By David Thompson, CPCU, AAI, API
When the Customer Representative (CR) license (referred to
by many as the 4-40) was introduced in 1990, it was (as the joke goes) before
Al Gore invented the Internet! At that time, very few insurance professionals
had even heard the phrase, “working remotely.” Today, the number of insurance
professionals who work outside of the “main office” is significant. It’s common
that some agency staff seldom, if ever, visit the main office. With technology
today, it’s very simple for someone to work anywhere with an Internet
connection, even in an airplane or car with little more than a smartphone in
The age of the CR license, combined with the advances in
technology, has created an issue that agency management needs to be very aware
of, that being the duties permitted (and, more importantly, duties not
permitted) by someone holding a CR license. Agency staff must be well aware of
these limitations; else they risk severe fines and disciplinary actions by the
Florida Department of Financial Services.
While not viewed as “exciting” by some, it’s important that
several Florida Statutes be reviewed first. (Emphasis in bold added.)
insurance.—“Transact” with respect to insurance includes any of the following,
in addition to other applicable provisions of this code:
(1) Solicitation or
(3) Effectuation of a
contract of insurance.
(4) Transaction of matters subsequent to effectuation of a contract of
insurance and arising out of it.
representative’s office.—A customer representative shall be housed wholly and
completely within the actual confines of the office of the agent or agency whom
he or she represents, together with any such furniture, books, records, equipment,
and paraphernalia necessary for the conduct of such insurance business. The customer representative shall not
maintain any such office or furniture, books, records, equipment, or
paraphernalia at any other address or location, nor shall he or she maintain or
make use of any other quarters, space, or address, for the purpose of the
conduct of such business. No advertising, letterhead, or telephone listing
of the customer representative shall indicate any business address other than
that of the agent or agency by whom he or she is employed. No customer
representative may be employed from any location except where an agent licensed
to write such lines spends his or her full time in charge of such location.
representative’s powers; agent’s or agency’s responsibility.—
(1) A customer
representative’s license shall not cover life insurance or any kind of
insurance for which the agent or agency by which he or she is appointed is not
(2) A customer
representative may engage in transacting insurance with customers who have been
solicited by any agent or customer representative in the same agency, and may
engage in transacting insurance with customers who have not been so solicited
to the extent and under conditions that are otherwise consistent with this part
and with the insurer’s contract with the agent appointing him or her.
(3) A customer
representative shall be a salaried employee of the agent or agency. His or her
compensation shall not include commissions and shall not be primarily based on
the production of applications, insurance, or premiums.
(4) A customer representative shall not engage in transacting insurance
outside of the office of his or her agent or agency.
(5) All business
transacted by a customer representative under his or her license shall be in
the name of the agent or agency by which he or she is appointed, and the agent
or agency shall be responsible and accountable for all acts of the customer
representative within the scope of such appointment.
To stress, again,
parts of the statutes:
- A customer representative shall not engage in
transacting insurance outside of the office of his or her agent or agency.
- The customer representative shall not maintain
any such office or furniture, books, records, equipment, or paraphernalia at
any other address or location, nor shall he or she maintain or make use of any
other quarters, space, or address, for the purpose of the conduct of such
- Transaction of matters subsequent to
effectuation of a contract of insurance and arising out of it.
While it may be a slight oversimplification, it’s close to
accurate to say, “The customer rep can’t do anything that requires an insurance
license from outside the four walls of the agency.” Let’s consider several
common situations and point out whether the activity is legal or not.
The customer rep is at her desk and the receptionist sends a
prospect back to discuss an auto policy that the prospect wants to purchase. The
customer rep obtains the necessary information to quote, prepares a quote,
explains coverages, completes an application, signs the application, accepts
payments, and binds coverage. This action is legal. Note, however, some
insurers or agencies may not grant the customer rep such broad authority.
After getting the policy in Situation #1 issued, the
customer rep happens to run into the customer in a grocery story on her way
home from work. The insured says to the customer rep, “I was looking at my
policy and the uninsured motorist (UM) coverage is quite expensive. Exactly
what does UM cover? Do I need it if I have health insurance?” The customer rep
explains how UM coverage works and explains the options available to the
customer. This action is illegal because a customer rep can’t transact
insurance (explaining coverage is transacting) from outside the office. To be
legal, this person must have a general lines (2-20) license. As an alternative,
the customer rep could tell the customer, “Let me make a note to call you
tomorrow about this when I get back to the office.”
The customer rep’s spouse gets a job transfer to another
city or state. The agency owner wants to keep the customer rep on staff because
of her great work ethic. The decision is made to keep her on staff and allow
her to work from her home at the new city. The agency sets her up with a
laptop, printer, Internet, and all other items necessary for her to work from
home. She even has a telephone that rings at her desk, just as if she were at
the agency main office. Customers call the customer rep and she explains
coverage, takes applications, binds coverage, and sends change requests to the
carrier. This action is illegal. The customer rep is transacting insurance from
outside the office. To be legal, this person must have a general lines (2-20)
The customer rep, from his home, is told by the agency owner
that he is not permitted to speak with customers; his only contact with
customers must be via email. Customers email him to request policy changes and
ask questions about policy coverages. The customer rep responds via email. This
action is illegal. Per Florida Statute 624.10, the customer rep is transacting
insurance, even though he is only doing it via email. To be legal, this person
must have a general lines (2-20) license.
The customer rep, from home, is told by the agency owner
that she will not be able to speak directly with customers nor will she be able
to correspond directly with them via email. The agency staff will send her
change requests that other staff have taken and she will process those with the
carriers. She will be responsible for reviewing the changes and advising agency
staff that they are correct, allowing for agency staff to forward the change to
the customer. This action is illegal. Although the customer rep has no direct
contact with the customer, her actions fall within the definition of
The customer rep has a smartphone and is able to access
agency email via that device. While eating lunch at a local restaurant, he
checks email, sees a coverage question sent by a customer, and responds to the
customer explaining coverage under the policy. This action is illegal. The
customer rep is transacting insurance outside of the office.
Pat Producer (2-20 license) needs to go visit a customer to
discuss the renewal application. Because Chris Customer Rep (4-40 license)
knows the account well, Pat takes Chris with him to meet the customer at his
office. During the course of discussion, Chris explains the coverages under the
policy and answers many of the questions posed by the customer. This action is
illegal. Even though there is a licensed agent present, Chris can’t transact
insurance outside of the office unless she holds a 2-20 license.
As the statutes and examples above illustrate, a person
holding a CR license needs to use great caution when outside of the office. Any
action the customer rep takes that requires an insurance license is illegal if
it’s done from outside the main office.
If you have any questions about federal or state laws, ask them here.