HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/CS/HB 1111 Non-coverage-related Regulation of Insurance
SPONSOR(S): Commerce Committee, Insurance & Banking Subcommittee, Barnaby and others
TIED BILLS: IDEN./SIM. BILLS: CS/SB 312
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee 18 Y, 0 N, As CS Fortenberry Lloyd
2) Commerce Committee 17 Y, 0 N, As CS Fortenberry Hamon
SUMMARY ANALYSIS
Life Insurance Agents: Florida law sets forth pre-licensure education and experience requirements for life
insurance agents. Among other specified requirements, applicants must have successfully completed 40 hours
of coursework in life insurance, annuities, and variable contracts, three of which must be on ethics. The bill
reduces the number of hours of prelicensure coursework a life insurance agent applicant must complete from
40 hours to 30 hours.
Value-added Insurance Services (VAS): The Unfair Insurance Trade Practices Act (Act) defines unfair
methods of competition and unfair or deceptive acts in the business of insurance. It provides an extensive list
of prohibited methods and acts, including prohibitions on certain inducements to the purchase of insurance,
including rebates, dividends, stock, and contracts that promise to return profits to a prospective insurance
purchaser. The Act describes prohibited discrimination and prohibits sliding.
Value-added insurance products or services (VAS) are provided with the sale of insurance, but extend beyond
simply providing insurance coverage. VAS include risk control or claims management services, funeral
planning, or financial planning. Depending on how VAS are structured or offered, there is a concern that by
providing them to policyholders, insurers may violate the Act.
The bill establishes that certain actions by insurers related to VAS are not discrimination or unlawful rebates
under the Act. All of these criteria regarding the VAS must be met for the actions to be excluded:
Offered at no cost or reduced cost by an insurer, insurance agent, or employee, affiliate, or third-party
representative of the insurer or insurance agent;
Not specified in the insurance policy; and
Primarily designed to do one or more of the following:
o Provide loss mitigation or control;
o Reduce claim or claim settlement costs;
o Provide education about liability risks or risk of loss to people or property;
o Monitor or assess risk, identify sources of risk, or develop strategies to eliminate or reduce risk;
o Enhance health;
o Enhance financial wellness through items such as education or financial planning services;
o Provide post-loss services;
o Incentivize behavioral changes to improve the health, or reduce the risk of death or disability; or
o Assist in the administration of employee or retiree benefit insurance coverage.
The VAS cost must be reasonable compared to the customer’s premium or coverage, and availability must be
based on specified factors. VAS that do not meet the factors may be provided as part of a pilot program for up
to one year. An insurer, agent, or representative may not: offer to provide insurance or inducement to purchase
another policy; or use the words “free” or “no cost,” or similar words in an advertisement.
The bill has no impact on local or state government revenues or expenditures. It has an indeterminate direct
economic impact on the private sector.
The bill is effective July 1, 2023.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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DATE: 4/20/2023
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Pre-Licensure Requirements for Life Insurance Agents
A life insurance agent is an individual who represents an insurer as to life insurance and annuity
contracts, including agents appointed to transact life insurance, fixed-dollar annuity contracts, or
variable contracts by the same insurer.1 Currently, 23 states have no pre-licensure education or
experience requirements for life insurance agents.
An applicant for a Florida license as a life insurance agent is not qualified for licensure unless, within
the 4 years immediately preceding the date of the application for a license, such applicant has: 2
Successfully completed 40 hours of coursework in life insurance, annuities, and variable
contracts, 3 hours of which must be on ethics. Courses must include instruction on the subject
matter of unauthorized entities engaging in the business of insurance;
Successfully completed at least 60 hours of coursework in multiple areas of insurance, which
included life insurance, annuities, and variable contracts, 3 hours of which must be on ethics.
Courses must include instruction on the subject matter of unauthorized entities engaging in the
business of insurance;
Earned or maintained an active designation as Chartered Financial Consultant from the
American College of Financial Services; or Fellow, Life Management Institute from the Life
Management Institute;
Held an active license in life insurance in another state, where such state grants reciprocal
treatment to Florida licensees; or
Been employed full time by the Department of Financial Services (DFS) or the Office of
Insurance Regulation (OIR) in life insurance regulatory matters for at least one year, if the
application for the examination is made within 4 years after leaving employment and if the
employee was not terminated for cause.
Unfair Methods of Competition and Unfair or Deceptive Acts
The Unfair Insurance Trade Practices Act (Act),3 among other things, defines unfair methods of
competition and unfair or deceptive acts in the business of insurance.4 It provides an extensive list of
prohibited methods and acts. Among these are prohibitions on certain inducements to the purchase of
insurance, including rebates, dividends, stock, and contracts that promise to return profits to the
prospective insurance purchaser. The Act describes prohibited discrimination, which includes refusal to
insure anyone solely because of the following reasons: 5
The insured’s race, color, creed, marital status, sex, or national origin;
The residence, age, or lawful occupation of the individual or the location of the risk, unless there
is a reasonable relationship between the residence, age, or lawful occupation of the individual
or the location of the risk and the coverage issued or to be issued;
The insured’s or applicant’s failure to agree to place collateral business with any insurer, unless
the coverage applied for would provide liability coverage which is excess over that provided in
policies maintained on property or motor vehicles;
The insured’s or applicant’s failure to purchase noninsurance services or commodities, including
motor vehicle services;
1 S. 626.015(12), F.S.
2 S. 626.7851, F.S.
3 Ch. 626, F.S., part IX.
4 S. 626.9541, F.S.
5 S. 626.9541(1)(x), F.S.
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The fact that the insured or applicant is a public official; or
The fact that the insured or applicant had been previously refused insurance coverage by any
insurer, when such refusal to insure or continue to insure for this reason occurs with such
frequency as to indicate a general business practice.
The Act also prohibits sliding, which includes:
Representing to an applicant that a specific ancillary coverage or product is required by law
when it is not;
Representing to an applicant that a specific ancillary coverage or product is included in the
policy applied for without an additional charge where there is a charge for it; and
Charging an applicant for a specific ancillary coverage or product, in addition to the cost of
insurance applied for, without informing the applicant. 6
There are many exceptions to the prohibitions defined by law. Among the exceptions is authorization
for insurers and their agents to offer and make gifts of charitable contributions, merchandise, goods,
wares, store gift cards, gift certificates, event tickets, anti-fraud or loss mitigation services, and other
items up to $100 per calendar year to an insured, prospective insured, or any person for the purpose of
advertising.7
Value-added Insurance Products or Services
Value-added insurance products or services (VAS) are provided with the sale of insurance, but extend
beyond simply providing insurance coverage.8 When selecting between competing insurers, the type of
quality of these services provided by an agent or insurer may be important factors in an applicant’s
decision making.9 VAS may include risk control or claims management services.10 For example, those
VAS provided with employer practices liability insurance attempt to prevent and control claims covered
by this type of insurance and include: 11
Human resource audits;
Training and reference manuals;
Sample employee handbooks;
Loss prevention software; and
Access to hotlines manned by human resource professionals.
VAS are also often included with life insurance to provide extra support for decisions that must be
made shortly after the loss of a loved one or at other difficult times.12 These VAS include:13
Will and funeral preparation services;
Counseling services; and
Accelerated benefit cash advances.
Depending on how VAS are structured or offered, there is a concern that by providing them to
policyholders, insurers may violate the Act. In 2021, The National Association of Insurance
Commissioners (NAIC) created a model Unfair Trade Practices Act, that, among other provisions,
addresses these concerns regarding VAS and clarifies the circumstances under which VAS are not
unfair trade practices.
6 S. 626.9541(1)(z), F.S.
7 Rule 69B-186.010, F.A.C., Unlawful Inducements Related to Title Insurance Transactions, governs inducements related
to title insurance, but exempts gifts within the value limitation of s. 626.9541(1)(m), F.S. However, federal law prohibits
any fee, kickback or thing of value given for referral of real estate settlement services on mortgage loans related to federal
programs. 12 U.S.C. §2607 (2017).
8 See IRMI, Value-added services, https://www.irmi.com/term/insurance-definitions/ value-added-s ervices (last visited Mar.
19, 2023).
9 Id.
10 Id. VAS help to prevent or mitigate covered losses.
11 Id.
12 The Hartford, Protecting and Preparing Employees with the Value-added Services of Life Insurance,
https://www.thehartford.com/insights/employee-benefits/ value-added-servic es-life-insurance (last visited Mar. 19, 2023).
13 Id.
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Effect of the Bill
The bill reduces the number of hours of prelicensure coursework a life insurance agent applicant must
complete in life insurance, annuities, and variable contracts from 40 hours to 30 hours.
The bill also codifies certain portions of the NAIC Unfair Trade Practices Act. It establishes that certain
actions by insurers related to VAS are not discrimination or unlawful rebates under the Act. All of these
criteria regarding the value-added insurance products or services must be met for the provision of VAS
to be excluded:
Offered at no cost or reduced cost;
Not specified in the insurance policy;
Offered or provided by an insurer, insurance agent, or employee, affiliate, or third-party
representative of the insurer or insurance agent; and
Primarily designed to do one or more of the following:
o Provide loss mitigation or control;
o Reduce claim or claim settlement costs;
o Provide education about liability risks or risk of loss to people or property;
o Monitor or assess risk, identify sources of risk, or develop strategies to eliminate or
reduce risk;
o Enhance health;
o Enhance financial wellness through items such as education or financial planning
services;
o Provide post-loss services;
o Incentivize behavioral changes to improve the health, or reduce the risk of death or
disability; or
o Assist in the administration of employee or retiree benefit insurance coverage.
Under the bill, the cost to the insurer or agent offering the product or service must be reasonable in
comparison to the customer’s premiums or insurance coverage for the type of policy. The insurer or
agent must ensure the customer receives the contact information necessary to assist the customer with
the product or service. The bill specifies that the availability of the product or service must be based on
documented objective evidence maintained by the insurer or agent and produced to OIR or DFS upon
request.
If an insurer or agent has a good faith believe, but lacks sufficient evidence to demonstrate, that the
product or service meets the criteria explained above, the insurer or agent may provide the product or
service in a manner that is not unfairly discriminatory as part of a pilot or testing program implemented
for a maximum of one year. The bill requires that the insurer or agent notify OIR or DFS, as applicable,
of the pilot or testing program before beginning the program. After providing notification, the insurer or
agent may begin the program unless OIR or DFS objects to it within 21 days after receiving the notice.
The bill establishes that an insurer, agent, or representative may not:
Offer to provide insurance or inducement to the purchase of another policy;
Use the words “free” or “no cost,” or similar words in an advertisement.
B. SECTION DIRECTORY:
Section 1. Amends s. 626.7851, relating to requirement as to knowledge, experience, or instruction.
Section 2. Amends s. 626.9541, F.S. relating to unfair methods of competition and unfair or
deceptive acts or practices defined.
Section 3. Provides an effective date of July 1, 2023.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
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A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill has an indeterminate direct economic impact on the private sector, but VAS may lead to
reduced claim costs to the extent they fulfill their intended purpose. 14
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. This bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill provides the Financial Services Commission with the authority to adopt rules necessary to
administer the statutory changes set forth in the bill.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
On March 21, 2023, the Insurance & Banking Subcommittee considered a proposed committee substitute
for the bill and reported the bill favorably as a committee substitute. The proposed committee substitute
removed the following from the bill:
14 A bill analysis has been requested from OIR, but has not been received at the time of publication of this analysis.
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Provisions regarding the use of genetic testing information by life insurers, long-term care insurers,
and disability income insurers.
Language describing particular VAS that was redundant of, and potentially conflicted with, existing
provisions in the Act regarding gifts given by insurers to policyholders.
On April 18, 2023, the Commerce Committee considered a proposed committee substitute for the bill and
reported the bill favorably as a committee substitute. The proposed committee substitute made the
following changes to the bill:
Reduced the number of hours of prelicensure coursework a life insurance agent applicant must
complete in life insurance, annuities, and variable contracts from 40 hours to 30 hours.
Limited the provi