales commission was at a considerably higher rate than the commission he earned on the sale of insurance itself. In fact, his commission was 90 percent of the $150.00 motor club fee. Since Ms. O'Donohue did not have the entire $277.00 at the time of the transaction, because she had been relying on the lower quote for the insurance given to her over the telephone, she only paid $200.00 down payment at the time of the transaction, with a balance owed of $79.00, as reflected on her receipt. Her mother had reservations concerning the purchase of this insurance from the Respondent and told her daughter that she thought that because the insurance she purchased involved financing the premium, she could save money by going to GEICO insurance company. Therefore, the following day, she went to GEICO and secured new coverage at a lower premium rate and then called the Respondent's Agency to confirm that she could cancel her policy, with no penalty. They replied that she could cancel her policy just so long as she brought them proof that she had secured new insurance, since the law presently does not allow them to cancel the coverage until they are shown proof that the insured has obtained other coverage. Ms. O'Donohue, therefore, went to GEICO, purchased new insurance for her vehicle, and then brought proof to the Agency and requested that the Respondent cancel her insurance. This request was made on June 19, 1993. At that time, she requested a refund of the $200.00 down payment which she had made two days before and was assured that she would receive it within 60 days. In fact, she never received a refund and continued to receive past-due and delinquency notices from ETI, the premium finance company. She notified the Agency of this problem on numerous occasions to no satisfaction. Due to ETI's belief that her coverage was still in force and that they were still owed the premium payments, her credit was endangered. This was all directly related to the Respondent's failure to properly and timely process her cancellation request. On June 20, 1993, Terre Thompson of Pensacola, Florida, also went to the Respondent's Agency to purchase insurance for her 1993 GEO Metro automobile. The Respondent met her at the automobile dealership, where she purchased the vehicle. He had already prepared documents for the purchase of insurance to be underwritten by Security and General, along with a premium financing agreement and other documents. He had marked X's where Ms. Thompson was supposed to sign all contracts and disclosure forms. The Respondent filled out all of the information on the documents and merely told her, in effect, to "sign here, here and here". The transaction was conducted very quickly and with little or no explanation of coverage or benefits. Although Ms. Thompson needed full coverage for her vehicle, because it was financed, she did not want towing and rental benefits. The Respondent, however, gave her to understand that it was required in the coverage package she purchased. Accordingly, on June 20, 1993, she made a down payment of $100.00, with an additional amount due of $51.00 by June 27, 1993. Although the receipt was dated June 20, 1993, Ms. Thompson did not actually receive it until June 27, 1993, when she returned to the Respondent's Agency to pay the $51.00 owed. The receipt falsely depicts that the "total premium" was $834.00. Actually, the cost of the insurance was only $754.00. The additional $80.00 was for a motor club product, although the $80.00 was buried in and represented to be part of the total insurance premium for the transaction. The down payment of $231.00 quoted, likewise, was deceptive because only $151.00 of that was actually applied to insurance coverage, which was all of the coverage that Ms. Thompson had requested. The Respondent collected the $100.00 on June 20, 1993 and entered into a financing arrangement with the customer, Ms. Thompson, for the $51.00 to be paid on June 27, 1993. In fact, this was only enough to cover the down payment for the actual insurance coverage because the Respondent forgot to include the fee for the motor club coverage on the "front end" or in the down payment, as was his normal practice. This is why Ms. Thompson became upset when she learned she owed an additional $71.00 when she returned on June 27, 1993, when she thought she had only owed approximately $60.00. In any event, the receipt finally received by her reflected payments of $100.00, $60.00, and $71.00, which totals $231.00. This amount includes the $151.00 down payment for actual insurance coverage and the remaining $80.00 for motor club membership, which Ms. Thompson did not know she had purchased at the time and did not desire to purchase. Indeed, Ms. Thompson, and the other customers referenced in the Amended Administrative Complaint, who testified, signed the disclosure in the standard package of documents presented to them by the Respondent. It indicated that they acknowledged that the motor club benefit or the "nations safe driver" medical benefit was an optional coverage, not required by law and that, after explanation of it, they had elected to purchase it. In fact, they signed those documents, albeit imprudently, without actual knowledge that they were obtaining that coverage and without explanation that it was not legally required. No disclosure was made to them that the purported "total premium" amount actually included payment for the motor club benefit, which was not actually part of the insurance premium and which, at least in the case of those customers with AAA memberships, was totally unnecessary. Timothy Malden of Jacksonville, Florida, purchased a vehicle on or about August 31, 1993. He needed full coverage because the vehicle was financed, that is, he needed PIP, PD, comprehensive coverage, and collision coverage. He went to the Respondent's Agency on that date to purchase coverage on his 1986 Pontiac Fiero. During the course of the transaction, handled by the Respondent, Mr. Malden was asked if he had motor club coverage or benefits and he told the Respondent that he had AAA membership and showed the Respondent his AAA card. The Respondent and Mr. Malden entered into a transaction to sell Mr. Malden insurance. The transaction involved approximately seven different documents and took a total of about 15 to 20 minutes. Mr. Malden merely signed the documents. The Respondent told him that he just needed his signature on the documents and the Respondent did not explain the coverage. The procedure seemed rushed or hurried to Mr. Malden. Although Mr. Malden signed the disclosure (inadvertently, because apparently he did not read it) stating, in effect, that the motor club coverage was optional, not required and that after having it explained to him, he had decided to purchase it, he, in fact, did not know at the time that he had purchased the motor club coverage and it had not been explained to him. Moreover, as stated above, he had explained to the Respondent that he did not need it because he already had AAA motor club coverage. Nevertheless, the Respondent, knowing that Mr. Malden had AAA, still sold him the motor club coverage with the Atlantic Travel Association for an additional fee of $150.00. Mr. Malden made no informed consent to purchase that benefit. The PIP and PD coverage was placed with Security at a premium of $395.00. The comprehensive and collision coverage was placed with Continental American Insurance Company (Continental) for a premium of $525.00. The total premium for "insurance" was $920.00, with a $230.00 down payment. The premiums were financed by ETI. Mr. Malden, however, was required to pay a "down payment" of $380.00. The receipt issued to him reveals a "total premium" of $1,070.00. The actual cost of insurance was only $920.00. The additional $150.00 was for motor club coverage, and the charge for that was hidden in what was represented on the receipt as "total premium". Likewise, the down payment of $380.00 was deceptive in nature because only $230.00 of it was actually a down payment for insurance coverage. The remainder of it, as explained above with regard to the other customers, was actually full payment for the unnecessary, unwanted motor club benefit. On March 8, 1994, Karen Sigler of Pensacola, Florida, went to the Agency to purchase automobile insurance for a 1990 Plymough Voyager. She stated to the Respondent that she only wanted the minimum automobile insurance required by Florida law. She told the Respondent that she needed new insurance because her previous insurance company had gone out of business. The Respondent handled the transaction for her and she specified that she wanted only that coverage which the State of Florida required. Ms. Sigler had been originally quoted a $324.00 premium amount. When she actually entered into the insurance transaction, however, an additional $65.00 was added on to that amount because the Respondent sold her an additional "Nations Safe Drivers, Inc." enrollment. This is not an insurance product but, rather, is a form of supplemental medical benefit. Ms. Sigler had not requested this and did not understand the nature of it, believing that it was unnecessary because she was already qualified as a "safe driver" based upon her driver's record. She was given no explanation as to what that enrollment form, and benefit was nor that there was an extra charge for it. Even as reflected on the enrollment form, Ms. Sigler merely thought that the Nations Safe Drivers membership was a part of the required insurance purchase package. This is not true, in fact, since only PIP and PD coverages are required by law. Ms. Sigler was thus sold a product she did not request, which was not required by law and which was not explained to her. The entire transaction took approximately one- half hour. The receipt issued to Ms. Sigler shows that the "total premium" was $324.00. In fact, however, the actual cost of insurance was a $259.00 premium. The additional $65.00 of the $324.00 amount was the fee for the Nations Safe Drivers membership, which was hidden in what was represented as a "total premium". Moreover, the down payment she paid of $98.00 was deceptive because only a part of it was applied to automobile insurance coverage and the remainder was the fee for the Nations Safe Drivers membership. The Respondent's business practice in this regard resultingly misled Ms. Sigler into believing that Nations Safe Drivers, Inc. was required by State law and that it was an insurance product, which it was not. Here, again, in spite of the disclosure she signed and the documents that she was hurriedly urged to execute by the Respondent, the clear and convincing evidence shows that she did not actually, knowingly consent to purchase the extra non-insurance product referenced above. The Respondent's business practice, the way he represented the nature of her insurance coverage and in the manner in which he conducted the transaction did not involve an actual explanation of the non-insurance product he misled her into purchasing. Thus, there was no informed consent to purchase that product. Rosa Johnson went to the Respondent's Agency on March 21, 1994. She wanted to purchase the "minimum" automobile insurance required by State law for her 1971 Plymouth. She dealt with the Respondent and another gentleman who worked under the Respondent's direction and control. She told them she only wanted the basic, legally-required coverage. PIP and PD coverage was issued through Security. Ms. Johnson was also sold the Nations Safe Drivers product. This product was not actually explained to her, in spite of the fact that she may have signed a written disclosure that it had been, including the fact that it was an optional benefit and not part of the legally-required insurance coverage. She did not request this product nor was it explained to her so that its meaning and coverage was understood by her. Upon conclusion of the transaction, Ms. Johnson had purchased PIP and PD coverage from Security for a premium of $248.00, plus an unrequested enrollment in Nations Safe Drivers, Inc. for a fee of $35.00. All of this amount was financed by ETI. Here, again, as with the other customers, the receipt furnished to Ms. Johnson indicates a total "premium" of $283.00. The actual cost of insurance or true premium was $248.00. The additional $35.00 of the $283.00 amount was the cost of the Nations Safe Drivers, Inc. product, which was hidden in what was represented to her on the receipt as the "total premium". Likewise, the purported down payment of $85.00 was deceptive in the manner in which it was presented and required of Ms. Johnson, because only part of it was applied to insurance coverage, the remainder being the $35.00 fee for the added non- insurance product referenced above. The Respondent's authority to bind coverage with Security Insurance Company had been terminated on March 14, 1994 due to excessive late submissions of insurance applications to the carrier. The problem was later alleviated and his authority to bind insurance for Security was restored by that company. However, during the period of time his binding authority had been terminated, the Respondent kept taking applications and binding policies. This caused the insureds to believe that they had coverage when, in fact, they did not, because the carrier, Security, through its managing agent, U.S. Underwriters, did not, for a period of time, allow the Respondent to obligate that company for coverage. Accordingly, in due course, Ms. Johnson was notified by U.S. Underwriters, on behalf of Security, that she had no coverage. She became upset and filed a complaint with the Insurance Commissioner because she had understood that as soon as the transaction with the Respondent was completed, her coverage had been bound and timely filed and processed with the underwriting insurance carrier. Charles Meadows of Gulf Breeze, Florida, required insurance on his 1986 Chrysler LeBaron. He wanted to purchase the minimum amount of legally- required coverage and went to the Respondent's Agency for that purpose on May 17, 1994. He needed the minimum amount of legally-required insurance so that he could obtain a tag for his automobile from the county tag office. He was in a hurry because he had taken leave from work and needed to get his insurance transaction consummated, as well as to obtain his automobile tag before 4:30 p.m. He conferred with a lady who was employed by the Respondent at the Agency who handled his transaction. She completed all of the documents, spread them across the counter, and marked and told him the places to sign to effect the binder of the coverage that day. The transaction occurred quickly, lasting only approximately 15 minutes. He received no effective explanation of any of the coverages. Rather, he relied on her representations that he was getting what he had asked for, that is, the minimum legally-required Florida insurance coverage. The coverage he obtained was placed with Security as to the PIP and PD coverage. The premium for that coverage was $321.00. The total premium quoted to him was $421.00, which included a $100.00 membership in the Gulf Coast Travel Association, a motor or travel club. Mr. Meadows was not aware that he had this extra amount of coverage or membership until he conferred with Mr. Spencer of the Department at a later time, who informed him of such. If he had known that the agreements he was signing during the hurried, unexplained transaction with the Respondent's employee included the motor club coverage, he would have declined it because his wife already had coverage with AAA for towing and related benefits. Mr. Meadows made a down payment of $190.00 on May 17, 1994. The receipt issued to him revealed a "total premium" of $421.00. The actual cost of insurance was $321.00, with the additional $100.00 being for the motor club, although the total amount was represented as "total premium". Additionally, the down payment of $190.00, which he paid, was deceptive in that only $90.00 was actually applied to insurance coverage and the remaining $100.00 was the total up-front fee for the motor club coverage, although it was represented to Mr. Meadows as being the $190.00 down payment on the insurance premium itself. Later, Mr. Meadows learned that he had the motor club benefits which he did not want or need and so he demanded a refund of his money from the Respondent. He spoke to the Respondent personally about this but did not receive immediate satisfaction. There was a substantial delay in receiving his refund after the Respondent told him that he would receive one. The Respondent justified this by stating to him that it had to come from "another office" and that it would not come from his Agency itself. Dorothy Weber of Pensacola, Florida, required automobile insurance for her 1986 Chevrolet Blazer and a 1978 Chevrolet Caprice. She went to the Respondent's Agency on June 15, 1994 and indicated to one of his employees that she was interested in the cheapest coverage available. She wanted nothing extra, except that required by law. She received very little explanation of the coverages and benefits, other than in response to questions she asked. The transaction of insurance was conducted in a similar manner to those referenced earlier in these Findings of Fact. The PIP and PD coverage was placed with the Florida Joint Underwriting Association. It carried a premium of $787.00. Despite Ms. Weber's request for only the minimum, legally-required insurance, she was also sold a motor club (Gulf Coast Travel Association) unbeknownst to her at the time at an additional fee of $150.00. In spite of the fact that Ms. Weber signed the disclosure concerning the optional nature of the motor club and related fee and so forth, as described in further detail in the above Findings of Fact, in actual fact, it was not explained to her. The fact that the fee for it was separate from the insurance premium for the insurance coverage was not explained to her and she effectively was not informed that she was purchasing that product. During the transaction, she was informed that if her vehicle broke down, she could obtain wrecker service. Nothing was mentioned to her, however, about Gulf Coast Travel Association or that the $150.00 was an extra fee. She merely had all of the forms presented to her in rapid fashion and was asked to sign them. The explanation simply was that the "total policy" cost $937.00, and there was a down payment of $318.00 supposedly for premium only. The entire transaction took approximately one-half hour. Later, Ms. Weber discovered that she had been misinformed and complained to the Department and the Respondent's Agency, specifically indicating that she had not been informed that the $150.00 for the motor club was separate nor that she had purchased motor club coverage. The receipt furnished to Ms. Weber concerning the amounts she paid to secure her coverage is misleading. It indicates a total premium of $937.00, when the actual cost of the insurance was $787.00. The additional $150.00 was for the undisclosed motor club coverage hidden in what was represented on the receipt as a "total premium". The down payment of $308.00 was deceptive or misleading in that only $158.00 of it was actually a down payment on insurance coverage. Barry and Deeana Walker of Pensacola, Florida, needed automobile insurance for a 1990 Plymouth Laser. They wanted the cheapest coverage legally required and available to them. The Respondent dealt with the Walkers and was their agent of record. Mr. Walker remembers nothing being mentioned about a motor club, but Mrs. Walker remembers that the agent mentioned "Nations Safe Drivers, Inc."; however, she specifically informed him that she did not want it. In fact, Nations Safe Drivers is a non-insurance membership plan which includes a medical supplement coverage benefit. It is not a motor club. The PIP and PD and bodily injury coverages were placed with Underwriters Guaranty Insurance Company (UGIC) for a premium of $641.00. The premium was originally financed by Underwriters Financial. Also executed on May 4, 1994 was another premium finance agreement with ETI. It provided for an insurance premium of $441.00 for a policy issued by UGIC and the financing of a Nations Safe Drivers enrollment for $100.00. This document was not signed by the Walkers. On May 4, 1994, the Walkers paid $150.00 by check and were required to pay an additional $143.00 by May 20, 1994. The $143.00 was paid; and subsequently, the Walkers received a notice of additional premium of $190.00 due and they paid an additional down payment of $76.00. The Walkers made payments on the ETI premium financing agreement up until October, 1994, even though it had never actually been signed. They made down payments of $369.00 and monthly payments totaling $333.63, for a total of $702.63. Sometime in October of 1994, they received a letter from the Department of Highway Safety and Motor Vehicles, Division of Drivers Licenses in Tallahassee, Florida, stating that Mr. Walker's driver's license was suspended because his insurance had been cancelled, effective July 16, 1994. The Walkers had received a notice from the insurance company of cancellation (because apparently that company would not insure co-owned vehicles) and had gone to the Respondent to see what to do about that problem. The Respondent told them to fill out a form which he gave them and that everything would be taken care of. They filled out the form at his behest so as to indicate that Mr. Walker's father, the co-owner, would not be a driver of the vehicle. Accepting the Respondent's representation, they believed that that would take care of the cancellation of coverage problem, and they continued to make their monthly payments on their premium financing agreement until October of 1994 based upon what the Respondent told them. In fact, the coverage was cancelled effective July 16, 1994; and soon thereafter, Mr. Walker's driver's license was suspended due to failure to carry valid insurance on his automobile. If the Respondent had acted with promptness in correcting the underwriting error, upon being apprised of the situation by the Walkers, the lapse in coverage and suspension of the driver's license need not have occurred and the payments on the original coverage need not have been made until October 11, 1994, when new coverage was finally obtained by the Respondent at the Walkers' behest. Although, on November 11, 1994, ETI credited the Respondent and the Walkers for $169.41 of unearned premium, the damage had already been done by that point in terms of the lapse of coverage and the suspension of Mr. Walker's driver's license, with attendant financial risk and inconvenience to Mr. Walker. Moreover, the receipt issued to the Walkers in the original insurance transaction indicates a total premium of $741.00. As in the other situations, the actual insurance cost was $641.00, and the additional $100.00 was for the Nations Safe Drivers non-insurance medical payment product, wrapped up in what was represented as "total premium". The down payment of $293.00 was similarly misleading because only $193.00 of that applied to actual insurance coverage. The Respondent received his fee of $100.00 for the added-on product mentioned above entirely out of the up-front, down payment amount. Thus, the Respondent received the entire fee for the Nations Safe Drivers product within a purported "premium receipt" amount described to the customer as an insurance down payment. On January 26, 1995, Ms. Betty Cook of Walnut Hill, Florida, needed to purchase insurance for her 1994 Thunderbird and her 1993 Chevrolet C1500 pickup truck. She went to the Respondent's Agency to accomplish her insurance renewal transaction. A lady by the name of Sonya handled the transaction for her that day. The Cooks' insurance was placed with UGIC for a premium of $1,123.00. The premium was financed through Underwriters Financial of Florida, Inc. The transaction was initiated on January 26, 1995 but ultimately concluded on January 28, 1995, after Mrs. Cook had received and signed all of the paperwork. Mrs. Cook made a premium down payment of $339.00 and mailed her first payment when it was due. She thereupon was sent a notice stating that no policy existed. She called the Agency to see what was wrong and someone at the Agency indicated to her that it would taken care of immediately. A lienholder on the pickup truck sent a notice to her that they had not been notified that the insurance had been renewed. Mrs. Cook became very concerned and the Respondent offered to refund her premium; however, three months had evidently elapsed since she first renewed her insurance or thought she had. Thus, Mrs. Cook, without knowing at the time, was driving her automobiles without insurance coverage for approximately a three-month period. Mrs. Cook contacted the Department and got her insurance reinstated and placed with another servicing agent. The policy was issued by UGIC, without requiring the payment of a premium down payment by the Respondent. The Respondent had still not forwarded the $339.00 down payment originally received from Mrs. Cook as of April 19, 1995. This lapse or failure to forward the insurance down payment obviously resulted in the coverage never being bound with the company. Therefore, the company had not issued and had no record of coverage for Mrs. Cook's vehicles. The agent for this company was required to account for and promptly forward insurance premium down payments, such as this, to the insurer he represented and on behalf of the insured he also represented in the transaction. Christopher Camus of Pensacola, Florida, went to the Respondent's Agency to purchase insurance for a 1983 Oldsmobile Cutlass. He went to the agency on August 25, 1993, and the Respondent placed his coverage with Security. The total premium was quoted as $274.00. Mr. Camus signed an application on that date and paid the full amount to the Respondent. The Respondent failed to forward the application and premium to the insurance carrier, and the policy of insurance was not actually issued until November 30, 1993. Mr. Camus was thus left without coverage for approximately two months. He made repeated telephone calls to the Agency to no avail. Agency personnel maintained that the problem was occurring with the insurance company itself and was not the fault of the Respondent's Agency. The Respondent deposited Mr. Camus' check in August of 1993, but the application for his insurance was never received by Security until December 23, 1993. The Respondent thus did not promptly and appropriately handle the insurance premium funds in question and forward the application so as to promptly bind the coverage for the customer. Indeed, it is noteworthy that this company revoked the Respondent's authority to bind coverage for customers on March 14, 1994 due to an excessive amount of such late submissions of insurance applications and premiums. In 1993, of the 1,299 applications taken by the Respondent and his Agency, only 58 percent reached the insurer's office within the required time period. In summary, the evidence presented in this case indicates that the Respondent engaged in the general business practice of selling ancillary products to insureds without truly obtaining "informed consent" of those insureds. The pattern running through the testimony of the above-described witnesses, none of whom were shown to have any motive to falsify their testimony, was that, although they signed the various disclosures on the insurance underwriting or binding documents, indicating that they understood that the ancillary products were optional, were not insurance, and were not required to be purchased. They did not receive any significant explanation of the optional nature of those products concerning the advisability of their purchase (particularly as to those customers who had AAA coverage), nor the extra cost attributable to those products. Each insured witness consistently maintained that he or she had not read the numerous documents presented to them. Certainly, they should have, in an abundance of caution, read the documents and attempted to understand them. Their failure to do so, however, does not absolve the Respondent of his duty to specifically explain to each customer the exact nature of the coverage being offered, whether or not it was legally optional, particularly, as to those customers who stated definitely that they only wanted the bare minimum coverage required by law, and the fact that it was optional at an extra cost, and was not included in the basic insurance coverage being sold. It is clear from these witnesses' testimony that none had requested motor club benefits or any other ancillary product and yet, in effect, these were automatically added to the policies involved in this proceeding in each transaction and were clearly not explained to the customers. The general business practice of the Respondent involved in the sale of the motor club and ancillary products belies the existence of "informed consent" on the part of the customers. Mr. James Self is a former agent for the Respondent, who testified regarding the Respondent's business practices. He was trained by the Respondent and worked for the Agency from August, 1993 to June, 1994. The Agency had a policy of giving telephone quotes for insurance premiums, without including the amount represented by motor club or other add-on optional products. The Agency would then add such products to the insurance package when the customer came in to purchase insurance. According to Mr. Self, any sort of explanation or disclosure of these add-on products to the customer would be merely to the effect that the insurance "quote" included towing or rental. There was little else explained about it. In many of the situations with witnesses in this case, the insureds only requested the minimum coverage and, therefore, no optional or ancillary products were justified without full explanation to the customer. Mr. Self described how the Respondent specifically trained him in "clubbing", which meant adding motor club coverage to the insurance coverage requested by customers. The Respondent's own testimony shows the economic necessity for the pervasive sale of such motor club benefits to as many customers as possible, when he stated: It's really the only way to exist . . . Q: So you're telling me that the only way for you to exist is to sell motor clubs? A: Financially, it's -- really for most businesses in this market it's the only way to be able to survive. Transcript, page 175. The Respondent further acknowledged the pecuniary interest he had in selling travel or motor clubs since he described his average commission as being 90 percent of the fee for writing that coverage, which is higher than the commission on insurance products. Moreover, he recovered all of that money from the down payment the customers were making, supposedly for their insurance coverages. Therefore, his incentive was multiplied because he was getting the high commission percentage rate, plus he was getting all of it in cash on the initial portion of the transaction, the down payment. Mr. Self also explained that salesmen would never tell the insured exactly how much the motor club cost. On occasions, when Mr. Self would try to partially disclose the motor club, the Respondent would tell him to "hurry up", that he was taking too much time in effecting the transaction. It was Mr. Self's experience that approximately 99 percent of the customers coming into the Agency for insurance left having purchased motor club benefits. Eventually, Mr. Self was terminated because he did not sell enough motor club products. The overall gravamen of his testimony shows that he attempted to make some disclosure or explanation of the motor club and other ancillary products but was discouraged from doing so by the Respondent, with the implication being that this ultimately resulted in his termination from employment with the Respondent's Agency. The evidence thus establishes that, for the most part, the insureds in question did not really know what "minimum coverage" or "full coverage" really consisted of when they came in to purchase such insurance. In making this lay description of the coverage they desired, they then relied on the agent, the Respondent or his employees, to sell them coverage which comported with their wishes and needs, since they were not schooled in the insurance business and related laws themselves. Since they were not so schooled, they almost totally relied on any explanation given to them by the Respondent or his agents or employees. In spite of the signing of the disclosure documents referenced in the above Findings of Fact, the reality of the situation, as a continuing, consistent pattern throughout the testimony adduced from these insureds, and from Mr. Self, reveals that no regular business practice of obtaining an informed consent from customers, such as these, was carried out by the Respondent.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is RECOMMENDED that the Respondent, Daniel Lee Alison, be found guilty of the violations set forth and discussed above, that his license as an insurance agent in the State of Florida be revoked for a period of two years and that he be ordered to pay a fine in the amount of $9,000.00, within a time to be set by the Department. DONE AND ENTERED this 2nd day of October, 1996, in Tallahassee, Florida. P. MICHAEL RUFF Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of October, 1996. APPENDIX TO RECOMMENDED ORDER CASE NO. 95-2690 Petitioner's Proposed Findings of Fact 1-35. Accepted, except to the extent that they do not comport with the Administrative Law Judge's findings of fact on these subject matters to which they are subordinate. Rejected, as being subordinate to the Administrative Law Judge's findings of fact on this subject matter. Rejected, as being subordinate to the Administrative Law Judge's findings of fact on this subject matter and because of the editorial comment. Accepted, in part, but subordinate to the Administrative Law Judge's findings of fact on this subject matter and rejected, as to the editorial comment. 39-40. Rejected, as being subordinate to the Administrative Law Judge's findings of fact on this subject matter. 41-44. Accepted, in part, but rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter. Respondent's Proposed Findings of Fact 1-13. Accepted, but not as materially dispositive of the issues presented for resolution. Accepted, in part, but rejected, as subordinate and somewhat contrary to the Administrative Law Judge's findings of fact on this subject matter. Accepted, but not itself materially dispositive to the issues presented for resolution in this case. 16-17. Accepted. 18. Rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter. 19-25. Accepted, but not themselves materially dispositive to the resolution of the issues presented to the Administrative Law Judge. 26. Accepted. 27-29. Rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter. 30-32. Accepted. 33-36. Accepted, in part, but rejected, as to the overall material import and as subordinate to the Administrative Law Judge's findings of fact on this subject matter. 37-43. Rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter and to some extent, as immaterial. 44. Accepted, as technically correct, but witness Self, a former employee and a witness who purchased insurance, did establish in his testimony that purchase of an ancillary product was a pre-condition to premium financing by Agency policy. 45-47. Accepted, in part, but otherwise rejected, as subordinate to the Administrative Law Judge's findings of fact on this subject matter. 48. Accepted. 49-52. Accepted, but not in and of themselves dispositive of the material issues presented concerning this witness' transaction(s). Rejected, as immaterial. COPIES FURNISHED: Michael K. McCormick, Esquire Department of Insurance Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0300 Charles J. Grimsley, Esquire Charles J. Grimsley & Associates, P.A. 1880 Brickell Avenue Miami, Florida 33129 Bill Nelson Treasurer and Insurance Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Dan Sumner, Acting General Counsel Department of Insurance and Treasurer The Capitol, PL-11 Tallahassee, Florida 32399-0300
The Issue The issues in this case are whether Respondents violated Subsections 626.611(7), 626.611(9), 626.611(10), and 626.611(13), Florida Statutes (2008),1 and, if so, what discipline should be imposed.
Findings Of Fact At all times material to the allegations in the Administrative Complaints, Mr. Holliday, III, was a licensed Florida surplus lines (1-20) agent, a life and health (2-18) agent, a general lines (property and casualty) (2-20) agent, an independent adjuster (5-20), and agent in charge at International Brokerage and Surplus Lines, Inc. (IBSL). Mr. Holliday, III, had been associated with IBSL since its inception in 1993. At all times material to the allegations in the Administrative Complaint, Mr. Holliday, IV, was licensed in Florida as a general lines (2-20) agent. At all times material to the allegations in the Administrative Complaint, Mr. Holliday, III, and Mr. Holliday, IV, were officers and owners of IBSL. Most recently, Mr. Holliday, III, was the secretary of IBSL. He handled the underwriting and risk placement for the agency. From approximately March 1993 to April 2009, Mr. Holliday, IV, was the president of IBSL. As president of IBSL, Mr. Holliday, IV's, duties included signing agreements which established IBSL's business function as that of a general managing agent and signing agreements which empowered IBSL to collect premiums on behalf of insureds. IBSL ceased doing business on May 1, 2009. In the insurance industry, a common method of procuring insurance involves a retail producer, a wholesale broker, and a program manager. A customer desiring insurance contacts its local insurance agent, which is known as a retail producer, and applies for insurance. The retail producer has a producer agreement with a wholesale broker, who has a producer agreement with a program manager. The program manager represents insurance companies. The retail producer sends the customer's application to the wholesale broker, and the wholesale broker contacts the program manager and forwards the application to the program manager. The program manager will provide a quote if the insurance company is willing to insure the customer. The quote is passed back to the customer via the wholesale broker and the retail producer. If the customer decides to take the insurance, the program manager will issue a binder to the wholesale broker, who will submit the binder to the retail producer. The wholesale broker will issue an invoice for the premium to the retail producer. The program manager pays a commission to the wholesale broker pursuant to its producer agreement with the wholesale broker, and the wholesale broker pays a commission to the retail producer pursuant to its producer agreement with the retail producer. When the retail producer sends the premium payment to the wholesale broker, the retail producer will deduct its commission. The wholesale broker sends the premium amount to the program manager less the wholesale broker's commission. If the customer is unable to pay the entire amount of the premium, part of the premium may be financed through a premium finance company. The premium finance company may pay the premium to the retail producer or to the wholesale broker. International Transportation & Marine Agency, Inc. (ITMA), is a program manager and is engaged in the business of selling, brokering, and servicing certain lines of policies of insurance written or issued by insurance companies. ITMA is a program manager for Pennsylvania Manufacturers Insurance Association (Pennsylvania Manufacturers), an insurance company. IBSL, a wholesale broker, entered into a producer's contract with ITMA on January 4, 2008. Wimberly Agency, Incorporated (Wimberly), is a retail producer located in Ringgold, Louisiana. In 2008, Wimberly had a producer's agreement with IBSL. Carla Jinks (Ms. Jinks) is the administrative manager for Wimberly. In October 2008, R.L. Carter Trucking (Carter) was a customer of Wimberly and applied for motor truck cargo insurance with Wimberly. Wimberly submitted an application to IBSL and requested that coverage be bound effective October 28, 2008, for Carter. IBSL contacted ITMA and received a binder for a policy with Pennsylvania Manufacturers. The cost of the policy was $9,500.00 plus a policy fee of $135.00 for a total of $9,635.00. Carter paid Wimberly $2,500.00 as a down payment and financed the remainder of the cost with Southern Premium Finance, LLC, who paid the financed portion directly to Wimberly. Wimberly deducted a ten percent commission of $950.00 and sent the remainder, $8,635.00 to IBSL. The check was deposited to IBSL's clearing account. On January 22, 2009, Carter contacted Ms. Jinks and advised that he had received a notice of cancellation effective January 22, 2009, due to non-payment to Pennsylvania Manufacturers. On the same date, Ms. Jinks received a facsimile transmission from IBSL, attaching the notice of cancellation and stating: "There was some confusion with the payment we send [sic] and we are working on getting it reinstated." There were some e-mails between Wimberly and Mr. Holliday, III, concerning the placement of coverage with another company. IBSL was unable to place coverage for Carter. By e-mail dated January 30, 2009, Ms. Jinks advised Mr. Holliday, III, that she had been able to place coverage for Carter and requested a return of the premium paid on a pro rata basis. She advised Mr. Holliday, III, that the return premium should be $7,651.35. By e-mail dated January 30, 2009, Mr. Holliday, III, stated: We will tender the return as quickly as it is processed by accounting. I do sorely regret the loss of this account, and our inability to get the Travelers quote agreed on a timely basis. By February 19, 2009, Wimberly had not received the return premium from IBSL. Ms. Jinks sent an e-mail to Mr. Holliday, III, on February 19, 2009, asking that the return premium be rushed to Wimberly so that it could be used to pay for the replacement policy. As of the date of Ms. Jinks' deposition on November 16, 2009, neither Mr. Holliday, III; Mr. Holliday, IV; nor IBSL had given the return premium to Wimberly. K.V. Carrier Services, Inc. (K.V.), is a retail producer located in Medley, Florida. In 2007, K.V. and IBSL entered into a business arrangement with IBSL. Under the arrangement, K.V. was the retailer, IBSL was the wholesale broker, ITMA was the program manager, and Pennsylvania Manufacturers was the insurance company. K.V. collected the down payments for the policy premiums from its customers and sent the down payments to IBSL. The remainder of the premiums were financed by financing companies, who sent the remainder of the premiums to IBSL. IBSL was supposed to send the monies paid for the premiums to ITMA. The following customers made down payments to K.V. and financed the remainder of their premiums with a financing company. E & E Trucking Service OD Transport, Inc. Fermin Balzaldua Eduardo Bravo Carlos Ramirez Edwin Bello Janet Rodriguez UTL, Inc. Prestige Transport USA JNL Transportation, Inc. Valdir Santos DJ Express PL Fast Carrier Ysis Transport K.V. sent the down payments for these customers to IBSL. The financing company sent the remainder of the premiums for these customers to IBSL. The total amount of premiums sent to IBSL for these customers was $19,768.45. IBSL did not send the premium payments for these customers to ITMA. The policies for these customers were cancelled for non-payment. K.V. found another company that was willing to insure K.V.'s customers. K.V. paid the down payments for the new policies from its own funds, hoping that IBSL would repay the finance company with any unearned premiums that would be returned to IBSL as a result of the cancellations. ITMA sent an invoice called an Account Current Statement to IBSL for the business conducted in the month of November 2008. The total amount owed to ITMA was listed as $55,116.32. The invoice included the premium for the policy issued for Carter, less IBSL's commission. The premiums for the policies issued to Eduardo Bravo; Fermin Bazaldua; JNL Transportation, Inc.; Janet Rodriguez; OD Transport, Inc.; and Prestige Transport USA were also included in the Account Current Statement for the business that IBSL conducted in November. IBSL was required to pay the $55,116.32 by December 15, 2008, but did not do so. ITMA received a check from IBSL dated December 31, 2008, for $25,000.00. A notation on the check indicated that it was a partial payment for the November business. The check was unallocated, meaning IBSL did not state to which premiums the partial payment should be applied. Mr. Holliday, III, claimed that IBSL had sent a bordereaux along with the check showing to which policies the payment applied. Mr. Holliday, III's, testimony is not credited. Donald Kaitz (Mr. Kaitz), the president of ITMA, communicated with one of the Respondents, who advised Mr. Kaitz that he needed another week or so to collect some premiums from his retail producers. On January 12, 2009, ITMA received a telephone call from IBSL, stating that IBSL could not pay the balance owed to ITMA and that ITMA should take whatever action it felt necessary. As a result of the communication from IBSL, ITMA issued notices of policy cancellation on all applicable policies listed in the Account Current Statement which was to be paid on December 15, 2008. Copies of the cancellation notices were sent to the insureds and IBSL. ITMA issued pro rata return premiums based on the number of days that each policy had been in effect. The return premiums were sent to IBSL by a check for $18,790.06. Additionally, ITMA sent IBSL a list of the policies that had been cancelled, showing the earned premiums which had been deducted from the $25,000.00. IBSL received and retained a net of $30,116.32, which was owed to ITMA. This amount is derived by deducting the $25,000.00, which IBSL sent to ITMA, from the $55,116.32, which was owed to ITMA. By letter dated April 2, 2009, IBSL sent K.V. a check for $524.80, which stated: We have totaled all amounts owing to IBSL by KV Carrier Service, and we have totaled all pro rated commissions owing by IBSL to KV Carrier Services for the benefit of your clients and have included our check # 1025 in the final amount of $524.80 to settle the account. All net unearned premiums for other than unearned commissions which are funded herein you must contact the insurance carriers involved and request payment under the provisions of Florida Statutes #627.7283. Federal Motor Carriers Risk Retention Group, Incorporated (FMC), is an insurance company, which sells commercial auto liability insurance, specifically targeted to intermediate and long-haul trucking companies. CBIP Management, Incorporated (CBIP), is a managing general underwriter for FMC. FMC had an agreement effective June 1, 2008, with IBSL, allowing IBSL to act as a general agent for FMC. As a general agent for FMC, IBSL was given the authority to accept risk on behalf of FMC. IBSL was given a fiduciary responsibility to accept insurance applications, provide quotes, and bind coverage. Once IBSL binds a policy for FMC, FMC issues a policy and is responsible for the risk. IBSL would receive the down payment from the retail agency, and, in most cases, the finance company would pay the balance of the premium directly to IBSL. The agreement between FMC and IBSL provided that IBSL was to provide FMC a monthly report of premiums billed and collected, less the agreed commission. The report was due by the 15th of the month following the reported month. In turn, FMC was to issue a statement for the balance due, and IBSL was required to pay the balance due within 15 days of the mailing of the statement following the month in which the policy was written. In August 2008, FMC began to notice that IBSL was selling premiums lower than FMC's rating guidelines. IBSL owed FMC approximately $186,000.00, which was due on August 15, 2008. IBSL sent FMC a check, which was returned for insufficient funds. FMC contacted IBSL and was assured that the check was returned due to a clerical error and an error by the bank. Assurances were given to FMC that funds would be transferred to FMC the following day; however, FMC did not receive payment until five days later. In September 2008, Joseph Valuntas (Mr. Valuntas), the chief operating officer for FMC, paid a visit to Mr. Holliday, III, and Mr. Holliday, IV. Mr. Valuntas expressed his concerns about the delay in receiving payment in August. He also pointed out that IBSL had taken some risks which were not rated properly and that there were some risks in which IBSL was not following the underwriting guidelines. After his visit with the Hollidays, Mr. Valuntas wrote a letter to IBSL, restricting IBSL to writing in Florida and limiting the amount of gross written premium to no more than $100,000.00 per month. IBSL did not adhere to Mr. Valuntas' instructions. An example of IBSL's conduct involved the writing of a policy for Miami Sunshine Transfer, which is a risk category designated as public delivery. Public delivery was not a standard that FMC insured and, as such, was not covered by FMC's reinsurance. Beginning on or about September 21, 2008, FMC began getting complaints from policyholders and retail agents about cancellations of policies that had been paid timely and in full. Although the retail agents had paid the premiums in full to IBSL, IBSL had not forwarded the premiums to FMC. By October 2008, IBSL owed FMC approximately $120,000.00 in past due premiums. FMC officially terminated the IBSL agreement in October 2008. IBSL sued FMC for breach of contract. On December 22, 2008, FMC received a check from IBSL in the amount of $25,122.80, but IBSL did not specify what premiums were being paid by the check. From February 1, 2006, through November 20, 2008, IBSL had a business relationship with Markel International Insurance Company Limited (Markel), an entity for which IBSL was writing insurance. IBSL was a coverholder for Markel, meaning that IBSL could produce insurance business for Markel and had the authority to collect and process premiums and bind insurance on Markel's behalf. Once the premiums were collected by IBSL, they were to be reported to Markel, and, within a maximum of 45 days, IBSL was to remit to Markel the aggregate gross written premiums less IBSL's commission. T. Scott Garner (Mr. Garner) is an expert auditor and financial analyst who currently works for Northshore International Insurance Services (Northshore), an insurance and reinsurance consulting firm. Markel retained Mr. Garner to determine the amount of money that IBSL should have sent to Markel for business transacted by IBSL for the period between February 1, 2006, and November 20, 2008. In doing his analysis, Mr. Garner used the bordereauxs which IBSL prepared and provided to Markel. Bordereauxs are monthly billing reports or accounts receivable reports. Mr. Garner also used data from Omni, which is a software system that was used by IBSL. Mr. Garner used the following procedure to determine what IBSL owed Markel. He determined how much risk IBSL wrote during the time period, that is, the gross written premium. He identified the amount of money that Markel had received from IBSL for the time period. Next he determined the amount that should have been received from IBSL, the gross written premiums minus IBSL's commissions. He compared what should have been remitted to Markel with the amount that was actually received by Markel. Based on his analysis, Mr. Garner calculated that IBSL owed Markel $1,208,656.61. Mr. Garner's analysis is credited. Respondent submitted a FSLSO Compliance Review Summary, which was done by the Florida Surplus Lines Office. At the final hearing, Mr. Holliday, III, viewed the report to mean that Markel was incorrect in the amount of money that was owed to it by IBSL. The report does not indicate that the policies on which the premium variances were noted were policies issued by Markel. Additionally, in his review, Mr. Garner eliminated duplicate transactions in determining the amount owed to Markel. The report did give a long list of policies, which should have been reported to Florida Surplus Lines Office, but IBSL had failed to report the policies.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that Respondents committed the violations alleged in Counts I through V of the Administrative Complaints, dismissing Count VI of the Administrative Complaints, and revoking the licenses of Respondents. DONE AND ENTERED this 15th day of October, 2010, in Tallahassee, Leon County, Florida. S SUSAN B. HARRELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of October, 2010.
Findings Of Fact Respondent, Frank Alvin Lashman (Lashman), was at all times material hereto a licensed insurance agent in the State of Florida. Lashman is qualified for licensure and/or licensed as an Ordinary Life, including Health Agent, Dental Health Care Service Contract Salesman, and Legal Expense Insurance Agent. At all times material hereto, all funds received by Lashman from consumers or on behalf of consumers representing premiums or monies for insurance policies were trust funds received in a fiduciary capacity. Such funds were to be paid over to the insurer, insured, or other persons entitled thereto, in the regular course of business. On or about July 1, 1985, Lashman, as a general agent for American Integrity Insurance Company (American), solicited Martha Lunsford to purchase a medicare supplement insurance policy. On July 31 1985, Lashman secured an application for the subject insurance policy from Ms. Lunsford, and delivered to her a "certification" document which provided: That, I am a licensed agent of this insurance company and have given a company receipt for an initial premium in the amount of $189.20 which has been paid to me by ( ) check (x) cash ( ) money order. The proof establishes that Lashman did not receive the initial quarterly premium of $189.20 from Ms. Lunsford, or give a company receipt for any monies. Rather, Lashman collected $25.00 on July 3, 1985 with the intention of submitting the application to American once he had collected the entire initial premium. Over the ensuing months Lashman visited Ms. Lunsford on a number of occasions to collect the balance due on the initial premium. While the proof is uncontroverted that the full premium of $189.20 was never paid, there is disagreement as to the total amount Ms. Lunsford paid to Lashman. The premium installments Ms. Lunsford paid to Lashman were in cash. Lashman kept no record of the amount or date of payment, and gave no company receipt for the monies collected. The only evidence of payment Lashman provided to Ms. Lunsford was a brief note on the back of his business cards stating the amount received. The last business card he gave to Ms. Lunsford reflects a payment of $60.00, and a balance due of $9.00. On balance, the proof establishes that Ms. Lunsford paid to Lashman $180.20 toward the initial premium of $189.20. Under the terms of Lashman's general agent's contract with American, he was: . . . authorized to solicit applications for insurance for (American), to forward these applications to (American) for approval or rejection, and to collect only the initial premium payment due on such applications. While American averred that Lashman's contract did not permit him to collect the initial premium payment in installments, there is no such prohibition contained in the agreement or proof that Lashman was otherwise noticed of such a prohibition. Accordingly, there is no proof that Lashman committed any offense by collecting the premium in installments, by failing to remit any monies to American until he was in receipt of the full initial premium, or by failing to submit the application to American until the initial premium was paid in full. Although Lashman is free of wrongdoing in the manner in which he strove to collect the initial premium and his delay in submitting the application to American, the proof does establish that Lashman breached a fiduciary relationship by failing to safeguard and account for the monies collected. On November 22, 1985, Ms. Lunsford filed a criminal complaint against Lashman for his failure to secure the subject insurance policy. Incident to that complaint, Lashman was interviewed by a criminal investigator with the State Attorney's Office and served with a subpoena duces tecum which required the production of: ANY AND ALL RECORDS PERTAINING TO THE INSURANCE POLICY SOLD TO . . . MARTHA D. LUNSFORD ON JULY 3, 1985 BY FRANK LASHMAN, ACTING AS AGENT FOR AMERICAN INTEGRITY INSURANCE COMPANY. During the course of his interview, Lashman told the investigator that he had not procured the policy because the initial premium had not yet been paid in full. Lashman further stated that although he kept no records of the payments made, all funds received from Ms. Lunsford had been deposited in his account with Florida National Bank. As of December 20, 1985, Lashman's account with Florida National Bank carried a balance of $5.81. At hearing Lashman averred that he had erred when he advised the investigator that he had deposited the monies he received from Ms. Lunsford in his account with Florida National Bank. According to Lashman, he put the money, as he collected it, into an envelope, which he kept in the file with Ms. Lunsford's insurance papers. Lashman's explanation for not exhibiting the envelope and money to the investigator when questioned was ". . . he didn't ask me for that." Lashman's explanation is inherently improbable and unworthy of belief. On January 12, 1986, the investigator advised Lashman's attorney that a warrant had been issued for Lashman's arrest on the complaint filed by Ms. Lunsford. On his counsel's advice, Lashman sent Ms. Lunsford a cashier's check in the sum of $149.00, as a refund of premiums paid. Ms. Lunsford did not negotiate the check, nor was it of a sufficient sum to represent a return of all premiums paid by Ms. Lunsford.
Findings Of Fact At all times pertinent to this hearing, Petitioner held a license issued by the Florida Department of Insurance as a general lines insurance agent. On or about April 3, 1979, Steven B. Atkinson entered the Okeechobee Insurance Agency in West Palm Beach, Florida, from whom he had purchased his auto insurance for approximately three years. His intention at this time was to purchase only that insurance necessary to procure the license tags for his automobile, a seven-year-old Vega. He told the person he dealt with at that time at the insurance agency that this was all he wanted. He did not ask for auto club membership, did not need it, and did not want it. He asked only for what he needed to get his tags. However, he was told by a representative of the agency that he needed not only "PIP" insurance, but also auto club membership and accidental death and dismemberment insurance. Of the $144 premium, $31 was for the required "PIP" coverage, $75 was for auto club membership (not required), and $38 was for accidental death and dismemberment (AD&D) (not required). Representatives of the agency told him that he needed all three to get the tags and, though he knew what he was getting and knew he was purchasing all three, he agreed because he was told by the agency representatives that he needed to have all three in order to get his tags. 3 Diane Phillipy McDonald contacted the Okeechobee Insurance Agency in April, 1979, because she had heard on the radio that their prices were inexpensive. All she wanted was personal injury protection (PIP), which was what she thought the law required to get tags on her automobile. When she first called the agency and asked how much the coverage she wanted would be, she was told she could pay a percentage down and finance the rest. When she entered the agency, she was waited on by a man whose name she cannot remember. However, she did not ask for auto club coverage or accidental death and dismemberment coverage, nor did those subjects ever come up in the conversation. She asked only for PIP, and she paid a $50 deposit on her coverage. In return for her deposit, she was given a slip of paper that reflected that she had purchased PIP coverage. She was not told she was charged for auto club membership or accidental death and dismemberment. The forms that she signed, including those which reflect a premium for all three coverages in the total amount of $137, bear her signature, and though she admits signing the papers, she denies having read them or having them explained to her before she signed them. In fact, she cannot recall whether they were even filled out when she signed them. In regard to the papers, the premium finance agreement signed by the witness on April 3, 1979, reflects in the breakdown of coverage total premium of $137. However, immediately below, the total cash premium is listed as $158, $21 more than the total of the individual premiums for the three coverages, and the financing charge is based on that amount1 less the down payment. Marvin W. Niemi purchased his auto insurance from the Okeechobee Insurance Agency in March, 1979, after he heard their advertisement on the radio and went in to get the insurance required by the State in order to get his license tags. When he entered the agency, he asked personnel there for the minimum insurance required to qualify for tags because he was strapped for money at the time and could not afford anything else. He definitely did not want auto club membership. In fact, discussion of that did not even arise, nor did he want the accidental death policy. When he left the agency, he thought he was only getting what he had asked for; to wit, the PIP minimum coverage. All the forms that he signed were blank when he signed them. This application process took place very quickly during his lunch hour from work. He admits giving his son's (David Robert) name as the beneficiary on his insurance, but did not realize at the time that he was purchasing coverage other than the minimum coverage required. His rationale for giving his son's name as beneficiary was that agency personnel asked and the witness felt if there was any money involved, it should go to his son. In fact, Mr. Niemi was sold not only the PIP, but membership in an auto club and PIP coverage with an $8,000 deductible. Again, the total premium was $137, when the actual premium for the coverage he asked for was only $24. Frank Johnson purchased his insurance from Okeechobee Insurance Agency in April, 1979, because he had heard and seen their advertisement on radio and television and it appeared to be reasonable. He wanted only PIP coverage as required by law sufficient to get his license tags. When he entered the agency, he spoke with a man whose name he does not know, who after consulting the books came up with the premium for the coverage to be purchased. During this meeting, the question of motor club or AD&D coverage was not mentioned. His signature does not appear on the statement of understanding, which outlines the coverage and the premium therefor. In this case, because Mr. Johnson had had some prior traffic tickets, his total premium came to $243. His coverage, however, included bodily injury liability, property damage liability, PIP, and auto club. After paying a $50 down payment, he made two additional payments which totaled approximately $50, but thereafter failed to make any additional payments. On August 1, 1980, Marguerite and Steven von Poppel entered the Federal Insurance Agency in Lake Worth, Florida, to purchase their automobile insurance coverage. They purchased policies which included bodily injury and property damage liability, PIP coverage, and comprehensive and collision coverage. The PIP coverage had a deductible of $8,000, and the comprehensive and collision coverage both had $200 deductibles. Mrs. von Poppel indicates that it was not their intention to have such large deductibles on their coverage. In any event, on that day, they gave a check for down payment in the amount of $320 and advised the employee of the agency that upon billing for the balance due of the $915 total premium, they would send the check. Neither Mrs. von Poppel nor Mr. von Poppel desired to finance the balance due of $595, and Mrs. von Poppel did not affix her signature to an application for premium financing with Devco Premium Finance Company dated the same day which bears the signature of Kevin D. Cox as agent. This premium finance agreement lists a cash premium of $966, as opposed to $915. The receipt given to the von Poppels initially reflects a down payment of $320, which is consistent with the receipt, and an amount financed of $646, as opposed to $595, which would have been the balance due under the cash payment intended and desired by the von Poppels. Somewhat later, Mrs. von Poppel received a premium payment booklet from Devco in the mail. When she received it, she immediately went to the Federal Insurance Agency, told them she did not desire to finance the payments, and that day1 September 3, 1980, gave them a check in the amount of $595, which was the balance due on their insurance coverage. This check was subsequently deposited to the account of Federal Insurance Agency and was cashed. This did not end the von Poppel saga, however, as subsequently the von Poppels were billed for an additional amount of $116.18, which reflects the interest on the amount ostensibly financed. When the von Poppels received this statement, they contacted the Federal Insurance Agency and were told that there was some mistake and that the matter would be taken care of. They therefore did not make any further payments, except a total payment of $20, which they were told was still owing. This $20 payment was made on May 29, 1981, after their insurance had been cancelled for nonpayment of the balance due on the finance agreement. The policy was, however, subsequently reinstated, back-dated to the date of cancellation, after the von Poppels complained. Their complaints, however, did nothing to forestall a series of dunning letters from a collection agency to which Devco had referred the von Poppels' account. It is obvious, therefore, that Federal Insurance Agency did not notify Devco of the fact that the amount due and payable had been paid, and did not clear the von Poppels with Devco or with the collection agency thereafter. As a result, the von Poppels filed a complaint with the Insurance Commissioner's office. That terminated their difficulty on this policy. On September 15, 1980, Federal Insurance Agency submitted a check in the amount $595, the amount paid to them by the von Poppels in full settlement of their account, to Devco. There appears to have been no additional letter of explanation, and though Devco credited this amount to the von Poppel account, it did not know to cancel the finance charges since the von Poppels' decline to finance their premium. Of the total amount of the von Poppel premium, the majority, $636, was attributable to the basic insurance in the amount of $10,000-$20,000 liability written by American Risk Assurance Company of Miami, Florida. The supplemental liability carrying a premium of $180 and covering $40,000-$80,000 liability was written by Hull and Company, Inc., out of Fort Lauderdale for Empire Fire and Marine Insurance Company. The third portion of the coverage carrying a charged premium in the amount of $150 covered the AD&D covered by Reliance Standard Life Insurance Company (RSLIC) of Philadelphia, Pennsylvania. This coverage, in the principal sum of $10,000 in the case of Mr. von Poppel and $5,000 in the case of Mrs. von Poppel, was included without the knowledge or the cosnet of the von Poppels. The policies, numbered 10753 R and 10754 R, were never delivered to the von Poppels as, according to an officer of RSLIC, they should have been, but are in the files of the Federal Insurance Agency. Further, the von Poppels were overcharged for the coverage. Respondent, however, did not remit any of the premium to Reliance Standard Life Insurance Company Instead, on August 1, 1980, the same day the von Poppels were in to purchase their insurance, he issued a sight draft drawn on Devco Premium Finance Company to Reliance Standard Life in the amount of $150. Reliance Standard Life was not the same company as Reliance Standard Life Insurance Company, was not controlled by Reliance Standard Life Insurance Company, and in fact had no relation to Reliance Standard Life Insurance Company. Reliance Standard Life was a corporation duly organized and existing under the laws of the State of Florida in which Kevin D. Cox was president and Howard I. Vogel was vice president-secretary. Of the $150 premium, 90 percent was retained by Respondent or his company as commission and 10 percent was transmitted to Nation Motor Club along with a 10 percent commission on policies written for other individuals. Nation Motor Club would then transmit the bona fide premium of 24 cents per $1,000 coverage to RSLIC. More than a year later, on October 16, 1981, Federal Insurance Agency reimbursed the von Poppels with a check for $42.50, representing the unearned portion of the unordered AD&D coverage. Clifford A. Ragsdale went to the Federal Insurance Agency in Lake Worth on April 19, 1982, to purchase his auto insurance because after calling several agencies by phone and advising them of the coverage he wanted, this was the least expensive. To do this, he would read off the coverage from his old policy and get a quote for the identical coverage. After getting this agency's quote, he went to the office where, after talking with two different ladies to whom he described the coverage he desired, he got to the person with whom he had talked on the phone and read his current coverage, and who already had some of the paperwork prepared. During all his discussions with the agency's employees on the phone and in person, he did not speak of, request, or desire auto club membership. He has been a member of AAA since 1977, and his membership there covers all the contingencies he is concerned with. Additional auto club membership in another club would be redundant. He gave the agency representative a check for $247 as a down payment and agreed to finance the balance due through Premium Service Company. Though he was given a receipt for the $247 deposit, the premium finance agreement he signed that day at the Federal Insurance Agency reflected a cash down payment of only $147, thus falsely inflating the balance due to be paid by the client. The $100 difference was refunded to Mr. Ragsdale by Federal Insurance Agency on October 25, 1982, some six months later after he complained to the Insurance Commissioner's office and was told that the $100 difference was for membership in a motor club that he did not desire or agree to. As late as December 29, 1982, over eight months later, the agency had still not remitted the $147 to Premium Service Company, who then added this deposit already paid by the client back to the account balance. Mr. Ragsdale did not read all the documents he signed at the agency, and he never received the policy he ordered. He was told he was signing an application for insurance and signed several instruments in blank at the request of the personnel at Federal Insurance Agency. He was told they would later fill in what wad needed. Respondent was the general lines agent of record for the Okeechobee Insurance Agency, located at 1874 Okeechobee Boulevard, West Palm Beach, Florida, during March and April, 1979, and at the Federal Insurance Agency, 3551 South Military Trail, Lake Worth, Florida, during the period which included August, 1980, and April, 1982. In each agency, he had instructed his' personnel how to serve and handle customers who came to the agency requesting the lowest minimum required insurance in which the agency specialized and which the agency, through its advertising program, purported to offer. As testified to by Linda Holly, an employee of Federal Insurance Agency, and as admitted by Respondent, when a prospective customer entered the agency requesting the minimum required coverage, the agent was to ask if the customer knew what the minimum was. The agent would then explain what was required and quote a premium which included not only the minimum required insurance, but also some additional service which, depending on the time, could be AD&D, towing, motor club, or the like, none of which was required by the State of Florida. Respondent instructed his employees to do this on the rationale that the premiums and commissions on the minimum required insurance were so low that the agency could not make sufficient profit on the sale of it, alone, to stay in business.
Recommendation Based on the foregoing, it is RECOMMENDED: That Respondent's license as a general lines agent in the State of Florida be revoked. RECOMMENDED this 3rd day of August, 1983, in Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings Department of Administration 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of August, 1983 COPIES FURNISHED: Daniel Y. Sumner, Esquire William W. Tharpe, Jr., Esquire Department of Insurance Legal Division 413-B Larson Building Tallahassee, Florida 32301 Mr. Kevin Denis Cox 1483 S.W. 25th Way Deerfield Beach, Florida 33441 The Honorable Bill Gunter State Treasurer and Insurance Commissioner The Capitol Tallahassee, Florida 32301
The Issue Whether Respondents committed the violations alleged in the Administrative Complaints, and, if so, what penalties should be imposed on either or both of them.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: Respondent, Eduardo Enrique Mendez ("Mendez"), at all times material to this matter, was a licensed insurance agent subject to the regulatory jurisdiction of the Petitioner. Petitioner issued Mendez license number A176292. Mendez is licensed as a 2-18 life and health agent and a 2-20 general lines agent for the sale of property and casualty. Mendez first started in the insurance business in 1969 while in Panamá. He came to the United States in 1988. In South Florida, he has been known as "Mr. Panama" in the insurance industry for approximately 20 years. Respondent, Insurance Resources of the Americas, Inc. ("Insurance Resources"), is and was, at all times material in this matter, a corporation registered as a Florida insurance agent subject to the regulatory jurisdiction of Petitioner, having been issued license number R054007. Mendez is the corporation's owner and president. Insurance Resources typically handles all kinds of property and casualty insurance, but for approximately the last six years has specialized in the used car dealer business by providing bonds for the car dealers to open their operation. Bass Underwriters ("Bass") is a managing general agent which works with insurance agents who purchase insurance for their customers. Bass has no direct relationship with the customers only with the retail agent who is responsible for collecting the premium. On January 22, 2003, Insurance Resources, as producer, and Bass signed a producer agreement which allowed Insurance Resources to sell insurance through Bass or certain carriers that Bass obtains as a wholesaler. Insurance Resources received commissions as compensation under the agreement. The agreement contained a provision which guaranteed the collection of additional premiums that might arise as a result of an audit of the insurance customers. The provision provided in relevant part: Producer shall be liable to Bass Underwriters, Inc. for the full amount of premium, fees and applicable sum taxes, less commission, including additional and/or adjustable premiums developed under audits or applicable rating plan on every insurance contract placed by Producer through Bass Underwriters, Inc. Producer shall remit Twenty Five Percent (25%) of the premium upon binding. The full amount of premium, fees and applicable state taxes, less commission is due to Bass Underwriters, Inc. not later than the 15th day of the first (1st) month after the effective date of such contract, audit, rating plan, or other adjustment. During the term of the producer agreement, three policies were issued that Bass determined additional premiums were owed by Insurance Resources. On June 29, 2005, Bass notified Insurance Resources by invoice that an additional premium was owed for the insured, L. Boulevard Café, in the amount of $6,955.00. L. Boulevard Cafe, a restaurant, obtained a Century Surety policy through Insurance Resources effective November 15, 2004. In making the application, the restaurant declared a certain amount of projected sales. The premium was based upon the total sales recorded by the customer. Century Surety did a self audit and determined that the amount of sales was significantly more than the coverage. Subsequently, the carrier went back and assessed additional premiums to make up the difference between the amount of coverage represented and the self reported amount, which totaled $6,955.00. Around August 2005, after receiving the Bass invoice with the additional premiums, Insurance Resources notified L. Boulevard Café about the invoice and explained that the additional insurance premium of $6,955.00 was owed because of the difference in the amount calculated from the audit. Mendez notified Rafael Garcia, prior owner of L. Boulevard Café, about the additional insurance premium but L. Boulevard Cafe was having financial problems. L. Boulevard Café never made the additional premium payment. On July 1, 2005, Bass notified Insurance Resources by invoice that an additional premium was owed for the insured, Winner's Circle, in the amount of $418.00. Winner's Circle obtained a XL Specialty Insurance Company policy through Insurance Resources effective May 23, 2005. An inspection was performed after the policy quote was bound and issued. The subsequent inspection concluded that the construction code of the building was different from the construction code represented on the application. The difference triggered a premium increase of $418.00. When Insurance Resources found out about the additional premium for Winner's Circle, Mendez sent an invoice explaining the increase and requesting payment. Winner's Circle refused to pay the amount because the policy was issued under a lower premium. Winner's Circle decided not to keep the policy when Respondent requested that they make payment of the additional premium amount and the balance of the premium on the policy. Payment was never made. The policy was cancelled. The account was credited and the final total owed was $160.40, which Bass became responsible for with the carrier. On July 11, 2005, Bass notified Insurance Resources by invoice that an additional premium was owed for the insured, Venecar, Inc., in the amount of $1,298.00. Venecar, a small used car dealership, obtained a Century Surety policy through Insurance Resources effective July 18, 2004. The insurance inspectors did an inspection after the policy was issued and determined that one more employee and driver than had been represented in the application existed and that employee generated a change in the rating for the premium, which Bass ultimately decided was an additional premium of $1,298.00. After Insurance Resources learned about the results of the inspection, Mendez called Bass and told Ms. Rodriguez, the accountant, that the premium increase of $1,298.00 was too high and could not be the proper rate for one driver because one driver should be around $400.00. Bass ignored Mendez's proposition. Subsequently, Mendez told Venecar about the outstanding premium amount owed and they refused to pay. Insurance Resources followed up and contacted Venecar several more times requesting the additional premium payment to no avail. Soon thereafter, Venecar closed. Mendez reported his efforts to Bass while he tried to collect the three changed premium amounts. Insurance Resources never collected the additional premium from L. Boulevard Café, Winner's Circle, or Venecar even though Mendez repeatedly sought to get the outstanding premiums from all three insured customers. Despite Respondents best efforts, they never received any of the additional premiums that accrued. Bass still expected Insurance Resources to pay the additional premiums pursuant to the producer agreement. On May 1, 2006, Bass sent Insurance Resources a statement of account. The invoice statement informed Insurance Resources that the premium due for the three different accounts totaled $8,021.39. The statement outlined the amount owed from each insured. After Bass made several demands for the three accounts, Bass submitted the account to collections and the matter ultimately ended in litigation. On November 5, 2007, a final judgment was entered against Insurance Resources in favor of Bass for the principal of $8,021.39, costs of $275.00, and prejudgment interest of $1,298.14, for a total of $9,594.53. The judgment remains unsatisfied. On February 15, 2008, Insurance Resources paid $1,919.00 on the judgment. On February 29, 2008, Insurance Resources paid $640.00 on the judgment. There is a balance owed of $7,035.53. Insurance Resources also had a relationship with AAPCO, a premium finance company that financed the balance of what an insured could not pay. Respondent Insurance Resources was an authorized entity to accept premium finance contracts utilizing AAPCO premium finance. Insurance Resources had the authority to write check drafts on AAPCO's bank account for the entire premium amount owed on a customer's insurance policy and remit it to the insurer. Respondent would then submit the policy application together with the premium down payment received from the consumer to AAPCO, which would finance the rest of the policy premium. In 2009, Insurance Resources was having problems financially. Mendez approached Mrs. Blanco, AAPCO's office manager, and told her Insurance Resources sales had dropped fifty percent. Mendez, on behalf of Insurance Resources requested to make a payment arrangement.1 Blanco refused to make any type of arrangements. She insisted that Insurance Resources pay everything up front. Mendez approached her several more times but she would not negotiate. At one point, Mendez even requested that AAPCO place the $4,000.00 in producers fees owed to Insurance Resources against the monies owed and she refused to pay Respondent the $4,000.00 In 2009, Mendez submitted three checks to AAPCO's as down payments for insureds' accounts. Check number 1347 was for $10,228.47. The check was from account number 2000034377804 Mr. Panama Inc.'s account. Check number 1342 was from the same account in the amount of $2,828.15. However, check number 159 was for $3,368.44 from Insurance Resources account number 2000040742805. Checks 1347, 1342, and 159 totaled approximately $16,425.00. The funds were intended to be premium down payments on insurance policies purchased by Florida insurance consumers. Insurance policies were issued for each of the checks for down payments for insured's accounts Insurance Resources submitted. AAPCO deposited the three checks and they were submitted to the bank for negotiation. Each check was returned for insufficient funds. AAPCO attempted to collect the money for the three checks that were returned for non-sufficient funds. AAPCO demanded payment of the funds and even called Mendez in an effort to collect the funds. Mendez admitted at hearing that the three checks bounced because he had used the funds for his business operating account since the business was doing bad financially. Insurance Resources had not yet repaid AAPCO their monies owed for the three checks. AAPCO has suffered a financial loss due to nonpayment. After nonpayment, AAPCO turned the matter over to AAPCO's legal department. After an investigation, Petitioner charged Respondents with numerous violations by separate Administrative Complaints dated April 21, 2010. The Charges: In Count I of the Administrative complaint filed against Mendez, Petitioner charges Mendez with violations of sections 626.561(1), 626.611(7), (9), (10), and 626.621(4), Florida Statutes, for failing to remit all premiums due to Bass. In Count II, Petitioner charges Mendez with violations of sections 626.561(1),626.611(7), 626.611(9) and (10), and 626.621(4) for submitting the three checks to AAPCO in payment of the policy down payment premiums that were returned for insufficient funds and not repaid after demand. In Count I of the Administrative complaint filed against Insurance Resources, Petitioner charges Insurance Resources with violation of sections 626.561(1),626.6251(5)(a),(d),(f),(j), and (k) for failing to remit all premiums due to Bass.2 In Count II Petitioner charges Insurance Resources with violations of sections 626.561(1), and 626.6251(5)(a),(d), (f),(j), and (k) for remitting three checks to AAPCO in payment of the policy down payment premiums that were returned for insufficient funds and not repaid after demand.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order that: (a) finds Respondents not guilty as charged in Count I, of the Administrative Complaints; (b) finds Respondents guilty in Count II; (c) suspends Respondent Mendez's license for 12 months with reinstatement conditioned upon repayment to AAPCO; and (d) suspends Respondent Insurance Resources' license for three months with reinstatement conditioned upon repayment to AAPCO. DONE AND ENTERED this 28th day of February, 2011, in Tallahassee, Leon County, Florida. S JUNE C. MCKINNEY 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 February, 2011.
The Issue Should discipline be imposed by Petitioner against Respondent's insurance agent licenses, life including variable annuity (2-14), and general lines (2-20), pursuant to Chapters 624 and 626, Florida Statutes (2004)?
Findings Of Fact Stipulated Facts Respondent is licensed by Petitioner as a life including variable annuity (2-14) and a general lines (2-20) insurance agent and has been issued license D029506. During the time referenced in the Administrative Complaint, Respondent was licensed as a customer representative (4-40) and a life including variable annuity (2-14) agent. The Department has jurisdiction over Respondent's insurance licenses and appointments. At all times relevant to the dates and occurrences referenced in the Administrative Complaint, Respondent was employed or affiliated with Direct General Insurance Agency, Inc., a Tennessee corporation, doing business in Florida as Florida No-Fault Insurance Agency (Cash Register). Additional Facts: At times relevant to the case Respondent held his life including variable annuity license (2-14) under an appointment with Direct Life Insurance Company. At times relevant to the case Respondent had a customer representative license (4-40) under appointment with Direct General Insurance Agency, Inc. At present Respondent continues to hold the life including variable annuity license (2-14) under an appointment with Direct General Life Insurance Company. At present he has a general lines license property and casualty license (2-20) under appointments with Direct General Insurance Company and American Bankers Insurance Company of Florida. On February 8, 2005, Brandi Dean called Cash Register to receive a quote for the purchase of basic automobile insurance coverage. She was provided a quote at that time. On February 8, 2005, Brandi Dean, went to the Cash Register to purchase basic automobile insurance coverage. She had done business with the insurance agency before. Her policy with Direct General Insurance Company was Policy No. FLCR162714439, as reflected in Petitioner's Exhibit numbered 15, with a scan cover sheet entitled "Renewal Auto." On February 8, 2005, Ms. Dean purchased automobile insurance coverage that would be effective from February 10, 2005 through February 10, 2006. She was charged $316 for property damage liability (PD) and $216 for basic injury protection (PIP) for a total of $532, with a $25 policy fee. The application information within the exhibit reflects the customer's name, signature, and initials in various places. On February 8, 2005, Ms. Dean was provided another form referred to as an Explanation of Policies, Coverages and Cost Breakdown (including non-insurance products). Petitioner's Exhibit numbered 16. She signed that document. It reflected the auto policy coverage information. It also set forth under a category referred to as optional policies, the purchase of Lloyd's Accident Medical Protection Plan for $110. Petitioner's Exhibit numbered 17 is additional information concerning the Accident Medical Protection Plan application by the customer signed by her. It details a $110 annual premium for individual coverage of $1,000 medical expense, and 125/day-365 day hospital coverage. Within that same exhibit there is a form signed by the customer titled 100% certain underwriters @ Lloyd's/London (DB/33) Accident Medical Protection Plan. This reflects $110 cost, $125 daily coverage and the total annual benefit of $45,625. Petitioner's Exhibit numbered 18 is a scan cover sheet entitled Renewal Finance with Premium Finance Agreement Information in association with Direct General Financial Services, Inc., in which the customer Ms. Dean paid $69.63 down, financed $599.82, with a total price of $748.61 when considering the annual percentage rate for financing. This document in totality was initialed and signed by Ms. Dean. Ms. Dean was provided a receipt for her cash down-payment on the purchase. Petitioner's Exhibit numbered 14. Petitioner's Exhibit numbered 19 is an Insurance Premium Financing Disclosure Form signed by the customer, reflecting the cost of the automobile insurance and the hospital indemnity plan, the amount of total cost and includes the policy fee for the automobile insurance, document stamp tax, the down payment, and the total amount financed $599.82. Ms. Dean was left with the impression that she had only purchased automobile insurance. She believed that the monthly payments for the financing were only in relation to automobile insurance. Ms. Dean does not recall having the accidental medical protection plan explained to her as to its terms. She does not recall anyone explaining that it was an optional plan unassociated with automobile insurance. She told the agent that she dealt with that she was only interested in purchasing the state-required automobile insurance coverage. Had she realized that she was purchasing optional accident medical protection, not part of the automobile insurance purchase, she would have declined the optional policy. Ms. Dean does recall that the agent she dealt with made some brief explanation about the documents involved in the transaction but not every page was explained. Ms. Dean recalls explanations about the automobile policy but nothing about optional coverage. Ms. Dean glanced over the documents but did not read every word included in the documents. Ms. Dean does not recall whom she dealt with on February 8, 2005. Otherwise, the record does not reflect the person who sold the automobile insurance and accidental medical protection plan to her at that time. At times relevant, Denise Daley Turnbull worked at Cash Register. She was a customer representative license (4- 40), appointed by Direct General Insurance Agency, Inc. On March 24, 2005, William L. Green, Jr., came to Cash Register to purchase automobile insurance. He dealt with Ms. Turnbull. He made a $170.02 down payment for his purchases, as reflected in Petitioner's Exhibit numbered 4, which is a receipt provided to Mr. Green. A scan cover sheet related to an auto policy purchased, together with the application information for the automobile insurance purchased through Direct General Insurance Company is found within Petitioner's Exhibit numbered Mr. Green purchased automobile insurance for property damage liability (PD) in the amount of $590 and basic personal injury protection (PIP) for $370, with a $25 policy fee, totaling $985. He signed and initialed parts of the forms in association with the automobile insurance. Ms. Turnbull also signed forms in association with the automobile insurance. Petitioner's Exhibit numbered 6 is an explanation of policies, coverages and cost breakdown (including non-insurance products) reflecting the overall purchases by Mr. Green. He signed that form. It relates the automobile insurance purchase. It also relates the purchase of an American Bankers Travel Protection Plan for $60, a Lloyd's Accidental Medical Protection Plan for $110 and life insurance of $98. With fees and other costs the total purchase was $1270.99. Of relevance here, Petitioner's Exhibit numbered 9 is a scan cover sheet in relation to the life policy signed by Ms. Turnbull. It also includes application information to Direct Life Insurance Company with certain questions reflected that were initialed by the purchaser. Mr. Green signed the application. Respondent also signed the application, as well as printing his name and insurance license number on the form. Petitioner's Exhibit numbered 10 is a scan cover sheet for a New Finance with Direct General Financial Services, Inc., which reflects a $162.03 down-payment, $1105.17 in amount financed, with a $129 finance charge. The total sales price for all purchases was $1396.20, to include the life insurance with Direct Life Insurance Company. Mr. Green signed the premium finance agreement. Petitioner's Exhibit numbered 11 is a copy of the Insurance Premium Finance Disclosure Form signed by Mr. Green. Ms. Turnbull has no recollection of the Respondent's participation in the sale of the life insurance policy to Mr. Green. She does recall that Respondent was in the insurance agency office when the life insurance was purchased. She recognizes Respondent's signature in association with the life insurance application and purchase. Mr. Green had no intention of purchasing life insurance when he went to Cash Register on March 24, 2005. He recalls dealing with Ms. Turnbull. No one else sat with Mr. Green and explained policy information to him. Specifically, Respondent did not sit with Mr. Green and offer explanations about the policy. Mr. Green did not see Respondent sit with Ms. Turnbull and Respondent remained silent while she sold the life policy. Had Mr. Green realized that he was purchasing life insurance he would have declined the opportunity.
Recommendation Upon consideration of the facts found and the conclusions of law reached, it is RECOMMENDED: That Petitioner enter a final order finding a violation under Count I as set forth in the conclusions of law, dismissing Count II and suspending Respondent's license for six months for the violation. DONE AND ENTERED this 7th day of May, 2007, in Tallahassee, Leon County, Florida. S 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 7th day of May, 2007. COPIES FURNISHED: William Gautier Kitchen, Esquire Gregg Marr, Esquire Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0333 L. Michael Billmeier, Jr., Esquire Galloway, Brennan and Billmeier, P.A. 240 East Fifth Avenue Tallahassee, Florida 32303 Michael L. Rothschild, Esquire Larry S. Davis, P.A. 1926 Harrison Street Hollywood, Florida 33020 Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Level 11 Tallahassee, Florida 32399-0300 Daniel Sumner, General Counsel Department of Financial Services The Capitol, Level 11 Tallahassee, Florida 32399-0307
The Issue This case involves an Administrative Complaint filed by the petitioner, State of Florida, Office of Treasurer/Insurance Commissioner, against James H. Bowling and Premium Budget Service, Inc., Respondents. The action is brought under the authority of Chapters 626 and 627, Florida Statutes. The petitioner is attempting to take disciplinary action against the licenses of the Respondents pertaining to their performance in insurance business transactions conducted in the State of Florida. Originally, the Administrative Complaint contained eight counts. At the commencement of the hearing, Count IV of the Administrative Complaint was dismissed. The remaining Counts I through VII accuse Respondent Bowling with a series of substantive violations related to his business transactions with individual customers with whom be allegedly was involved in the selling of insurance in the State of Florida. Specifically, Respondent Bowling is charged with: Receiving premiums or other funds belonging to insurers or others in transactions under his license which were trust funds received by him in a fiduciary capacity, which funds he failed to account for or pay to the insurer, insured or other persons entitled thereto in violation of Subsection 626.561(1), Florida Statutes. Willfully, under his license, circumventing the prohibitions of the Insurance Code, in violating of Sub section 626.611(4), Florida Statutes. Demonstrating a lack of fitness or trustworthiness to engage in the business of insurance, in violation of Subsection 626.611 (7), Florida Statutes. Demonstrating a lack of reasonable and adequate knowledge and technical competence to engage in the transactions authorized by the license or permit, in violation of Subsection 626.611(8), Florida Statutes. Engaging in fraudulent or dishonest practices in violation of Subsection 626.611(9), Florida Statutes. Misappropriating, converting or unlawfully withholding moneys belonging to insurers, insureds, beneficiaries or others received in the conduct of his business pursuant to license, in violation of Subsection 626.6II(10), Florida Statutes. In connection with the purported violation set forth in the aforementioned issue a., willfully violating an order, rule or regulation of the Insurance Department, or willfully violating provisions of the Insurance Code, contrary to Subsection 626.611(13), Florida Statutes. In connection with the purported violation set forth in the aforementioned issue a, violating provisions of the Insurance Code by an act contrary to Subsection 626.621(2), Florida Statutes. The Respondent, James H. Bowling, is accused through Count VIII of a violation of all those provisions set out in the accusations found in the statements a. through h. set out herein, related to remaining Counts I through VII and is an accusation that encompasses the cumulative effect of the violations in remaining Counts I through VII. If the Respondent, James H Bowling, is found to be guilty of the offenses set out in the Administrative Complaint, it is the petitioner's intention to revoke his license and eligibility for future licenses and/or to refuse the issuance of additional licenses as an insurance agent, or to impose as many lesser penalties as may be proper under the provisions of Sections 626.611, 626.621 and 626.681, Florida Statutes, and the Florida Insurance Code. Count VIII, related to the Respondent, Premium Budget Service, Inc., seeks to suspend or revoke its license as a premium finance company, and the basis for such action is premised upon the evidential facts alleged in remaining Counts I through VII and under authority of Subsection 627.832(1)(c), Florida Statutes.
Findings Of Fact THIS CAUSE comes on for consideration based upon the Administrative Complaint of petitioner, State of Florida, Office of Treasurer/ Insurance Commissioner, filed against James H. Bowling and Premium Budget Service, Inc., Respondents. The general details of the nature of the allegations may be found in the issues statement of this Recommended Order, and the particular allegations in each count will be discussed in the course of these findings of fact and the conclusions of law. The Petitioner, State of Florida, Office of Treasurer/Insurance Commissioner, is an agency of the State of Florida charged by statute with the duty to regulate the insurance industry in this state. The authority for such regulation, related to the case sub judice, is established in Chapters 626 and 627, Florida Statutes. The Respondent, James H. Bowling, is a licensed 2-20 insurance agent in the State of Florida, who holds such license with the permission of the Petitioner. Premium Budget Service, Inc., is licensed by the Petitioner pursuant to the provisions of Chapter 627, Florida Statutes. For the period January, 1975, to December, 1978, the Respondent, James H. Bowling, owned and operated as a licensed 2-20 insurance agent in the State of Florida, a company known as Atlas Insurance Agency, Inc. During that time, Bowling was the president of that corporation and was a 50 percent shareholder of its stock issue. Atlas had eight offices throughout Duva1 County, Florida, in which Bowling was transacting the business of the company. His specific function in connection with Atlas was that of the overall responsibility for the operation of Atlas insurance Agency, Inc., in managerial terms. In addition, Respondent Bowling served as the president of Premium Budget Service, Inc., during the period January, 1975, through December, 1978. This company was owned by Sandra R. Bowling, Respondent Bowling's wife. The business of Premium Budget Service, Inc., in the years in question was that of financing premium accounts to be paid by customers of Atlas Insurance Agency, Inc. to the company offering the insurance coverage. Under this arrangement, Premium Budget Service, Inc., financed the amount of the premium for insurance which was being handled by Atlas, and the customer agreed to pay back the amount of premium financed on an installment basis under terms and conditions of an installment contract. Some of the contracts which Premium Budget Service, Inc., had received from Atlas insurance Agency, Inc., for financing were subsequently assigned by Premium Budget to Devco Premium Finance Company. Devco, as a condition of the assignment, paid Premium Budget the amount of principal financed together with a transfer fee and was then reimbursed by the customer who made Installment payments of principal and interest to Devco on the amount of policy premium financed. This arrangement commenced in September, 1975, and was in operation during the pendency of some of the contracts which are at issue in this Administrative Complaint. The contracts which the Administrative Complaint focuses on were contracts involving customers through the Joint Underwriters Association program in Florida. The Joint Underwriters Association Is an organization made up of insurance companies who do business in the State of Florida in which members of the association have as their principal purpose the writing of insurance for high risk automobile drivers who operate automobiles in the State of Florida. Under this plan, Atlas insurance Agency, Inc., used United States Fidelity and Guaranty Company, hereinafter referred to as "U.S.F.&G.", as its servicing carrier in the time sequence relevant to this complaint. The first allegation in the Administrative Complaint concerns an insurance policy which Atlas sold to one Daniel Lashley. Lashley paid the full amount of the insurance premium by money order No. 1306407044 made out in the amount of $307. U.S.F.&G. issued policy No. 8-90-104607. This policy was issued after Atlas had mailed a down payment of $100 to U.S.F.&G. The check from Atlas was written on Bowling's signature. Lashley had paid the money order on April 4, 1977, and U.S.F.&G. had received the $100 deposit on April 28, 1977. The policy was mailed by U.S.F.&G. to Atlas on May 12, 1977, and the down payment check was deposited in the bank account of U.S.F.&G. on May 15, 1977. The effective date of the policy was April 8, 1977, to April 8, 1978. In addition, there was a premium billing requirement of $1.00 which Lashley paid on June 4, 1977. Apparently, this $1.00 payment was made to Atlas, because on November 23, 1977, a notice of termination was sent to Atlas and to David Lashley indicating an outstanding balance of $208. This notice was sent because U.S.F.&G. was unable to locate any payment other than the initial down payment of $100 which had been submitted with the application for policy; notwithstanding the fact that the total policy amount called for $308, which full amount should have been paid within thirty days of the date of issue of the policy. Final cancellation notice was mailed on December 21, 1977. This final cancellation notice was only forwarded to the agent, Atlas; however, on January 5, 1978, a notice was sent to Lashley indicating $103 earned premium due on the policy to keep the policy in effect until the end of the term. Lashley contacted the Florida Department of Insurance to determine why the policy had been cancelled and at that time he furnished proof of payment for the full amount of premium. An investigator with the Florida Department of Insurance contacted U.S.F. &G. who reinstated the policy on April 19, 1978, to be effective December 4, 1977. This reinstatement was made in spite of U.S.F.&G.'s records which showed no payment of the outstanding $208, nor contact from anyone connected with Atlas insurance Agency on the issue of why the policy had been cancelled. The Respondent, James H. Bowling, contended in the course of the hearing that a second check in connection with the Lashley premium had been forwarded to U.S.F.&G. on the Atlas account, check No. 19837, dated May 31, 1977. He also stated that his files indicated a notice of cancellation of November, 1977, to be effective December 4, 1977, but he took no action because a review of the file indicated that full payment had been received by U.S.F.&G., as evidenced by a memorandum from U.S.F.&G., indicating reinstatement and a note from an unnamed Atlas employee to the effect that the policy was to be reinstated, which led him to believe that someone in the Atlas office conferred with the U.S.F.&G. office and believed that the money on the second check of $208 had been found. Bowling's further explanation for the delayed payment of the balance of the policy was to the effect that normally on policies which were financed, only the initial installment was paid down and the balance paid at a later date, and he felt that one of his employees had treated the cash premium payment in Lashley's case in the same manner, by mistake. Testimony in the hearing established that certain checks forwarded to U.S.F. &G. had been mishandled, and those occurrences were happening around the time Lashley's's policy was purchased. Therefore, it has not been satisfactorily shown that the additional amount of $208 was not forwarded by a check dated May 31, 1977. Nonetheless, this does not excuse Atlas nor its managing agent, Bowling, from the necessity to forward all moneys received from Lashley on April 4, 1977, when it was received, and in one lump sum. Nor does It excuse the fact that even though Atlas knew of the cancellation in November/December of 1977, it left it to Lashley to take the initiative to rectify the problem, which was not accomplished until April, 1978; instead of immediately inquiring of U.S.F.&G. about the missing money when they were told of the problem. Accepting Bowling's representations that contacts were made with U.S.F.&G. on the subject of the Lashley account, it is apparent that those contacts took place after Lashley had set matters in motion. leading to the April, 1978, reinstatement. Count II of the Administrative Complaint involves a transaction between Atlas and a Bobby R. McGowan, Sr., to sell McGowan insurance policies. One of the policies was an automobile policy through U.S.F. &G. and a second was a personal effects policy through Parliament Insurance Company. The automobile policy was No. 8-90-056330 and the personal effects policy was No. PIM-18643. The premium on the automobile policy was $546 and the premium on the personal effects policy was $20. The terms of the policies ran from January 13, 1976, through January 13, 1977. There was a contract which McGowan entered into with Premium Budget Service, Inc. to finance the premiums due in the two policies. The total premium of both policies was $566, with a down payment of $198 from McGowan and an amount financed of $368. This contract was assigned to Devco Premium Finance Company in January, 1976. Devco paid for the assignment by having Respondent Bowling execute a sight draft which contained the amount due to Premium Budget on the McGowan account. This execution of the sight draft was on January 14, 1976, and it was honored by Devco on January 16, 1976. The proceeds pertaining to McGowan which were received by Premium Budget Service, Inc., were then transmitted by check to Atlas and Atlas at that point had the total premium amounts of $566. Atlas in turn forwarded $150 to U.S.F.&G by a check bearing Bowling's signature, which was deposited in the U.S.F.&G. account on June 2, 1976. In the interim, Devco requested a cancellation of U.S.F.&G.'s policy on McGowan and that request was made on March 10, 1976. The policy was cancelled and U.S.F. &G. returned $42 of unearned premiums to Devco. A notice of the cancellation was forwarded to Atlas and to McGowan. The reason for the cancellation action by Devco was related to McGowan's nonpayment on the installment contract to Devco. Devco claims to be short $361 in what should have been returned to them as unearned premiums. U.S.F. &G. did not forward that amount because they never received it from Atlas. Respondent, James H. Bowling, sent $366.63 to Devco on the McGowan account under check No. 18779 dated April 7, 1977, by his signature. Devco never received that amount and the cancelled check cannot be found, and Devco has never received its money. The reason for the delay in repaying Devco, according to the Respondent, was because he had an agreement with Devco in the person of their former owner, Doyle E. Varnes, to the effect that the premium money other than the necessary down payment would be held by Atlas, and if a policy was cancelled before it was issued, that the money other than the down payment would be sent by Atlas to Devco and not to U.S.F.&G.; otherwise, after issue the balance could go to the insurer. Varnes testified and did not acknowledge that agreement; additionally, any such agreement would be contrary to the requirement that the full amount of the premium be submitted by Atlas and, more importantly, Bowling's explanation about withholding moneys on this or any other case in which Devco paid Premium Budget for an assigned contract is not believable. Count III deals with a transaction in which Atlas sold Dorothy G. Morgan a policy from U.S.F.&G. This transpired in December, 1975. Dorothy G. Morgan made the down payment of $95, leaving an amount to be financed of $175 of the total premium of $270. This was an instance in which Premium Budget Service, Inc., assigned the contract to Devco under the same arrangement described in the transaction involving the customer, McGowan. On December 25, 1975, Bowling signed the draft for payment to Premium Budget. The term of the policy was December 15, 1975, to December 15, 1976, and the automobile insurance policy number was 8-90-49673. Atlas received the full amount of premium of $270, including the amount to be financed and paid $100 to U.S.F.&G. as a down payment deposited by U.S.F.&G. on May 20, 1976. After the down payment was mailed by a check drawn by Bowling on an Atlas bank account, Devco asked U.S.F.&G. to cancel the policy and a notice of cancellation was forwarded to Atlas and Morgan. This notice of cancellation, as all notices of cancellation involved in a transaction with U.S.F.&G. alluded to in this Administrative Complaint, contained a statement of the down payment amount and the outstanding premium amount. At that point of the notice of cancellation, U.S.F.&G. had not received the balance of the premium payments beyond the $100, the initial installment, and it did not return any moneys to Devco after the policy was cancelled because the amount of the earned premium was $109 which exceeded the amount of down payment by $9, leaving a negative balance. Devco was eventually paid the amount of money that it had outstanding, to-wit, the $170; by a check dated March 21, 1979, drawn on the account of The insurance Store, Inc. The draft on The Insurance Store, Inc., carries Respondent Bowling's signature and may be found as the Respondent's Exhibit No. 5 admitted into evidence. (Count IV had been dismissed prior to the hearing.) Count V involves the transaction between Atlas Insurance Agency, Inc., and one Willard I. Rader. This transaction involved the sale of an automobile policy through U.S.F.&G. with the premium amount of $370 which was subsequently adjusted to $428, policy No. 8-90-49616, and a personal effects policy through Parliament Insurance Company, No. PIM-232l3, with a premium of $20 produced by Atlas. The terms of the two policies were January 12, 1976, to January 12, 1977. The policies were assigned by Premium Budget Service, Inc., to Devco under the arrangement described above and on Bowling's signature to a draft dated January 14, 1976, which draft was honored by Devco on January 16, 1976. Premium Budget having received the proceeds from the assignment of the contract to Devco, paid Atlas moneys sufficient to leave Atlas with the full amount of the premium. In the beginning, the total premium for both policies was $390, with the down payment of $137, leaving $253 to be financed. Atlas forwarded $100 to U.S.F.&G.`s representative as a minimum down payment and U.S.F.&G. deposited that amount of money on June 21, 1976. U.S.F.&G. did not receive any further moneys from Atlas. Devco subsequently requested that the policy be cancelled and the policy was cancelled and Atlas and Radar were notified of the cancellation. U.S.F.&G. returned no money to Devco, in view of the fact that the earned premium was $177 and the amount of down payment was $100. On April 25, 1978, Atlas Insurance Agency, Inc., wrote a check under the signature of the Respondent, Bowling, in the amount of $270 which was paid to Devco. This $270 represented the balance of the premium down payment which should have been forwarded to U.S.F.&G. with the $100 down payment. The check may be found as the Respondent's Exhibit No. 6 admitted into evidence. Count VI involves the sale of an automobile policy by Atlas to Gerda M.Weidman. This policy was issued by U.S.F.&G. under No. 8-90-49695. The amount of premium was $184 which was later adjusted to the amount of $211. The term of the policy was from December 8, 1975, to December 8, 1976. The Weidman policy was financed to the extent of $120 of the original $184, the down payment being $64. The finance agreement was arranged by Premium Budget Service, Inc., who assigned the contract to Devco under terms described above. The sight draft was executed under Bowling's signature on December 9, 1975, and was honored by Devco, which assignment proceeds were transmitted through Premium Budget to Atlas, leaving Atlas with $184. Atlas transmitted $50 of that $184 as a down payment, instead of the proper amount of $184. This $50 amount was deposited by U.S.F.&G. on March 30, 1976. Devco had in February, 1976, requested the cancellation of the policy and the policy was cancelled with Atlas and Weidman being notified of the cancellation. U.S.F.&G. returned $9 of unearned premium to Devco. On April 25, 1978, a check was issued from Atlas Insurance Agency, Inc., to Devco in the amount of $134 under signature of James H. Bowling. This $134 represented the balance of the moneys due to Devco on the premium amount financed by Devco. The check in the amount of $134 may be found as Respondent's Exhibit No. 7 admitted into evidence. Count VII of the Administrative Complaint charges this Respondent, James H. Bowling, with violations connected with the sale of an automobile insurance policy by Atlas to one John K. Detmer. On May 5, 1977, John K. Detmer paid Atlas $210 as a down payment. An additional $428.08 was financed by Premium Budget Service, Inc., which amount reflected interest and other charges. The payment was for the purchase of a policy from U.S.F.&G., which issued policy No. 8-90-104724 effective May 8, 1977. The policy was issued after they received only $200 as a down payment, compared to the full amount of premium required, which would have been the $210 Detmer paid together with that portion of the $428.08 balance related to the premium. Detmer subsequently paid the entire amount required under the finance contract with Premium Budget Service, Inc. On November 21, 1977, U.S.F.&G. cancelled the policy after notifying Atlas and Detmer of the cancellation, in view of the fact that they had only received the $200 deposit and other moneys were due and owing on the premium. This policy has never been reinstated by U.S.F. &G. The Respondent claims that the additional amount of $399 was mailed to U.S.F.&G. under check No. 20512 from the account of Atlas drawn on July 13, 1977; however, U.S.F.&G. claims that they never received the additional payment. The Respondent's files indicate the cancellation notice and the effective date of that notice to be December 4, 1977, and a note that the policy was to be reinstated. There are no notes in the files with U.S.F.&G. of any conversation pertaining to the subject of reinstatement. Accepting the representation that the second check was forwarded on July 13, 1977; the Respondent, Bowling, as the managing agent of Atlas and Premium Budget, acted inappropriately in not forwarding the full amount of premium as one lump sum payment and in the task of following up the cancellation of the policy. Furthermore, even if it is assumed that there was some conversation between employees of Respondent Bowling's office and U.S.F.&G. and a note placed in the Atlas file to the effect that there would be reinstatement, there should have been a follow-up with Detmer to make certain that the policy had been reinstated, particularly since the cancelled check in the amount of $399 has never been returned and, had the policy been reinstated, it is reasonable to expect some notification memorandum would have been given such as was given in the Lashley matter. (Section 120.57, Florida Statutes, allows the parties to submit proposed findings of fact, conclusions of law and recommendations. The Respondents have availed themselves of that opportunity and those proposals have been reviewed prior to the rendition of this Recommended Order. To the extent that the proposals are not inconsistent with this Recommended Order, they have been taken into account and utilized in rendering the Recommended Order. To the extent that the proposals by the Respondents are inconsistent with this Recommended Order, they are hereby specifically rejected.)
Recommendation It is recommended that the license of the Respondent, James H. Bowling, to operate as a 2-20 insurance agent in the State of Florida be REVOKED. It is further recommended that the action against the license of Premium Budget Service, Inc., be DISMISSED DONE AND ENTERED this 6th day of August, 1979, in Tallahassee, Florida. CHARLES C. ADAMS Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Patrick F. Maroney, Esquire Office of Treasurer/Insurance Commissioner 428-A Larson Building Tallahassee, Florida 32301 John London Arnold, Esquire 919 East Adams Street Jacksonville, Florida 32202 =================================================================
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the July 20 rate filing of Colonial Penn Insurance Company in Case No. 82-148 be APPROVED. It is further RECOMMENDED that the November 12 rate filing of Colonial Penn Insurance Company in Case No. 82-1048 be APPROVED. DONE and ENTERED this 18th day of August, 1982, 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 18th day of August, 1982.
