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DFS Reminds Industry of Scope of “Transacting” Insurance

DFS Reminds Industry of Scope of “Transacting” Insurance

One of the questions we receive from time to time is whether certain activities require an individual or business to obtain an agents’ license in Florida.  The Florida Department of Financial Services recently addressed this in a short article describing what it means to “transact” insurance in Florida.  In general, a person must obtain an insurance agent’s license before holding himself or herself out as transacting insurance.   In Florida, the scope of “transacting” implicates a couple of definitions in the Insurance Code.

Section 624.10 defines transacting insurance to mean any of the following” activities or actions:

  • Solicitation or inducement
  • Preliminary negotiations
  • Effectuation of a contract of insurance
  • Transaction of matters subsequent to effectuation of a contract of insurance and arising out of it.

“Solicitation” in turn is defined at section 626.112, Florida Statutes.  Solicitation means the attempt to persuade any person to purchase an insurance product by:

  • Describing the benefits or terms of insurance coverage, including premiums or rates of return;
  • Distributing an invitation to contract to prospective purchasers;
  • Making general or specific recommendations as to insurance products;
  • Completing orders or applications for insurance products;
  • Comparing insurance products, advising as to insurance matters, or interpreting policies or coverages; or
  • Offering or attempting to negotiate on behalf of another person a viatical settlement contract as defined in section 626.9911.

Thus, when evaluating whether an agent’s license is required in particular situations, a person should consider whether he or she will be transacting insurance, which in part entails also determining whether the person’s actions fall within the statutory scope of solicitation.