by Structured Settlement Watchdog
The February 2014 Insurance Insights from the Florida Department Financial Services is intended to assist Florida licensed insurance agents to keep their insurance business in compliance. It highlights the unfortunate double standard that the Florida legislature presently holds for the structured settlement secondary market.
Let's take a look at what I am talking about:
Insurance agents are subject to this:
A. Advertising to Cover Fees is a Marketing No-No
"As a marketing idea you want to offer to cover the wire fee from your customer's bank. Their wire fee is $25 or less so that should not constitute going over the advertising fee limit, correct? No.
The $25 fee that is stated in Section 626.9541(1)(m), Florida Statutes, is for advertising gifts, ONLY.
This fee is the limit each article of merchandise must not exceed when a licensee wants to give a person something that will remind that person of that licensee and his/her services. The examples we often use are coffee mugs, umbrellas, portfolios, pens, key fobs, etc. containing the licensee or business name.
It is important to note that the statute clearly states this must be an article of merchandise. Food does not qualify as merchandise. Gift cards are not considered merchandise.
Offering to cover any fee or charge could be considered to be a violation of Section 626.9541(1)(h), Florida Statutes.
Payment of the customer's bank wire fee by a licensee would be an inducement for a person to use one title agent's services over another".
Commentary About Regulatory Gap
While the structured settlement brokers who place structured settlement annuities hold active insurance licenses, cash now pushers, and those selling structured settlement payment rights to investors, are more often than not without any insurance or securities license.
It's even possible they are not registered with the Secretary of State in the state they are soliciting business.
Cash now pushers lure non residents to Florida, the state most notorious for companies engaging in forum shopping, with financial incentives and may assist the non resident to do just enough to convince a court that the seller is domiciled in Florida while possibly coaching the seller to participate in a fraud on the court.
In addition to the state of Florida, the IRS should be interested as some quality investigating may turn up some tax revenues from 40% excise tax levies on the violators of the structured settlement protection acts in Florida and elsewhere.
More on Florida forum shopping here.
B. Life and Health Agents: Working from Home?
"Many life and health agents rent space in a "virtual office" that are typically just conference rooms where the agent can meet with the clients outside of their home. However, the agent's home is usually the place where records are stored. Therefore the agent's home address should be listed as the business address on file with the Department, not the location of the rented space".
Commentary About Regulatory Gap
A couple of good examples (by no means exclusive)
Sovereign Funding Group has used a Fair Oaks residence that David and Melissa Springer have not resided in since 2009 in Columbia, MD ; at times using an actual home address on Lomar Drive in Mt. Airy MD and then a UPS mailbox in Rockville with a fake office picture on its BBB profile, followed by a virtual office in Frederick , MD. with a fake office picture on its BBB profile. David Springer also testified June 28, 2013 to making up phony names (with phony degrees and phony social media accounts that he used in promotion and continues to use in the promotion of his company's business).
Genex Capital and Assured Annuity claim an address that amounts to a UPS mailbox in Dover, Delaware. and Genex claims on their BBB file that their company was founded in Maryland (information previously obtained from Maryland and reported on this blog suggests otherwise). The stated Headquarters location on the BBB is a Regus office center in Baltimore (listing Roger Proctor and a former employee who according to HER LinkedIn profile had not worked for Genex since May 2012) similar to SSQ Structured Settlement Quotes which lists a Hartford address that is simply a mail drop. There is discoverable evidence that the companies operations are in Vancouver Canada at an address believed to be where CEO Roger Proctor lives. As to SSQ,the company claims to have done more than half a billion dollars worth of transactions. It's safe to say that the records for all those transactions are not being stored in the UPS mailbox in Dover or the Regus mailbox in Hartford.
C. Records Retention and Department Access to Records
"With respect to access to records, the Florida Statutes require insurance licensees to have their records readily accessible to the Department. Similarly, the Florida Statutes require that records be made freely available to the Department. The statutes do not allow licensees or agency staff to set pre-conditions on access to records such as making an appointment in advance or sending a letter in advance of what is wanted.
There appears to be some confusion over how long records need to be kept. The Florida Statutes require licensees to preserve their books, accounts and records for at least three (3) years. The preservation of records by computer or photographic reproductions or records in photographic form is sufficient to be compliant, as long as they can be made available immediately upon request.
There also seems to be some confusion over whether or not the Department is capable of maintaining confidentiality over the records we obtain. The Florida Statutes clearly state that the complaint and any information obtained pursuant to an investigation by the Department is confidential. The records could become a matter of public record if charges are filed or any type of disciplinary action is taken".
Commentary About Regulatory Gap
There is no such requirement for those in the structured settlement secondary market, whether as a buyer or soliciting investors in structured settlement payment rights.
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