The Issue Whether Respondent committed the violations alleged in the Administrative Complaint and, if so, what penalties should be imposed.
Findings Of Fact Based upon the evidence adduced at hearing and the record as a whole, the following findings of fact are made: Respondent's Licensure and Work History Respondent is now, and has been at all times material to the instant case, licensed by Petitioner as a general lines (property and casualty) insurance agent. At no time material to the instant case has he been licensed as a surplus lines agent. In the 30 plus years that he has been in the insurance business, no licensing agency has taken any disciplinary action against him. From January of 1997 until July of 1997 (which includes the entire period during which the events described in the Administrative Complaint took place), Respondent worked as an insurance agent for Braishfield of Florida, Inc. (Braishfield), an insurance agency/brokerage firm. (In July of 1997, he started his own insurance agency/brokerage firm, Bandel and Associates, which he still operates.) The Saxony Condominium Association The Saxony Condominium Association (Association) consists of the owners of the 672 units (located in 14 buildings) in the "Saxony" section of the Kings Point condominium development in Delray Beach. The development is approximately seven to ten miles from the Atlantic Ocean. For the past six years, Elinor Lichten has been the president of the Association. The Association's Insurance Committee In August of 1992, before Ms. Lichten became president of the Association, Hurricane Andrew made landfall in the South Florida area and caused extensive property damage. In the years that followed, the premiums that the Association paid for insurance increased dramatically. In February of 1996, in an effort to contain these escalating insurance costs, the Association formed an insurance committee. Ms. Lichten named Dan Miller to serve as the chairman of the committee. Mr. Miller appointed the remaining members on the committee. Ed Greenbaum was among those Mr. Miller appointed to the committee. Ms. Lichten was not a voting member of the committee, although she did attend some (but not all) of the committee's meetings. The Association's Fireman's Fund Policies At the time the insurance committee was formed, the Association was insured by Fireman's Fund. It obtained this insurance coverage through Sedgwick James of Florida, Inc. (Sedgwick). The insurance agent who represented Sedgwick in its dealings with the Association was J. Simione. In October of 1996, the Association received a notice that the Fireman's Fund policies would not be renewed. Upon receiving the notice, Ms. Lichten telephoned Mr. Simione, who advised her that he was "negotiating to reinstate that policy and that in all probability it would be reinstated." Mr. Simione subsequently contacted Ms. Lichten and advised her that the negotiations had been successful. The Fireman's Fund policies were thereafter renewed. The renewed policies had an effective date of December 1, 1996, and an expiration date of December 1, 1997. The Association agreed to the renewal notwithstanding the renewed policies' high premiums and deductibles. Members of the insurance committee, who had met with Mr. Simione "between three to five times" prior to the renewal of the policies, had advised the committee members that there were no better options available and that they should "be absolutely delighted [to] have the coverage [they] had since insurance companies were not renewing policies." When they asked Mr. Simione to "find [a] layered program [for the Association, like those other condominium associations in the area had] where the [risk] is divided so that the premiums are reduced," Mr. Simione told them that it "wasn't possible," explaining that "all of the layering programs [they] had referred to had since fallen apart." The Insurance Committee's Discussions with Respondent Following the renewal of the Fireman's Fund policies, members of insurance committee, at the direction Mr. Miller, "start[ed] to interview" other insurance agents "to see whether or not Mr. Simione's comment to [them concerning the unavailability of a layered program for the Association] had any validity." Respondent was the second agent to be "interview[ed]." He was initially contacted by Ed Greenbaum, who told him that the insurance committee "was very upset by the current coverage package they had" and wanted to see if "there was something better." Respondent spoke subsequently with both Mr. Greenbaum and Mr. Miller. Following this conversation, he sent Mr. Greenbaum the following letter, dated February 23, 1997: It was pleasure talking to you and Dan Miller and I appreciate your candor. Based on the information you provided on the phone, it appears the premiums and deductibles that are currently in force are excessive. My comment is based on what is available in the marketplace today. It appears that the earliest I can sit down and discuss this with the board is in May. My recommendation is that we move our meeting up to March or April. This will enable us to obtain the best possible terms and conditions as we will have ample time prior to the beginning of the hurricane season. The association has nothing to lose and potentially a lot to gain. My evaluation requires a minimum amount of time. After our meeting and a review of the current program and losses, I will be in a position to confirm in writing what improvements can be made. I look forward to hearing from you. Respondent provided the "marketing person" at Braishfield with the information he had been provided by Mr. Greenbaum and Mr. Miller concerning the Association's insurance needs and loss history. The "marketing person" thereupon canvassed the market to determine if there were any alternatives to the Fireman's Fund policies. Such canvassing revealed that there did exist an alternative to the Fireman's Fund policies, in the form of a layered program in which three of the participating insurers were not "authorized insurers," as that term is used in Florida's "Surplus Lines Law." The "marketing person" prepared the following "Statement of Diligent Effort" for Respondent's signature as the "producing agent": Pursuant to [sic] Section 626.914(4), Florida Statutes, requires producing agents to document that a diligent effort has been made to place a risk with at least three (3) authorized insurers prior to contacting a surplus lines agent to export the risk in the surplus lines market. The following form, prescribed by the Department, must be completed IN FULL for each risk. Name of person contacted and telephone number are MANDATORY. COUNTY OF RISK: Palm Beach County NAME OF INSURED: Saxony A-N Condominium Association TYPE OF COVERAGE: Property AUTHORIZED INSURER #1 NAME- Hartford Insurance TELEPHONE NUMBER- 800-824-1732 PERSON CONTACTED- Ben Wilson DATE OF CONTACT- March 21, 1997 REASON FOR DECLINATION- Type of Risk/Property Location AUTHORIZED INSURER #2 NAME- General Accident Ins. TELEPHONE NUMBER- 407-660-1985 PERSON CONTACTED- Bob Rayser DATE OF CONTACT- March 21, 1997 REASON FOR DECLINATION- Type of Risk/Property Location AUTHORIZED INSURER #2 NAME- RISCORP TELEPHONE NUMBER- 800-226-7472 PERSON CONTACTED- Bryan Flowers DATE OF CONTACT- March 21, 1997 REASON FOR DECLINATION- Risk does not qualify for program Respondent signed this "Statement of Diligent Effort" on the line provided for the "[s]ignature of [p]roducing [a]gent." He did so in good faith based upon the representations made to him by the "marketing person." In April of 1997, Respondent met with members of the insurance committee and Ms. Lichten at Mr. Miller's residence to discuss the possibility of the Association obtaining, through Braishfield, the layered program of insurance described above to replace the Fireman's Fund policies that were then in effect. Respondent, on behalf of Braishfield, made a "conceptual" proposal at the meeting. After the meeting, Respondent sent the following letter, dated April 16, 1997, to Dan Miller: It was a pleasure meeting with you and the committee and again I want to apologize for arriving late. Per our discussions, we will provide our final proposal after receiving written confirmation regarding the three year loss history for property and liability. Our proposal will be effective June 1, however we will use whatever date is acceptable to the committee. We anticipate, it will take us approximately two weeks from the time we go into the marketplace until everything is finalized. It appears, there is minimal exposure for equipment, such as heating, cooling and electrical systems. Consequently, we will not include machinery and equipment breakdown in our final proposal. I strongly recommend that you obtain an updated appraisal on your buildings as it is extremely important that your replacement cost reflect today's cost. This will eliminate any potential coinsurance or under insurance problem in the event of a loss. I look forward to working with you and the committee and being appointed as your broker to assist you in all your insurance needs. In May of 1997, Respondent, on behalf of Braishfield, presented a detailed formal written proposal (Braishfield's Written Proposal) to the Association. Braishfield's Written Proposal contained an "Executive Summary" which read as follows: Executive Summary Per our conceptual proposal and correspondence of April 16, we are pleased to present our final program including terms and conditions. Our proposal is based on information provided by the Insurance Committee on policies that are currently in force. Our comparison of coverages incorporates this information. The differences are what we believe to be the key or salient features of each program. The bottom line is, we are offering a substantial premium savings, significantly lower deductibles with comparable coverage. Our recommendation is to appoint Braishfield of Florida as your broker to place all coverage in effect as soon as possible. The "final program" referenced in the "Executive Summary" was a layered program. The "[p]articipating [c]arriers" in the program and their "Best's Ratings" were listed as follows in Braishfield's Written Proposal: PARTICIPATING CARRIERS Property Insurance Carriers Best's Rating Lexington Insurance A++15 General Star Insurance A++7 Royal Surplus Lines A-7 General Liability/Crime New Hampshire Insurance A++15 Directors & Officers Liability Chubb Insurance Group A++15 Umbrella Liability Great American Insurance A+11 The three "carriers" providing "property insurance" coverage were not "authorized insurers," within the meaning of the "Surplus Lines Law." The "[b]enefits of the Braishfield [p]roposed [p]rogram [o]ver [c]urrent [p]rogram" were described in Braishfield's Written Proposal as follows: A Premium Savings of $42,529 Annually.* No Coinsurance Penalty. A 2% Deductible per building as respect to the perils of wind and hail. A $5,000,000 limit for Excess Liability A $5,000 AOP Deductible * Our premium savings is based on the following: Company Coverage Premiums Fireman's Fund Package $144,071 Fireman's Fund Umbrella $2,168 TOTAL $146,239 $ 12,966 (Agent's Fee) TOTAL $159,205 Proposal Cancellation Date June 1, 1997 Pro Rata Return Premium- $79,761 Short Rate Return Premium- $71,801 NOTE: A $1,000,000 Umbrella would produce a further savings of $3,395 Braishfield's Written Proposal also contained a "Program Comparison," which provided as follows: Coverage Current Proposed Program Program $20,454,000 Blanket As Per Limit on Schedule Real and Personal Property Coinsurance Yes No Demolition $250,000 Cost Law & $5,000,000 $500,000 Ordinance Deductible -Wind 3% of $20,454,00 2% Per Building -AOP $10,000 $5,000 Valuation Replacement Cost Re- Placement Cost Unnamed Yes See Note Storm Deductible Umbrella $1,000,00 $5,000,000 Limit NOTE: Our comparison does not include unnamed storm wind coverage. This will be discussed during the presentation. Respondent met with the committee members and Ms. Lichten for about eight hours on or about May 6, 1997. At the meeting, he explained Braishfield's Written Proposal in detail and answered questions. On or about May 9, 1997, Respondent sent the following letter to Mr. Miller for the insurance committee's consideration: The benefits to the association under Braishfield's proposal are: A $5,000 AOP deductible Significantly lower premium No co-insurance penalty A superior wind deductible in the event of a catastrophe such a hurricane. The elimination of any rate increase in 1997 even if this is a bad year for the insurance industry. Outstanding insurance service will include a renewal strategy meeting 120 days prior to expiration. This meeting will disclose options, market conditions and pricing projections. This will allow the committee to act proactively instead of reactively in the best interest of the association. -$5,000,000 Umbrella. One other point to consider involves the payment of premium. If you cancel the Fireman's Fund Package policy on June 1, the earned premium is estimated to be $72,035. If you include a short rate penalty this increases to $79,239. Including the May installment the association has paid $96,165. The difference or the return premium due the association is $24,130 which should be refunded within 60 days. Since you have paid more premium than is earned no payment should be made for June. This enables the association to apply June's payment of $12,015 toward the down payment under Braishfield's program of $26,557.16. The net amount the association has to come up with is $14,542.16. I trust this will be helpful to the committee. It has not been shown that that Respondent at any time knowingly provided the Association (through its officers and representatives) with any false or misleading information or that he knowingly, with the intent to deceive, hid any information from the Association. He disclosed, among other things, that Braishfield's proposed layered program, unlike the Fireman's Fund policies, included "unauthorized insurers" and explained the differences between "unauthorized" and "authorized" insurers. In explaining these differences, he talked about the Florida Insurance Guaranty Act, which protects those insured by "authorized insurers" in the event of insurer insolvency, but does not offer similar protection to those insured by "unauthorized insurers." Respondent also advised that the mid- term cancellation of the Fireman's Fund policies would result in a "short rate" penalty and, in addition, he discussed how Braishfield's proposed layered program would be financed and the interest rates that would be charged. The Association's Acceptance of Braishfield's Written Proposal The insurance committee brought Braishfield's Written Proposal before the Association's board of directors, which voted 15 to 14 in favor of accepting the proposal and replacing the Fireman's Fund policies with the layered program proposed by Braishfield. Post-Acceptance Activities After learning of the results of the vote, Respondent sent the following letter, dated May 27, 1997, to Mr. Miller: I was delighted to hear that the board has made their decision in favor of Braishfield. If we are looking at a May 31, 1997, effective date it is essential that the following matters be addressed immediately: The original finance agreement signed in the appropriate places indicated by "x." A check in the amount of $26,557.67 should be made payable to Braishfield of Florida for the down payment. Both the finance agreement and the check must be available to be picked up by me prior to May 31, 1997. A broker of record letter naming Braishfield on the Director's and Officer's liability policy must be executed and signed. The specific policy number should be included in the caption. A sample letter was included in our final proposal. We will be sending you a completed statement of values form which will require signature of a board or insurance committee member. I have taken the liberty of drafting a letter advising the agent to cancel all coverages effective May 31, 1997. Included is a request to confirm the return premium due the association as well as any unearned fee that will be returned. This letter should be written on Saxony letterhead and signed by you or the President of the association. In accordance with Respondent's suggestion, Ms. Lichten sent the following letter, dated May 28, 1997, to Mr. Simione: Re: Fireman's Commercial Insurance Pkg. Policy #S15MZX80662013 Fireman's Umbrella Insurance Policy #XSC 00074217738 Dear Mr. Simione: Effective May 31, 1997, please cancel above captioned policies. The Saxony Board of Directors at a Special Meeting held on May 27, 1997 voted to appoint a new agent. Please acknowledge the above cancellation in writing and also confirm the return premium due under each policy, including any penalty. Confirmation of any unearned brokerage fee should also be included. All calculations should be based on a May 31, 1997 cancellation date. Thank you for your cooperation and consideration you have given Saxony over the past few years. The following day, May 29, 1997, Ms. Lichten sent the following letter, with the described enclosures, to Respondent: Enclosed herewith please find the following: Duly signed Finance Agreement for our Insurance as agreed upon. Check #001 payable to Braishfield of Florida date May 28, 1997 drawn on Sun Trust in the amount of $26,557.67, which represents our down payment. Please send us [a] letter acknowledging receipt of the above together with [a] letter indicating that we will indeed have insurance as we agreed to commencing May 31, 1997. Looking forward to working with you. That same day, May 29, 1997, Respondent sent Ms. Lichten "copies of binders confirming coverage effective May 31, 1997 as per [Braishfield's] May 6th proposal." On June 5, 1997, Ms. Lichten sent Mr. Simione a signed (by Ms. Lichten) and dated (May 29, 1997) "Cancellation Request/Policy Release" form formally requesting cancellation of the Fireman's Fund policies, effective May 31, 1997. On or about June 20, 1997, Ms. Lichten was sent a Certificate of Insurance "certify[ing] that the policies listed [which had been described in Braishfield's Written Proposal] ha[d] been issued to the [Association] for the policy period indicated [May 31, 1997, to May 31, 1998]." On or about June 30, 1997, the appraiser that the Association had hired (Allied Appraisal Service) completed the "updated appraisal on [the Association's] buildings" that Respondent had recommended. Respondent reviewed the appraisal report and prepared a written analysis of the report, which he subsequently discussed with the members of the insurance committee and Ms. Lichten. In his written analysis, Respondent stated, among other things, the following: This proposal analyzes the appraisal made by Allied Appraisal Service on June 30, covering the building and surrounding improvements at Saxony "E," Delray Beach, Florida 33446. The purpose is two fold. To ascertain if the values being reported to the insurance companies reflect as closely as possible the exposure at risk. This includes the impact on coverages such as limits and deductibles. The other area is the premium which includes various options. The property coverage is underwritten in a layered program using three companies. The total limit of coverage is $20,454,000, which is subject to a sublimit per building of $1,461,000. Based on the updated appraisal, the 100% replacement cost on buildings and improvements is $24,561,978 which breaks down to $1,754,427 per building. These amounts were arrived at by eliminating and or reducing those items that were not the responsibility of the association. Other adjustments were made regarding contingencies and contractor's profit which should be discussed. The breakdown is provided on Exhibit I attached. The difference or the amount of increase required to comply with the appraisal is $4,107,978. The change in values increases the wind deductible from $29,220 to $35,088 per building. On or about July 18, 1997, Respondent (who, by this time, had left the employ of Braishfield and had started his own insurance agency/brokerage firm) sent Ms. Lichten a letter, which read as follows: Per our meeting with the insurance committee on Wednesday, July 16, it was recommended the building values be amended based on the property appraisal made by Allied Appraisal Service[] on June 30, 1997. The 100% replacement value including improvements is $24,561,978. The total amount of insurance in force is $20,454,000. The net result is a[n] increase of $4,107,978. Also included in the appraisal is the cost to change certain items revised by current building codes. This is known as law or ordinance coverage. We recommend an increase in the limit by $850,000 to $1,350,000 to cover the additional exposure. Both of the above increases place the property insurance in compliance with the appraisal. The underwriter has agreed to provide blanket coverage using 90% coinsurance. The blanket amount excluding law or ordinance coverage is $22,105,760. This is an improvement over the existing program as the blanket amount would apply to any one loss and the basis for determining the premium would be significantly less. Using an effective date of July 31, the additional premium including taxes and fees is $8,446.20. In addition to the improvement in coverage and key deductibles, our program provides a net savings in excess of $34,000 a year over the Fireman's Fund policy. The changes that Respondent had recommended based upon the "updated Appraisal" were "bound," as Respondent advised Ms. Lichten by the following letter dated August 12, 1997: This will confirm that effective July 31, the following changes have been bound: The total insurable value increased to $22,105,780. The Law or Ordinance coverage increased to $1,350,000. Coverage is on a blanket basis. The coinsurance clause has been amended to 90%. The 2% wind deductible per building is increased to $31,580. All of these changes were based on the property appraisal made by Allied Appraisal Service on June 30, with some exceptions, such as Misc. & Contingencies and Overhead/Profits. It was agreed by the insurance committee not to include these items. Attached is our invoice amount of $8,446.20 representing the additional premium due hereunder. Please make your check payable to Braishfield of Florida and send it to me. In October of 1997, Respondent submitted a renewal proposal to the Association. The proposal was accepted and renewed coverage was bound, effective December 1, 1997, for a period of three years.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department issue a final order dismissing the Administrative Complaint issued against Respondent. DONE AND ENTERED this 7th day of July, 2000, in Tallahassee, Leon County, Florida. STUART M. LERNER 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 July, 2000.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: At all times material to this proceeding, Respondent was eligible for, and licensed as, an insurance agent in the State of Florida. The Respondent is currently eligible for, and licensed as, an insurance agent in the State of Florida. At all times material to this proceeding, Respondent was a licensed agent for United States Fidelity and Guaranty Company (USF&G). At all times material to this proceeding, Respondent was an officer, director, and stockholder of D.E. Brewer and Company (Company), an incorporated general lines insurance agency primarily located in Jacksonville, Florida. On or about April 24, 1986, the Company entered into an agency agreement with USF&G whereby the Company was given authority to solicit and sell insurance on behalf of USF&C. This agency agreement was cancelled unilaterally by USF&G on November 24, 1986. At all times material to this proceeding, all funds received by the Company on behalf of USF&G represented premium funds paid by consumers for the purpose of obtaining insurance and were trust funds received in a fiduciary capacity to be paid over to USF&G in the applicable regular course of business. Under the agency agreement with USF&G, accounts of premium funds received by the Company on behalf of USF&G were to be "rendered at the end of each month" and any "balance shown to be due to" USF&G was to "be paid to the designated reporting office not later than the twentieth day of the second succeeding month". On or about October 27, 1986, Southland Services of Jacksonville, Inc. (Southland) issued a check to the Company in the amount of $15,799.00 as a monthly installment for an auto policy and a general liability policy issued by USF&G. These premium funds were collected by the Company on behalf of USF&G. On or about November 21, 1986, Southland issued a check to the Company in the amount of $13,785.00 as a monthly installment for auto policy and a general liability policy issued by USF&G. These premium funds were collected by the Company on behalf of USF&G. On or about November 12, 1986, S. Gordon Blalock (Blalock) issued a check to the Company in the amount of $1,341.00 as a premium on an auto policy issued by USF&G. These premium funds were collected on behalf of USF&G. On or about December 3, 1986, USF&G notified Blalock that USF&G had not received the premium and unless Blalock remitted the premium within 15 days his policy would be cancelled. This matter was cleared up by Blalock with USF&G and the policy was not cancelled. On or about November 5, 1986, Anita Grusenmeyer, on behalf of Grusenmeyer & Associates, Inc. (Grusenmeyer) issued a check to the Company in the amount of $2,810.00 as a premium payment for insurance policies issued by USF&G. These premium funds were collected by the Company on behalf of USF&G. On or about December 15, 1986, USF&G requested documentation from Grusenmeyer as to proof of premium payment to the Company on these insurance policies since the Company had not rendered the premium payment to USF&G. This documentation was furnished and there was no interruption of the coverage. On or about November 24, 1986, USF&G unilaterally terminated its agency agreement with the Company due to the Company's failure to remit premium funds collected on behalf of USF&G. Prior to, and at the time of the termination of the agency agreement by USF&G, Respondent was Vice President, a director and stockholder (11%) of the Company, but on or about November 24, 1986, the date of the termination of the agency agreement, Respondent became president of the Company. By letter dated December 12, 1986 and addressed to Respondent, USF&G, under paragraph 9 of the agency agreement, made a demand on the Company for the records pertaining to business dealings between the Company and USF&G. This demand was again made by letter on January 21, 1987. However, there was some concern on Respondent's part in turning these records over to USF&G and it was determined that USF&G could make copies of such records with someone from the Company being present. Due to conflicts in schedules of both parties this was never accomplished, and, in the interim, USF&G concluded that it had the capability to reproduce the records on its computer. No further demand for the records was made and the records were never turned over to USF&G by the Company. Also in its letter dated January 2, 1987, USF&G advised the Company that the premium funds received in November, 1986, were overdue as well as the August, 1986, and October, 1986, account. The August, 1986, and October, 1986, account would be for premium funds received in June, 1986, and August, 1986, respectively. The September, 1986, account had been paid on or about November 20, 1986, using premium funds received from Southland on November 21, 1986, in the amount of $13,785.00 to cover a check previously issued by Donald Brewer on an account that did not have sufficient funds to cover the check. The deposit of the Southland check into the account made the check written by Donald Brewer "good". In accordance with the agency agreement, the premium funds received from Southland ($15,799.00) in October, 1986, were due and payable on December 20, 1986, and the premium funds received from Southland ($13,785.00), Blalock ($1,341.00) and Grusenmeyer ($2,810.00) during November, 1986, were funds due and payable on January 20, 1987. However, these premium funds had been disposed of prior to Respondent becoming president of the Company on November 24, 1986, and the Company having insufficient funds that could be used to pay USF&G after Respondent became president, the funds were not remitted to USF&G in the regular course of business set forth in the agency agreement. All the premium funds received by the Company from Southland ($15,799.00 and $13,785.00), Blalock ($1,341.00) and Grusenmeyer ($2,810.00) in October and November of 1986 were deposited in the Southeast Bank, N.A., of Jacksonville, Florida, Account No. 001632637, an account on which Respondent had no check writing authority. All of the above-referenced funds were deposited in that account prior to Respondent becoming president on November 24, 1986. The Respondent was not the responsible agent for the three insurance accounts: Southland; Blalock; and Grusenmeyer, and none of the premium funds remitted to the company by these accounts were "received by" the Respondent. There is no evidence that these premium funds were "received by" any employee of the Company who was under the Respondent's direct supervision and control. There is no evidence that Respondent had access to, or responsibility for, the premium funds paid by Southland, Blalock and Grusenmeyer during October and November of 1986. Likewise, there is no evidence that the Respondent diverted or appropriated any of such premium funds to his own use or to the use of anyone other than to those entitled to receive them. Upon becoming president, Respondent opened a new bank account with the Florida National Bank, but there was no evidence that the account ever had sufficient funds, other than possibly premium funds belonging to other insurers which had been received on their behalf by the Company, to pay USF&G the premium funds due it from the Southland, Blalock and Grusenmeyer accounts. There was evidence that the Respondent had paid salaries to the employees out of the account, but no amount was established. Upon becoming president, Respondent began negotiating a settlement with USF&G on the amount of premium funds due USF&G. There was a dispute as to the amount but a settlement of approximately $52,000.00 was reached. Some of this amount has been paid, but there is a remaining balance. There was no evidence that Respondent, prior to becoming President of the Company, took any part in the policy decisions or administration of the Company, such as determining the manner in which the Company's receipts would be spent or to direct, control or supervise the activities of the employees or other insurance agents of the Company.
Recommendation Based upon the Findings of Fact, Conclusions of Law, the evidence in the record and the candor and demeanor of the witnesses, it is RECOMMENDED that the Petitioner, Department of Insurance and Treasurer enter a Final Order dismissing all counts of the Administrative Complaint filed against the Respondent, John Lanahan, Brewer in Case No. 87-2692. Respectfully submitted and entered this 26th day of July, 1988, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE 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 26th day of July, 1988. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 87-2692 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner Adopted in Finding of Fact 2, except that there was no evidence presented as to the types of insurance licenses Respondent held. Adopted in Finding of Fact 1. 3.-9. Adopted in Findings of Fact 3 through 9, respectively. 10. Adopted in finding of Fact 10 but clarified to show the date of the check to be November 12, 1986, rather than November 21, 1986. 11-14. Adopted in Findings of Fact 11 through 14. 15-16. Adopted in Finding of Fact 15. 17-18. Adopted in Finding of Fact 16. 19. Adopted in Findings of Fact 16 and 17. 20-22. Adopted in Finding of Fact 18. Adopted in Finding of Fact 19 and 22. Adopted in Finding of Fact 20 except that there is competent evidence to show that the Grusenmeyer payment was received and deposited prior to Respondent assuming the Presidency. Adopted in Finding of Fact 18. Adopted in Finding of Fact 23, but although there was a sincere dispute as to the amount there was no competent evidence that that amount was $200,000 or that the settlement figure of $52,000 was not a fair representation of the amount owed to USF&G by the Company. Specific Rulings on Proposed Findings of Fact Submitted by Respondent Adopted in Findings of Fact 1 and 2. Adopted in Findings of Fact 3, 19, and 24. Adopted in Findings of Fact 8, 9, and 19 but clarified. Adopted in Finding of Fact 18. Adopted in Finding of Fact 12. Adopted in Findings of Fact 18 and 19. 7-8. Adopted in Findings of Fact 12, 18 and 19. Adopted in Findings of Fact 20, 21 and 22. Adopted in Finding of Fact 23. 11-12. Rejected as being argument, not a finding of fact. COPIES FURNISHED: S. Marc Herskovitz, Esquire William W. Tharpe, Jr., Esquire 413-B Larson Building Tallahassee, Florida 32399-0300 Judith S. Beaubouef, Esquire Peter L. Dearing, Esquire Post Office Box 4099 Jacksonville, Florida 32201 Honorable William Gunter State Treasurer ana Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300
Findings Of Fact Introduction At all times relevant hereto, respondent, Florence Mounts Williams (Williams or respondent), was licensed as an insurance agent by petitioner, Department of Insurance and Treasurer (Department or petitioner). When the events herein occurred, Williams was an officer and director of Mr. Auto Insurance of Okeechobee, Inc. (Mr. Auto), an incorporated general lines insurance agency located in Okeechobee, Florida. She was also an officer and director of Florida Insurance Agency, Inc. (FIA), an insurance agency doing business in the same city. Respondent sold insurance to the public through both businesses. Williams is charged with violating the Florida Insurance Code while dealing with nine customers during the period between 1984 and 1986. These business transactions were made either through Mr. Auto or FIA, and, with certain exceptions, generally relate to Williams accepting a premium for a policy and then failing to procure a policy for the customer, or falling to refund the premium after the customer cancelled the policy. Some of these customers eventually filed complaints with the Department, and after an investigation was conducted, the administrative complaint, as amended, was issued. That prompted this proceeding. The State of the Industry and Williams in 1984-86 Before discussing the specific charges, it is appropriate to describe the industry conditions and practices as they existed in 1984-86. These were established without contradiction by expert witness Beverly. It is within this broad framework that Williams operated when the transactions in question occurred. The expert's bottom line conclusion, after reviewing the nine customers' files, was that no impropriety had occurred. The agent-customer interface normally begins when a customer visits an insurance agent to purchase a policy. The agent will generally get a rate quotation by telephone from a managing general agent (MGA) who brokers policies on behalf of various insurance companies. An MGA may more accurately be described as a branch office of the insurance company under contract. If the rate quoted by the MGA to the agent is acceptable to a customer, the agent has the applicant complete an application and pay the quoted premium, or at least make a down payment on the same. The application and premium are then forwarded by the agent to the MGA for risk review to determine if the applicant meets underwriting requirements. At the same time, the agent will issue a binder to the customer which evidences temporary coverage until the application is accepted or rejected by the insurance company. In the event coverage is later declined, industry practice dictates that the agent obtain coverage with another company as soon as possible since the agent has the responsibility to maintain coverage on a customer. However, what constitutes a reasonable period of time to do so was not disclosed. In obtaining new coverage, the agent need not have the customer execute a new application since the validity of the original application is not affected. The customer should, however, be notified at the earliest convenient time that coverage is with a different company. In some cases, a customer may choose to finance his premium through a premium finance company. If he does, the finance company pays the entire premium to the MGA or insurer when application is made, and the customer pays the amount owed (plus a finance charge) to the finance company through installment payments over an agreed period of time. If for some reason an application is not accepted by the insurer, it is the responsibility of the MGA or insurer to so notify the premium finance company and return the money. The finance company must then refund any money paid by the insured. When the events herein occurred, it was established through expert testimony that the Florida insurance marketplace was in a "chaotic" condition and could be described as a "zoo." During this time, a small agent such as Williams might find herself doing business with as many as fifteen different MGAs, each with a different set of rules. Thus, it was common for an agent to be confused as to her binding authority with a particular MGA and whether the proper amount of coverage was obtained. Moreover, because of the chaotic marketplace, it became increasingly difficult to find companies who would write coverage on certain types of policies. It was further established that in 1984-1986 the MGAs were "overflowed with work" thereby causing delays of up to "months" for an agent to learn from an MGA if the risk had been accepted and a policy issued. Applications and checks were also lost or misplaced by the MGA and carrier during this time period. Consequently, the agent would think that coverage had been obtained, and so advise the customer, but would later learn that the application had been rejected, or the company had no record of one ever being filed. There were also lengthy delays in MGAs and insurance companies returning unearned premiums to the agent for repayment to the customers. According to industry practice, once a refund is received by an agent, checks to customers would typically be issued only once a month. In Williams' case, she made refunds on the twenty-fifth day of each month. A further prohibition on an agent is that a refund can be paid to a customer only after the agent receives the refund check from the insurance company or MGA. In other words, refunds from an agent's own funds are prohibited. As a result of this confusion, the number of occasions when an agent was cited for an error or omission (E&O) went up "astronomically." Indeed, industry statistics tell us that one in six insurance agents has a claim filed against his E&O policy for failure to provide coverage as promised. For this reason, no reasonable agent, including Williams, would do business without an E&O policy. When the policies in question were sold, Williams had approximately 4,000 active and inactive files in her office. Her office help was mainly persons with no prior training in insurance, and who only stayed on the job for a matter of weeks or months. Consequently, there was some confusion and disarray in her two offices. Even so, Williams was responsible for the conduct of her employees. At the same time, however, it was not unreasonable for Williams to assume that, due to the overload of work on the MOAs, an agent could expect no action on an application to be taken by an MGA or carrier for many months, and that applications and checks might be misplaced or lost. Count I This count involves an allegation that Williams violated nine sections of the Insurance Code in conjunction with the sale of a boat insurance policy to David and Margaret Copeland on September 19, 1984. The evidence reflects that Margaret Copeland applied for insurance on her boat with Mr. Auto on or about September 19, 1984. Copeland had previously been turned down for insurance by several other local agents. After Williams received a telephonic quote of $168 per year from an MGA, and relayed this advice to Copeland, Copeland gave a $30 check as a down payment on her policy. The remaining premium was paid by two partial payments made on October 6 and November 7, 1984, respectively. Copeland was issued a binder to evidence her insurance coverage, and a receipt for the $30 down payment. The binder indicated that Barnett Bank was the loss payee and that coverage was with "Professional." In actuality, "Professional" was Professional Underwriters Insurance Agency, Inc. (Professional), an MOA in Altamonte Springs for various insurance companies doing business in the state. According to Williams, the application and check were forwarded to Professional shortly after the application was executed. Because the boat was being financed with Barnett Bank, and the lender required evidence of insurance, Copeland instructed Mr. Auto to furnish a copy of the policy to the bank. A copy of the binder was furnished by Williams to the bank on November 19, 1984, and again on December 7, 1984. However, after Margaret Copeland did not receive a copy of a policy, she contacted Mr. Auto on several occasions to obtain a copy but was given "excuses" why one had not been issued. At this point Williams simply believed Professional was "dragging its feet" since past experience had taught her Professional typically took three to four months to forward a copy of the policy. Nonetheless, in response to Copeland's requests, Williams wrote Professional on December 3, 1984, asking that it "please check on the (Copelands') boat policy which was written 9-19-84" because the lienholder needed a copy. Professional did not respond to Williams' request. After no policy was received, Margaret Copeland contacted Professional's office in Altamonte Springs by telephone and learned no policy had been issued by that firm. The Copelands then requested Mr. Auto to cancel their policy on March 12, 1985, and demanded a full refund of their premium. After having the Copelands execute a notice of cancellation, the same was forwarded by Williams to Professional with a note reading "Karen, check this out and see what is happening," together with a copy of her previous request that Professional check on the whereabouts of the policy. Again, Professional did not respond to this inquiry. Williams then telephoned Professional and spoke to its office manager seeking advice on the amount of refund due the Copelands. She was told to make a proration. On May 19, 1985, Williams offered David Copeland a partial refund ($89) of his premium but he declined. This amount of refund was based on Williams' belief that coverage existed from September 18, 1984, when she received a quotation, until March 12, 1985, or for approximately six months, and $59 represented the remaining unearned premium. Given the climate of the industry at that time, it was reasonable for Williams to make such an assumption. After Copeland declined her offer, Williams wrote Professional seeking further assistance and stating that "Insured was in here today, wanted his refund. I tried to prorate it and give it to him." Again, Williams received no formal reply from the MGA. To date, a policy has not been produced. Williams eventually refunded the entire premium to the Copelands in February 1987. Through testimony from a Professional representative, it was established that Williams had no binding authority with Professional except on homeowners and dwelling fire policies. On all others, including the type the Copelands desired, it was necessary for the agent to first telephone Professional and receive a "telephone bind" from a Professional representative. In a letter to petitioner dated August 7, 1985, Professional acknowledged that there was "a possibility this risk may have been quoted," but it could find no record of an application having been filed or verification of coverage bound through a binder number or cashed check. It did acknowledge receiving the Copelands' request to cancel their policy in March 1985. If a binder had been authorized, it would have been recorded in a binder book with a number assigned to that binder unless the company lost the policy or otherwise inadvertently failed to record this information. The representative also confirmed that Professional routinely brokered this type of policy in 1984, and that it binds several thousand policies per year. Given this volume of work, the representative acknowledged it was possible that Williams or an employee of her firm may have been given a telephone quote for the Copeland policy, or that the application could have been misplaced. C. Count III On June 19, 1985, William C. Norton, a retired railroad conductor, went to Mr. Auto to purchase an insurance policy for two automobiles. After being quoted an annual premium of $315 by an MGA (Jergen & Roberts), Williams gave this advice to Norton who then gave her a check in that amount. Norton was given a receipt and a binder to evidence his coverage. The binder reflected Norton's application had been placed with "Foremost," which is Foremost Insurance Company (Foremost) in Grand Rapids, Michigan. Williams forwarded the application to the MGA but it was later returned unbound because of several traffic violations by Norton. She then "shopped" the application around and was able to procure a policy from Orion Insurance Company (Orion) through Standard Underwriters, an MGA, at an estimated cost of $528.70 instead of the previously quoted rate of $315 per year. It should be noted that during this period of time, Norton was covered through binders executed by Williams. After Williams paid the amount ($528.70) due the MGA, a policy number (PA-102390) was issued. However, through "neglect" Williams never billed Norton for the difference between the originally quoted premium and the $528. After Orion reviewed Norton's driving record, it increased the annual premium to $622. When Williams received a bill for $622 per year, she sent Norton a notice on October 24, 1985, requesting an additional $144. 2/ When he refused, the policy was cancelled by the company for nonpayment in February 1986. By this time, Norton had gone to another company to obtain coverage. He had also requested from Williams a copy of his policy on four or five occasions but one was never produced. Norton also demanded a full refund of his money even though he had been covered by binders and a policy from June 1985 until February 1986, and was not entitled to a refund. When Williams refused, Norton filed an action in small claims court in February 1986, and won an uncontested judgment for $315. Williams stated she did not contest the matter because of several stressful events then occurring (e.g., a divorce and an employee theft) and the expense of hiring legal counsel. Mobile Home Division of Florida (MHD) is an MGA in Fort Lauderdale that reviews applications for automobile insurance with Foremost (and others), and determines if the applicant meets Foremost's underwriting requirements. It is one of five MGAs in the State representing Foremost. A representative of MHD reviewed his firm's records, and found no evidence of having received the Norton application. However, this was not surprising since Williams had not used MHD to obtain Norton's policy. Count VI Terryl J. Wisener is a college student with numerous traffic violations on his record. Because of this, he was forced to obtain automobile insurance through the Florida Joint Underwriters Association (FJUA), a small group of companies who write policies for high risk drivers such as Wisener. Insurance agents are "assigned" to one of the companies writing policies, even though they are not a regular agent of that company. Allstate Insurance Company (Allstate) happened to be a servicing carrier for FJUA in 1986, and Williams accordingly filed FJUA applications with that carrier when seeking insurance for high-risk customers. Under then existing rules, Williams could temporarily "bind" Allstate by writing a binder on a policy, but approval of the application and issuance of permanent coverage rested with Allstate. Until the application was rejected by Allstate, the driver was insured through the binder. During this same time period, it was "commonplace" for an FJUA carrier to return an application because of an "insignificant error" to avoid having to write a policy on a high-risk customer. On December 30, 1985, Wisener purchased a six-month automobile insurance policy through Williams. When the policy was due to expire on June 30, 1986, he returned seeking a renewal. Williams attempted to place the liability coverage with Allstate and the physical damage coverage through "Coastal," an MGA for Adriatic Insurance Company. She was quoted premiums of $996.70 and $814.70, respectively, for the two policies. After accepting a down payment of $552 from Wisener, she issued a binder and mailed the application to Allstate and Coastal with drafts for the entire premiums due. Because Wisener's Chevrolet Camaro was an eight-cylinder automobile, Coastal rejected the application in October 1986. Williams then attempted to replace the physical damage coverage with Allstate in November 1986. By virtue of Williams' binding authority, Wisener had coverage with Allstate until it rejected his application. The application, along with about fifty or sixty others, was eventually rejected by Allstate on February 27, 1987, because of a lack of "information." Until this occurred, Williams properly assumed that Wisener was covered and that Allstate was reviewing his application. In the meantime, and apparently without advising Williams, Wisener decided in October 1986 to purchase a policy through his parents' Allstate insurance agent in Port St. Lucie. He did so because he "believed" he had no insurance. However, he never made inquiry with Williams to confirm or deny this, or asked for a refund of his money. A representative of Allstate searched his firm's records and could find no evidence that a policy was ever written for Wisener through Williams. The company does acknowledge that it received Wisener's application and that it eventually returned the same "unbound" almost four months later. It gave no explanation for the delay. Although Wisener had not received a refund as of the time of hearing, this responsibility rests with Allstate (and not Williams) since it has never refunded to Williams the money paid by her for Wisener's policy. Count VII This count concerns a mobile home insurance policy purchased by Samuel and Mary Jo Moore in June 1985 from FIA. On June 25, 1985, Mary Jo Moore made application to renew her insurance policy on the mobile home. The policy had been in force for some ten years. Moore paid Williams $118 by check which was deposited and cashed by Williams. A check for $23 was also paid at a later date due to a premium increase. Williams issued Moore a binder evidencing coverage with Mobile Home Insurance Association (MHIA), an MGA in Gainesville, Florida. Shortly afterward, Williams learned from the MGA that the Moores' previous carrier, American Pioneer, had gone bankrupt and that there was a limited market for the Moores' application. Williams thereafter forwarded the application to another MGA, Jerger & Sons, Inc. (Jerger), in early August 1985. Temporary coverage was eventually issued by Jerger on August 23, 1985. However, the application was deemed to be incomplete because information regarding the number of spaces in the Moores' trailer park was lacking. This was not surprising since the Moores lived on private property and not in a trailer park. The application was returned to Williams with a reminder that unless the missing information was submitted to Jerger by September 6, 1985, coverage would be terminated. When no information was filed by that date, Jerger cancelled its coverage and returned the unbound policy on September 12, 1985. The Moores were not notified of this lapse in coverage. By allowing the coverage to lapse, and not notifying the Moores, Williams was negligent in her duties as an agent. After Jerger returned the application to Williams in late August 1985, Williams attempted to get the Moores to furnish photographs of the trailer site, and to sign the new application. Because both worked at jobs during business hours, Williams claimed she was unable to reach them prior to September 6, 1985. Williams continued her efforts to place the insurance and eventually filed the application with Foremost in March 1986. Although Williams concedes a lapse in coverage did occur, there is no evidence that this was an intentional or debilitate act on her part. After having the application returned twice, coverage was finally obtained for $201 in July 1986, or almost a year after the Moores first approached her concerning a renewal of their policy. This policy is effective through July 1987. Williams paid out of her own funds the difference between the original premium ($141) and the $201. In view of the original premium being applied to the 1986-87 premium, the Moores are not due a refund. On October 31, 1985, a tornado struck in the Okeechobee area causing damage to the Moores' trailer. The Moores contacted respondent who, at her own expense, had an adjuster from Vero Beach survey the damage in November. The adjuster learned no coverage was in force. The Moores then contacted respondent who, for some reason, had Jerger search for a policy. As might be expected, none was found, and Jerger would not agree to cover the loss. Williams instructed the Copelands to proceed against her E&O carrier for payment of their claim. At the time of final hearing, the claim had not yet been resolved. Count VIII On or about February 19, 1986, William A. McClellan, a retiree, purchased an automobile insurance policy from FIA. He paid $201 by check to Williams and received from her a receipt and binder evidencing coverage with "AIB" (Associated Insurance Brokers), the MGA for Balboa Insurance Company in Newport Beach, California. After the application was forwarded to AIB, it was initially returned because the agency check was drawn on insufficient funds. Thereafter, the check was made good (with no lapse in coverage) and Williams subsequently received a bill from Balboa for $247, or $46 more than she had previously quoted McClellan. When McClellan was presented the bill for an additional premium on May 1, 1986, McClellan told Williams to cancel his policy and to refund the unearned premium. She relayed this request to AIB and coverage was cancelled effective June 13, 1986. Thereafter, McClellan visited Williams' office at least seven or eight times seeking his refund, but was always told it was still being processed. This was a correct representation by Williams since AIB was less than diligent in processing a refund check. McClellan also filed a complaint with petitioner. Upon inquiry by petitioner, Williams advised the Department that McClellan would be paid as soon as AIB issued her a check. On or about July 29, 1986, AIB finally cut a check in the amount of $91.22 payable to Williams, and eventually issued a second check in the amount of $25.38 on October 1, 1986. The delay in issuing the checks was attributable to AIB and not Williams. After Williams received the first check, she offered McClellan a partial refund of $91.22 but he declined the offer. On October 10, 1986, or the day after Williams received the second check by mail, a representative of AIB flew by private plane to Okeechobee and obtained $133 in cash from Williams, who by then had received the second check from AIB. 3/ The representative paid McClellan the same day. Count IX On or about March 16, 1985, Luther B. Starnes purchased an insurance policy for his two automobiles from Mr. Auto for which he paid $473 by four installments over the next few months. After Williams received a telephone bind, Starnes was issued a binder evidencing insurance with a company called "Integrity." He also received a "Florida Vehicle Identification Card" evidencing PIP and liability coverage on his vehicles. In this case, Williams placed the coverage by telephone with AIB, the MGA for Integrity, which authorized her to temporarily bind the coverage. The application and check were thereafter sent by Williams to the MGA. After not receiving a policy by the fall of 1985, Starnes telephoned a district office of Integrity and learned his name was not on its computer. However, he did not contact Williams after that, or ask for a refund of his premium. Despite the accusation that Williams had no basis to believe that a policy had ever been issued by Integrity, an AIB representative confirmed at hearing that Starnes' application and premium had been received by AIB, and that AIB had issued a policy number covering Starnes. Indeed, respondent's exhibit 10 reflects that Integrity cashed the check, and simultaneously placed a sticker on the check which read "Integrity Insurance Co. Private Passenger Auto 100-FAB- 0206809." This indicated that AIB had assigned a policy number on behalf of Integrity and that Starnes' coverage was in effect. Indeed, Williams properly relied upon her cancelled check in believing that Starnes was insured. Moreover, it was appropriate for Starnes to pay for this coverage until Integrity formally rejected his application. Although Starnes never received a copy of a policy, the responsibility to issue one rested upon MGA or Integrity, but not Williams. Count X On or about July 11, 1986, David and Carolyn Douglas purchased an insurance policy for two trucks owned by David. The policy cost $1300 per year and Carolyn paid Williams this amount by check. A binder was given to Carolyn reflecting coverage through Dana Roerig and Associates (Roerig), an MGA in St. Petersburg for Canal Insurance Company (Canal). Under the MGA's then existing policy, it was necessary for Williams to forward the application to Roerig and request a rate quotation. After receipt of the application Roerig would normally telephone the agent, quote a rate, and then bind if the rate was acceptable. In this case, the quoted rate was unsatisfactory, and Roerig returned the application unbound on August 10, 1986. Williams then attempted to place the coverage through an MGA in Lakeland (E&S Agency). However, Williams was quoted a rate on September 25 which she knew was too expensive. After obtaining the second excessive quote, Williams immediately bound coverage with Allstate and forwarded the Douglas application to that carrier with an agency check on September 25, 1986. Because Allstate accepted only money orders or cashiers checks, and the application was undated, the application and check were returned by Allstate to Williams on October 7. Williams then sent Allstate a dated application and a money order in the amount of $1500, or $200 more than the original Douglas policy required. Although Allstate did not formally issue a policy, it assigned the Douglas application a policy number on December 15, 1986, and simultaneously issued a refund check for $121 to Douglas, since the policy cost $1,179 and not $1,300 as had been originally quoted to Carolyn Douglas. Therefore, at that point the coverage remained in effect. On December 23 Allstate issued another refund check to Douglas in the amount of $776 and advised it was cancelling coverage effective February 6, 1987. Allstate later returned the remainder of the $1,300 owed David and Carolyn Douglas. Therefore, even though they had coverage for some six months through various binders and the policy itself, the Douglases paid no premium. Although Carolyn Douglas made several attempts to obtain a copy of the policy, Williams could not produce one since the two MGAs and Allstate had held the application almost continuously for six months. It is noted that Allstate has never repaid Williams the $1500 sent by her with the Douglas application in October, 1986. Count XI Francis Carr is a locktender on Lake Okeechobee whose duties require him to open and close the locks. The job is subject to bids, and all bidders must have evidence of general liability insurance. Desiring to submit a bid, Carr purchased a one-year general liability policy from Mr. Auto on September 20, 1985, and paid Williams $540.75 for the coverage. Carr received a copy of a policy from Scottsdale Insurance Company (Scottsdale) on a later date. On April 15, 1986, Carr asked that his policy be cancelled. This was done the next day. Carr was due a $181 refund as unearned premium. Through no fault of Williams, the refund check was not issued by Scottsdale until October 21, 1986, or some six months later. Williams later endorsed the check without recourse to a local dress shop. In July 1986, Carr again bid on the locktender job, and, through his wife, made application on July 7 for a new policy so that he could submit a bid. Although the annual premium had now increased to approximately $1,500 per year, Mrs. Carr paid only a $215 down payment. Under this type of policy, Carr was responsible for thirty-five percent of the entire year's premium even if he cancelled the policy after one day. Therefore, the policy had a minimum cost of $525 regardless of its term. Because he had not paid this minimum amount, Williams applied Carr's $181 refund check from the prior year to the minimum amount owed. This was consistent with the industry practice of agents applying credit refunds to new policies of this nature. She also paid $85 from her own funds in early October 1986 to meet the thirty-five percent threshold amount. By then, however, Carr had instructed another employee to cancel his policy since his bid had not been accepted. When he didn't get a refund from the prior year, Carr filed a complaint with petitioner. However, Carr is not entitled to a refund from either year since he still owes Williams $85 for the 1986-87 policy, even after the 1985-86 refund is applied to the second policy. I. Count XII Frank I. Henry and Margaret J. Henry (no relation) lived together in a rented mobile home in 1984. Margaret purchased a policy on the mobile home contents from Mr. Auto in July 1984. She paid Williams a $40 premium, and then made three payments of $47.28 each to Envoy Finance Corporation (Envoy), a Deerfield Beach finance company which financed the balance of the amount owed. Margaret received a binder from Williams reflecting coverage with Mobile Homes Division (MHD), an MGA in Fort Lauderdale Envoy submitted a check for $118.50 to MHD on July 16, 1984, reflecting full payment for the policy. After forwarding the application to MHD, Williams assumed Henry had coverage through American Fidelity Company (AFC), a company which later went out of business that fall. According to MHD, however, the application should have been returned to Williams a few days after it was received because it had no insurance company writing those types of policies. Williams denied receiving the application, and MHD had no record of the application being returned. Williams' version is corroborated by the fact that MHD never advised Envoy that the policy had been returned, something MHD should have done if coverage was rejected. Moreover, MHD has never refunded the $118.50 paid by Envoy in July 1984. According to uncontradicted expert testimony, it is the responsibility of the MGA or carrier to advise the finance company of a coverage denial, and to make a refund to the finance company, which then makes a refund to the customer. Therefore, MHD or AFC, but not Williams, is at fault for not refunding Henry's money. Around April 20, 1985, Frank's mobile home was damaged by a fire. His claim was rejected by MHD since it had no record of coverage. Prior to this time, no request for a copy of the policy had been made by Henry, and Williams properly assumed that Henry's coverage was in effect. Williams has since notified her E&O carrier of a possible liability. As of the time of hearing, Henry's claim was still unpaid and he has not received a refund of his premium from MHD, AFC or Envoy.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty of a single violation of Subsection 626.621(6), Florida Statutes (1985), and that all other charges be dismissed. Respondent should be given a reprimand for this violation. DONE AND ORDERED this 29th day of May 1987, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of May 1987.
The Issue The issue presented is whether Respondent, a licensed insurance agent, is guilty of violating the statutes regulating the conduct of an insurance agent, and if so, what disciplinary action should be taken against him, if any.
Findings Of Fact At all times material hereto, Respondent has been eligible for licensure and licensed as a life and health insurance agent and as a dental health care contract salesman. For many years, Respondent had also been licensed to solicit general lines -- property, casualty, surety, and miscellaneous lines -- insurance in this state. Respondent was unaware that this license expired on March 24, 1987. At all times material hereto, Respondent was, however, eligible for licensure as a general lines agent. At all times material hereto, Respondent was one of the officers of Johnson's Model City Insurance Agency #1, Inc., a Florida corporation. That corporation was involuntarily dissolved on November 4, 1988. On December 30, 1986, Respondent telephoned Petitioner to discuss the propriety of an insurance agent charging a consulting fee. Following that telephonic conversation, an attorney for Petitioner directed correspondence to Respondent confirming that telephone conversation, advising that a consulting fee could legally be charged under certain circumstances. Those circumstances included the use of a separate consulting contract between the agent and the insured so that the insured would fully understand that he or she was entering into a separate contract and paying a separate consideration in advance of the performance of consulting services. Additionally, the services rendered must be other than those normally provided by an insurance agent. Further, if a separate consulting contract were effectuated, an agent could set up a separate consulting corporation to enter into such contracts. Hartford Insurance Company sells automobile insurance in the State of Florida by use of a toll-free telephone number. People who know the telephone number can call Hartford directly, obtain a quote for automobile insurance, and purchase a policy directly from Hartford. Hartford has no insurance agents in the State of Florida and pays no commissions to insurance agents in Florida for the obtaining of automobile insurance customers. A person can obtain a quote in writing from the Hartford in advance of purchasing a policy. Sometimes, the quotation card and the policy are issued and mailed simultaneously by Hartford to its new insureds. On September 20, 1987, Patricia Moss telephoned J. M. C. Insurance Consultants pursuant to an ad in the telephone yellow pages. She inquired about obtaining automobile insurance to replace her current policy which would expire on September 22, 1987. She spoke with an employee named Betty who advised her that she could obtain replacement insurance at a cost of $927. Since the cost quoted to her was substantially lower than the prices she had been quoted by the other agencies she had consulted, Moss went to the offices of J. M. C. on September 21, 1987. Betty presented Moss with a number of documents to sign. She signed a Power of Attorney appointing Johnson's Model City Insurance, Inc., doing business as JMC Insurance Consultants as her attorney-in-fact to obtain insurance for her, specifically ratifying and confirming actions taken on her behalf by J. L. Johnson- consultant. She also executed an Agreement with Consultant specifying the services that JMC Insurance Consultants would perform on her behalf. She signed a further statement which provided that: "I understand that JMC Insurance is acting as Consultants for my insurance placement and is entitled to any and all consultation fees." She also signed a document written in boldfaced type which states: IMPORTANT NOTICE THIS LETTER IS TO INFORM YOU THAT JMC INSURANCE CONSULTANTS ARE NOT AGENTS NOR DO WE REPRESENT HARTFORD INSURANCE COMPANY IN ANY WAY WHATSOEVER. WE REPRESENT "YOU" THE CLIENT AND WE ACT IN YOUR BEHALF WITH THE RIGHT THAT YOU GIVE US THROUGH A POWER OF ATTORNEY. WE ENDEAVOR TO PLACE YOUR AUTO INSURANCE FOR YOU ON YOUR BEHALF. WE ARE YOUR CONSULTANT. IF YOU HAVE A PROBLEM PLEASE CALL US WE ARE HERE TO HELP AND ACT IN YOUR BEHALF. CALL US FIRST. LET US HANDLE IT. CLIENT. I HAVE READ AND I UNDERSTAND. Moss gave JMC Consultants a check in the amount of $262.50 for which she was given a receipt which carried the specific notation that the money she had paid was for an insurance consultant's fee. She was also given a small card entitled Insurance Identification Card on which Betty filled in information showing that she would be insured by Hartford effective on the following day and specifically describing the coverage provided, the automobile insured, and the name and address of Moss. Within a week she received directly from the Hartford an insurance policy for the benefits which she sought. The policy itself reflected that the premium for the policy was $632 and that she would be receiving a bill from Hartford for that amount. She telephoned Betty, demanding a refund of her $262.50, which demand was refused. Betty explained to her that the amount was for the consultant's fee for obtaining the low- cost coverage for Moss. Hartford's direct marketing program does allow people to purchase insurance on someone else's behalf utilizing a Power of Attorney. Although Hartford's records do not reflect a Power of Attorney from Moss to J. M. C. Consultants or Respondent, Hartford's records regarding their policyholder Moss are not accurate. For example, they erroneously reflect that they quoted a rate to Moss on September 15, a week before they received any contact on her behalf. Although Moss testified that Betty told her the $262.50 was the down payment on her insurance premium, her testimony is not credible in view of the numerous documents that she signed stating that she fully understood that Respondent was not an agent for Hartford, that Respondent would be acting on her behalf pursuant to the Power of Attorney and Consultant's Agreement which she had signed, and the other documents reflecting that the $262.50 was a consultant's fee which she was paying to Respondent to act on her behalf. Her testimony that she did not understand is refuted by the documents she signed saying that she did. There is no allegation that Moss, a retired registered nurse, was unable to read. Rather, it is concluded that Moss voluntarily chose to pay the Hartford premium plus Respondent's consulting fee since the total price for the two charges was still substantially less than she could have obtained insurance for from other sources. Allstate Insurance Company is an insurer which sells insurance policies through their agents in the State of Florida. It also has a division which participates in Florida's Joint Underwriting Association (hereinafter "FJUA"), a program through which high-risk drivers who cannot obtain insurance in the regular voluntary insurance market can obtain automobile insurance. Prior to the time that his general lines agent license expired, Respondent participated in that program and was assigned to write insurance for Allstate for policyholders participating in the program. The Producers Contract entered into between Respondent and the FJUA, which assigned him to Allstate Insurance Company, provided that it would automatically terminate if an agent's general lines license expired. On July 22, 1988, James Tillie came to the office of J. M. C. to procure automobile insurance for the van that he used in his business. After meeting with Respondent, Tillie gave Respondent a check in the amount of $204 as a down payment on an automobile insurance policy. The check was endorsed and deposited into the business bank account of J. M. C. Respondent gave James Tillie an automobile insurance binder which reflected that his insurance policy was to be issued through Allstate Insurance Company. Under the terms of Respondent's contract with the FJUA, Respondent was required to submit James Tillie's application and premium to Allstate within 24 hours. The FJUA application acts as a binder. Once the application is completed and the premium is paid to the agent, the insured has automatic coverage for 30 days during which time the carrier, Allstate in this case, can act on the application. There is no evidence as to when Respondent forwarded James Tillie's application to Allstate; however, Allstate has no record of ever receiving the application. Respondent did tell James Tillie that within a couple of months he would receive from Allstate his policy and instructions for payment of the balance of his premium. After a month or two had elapsed, James Tillie became concerned since he had not yet received his insurance policy. He contacted Respondent who assured him that he did have insurance coverage. Shortly thereafter, James Tillie received in the mail from Respondent a card entitled Insurance Identification Card. On that card information had been filled in showing a policy number, the effective date, the insurance company as Allstate Insurance Company, a description of the insured vehicle, and the name and address of James Tillie. This is not an official Allstate identification card, and no one purported it to be such. An official Allstate Insurance card is issued by Allstate as part of the policy issued by it. On September 23, 1988, Sina Tillie, James' mother, visited J. M. C. for the purpose of purchasing automobile insurance for her new automobile. Sina Tillie is an elderly person who had never before owned an automobile or possessed a driver's license. She wished to purchase insurance on a brand- new automobile. Sina Tillie gave Respondent $1,828 in cash as full payment of the policy's annual premium. Respondent gave her an insurance binder which reflected that her insurance was placed with Allstate. Allstate has no record of receiving Sina Tillie's application and premium from Respondent. Subsequently, Sina Tillie became concerned when she had not yet received her insurance policy. She asked her daughter to contact Respondent. Respondent advised her daughter not to worry. He then mailed to Sina Tillie an Insurance Identification Card similar to the one which he had provided to James Tillie reflecting James' coverage. He also telephoned Sina Tillie to assure her that if anything happened, all she would need to do would be to show the card saying that she was covered and to contact him. Since neither he nor his mother had received a policy from Allstate, James Tillie called Allstate. He did not know that there were, in effect, two Allstates. The Allstate office which he contacted was a regular Allstate office which markets insurance to customers who call or come in, and not an office affiliated with the FJUA program. The person with whom he spoke told him that neither he nor his mother were insured by Allstate and that the policy numbers reflected on the Insurance Identification Cards given by Respondent to James and his mother were not Allstate policy numbers, but rather were binder numbers. James Tillie then contacted Respondent who consistently maintained that both James and Sina were insured. Respondent contacted Allstate regarding James' and Sina's policies. James Tillie came to the office of J. M. C. and met with Respondent. He advised Respondent that he and his mother had obtained insurance elsewhere and requested refunds of the premiums that he and his mother had paid. Respondent told Tillie that he could not refund the premiums since both James and his mother were insured in exchange for those premiums. Respondent eventually told James Tillie that he would refund the premiums if the Tillies would sign releases. James Tillie maintained that he would sign releases only after he had received the refund of the premiums. The meeting ended in stalemate. James Tillie contacted Petitioner, and Petitioner contacted Respondent. Respondent maintained that he would refund the premiums in exchange for a release. Petitioner forwarded a copy of Respondent's letter to James Tillie. Respondent eventually made arrangements with James and his mother to refund the premiums in monthly payments since he did not have the money to refund the premiums in full. By the time of the final hearing in this cause, Respondent had only refunded the total amount of $600 to the Tillies. At the time that Respondent's general lines agent license with Integrity Insurance Company was cancelled on March 24, 1987, he believed that he was being re-licensed by Fortune Insurance Company. However, he never received a license for or from Fortune and never checked to ascertain why.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding Respondent guilty of statutory violations as set forth in this Recommended Order and suspending Respondent's licensure and eligibility for licensure for a period of 60 days from the date of the Final Order entered in this cause. DONE and ENTERED this 13th day of June, 1990, at Tallahassee, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of June, 1990. APPENDIX TO RECOMMENDED ORDER Petitioner's proposed findings of fact numbered 1-3, 7-9, 14-19, 21-26, and 28-32 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed findings of fact numbered 4-6, 10, 11, 13, 20, and 27 have been rejected as not being supported by the weight of the credible evidence in this cause. Petitioner's proposed finding of fact number 12 has been rejected as being unnecessary for determination of the issues in this cause. COPIES FURNISHED: James A. Bossart, Esquire Department of Insurance and Treasurer Division of Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 Johnny L. Johnson 17120 Northwest 27th Avenue Opa Locka, Florida 33056 Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Don Dowdell, General Counsel Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 =================================================================
The Issue Does Petitioner, Department of Financial Services (DFS), have authority to determine if Respondent, Alberto Luis Sotero (Mr. Sotero) and Respondent, FalconTrust Group, Inc. (FalconTrust), wrongfully took or witheld premium funds owed an insurance company while a civil action between the insurance company and Mr. Sotero and FalconTrust pends in Circuit Court presenting the same issues? Should the insurance agent license of Mr. Sotero be disciplined for alleged violations of Sections 626.561(1), 626.611(7), 626.611(10), 626.611(13), and 626.621(4), Florida Statutes (2007)?1. Should the insurance agency license of FalconTrust be disciplined for alleged violations of Section 626.561(1), 626.6215(5)(a), 626.6215(5)(d). 626.6215(5)(f), and 626.6215(5)(k), Florida Statutes?
Findings Of Fact Based on the testimony and other evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: Mr. Sotero is licensed by DFS as an insurance agent in Florida and has been at all times material to this matter. He holds license number A249545. FalconTrust is licensed by DFS as an insurance agency in this state and has been at all times material to this matter. It holds license number L014424. Mr. Sotero is an officer and director of FalconTrust and held these positions at all times material to this proceeding. Mr. Sotero also controlled and directed all actions of FalconTrust described in these Findings of Fact. Zurich American Insurance Company is a commercial property and casualty insurance company. FalconTrust Commercial Risk Specialists, Inc., and Zurich-American Insurance Group entered into an "Agency-Company Agreement" (Agency Agreement) that was effective January 1, 1999. The Agency Agreement bound the following Zurich entities, referred to collectively as Zurich: Zurich Insurance Company, U.S. Branch; Zurich American Insurance Company of Illinois; American Guarantee and Liability Insurance Company; American Zurich Insurance Company; and Steadfast Insurance Company. The Agreement specified that FalconTrust was an "independent Agent and not an employee of the Company [Zurich.]". . .. The Agency Agreement also stated: All premiums collected by you [Falcontrust] are our [Zurich's] property and are held by you as trust funds. You have no interest in such premiums and shall make no deduction therefrom before paying same to us [Zurich] except for the commission if any authorized by us in writing to be deducted by you and you shall not under any circumstances make personal use of such funds either in paying expense or otherwise. If the laws or regulations of the above state listed in your address require you to handle premiums in a fiduciary capacity or as trust funds you agree that all premiums of any kind received by or paid to you shall be segregated held apart by you in a premium trust fund account opened by you with a bank insured at all times by the Federal Deposit Insurance Corporation and chargeable to you in a fiduciary capacity as trustee for our benefit and on our behalf and you shall pay such premiums as provided in this agreement. (emphasis supplied. The Agency Agreement commits Zurich to pay FalconTrust commissions "on terms to be negotiated . . . ." It requires FalconTrust to pay "any sub agent or sub producer fees or commissions required." The Agency Agreement also provides: Suspension or termination of this Agreement does not relieve you of the duty to account for and pay us all premiums for which you are responsible in accordance with Section 2 and return commissions for which you are responsible in accordance with Section 3 [the Commission section.] The Agency Agreement was for Mr. Sotero and Falcontrust to submit insurance applications for the Zurich companies to underwrite property and casualty insurance, primarily for long- haul trucking. The Agency Agreement and all the parties contemplated that Mr. Sotero and FalconTrust would deduct agreed-upon commissions from premiums and remit the remaining funds to Zurich. On September 14, 2000, Zurich and Mr. Sotero amended the Agency Agreement to change the due date for premium payments and to replace FalconTrust Group, Inc. (FalconTrust) for FalconTrust Commercial Risk Specialists, Inc., and to replace Zurich-American Insurance Group and Zurich Insurance Company, U.S. Branch, with Zurich U.S. Mr. Sotero and Zurich's authorized agent, Account Executive Sue Marcello, negotiated the terms of the commission agreement as contemplated in the Agency Agreement. Mr. Sotero confirmed the terms in a July 20, 1999, letter to Ms. Marcello. The parties agreed on a two-part commission. One part was to be paid from the premiums upon collection of the premiums. The second part, contingent upon the program continuing for five years, was to be paid by Zurich to Mr. Sotero and FalconTrust. The total commission was 20 percent. FalconTrust and Mr. Sotero were authorized to deduct 13 percent of the commission from premiums before forwarding them to Zurich. The remaining seven percent Zurich was to pay to Mr. Sotero and FalconTrust at the end of the program or after the fifth year anniversary date. The letter spelled out clearly that Zurich would hold the money constituting the seven percent and was entitled to all investment income earned on the money. The passage describing the arrangement reads as follows: Our total commission is 20 percent however Zurich will hold and retain the first 7 percent commission where they are entitle [sic] to earn investment income. I understand that FalconTrust will not benefit from this compounded investment income. However you mentioned you would increase our initial commission that is set at 13 percent currently from time to time depending on FalconTrust reaching their goals, but it will never exceed a total commission of 20 percent. It is to our understanding that the difference will be paid at the end of the program or after the fifth year anniversary date being 12/31/2005, but not earlier than five years. I do understand that if Zurich and/or FalconTrust cancels the program on or before the fourth year being 12/31/2004 that we are not entitle [sic] to our remaining commission that you will be holding. If the program is cancelled after 12/31/2004 by FalconTrust and/or Zurich it is understood that all commission being held will be considered earned. (emphasis added.) Until the program ended, the parties conducted themselves under the Agency Agreement as described in the letter. At some point the parties agreed to decrease the percentage retained by Zurich to five percent and increase the percentage initially paid to and kept by FalconTrust to 15 percent. During the course of the relationship FalconTrust produced approximately $146,000,000 in premiums for Zurich. At all times relevant to this matter, all premium payments, except for the portion deducted by sub-agents and producers before forwarding the payments to Mr. Sotero and FalconTrust were deposited into a trust account. The various sub-agents of FalconTrust collected premiums and forwarded them to FalconTrust, after deducting their commissions, which were a subpart of the FalconTrust 13 percent commission. FalconTrust in turn forwarded the remaining premium funds after deducting the portion of its 13 percent left after the sub-agent deduction. This was consistent with the Agency Agreement and accepted as proper by Zurich at all times. All parties realized that the held-back seven percent, later five percent, was money that Zurich would owe and pay if the conditions for payment were met. The parties conducted themselves in keeping with that understanding. Mr. Sotero and FalconTrust described the practice this way in their Third Amended Complaint in a court proceeding about this dispute: "In accordance with the Commission Agreement, Zurich held the contingency/holdback commission and received investment income thereon." (Emphasis supplied.) In 2006 Zurich decided to end the program. In a letter dated December 8, 2006, Tim Anders, Vice President of Zurich, notified Mr. Sotero that Zurich was terminating the Agency-Company Agreement of January 1, 1999. The letter was specific. It said Zurich was providing "notification of termination of that certain Agency-Company Agreement between Zurich American Insurance Company, Zurich American Insurance Co. of Illinois, American Guarantee and Liability Insurance Co., American Zurich Insurance Company, Steadfast Insurance Company . . . and FalconTrust Grup, Inc. . . ., dated January 1, 1999, . . .." Mr. Sotero wrote asking Zurich to reconsider or at least extend the termination date past the March 15, 2007, date provided in the letter. Zurich agreed to extend the termination date to April 30, 2007. At the time of termination FalconTrust had fulfilled all of the requirements under the Agency-Agreement for receipt of the held-back portion of the commissions. Mr. Sotero asked Zurich to pay the held-back commission amounts. He calculated the amount to exceed $7,000,000. Zurich did not pay the held- back commission amounts. As the program was winding down and the termination date approached, FalconTrust continued to receive premiums. As the Agency Agreement and negotiated commission structure provided, FalconTrust deducted its initial commission from the premium payments. But, reacting to Zurich's failure to begin paying the held back commission amounts, Mr. Sotero engaged in "self help." He deducted at least $6,000,000 from the premium payments from customers, received and deposited in the trust account. He took the money as payment from Zurich of earned and held back commissions.3 Nothing in the Agency Agreement or negotiated commission agreement authorized this action. In March of 2007, Mr. Sotero and FalconTrust also brought suit against Zurich in the Circuit Court for the Eleventh Judicial Circuit, Miami, Florida. The issues in that proceeding include whether Mr. Sotero and FalconTrust wrongfully took premiums and how much Zurich owes them for commissions. As of the final hearing, that cause (Case Number 07-6199-CA-01) remained pending before the court and set for jury trial in August 2010. There is no evidence of a final disposition. But the court has entered a partial Summary Judgment determining that FalconTrust wrongfully took premium funds for the commissions that it maintained Zurich owed. The court's Order concludes that the issue is not whether Zurich owed money to FalconTrust, but whether FalconTrust was entitled to take the funds when it did. Like the undersigned, the court determines that it was not. Between December 8, 2006, the date of the cancelation letter, and April 30, 2007, the program termination date, Mr. Sotero and FalconTrust did not remit to Zurich any of the approximately $6,000,000 in premium payments received. Despite not receiving premiums, Zurich did not cancel or refuse to issue the policies for which the premiums taken by Mr. Sotero and FalconTrust were payment. The policies remained in effect.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services suspend the license of Adalberto L. Sotero for nine months and suspend the license of FalconTrust Group, Inc. for nine months. DONE AND ENTERED this 15th day of October, 2010, in Tallahassee, Leon County, Florida. S JOHN D. C. NEWTON, II 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 15th day of October, 2010.
The Issue The issue in this case is whether the license of Allen Franklin Meredith (Respondent) should be disciplined by the Department of Insurance and Treasurer (Petitioner) for allegedly allowing others to use his general lines insurance agent license, and to sign his name to insurance policy applications while Respondent was not present, as more particularly set forth in the Administrative Complaint issued herein on or about October 12, 1989.
Findings Of Fact At all times material hereto, Respondent has been licensed, and eligible for licensure, in the State of Florida as a life and health insurance agent, health insurance agent, and a general lines insurance agent. During April, 1989, Respondent approached Gordon Rowan, owner of Gordon Rowan Real Estate and Insurance in Winter Haven, Florida, to inquire whether Rowan would assist Respondent in obtaining a renewal of his general lines insurance agent license. Respondent was residing with his family in Georgia at the time, and told Rowan that his Florida general lines agent license was about to expire, and he needed to get licensed with a Florida company in order to apply for renewal. Rowan agreed to pay for Respondent's renewal fee, and for licensing him with a Florida Company doing business through Rowan's agency. On or about April 30, 1987, Rowan applied to National Insurance Associates for licensure on behalf of Respondent, and paid the applicable license fee. On or about May 20, 1987, Respondent was licensed with National Insurance Associates as a general lines insurance agent, and his Florida general lines license was renewed. Respondent admitted in an affidavit executed on November 16, 1987, that he did authorize Rowan to use his general lines license from the beginning of May to the end of June, 1987, while he was still living in Georgia. This authorization was in exchange for Rowan's assistance in obtaining Respondent's licensure with National Insurance Association, and renewal of his Florida license. However, at hearing Respondent testified that he never authorized Rowan to "use" his license, only to "place" his license with Rowan's agency. Rowan testified that Respondent had, in fact, told him that he could use his license and write business under it, including signing Respondent's name to policy applications, even though Respondent was not in the office and did not participate in these transactions. Rowan's assistant, May Satava, was present when Rowan and Respondent discussed their arrangement, and confirmed Rowan's testimony. Based upon the demeanor of the witnesses, as well as the affidavit executed by the Respondent shortly after the events involved in this matter, it is found that Respondent's uncorroborated testimony at hearing is not credible, while that of Rowan and Satava is found to be credible and consistent with statements made to Luis Rivera, the Petitioner's investigator, in October, 1987. Respondent did tell Rowan that he could use his general lines license to write business, and to sign his name to applications in exchange for Rowan's assistance in obtaining the renewal of his Florida general lines agent license. Working under Rowan's control and supervision, Satava did sign Respondent's name to approximately 48 policy applications from May through July, 1987, while Respondent actually signed only 3 additional policy applications during this period. Thus, the vast majority of business written under Respondent's license during this time was actually completed by Satava, an unlicensed person working under the control and supervision of Rowan, without any involvement of Respondent, pursuant to his agreement with Rowan that Rowan could use his license. Respondent did receive a commission payment in the amount of $200 from Rowan for June and July commissions. This represented Rowan's estimate of a reasonable payment to Respondent for the use of his license during this time when Satava signed Respondent's name to approximately 48 policy applications.
Recommendation Based upon the foregoing, it is recommended that Petitioner enter a Final Order suspending Respondent's general lines agent license, and eligibility for licensure, for a period of six months. DONE AND ENTERED this 9th Florida. day of March, 1990 in Tallahassee, DONALD D. CONN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 9th day of March, 1990. APPENDIX Rulings on the Petitioner's Proposed Findings of Fact: 1-2. Adopted in Finding 1. Adopted in Finding 2. Adopted in Finding 3. 5-6. Adopted in Finding 6. Adopted in Finding 7. Adopted in Finding 8. Respondent did not file Proposed Findings of Fact. COPIES FURNISHED: Gordon T. Nicol, Esquire 412 Larson Building Tallahassee, FL 32399-0300 Allen Franklin Meredith 140 Flamingo Drive Auburndale, FL 33823 Don Dowdell, Esquire General Counsel Department of Insurance The Capitol, Plaza Level Tallahassee, FL 32399-0300 Hon. Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300
