CEO 79-18 -- March 22, 1979

CONFLICT OF INTEREST

COUNTY COMMISSIONER RECEIVING SHARE OF INSURANCE COMMISSIONS FROM SALE OF INSURANCE TO COUNTY

To: (Name withheld at the person's request.)

Prepared by: Phil Claypool

SUMMARY:

The Code of Ethics provides that no public officer shall have a contractual relationship with a business entity which is doing business with his agency. Section 112.313(7)(a), F. S. 1977. In a previous advisory opinion, CEO 76-85, it was found that this provision was violated when a city had created an insurance advisory committee, the members of which shared in the commissions resulting from sales of insurance to the city, as the committee members had a contractual relationship as third party beneficiaries with the insurance company which insured the city. The same rationale is applicable, and a prohibited conflict of interest is deemed to be created, when a county commissioner who is an insurance agent receives a pro rata share, together with other insurance agents in the county, of commissions resulting from the sale of insurance to the county.

QUESTION:

Does a prohibited conflict of interest exist when a county commissioner who is an insurance agent in the county receives a pro rata share of insurance commissions paid on the sale of insurance to the county, as do all other insurance agents in the county?

Your question is answered in the affirmative.

In your letter of inquiry you advise that ____ is a member of the St. Johns County Commission and a partner in an insurance agency in the county. You also advise that he receives a pro rata share of the insurance commissions resulting from the sale of insurance to the county by a local insurance agency on a nonbid, negotiated basis. You further advise that the insurance agency which is doing business with the county is not the subject commissioner's agency, and that all insurance agents in the county receive a pro rata share of the commissions from the sale of insurance to the county.

In 1974 the Attorney General advised that the Code of Ethics for Public Officers and Employees, specifically s. 112.314(1), F. S. 1973, did not prohibit a county commissioner from accepting a pro rata share of the insurance premiums paid by the county, as did all insurance firms in the county. Attorney General Opinion 074-106. Since that time the Code of Ethics has been amended, and s. 112.314(1) now appears as part of s. 112.313(3), F. S. That provision prohibits a public officer, acting in his official capacity, from purchasing any goods or services for his own agency from a business entity of which he is an officer, partner, or director, or in which he owns more than 5 percent interest, and prohibits a public officer from acting in his private capacity through that business entity to sell any goods or services to his public agency. We agree with the Attorney General that this provision of the Code of Ethics does not apply to the situation you have referenced as it is not the subject county commissioner's insurance agency which is selling insurance to the county.

However, the present Code of Ethics also provides that no public officer shall have a contractual relationship with a business entity which is doing business with his agency. Section 112.313(7)(a), F. S. 1977. In a previous advisory opinion, CEO 76-85, we advised that this provision would be violated when a city had created an insurance advisory committee, the members of which shared in the commissions resulting from sales of insurance to the city. There, we found that the committee members had a contractual relationship as third party beneficiaries with the insurance company which insured the city. Similarly, here, the subject county commissioner is in the position of a third party beneficiary to the contracts between the county and the insurance company, and therefore has a contractual relationship with the county commission.

Accordingly, we find that a prohibited conflict of interest is created when a county commissioner who is an insurance agent receives a pro rata share, together with other insurance agents in the county, of the commissions resulting from the sale of insurance to the county.