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Slip slidin' away with insurance unfair trade practices

When it comes to unfair trade practices in the insurance industry, we don't need the statute to figure a few of them out. Misrepresenting benefits, overcharging for coverage and underpaying claims -- better known as lying, cheating and stealing -- are universally acknowledged to be unfair trade practices. Yes, brokers and agents may try to justify the half-truth, and insurance companies may engage in advertising puffery, but, really, the lines are clearly drawn for those three misdeeds.

Conduct unbecoming an insurance company does not stop there. There are less well-known practices that Florida law prohibits. They may not rank among the seven deadly sins, but who is to say the eighth or ninth won't be just as lethal?

The practice that came to our attention recently is "sliding." The Florida Office of Insurance Regulation issued an "informational memorandum" in February regarding travel insurance policies and sliding. Apparently the OIR received complaints or reports that consumers were being taken advantage of. The OIR took the opportunity to remind insurers that sliding is specifically prohibited under the state's Unfair Insurance Trade Practices Act.

Sliding is about an insurance agent or company misrepresenting either the scope or the cost of coverage to a consumer. For example, the insurer may tell a consumer that state law requires anyone purchasing a homeowners policy to purchase auto insurance as well. Or, the insurer may say that auto insurance is included in that homeowners policy at no additional charge when, in fact, there is an extra charge that the consumer is not aware of.

The statute also bars an insurer from charging for extra coverage that the consumer has not agreed to purchase. An insurer cannot charge for coverage without the consumer's informed consent.

This was the issue that the OIR heard about, the lesser deadly sin that prompted the "informational memorandum" -- we used to call them bulletins -- last month.

We'll get into specifics in our next post.

Sources:

Florida Office of Insurance Regulation, "OIR-15-01M: Automatically charging consumers for ancillary travel insurance without consumers’ informed consent prohibited," issued Feb. 3, 2015

Florida Statutes Annotated § 626.9541 (West) via WestlawNext

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