Under Florida law, what is an insurer?

Why B is correct

Under the Florida Insurance Code (Chapter 624, Florida Statutes), an insurer is the party that undertakes to indemnify the insured or to pay benefits upon the occurrence of specified contingencies, such as death or illness. Insurers are supervised by the Office of Insurance Regulation and must hold a certificate of authority to transact insurance in Florida.

Why the other options are wrong

• A) The applicant is the insured, the party seeking the transfer of risk, not the party assuming it.
• C) Agents represent insurers in soliciting and negotiating, but they do not undertake to pay the benefits themselves.
• D) Banks sell financial products; assuming contingent insurance risk is what defines an insurer.

Memory hook

Insurer = the risk-taker paying benefits.

Why A is correct

Under Chapter 624, Florida Statutes, the insurer is the risk-bearing entity - the party that assumes the contingent risk and promises to pay policy benefits, and which must be authorized by the Office of Insurance Regulation to transact insurance in Florida. The insured is the person whose life or health is covered, the agent solicits and negotiates on the insurer's behalf, and the beneficiary merely receives proceeds. Agents should confirm an insurer is authorized before placing business with it.

Why the other options are wrong

• B) The person whose life or health is covered is the insured - the party for whose benefit proceeds are payable - not the risk-bearer.
• C) The producer solicits and negotiates on behalf of an insurer but neither underwrites the risk nor guarantees payment of claims.
• D) The beneficiary receives the proceeds and takes no underwriting risk in the contract.

Memory hook

Insurer = the one who carries the risk and pays claims.