State RegulationsFL specificDifficulty 2/5
A Florida agent's unlicensed friend refers a client who buys a large life policy, and the agent offers to split the commission with the friend for the referral that produced the sale. Under Florida law, this arrangement is:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under Chapter 626, Florida Statutes, commissions and other compensation for soliciting or producing insurance business may be paid only to persons who are properly licensed and appointed for that business; splitting a commission with an unlicensed friend for producing the sale is prohibited. In practice, referral arrangements that compensate unlicensed persons for producing insurance business expose the agent to Department of Financial Services discipline.
Why the other options are wrong
- A) Formally participating in the transaction is not the test; paying compensation for producing insurance business to an unlicensed person is the violation.
- B) The insurer's knowledge does not legalize a payment that Florida law itself prohibits.
- D) No registration device authorizes commission payments to an unlicensed person for producing insurance business.
Memory hook
No license, no commission - no exceptions.