Florida OIR Takes Action Against American Dream Auto Protect

Florida OIR Halts Unauthorized Activities of American Dream Auto Protect

On February 17, the Florida Office of Insurance Regulation (OIR), led by Insurance Commissioner Mike Yaworsky, issued a cease-and-desist order to American Dream Auto Protect. The company allegedly engaged in AI-driven unauthorized motor vehicle service agreements with Florida residents, lacking the appropriate licenses or regulatory approval from the OIR. This action highlights the industry's ongoing challenges with regulatory compliance requirements and the risks posed to consumers by unlicensed entities.

The OIR stressed that American Dream Auto Protect must manage existing auto warranties in full compliance with Florida statutes. They are required to facilitate policy cancellations, process claims efficiently, and issue refunds as needed, adhering to legal standards. Furthermore, the OIR instructed the company to notify consumers by disseminating the official cease-and-desist order and make it publicly available on their website.

The case involves nearly 900 active contracts with over $2.2 million in unearned premiums, and approximately 600 contracts remain active. The OIR noted that 80% of these contracts will expire within 18 months. To prevent further unauthorized activities, a complaint has been filed to cease the company's operations within the state. This situation emphasizes the essential role of effective risk management and regulatory compliance for insurance providers, carriers, underwriters, and compliance professionals operating in Florida’s dynamic insurance market.

For insurance industry professionals in Florida, understanding the OIR’s definition of unauthorized insurance entities is crucial. Unauthorized entities include any parties engaging in the insurance business, such as selling, negotiating, or advertising insurance products without the necessary licensing. The OIR remains vigilant in investigating reports of unlicensed actions and plans to launch a consumer-facing website to increase awareness of such activities. This development highlights the need for insurers, brokers, and managing general agents (MGAs) to align with regulatory standards to avoid potential penalties and maintain ethical business practices.