Education Library » Customer Reps Working Remotely? Be Very Careful

Customer Reps Working Remotely? Be Very Careful Print this page

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 hand.

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.)

624.10 Transacting insurance.—“Transact” with respect to insurance includes any of the following, in addition to other applicable provisions of this code:  

(1) Solicitation or inducement.  

(2) Preliminary negotiations.  

(3) Effectuation of a contract of insurance.  

(4) Transaction of matters subsequent to effectuation of a contract of insurance and arising out of it.  

626.7352 Customer 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.  

626.7354 Customer 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 then licensed.  

(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 be primarily based on commissions or 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 business.
  • 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.

Situation #1

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.

Situation #2

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.”

Situation #3

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) license.

Situation #4

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.

Situation #5

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 “transacting insurance.”

Situation #6

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.

Situation #7

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.

August 2017 


 

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