| 1 | The Committee on Insurance recommends the following: |
| 2 |
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| 3 | Committee Substitute |
| 4 | Remove the entire bill and insert: |
| 5 | A bill to be entitled |
| 6 | An act relating to warranty associations; creating s. |
| 7 | 634.1815, F.S.; providing conditions under which a |
| 8 | salesperson of a motor vehicle service agreement company |
| 9 | may rebate his or her commission; creating s. 634.3205, |
| 10 | F.S.; providing conditions under which a sales |
| 11 | representative of a home warranty association may rebate |
| 12 | his or her commission; amending s. 634.406, F.S.; providing |
| 13 | conditions under which a service warranty association is |
| 14 | exempt from certain premium reserve and liability insurance |
| 15 | requirements and may allow premiums to exceed certain |
| 16 | limits; creating s. 634.4225, F.S.; providing conditions |
| 17 | under which a sales representative of a service warranty |
| 18 | association may rebate his or her commission; providing an |
| 19 | effective date. |
| 20 |
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| 21 | Be It Enacted by the Legislature of the State of Florida: |
| 22 |
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| 23 | Section 1. Section 634.1815, Florida Statutes, is created |
| 24 | to read: |
| 25 | 634.1815 Rebating; when allowed.-- |
| 26 | (1) No salesperson shall rebate any portion of his or her |
| 27 | commission except as follows: |
| 28 | (a) The rebate shall be available to all consumers in the |
| 29 | same actuarial class. |
| 30 | (b) The rebate shall be in accordance with a rebating |
| 31 | schedule filed by the salesperson with the service agreement |
| 32 | company issuing the service agreement to which the rebate |
| 33 | applies. The service agreement company shall maintain a copy of |
| 34 | all rebating schedules for a period of 3 years. |
| 35 | (c) The rebating schedule shall be uniformly applied so |
| 36 | all consumers who purchase the same service agreement through |
| 37 | the salesperson for the same coverage shall receive the same |
| 38 | percentage rebate. |
| 39 | (d) The rebate schedule shall be prominently displayed in |
| 40 | public view in the salesperson's place of business, and a copy |
| 41 | shall be made available to consumers on request at no charge. |
| 42 | (e) The age, sex, place of residence, race, nationality, |
| 43 | ethnic origin, marital status, or occupation of the consumer |
| 44 | shall not be used in determining the percentage of the rebate or |
| 45 | whether a rebate is available. |
| 46 | (2) No rebate shall be withheld or limited in amount based |
| 47 | on factors which are unfairly discriminatory. |
| 48 | (3) No rebate shall be given which is not reflected on the |
| 49 | rebate schedule. |
| 50 | (4) No rebate shall be refused or granted based upon the |
| 51 | purchase of or failure to purchase collateral business. |
| 52 | Section 2. Section 634.3205, Florida Statutes, is created |
| 53 | to read: |
| 54 | 634.3205 Rebating; when allowed.-- |
| 55 | (1) No sales representative shall rebate any portion of |
| 56 | his or her commission except as follows: |
| 57 | (a) The rebate shall be available to all consumers in the |
| 58 | same actuarial class. |
| 59 | (b) The rebate shall be in accordance with a rebating |
| 60 | schedule filed by the sales representative with the home |
| 61 | warranty association issuing the home warranty to which the |
| 62 | rebate applies. The home warranty association shall maintain a |
| 63 | copy of all rebating schedules for a period of 3 years. |
| 64 | (c) The rebating schedule shall be uniformly applied so |
| 65 | all consumers who purchase the same home warranty through the |
| 66 | sales representative for the same coverage shall receive the |
| 67 | same percentage rebate. |
| 68 | (d) The rebate schedule shall be prominently displayed in |
| 69 | public view in the sales representative's place of business, and |
| 70 | a copy shall be made available to consumers on request at no |
| 71 | charge. |
| 72 | (e) The age, sex, place of residence, race, nationality, |
| 73 | ethnic origin, marital status, or occupation of the consumer |
| 74 | shall not be used in determining the percentage of the rebate or |
| 75 | whether a rebate is available. |
| 76 | (2) No rebate shall be withheld or limited in amount based |
| 77 | on factors which are unfairly discriminatory. |
| 78 | (3) No rebate shall be given which is not reflected on the |
| 79 | rebate schedule. |
| 80 | (4) No rebate shall be refused or granted based upon the |
| 81 | purchase of or failure to purchase collateral business. |
| 82 | Section 3. Subsection (8) is added to section 634.406, |
| 83 | Florida Statutes, to read: |
| 84 | 634.406 Financial requirements.-- |
| 85 | (8) An association licensed under this part and holding no |
| 86 | other license under part I or part II of this chapter is not |
| 87 | required to establish an unearned premium reserve or maintain |
| 88 | contractual liability insurance and may allow its premiums to |
| 89 | exceed the ratio to net assets limitation of this section if the |
| 90 | association complies with the following: |
| 91 | (a) The association or, if the association is a direct or |
| 92 | indirect wholly owned subsidiary of a parent corporation, its |
| 93 | parent corporation has, and maintains at all times, a minimum |
| 94 | net worth of at least $100 million and provides the office with |
| 95 | the following: |
| 96 | 1. A copy of the association's annual audited financial |
| 97 | statements or the audited consolidated financial statements of |
| 98 | the association's parent corporation, prepared by an independent |
| 99 | certified public accountant in accordance with generally |
| 100 | accepted accounting principles, which clearly demonstrate the |
| 101 | net worth of the association or its parent corporation to be |
| 102 | $100 million and a quarterly written certification to the office |
| 103 | that such entity continues to maintain the net worth required |
| 104 | under this paragraph. |
| 105 | 2. The association's, or its parent corporation's, Form |
| 106 | 10K, Form 10Q, or Form 20F as filed with the United States |
| 107 | Securities and Exchange Commission or such other documents |
| 108 | required to be filed with a recognized stock exchange, which |
| 109 | shall be provided on a quarterly and annual basis within 10 days |
| 110 | after the last date each such report must be filed with the |
| 111 | Securities and Exchange Commission, the National Association of |
| 112 | Security Dealers Automated Quotation system, or other recognized |
| 113 | stock exchange. |
| 114 |
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| 115 | Failure to timely file the documents required under this |
| 116 | paragraph may, at the discretion of the office, subject the |
| 117 | association to suspension or revocation of its license under |
| 118 | this part. An association or parent corporation demonstrating |
| 119 | compliance with subparagraph 1. and subparagraph 2. must |
| 120 | maintain outstanding debt obligations, if any, rated in the top |
| 121 | four rating categories by a recognized rating service. |
| 122 | (b) If the net worth of a parent corporation is used to |
| 123 | satisfy the net worth provisions of paragraph (a), the following |
| 124 | provisions must be met: |
| 125 | 1. The parent corporation must guarantee all service |
| 126 | warranty obligations of the association, wherever written, on a |
| 127 | form approved in advance by the office. No cancellation, |
| 128 | termination, or modification of the guarantee shall become |
| 129 | effective unless the parent corporation provides the office |
| 130 | written notice at least 90 days before the effective date of the |
| 131 | cancellation, termination, or modification and the office |
| 132 | approves the request in writing. Prior to the effective date of |
| 133 | cancellation, termination, or modification of the guarantee, the |
| 134 | association must demonstrate to the satisfaction of the office |
| 135 | compliance with all applicable provisions of this part, |
| 136 | including whether the association will meet the requirements of |
| 137 | this section by the purchase of contractual liability insurance, |
| 138 | establishing required reserves, or other method allowed under |
| 139 | this section. If the association or parent corporation does not |
| 140 | demonstrate to the satisfaction of the office compliance with |
| 141 | all applicable provisions of this part, it shall immediately |
| 142 | cease writing new and renewal business upon the effective date |
| 143 | of the cancellation, termination, or modification. |
| 144 | 2. The association must maintain at all times net assets |
| 145 | of at least $750,000. |
| 146 | Section 4. Section 634.4225, Florida Statutes, is created |
| 147 | to read: |
| 148 | 634.4225 Rebating; when allowed.-- |
| 149 | (1) No sales representative shall rebate any portion of |
| 150 | his or her commission except as follows: |
| 151 | (a) The rebate shall be available to all consumers in the |
| 152 | same actuarial class. |
| 153 | (b) The rebate shall be in accordance with a rebating |
| 154 | schedule filed by the sales representative with the association |
| 155 | issuing the service warranty to which the rebate applies. The |
| 156 | association shall maintain a copy of all rebating schedules for |
| 157 | a period of 3 years. |
| 158 | (c) The rebating schedule shall be uniformly applied so |
| 159 | all consumers who purchase the same service warranty through the |
| 160 | sales representative for the same coverage shall receive the |
| 161 | same percentage rebate. |
| 162 | (d) The rebate schedule shall be prominently displayed in |
| 163 | public view in the sales representative's place of business, and |
| 164 | a copy shall be made available to consumers on request at no |
| 165 | charge. |
| 166 | (e) The age, sex, place of residence, race, nationality, |
| 167 | ethnic origin, marital status, or occupation of the consumer |
| 168 | shall not be used in determining the percentage of the rebate or |
| 169 | whether a rebate is available. |
| 170 | (2) No rebate shall be withheld or limited in amount based |
| 171 | on factors which are unfairly discriminatory. |
| 172 | (3) No rebate shall be given which is not reflected on the |
| 173 | rebate schedule. |
| 174 | (4) No rebate shall be refused or granted based upon the |
| 175 | purchase of or failure to purchase collateral business. |
| 176 | Section 5. This act shall take effect upon becoming a law. |