69B-215.070. Exchange of Business: Property and Casualty Insurance

(1) Purpose. This rule regulates the acts and practices of insurers and agents specifically with respect to exchange of business under Section 626.752, F.S.

(2) Required Disclosure on Forms. All business submitted under Section 626.752, F.S., must be submitted on forms which prominently display the name of the insurer. All forms must prominently display the insurer’s name at the time the forms are furnished to the agent by the insurer or on the insurer’s behalf by the managing general agent (MGA). No business may be submitted on forms which did not prominently display the name of the insurer at the time the forms were furnished to the agent. The term “forms,” for purposes of this subsection, includes coverage documents, binders, and applications. This restriction shall not apply to the placing of surplus lines business.

(3) Brokering Agent. If an insurer intends to do business with a resident general lines agent not appointed by the insurer, the insurer must furnish the agent with its forms, coverage documents, binders, applications and other incidental supplies subject to these rules necessary to facilitate the writing of exchange of business as defined in Section 626.752, F.S.

(4) Writing Business Outside of Appointment. Under Section 626.752, F.S., an agent is permitted to transact insurance for companies the agent is not appointed to represent. However, the Department will discipline an agent under Section 626.752(3)(g)3., F.S., among other provisions, if the agent fails to furnish the applicant or insured with completed legible copies of all documents signed by the applicant or the agent prior to the applicant paying any part of the premium.

(5) Entries In Brokering Agent’s Register. The Department interprets Section 626.752(3)(e), F.S., regarding entries into the Brokering Agent’s Register, to require the brokering agent to make sequential entries as each application is taken.

(6) Bank Accounts for Non-Appointing Insurers.

(a) Regarding Section 626.561, F.S., and the exchange of business, the following conditions shall be met:

1. At least one bank account shall be established by the agent which shall hold all the funds received on behalf of insurers with whom the agent is not appointed. Said account or accounts shall not hold any other funds. Examples of “any other funds” include:

a. Funds received on behalf of an insurer with whom the agent is appointed;

b. Business operating expenses; or

c. Any other funds that are not trust funds of the insurer or the insured.

2. The agent shall keep separate account ledgers as to each insurer and a master account ledger as to these insurers collectively.

3. The agent shall maintain these ledgers at the same time as the agent effects transactions in the bank account or accounts. These accounts must be reconcilable.

4. The ledger(s) must be sufficient to allow the Department to trace the flow of funds among all the parties (including the insurers, premium finance companies, agents, agency, and/or insured(s) and among the agent’s accounts (including the appropriate ledger(s) and bank account(s)). All such transactions shall be traceable back to the brokering agent’s register (or “binder book”) which register must contain the entries as required by Section 626.752(3)(e), F.S.

5. The agent shall retain copies of the documents necessary to account for trust funds, including checks, electronic transfers, debit and credit card transactions, withdrawals, bank statements, binders, refund receipts, and ledgers, for a period of at least three years. Preservation of records by computer or photographic reproduction or records in photographic form shall constitute compliance with this requirement.

(b) Nothing in this rule shall preclude an agent from maintaining separate bank accounts as required by an insurer or MGA, providing that the requirements do not conflict with paragraph (6)(a) of this rule.

(c) This subsection does not apply to funds collected through the placement of surplus lines business.

(7) Effective Date of Coverage. At the time that coverage is bound, the brokering agent shall promptly notify the insured and the insurer of effective time and date of coverage and the brokering agent shall promptly forward the application and any due premium funds to the insurer. If coverage is not bound at the time of the application, the insurer or brokering agent shall promptly notify the insured when the coverage is bound as to the time and effective date of coverage. If coverage is not accepted by the insurer, then the brokering agent shall promptly inform the prospective insured that coverage was not bound.

(8) It shall be the responsibility of the insurer and MGA to verify that any business submitted to them for consideration is submitted in compliance with the provisions of this rule and Section 626.752, F.S. The insurer and MGA shall immediately report and supply a copy of any document submitted in violation of this rule to the Bureau of Investigation, Division of Insurance Agent and Agency Services, in Tallahassee, Florida. No insurer or MGA shall accept business from an agent not appointed with the insurer on a form, coverage document, binder, or application not furnished to the agent by the insurer and/or MGA. If any insurer or MGA fails to comply with this rule, the insurer or MGA shall be subject to penalty as provided under the Florida Insurance Code and rule Chapter 69B-231, F.A.C. If an insurer accepts or an MGA handles business under Section 626.752, F.S., the insurer and the MGA shall be liable for coverage arising thereunder. This subsection is not intended to relieve the brokering agent of his or her obligation to comply with this rule or to preclude any right of an insurer or MGA to seek recovery from the brokering agent for damages incurred due to the wrongful acts of the brokering agent.

Rulemaking Authority 624.308 FS. Law Implemented 624.307(1), 626.561(1), 626.752 FS. History–New 10-12-93, Formerly 4-215.070, Amended 6-9-20.