When it comes to insurance sector unfair trading practices, we don’t need the law to figure out a handful of them. Unfair commercial practices include misrepresenting benefits, overcharging for coverage, and underpaying claims, which are also characterized as lying, cheating, and stealing. Yes, brokers and agents may attempt to rationalize the half-truth, and insurance companies may engage in promotional puffery, but the limits for all three sins are clearly drawn.
The unethical behavior of an insurance business does not end there. There are several less well-known acts that are prohibited by Florida law. Even if they don’t rate among the seven deadly sins, who’s to say the eighth or ninth aren’t just as dangerous?
The practice that has just come to our attention is “Slide.” An announcement was made by the Florida Office of Insurance Regulation “In February, the Department of Transportation released a “informational memorandum” on travel insurance policies and sliding premiums. The OIR apparently received complaints or concerns that consumers were being exploited. The OIR used the opportunity to remind insurers that under the state’s Unfair Insurance Trade Practices Act, sliding is expressly forbidden.
Sliding occurs when a consumer is misled by an insurance agent or firm regarding the breadth or cost of coverage. For example, the insurer may inform a customer that state law mandates that everyone buying a homeowners policy also buys auto insurance. Alternatively, the insurer may claim that auto insurance is included in the homeowners policy at no extra cost when, in fact, there is an additional cost that the consumer is unaware of.
The law also prohibits an insurer from charging a customer for coverage that he or she has not consented to buy. Without the consumer’s informed consent, an insurer cannot charge for coverage.
This was the issue that the OIR was made aware of, the lesser mortal sin that spurred the investigation “Last month, we received a “informational memorandum” (we used to call them bulletins).
The Florida Office of Insurance Regulation (OIR) is a state agency that regulates insurance “Automatically charging consumers for ancillary travel insurance without their informed agreement is illegal, according to OIR-15-01M, which was published on February 3, 2015.
What is sliding in insurance Florida?
The Florida Office of Insurance Regulation (“OIR”) reminded Florida insurers in Bulletin OIR-15-01M dated February 3, 2015 (but published today, February 6) to avoid practices that violate Florida’s Unfair Insurance Trade Practices Act and its prohibition against unfair methods of competition, and unfair or deceptive acts or practices pursuant to section 626.9541(z), Florida Statutes (2014)specifically, the practice of “sliding.”
Although the Bulletin is addressed to “All Insurers,” the OIR explained that it has learned that some insurers selling travel insurance through retail travel agencies in conjunction with online travel purchases require customers to deselect a “radio button” or check box to opt out of purchasing ancillary travel insurance.
The cost of the coverage is automatically added to the buyer’s final purchase if the consumer does not deselect the insurance item on the website.
According to Florida law, “sliding” is defined as “charging an applicant for a specific coverage or product in addition to the cost of the insurance coverage asked for, without the applicant’s informed agreement.”
The practice of automatically charging customers for supplemental travel insurance (unless they deny coverage) is in violation of the “informed consent” requirement.
Instead, consumers must be given the option to accept or decline travel insurance or any other type of insurance.
Insurers are accountable for the activities of agents and others selling their products that engage in sliding or otherwise violate the Unfair Insurance Trade Practices Act, according to the OIR.
What is twisting in the insurance industry?
Twisting is the act of persuading or attempting to persuade a policy owner to cancel an existing life insurance policy and replace it with a nearly similar policy by utilizing misrepresentations or incomplete comparisons of the two policies’ benefits and drawbacks.
Which type of insurance company is not licensed to transact insurance in Florida?
An insurance company that is not licensed by the Florida Department of Financial Services is considered an unlawful entity. It is the responsibility of agents and brokers to perform reasonable research to ensure that they are not issuing policies or doing business with unlawful businesses.
How can an agent in charge have more than one location?
How is it possible for an agent-in-charge to have many locations? Multiple locations are permitted as long as the agent-in-charge is present at the time of the insurance transaction.
What is the difference between churning and twisting in insurance?
When an insurance producer replaces a client’s coverage with one from the same carrier that offers similar or worse benefits, this is known as churning. Twisting is a different carrier’s substitute contract with comparable or worse benefits.
What does redlining mean in insurance?
Redlining is an underwriting practice in which a risk is rejected purely on the basis of its geographic location. Most states’ laws restrict this practice since it tends to discriminate against minorities.
What does slander mean in insurance?
Slander is an inaccurate, defamatory statement made orally that lowers a person’s esteem in his or her community and gives rise to a legal claim against the speaker. Slander and libel lawsuits against the insured are covered by standard commercial general liability (CGL) insurance plans.
Why is rebating illegal in insurance?
Insurance producers benefit from rebate laws that aim to level the playing field. The law’s spirit is to prevent unfair advantages that some agents/brokers may have if they are able to provide a percentage of their commissions to potential clients. Smaller agents and brokers might not be able to make such an offer. Furthermore, based on the commission rates paid by the insurance company to the agent/broker, this may result in problematic recommendations on life insurance contracts. If one firm chooses to pay a greater commission rate than another, the agent/broker may use the higher commission rate to give a rebate to his or her potential customer in order to win the sale.