CFO – vs – Un-Authorized Insurers

  • CFO – vs – Un-Authorized Insurers

The state of Florida has created a user-friendly process for individuals looking to become an independent insurance producer or create an independent agency.  Despite the numerous easily accessible resources provided by the Chief Financial Officer and the Department of Financial Services, some people still choose to become a crime against logic and exert tremendous amounts of efforts to create illegal entities.  


It’s so much easier to do it correctly and eliminate the risk and stress of incarceration by obtaining proper authorization.   


Later in the section we’ll bring attention to three (3) somewhat recent examples of violations committed by an unauthorized health insurer and the agents who represented them.  These examples perfectly illustrate the great lengths people go through to disguise their illegal actions.  


I like talking about press releases and case studies because, they’re a terrific way to enforce the need to verify the professional status of potential insurers and employer.  As licensees, it’s our responsibility to properly vet any entity we intend on representing.

  • Un-Authorized Entities

Verify appointing insurers and agencies prior to selling services to the public.


Un-Authorized Entities are restricted from conducting business in Florida because as we’ll discuss numerous times throughout this course, if you’re choosing to circumvent state mandated minimum requirements you probably don’t have the consumers best interest in mind.  


  • Un-Authorized/illegal #entities can be based out of Florida (local/domestic), foreign (non-resident) or alien (based in another country).  


Many of these unauthorized entities appear to be reputable on the outside and often display or present fabricated letters from regulators insinuating admittance (Authorization).  The professional product brochures and websites they present to consumers and agents typically look as credible as everyone else’s so, they’re presented as proof of legitimacy.  


All these “marketing tools” are necessary to the insurance buying process however, in no way do these tools – OR ANY OTHER RESOURCE convey the authorization to conduct the business of insurance.  Unfortunately, our later examples show how irresponsible licensees will always be susceptible to scammers and easily recruited. 


The circumvention of regulation by these entities will eventually create a financial hazard for the insurance buying consumers and ultimately lead to criminal penalties and/or civil lawsuits.  Everyone and anyone who inadvertently or willfully represents an unauthorized entity’s unregistered products will be in violation of Florida’s Insurance Laws and therefore will be prosecuted accordingly (Third – Degree Felony).  


Irresponsible or not Unfortunately, in the past licensees themselves have been legitimately unaware of the fact they represented an unauthorized entity and purchased coverage for themselves as well as for their family.  Unauthorized entities and the “bogus health plans” they offer may utilize the veil of a trade association, union or affinity group which requires the consumer to join, prior to becoming eligible for coverage.  

Conditions for coverage like the ones I just mentioned should serve as an immediate warning sign for agents.  


  • Be-Aware: The Employee Retirement Income Security Act of 1974 (ERISA) and the Multiple Employer Welfare Arrangements (MEWA’s), historically these entities have caused confusion since they don’t conduct business like a conventional insurer.


  • Quite simply put, an ERISA insurance plans are established a (single) employer so they can offer insurance type coverage to its own employees.  No other entity aside from those directly affiliated with the employer can obtain coverage.  


  • A MEWA refers to an entity which consist of multiple smaller employers who in the name offering insurance coverage to their employees unite to decrease cost and increase buying power.  *MEWA’s are typically self-insured, tax exempt and can only offer insurance coverage to individuals who have an active employment related relationship with the covered entity or “subscriber”.