NU Online News Service, April 11, 1:05 p.m. – The Florida Department of Insurance is warning employers and individuals against buying health insurance from unlicensed carriers.

The department organized a campaign urging consumers to “verify before you buy” after hearing about four unlicensed health plans that bilked subscribers in the past 20 months.

State Treasurer and Insurance Commissioner Tom Gallagher charges that the four unlicensed carriers signed up about 15,000 buyers, then stopped paying claims and went out of business when incoming premiums failed to cover costs.

A Florida department video clip features Deerfield Beach, Fla., resident Richard Baer, who bought small-business coverage from an unlicensed company that went out of business in November. Baer thought he was covered when he underwent heart surgery last year, but he reports he now has more than $50,000 in unpaid claims.

Gallagher says he will move to revoke licenses of any agents knowingly selling unlicensed insurance, and that he will also pursue criminal charges. The Florida Legislature this year passed a law increasing the penalty for a licensed agent selling unauthorized insurance to a third-degree felony punishable by up to five years in jail, up from a first-degree misdemeanor, Gallagher says.

Because unlicensed entities do not participate in the state guaranty fund, which pays claims for insolvent carriers, the failure of unlicensed plans leaves policyholders flat, the Florida department says.

Under Florida law, if an unlicensed insurer fails to pay claims, the agents who sold the coverage may have to pay the claims.

The Florida department is not the first to complain about a boom in unlicensed health plans. The Texas Department of Insurance warned Texas insurance agents and brokers about a surge in unlicensed plans in Texas earlier this year.