| 1 | The Insurance Committee recommends the following: |
| 2 |
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| 3 | Council/Committee Substitute |
| 4 | Remove the entire bill and insert: |
| 5 | A bill to be entitled |
| 6 | An act relating to motor vehicle service agreement |
| 7 | companies; amending s. 634.041, F.S.; providing an |
| 8 | exception to a prohibition against service agreement |
| 9 | companies using certain reserves and contractual liability |
| 10 | insurance simultaneously; authorizing service agreement |
| 11 | companies maintaining certain net assets to use certain |
| 12 | reserves or certain contractual liability coverage |
| 13 | insurance; providing a definition; providing a |
| 14 | requirement; amending s. 634.136, F.S.; providing an |
| 15 | additional recordkeeping requirement for service agreement |
| 16 | companies; providing an effective date. |
| 17 |
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| 18 | Be It Enacted by the Legislature of the State of Florida: |
| 19 |
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| 20 | Section 1. Subsection (9) of section 634.041, Florida |
| 21 | Statutes, is amended to read: |
| 22 | 634.041 Qualifications for license.--To qualify for and |
| 23 | hold a license to issue service agreements in this state, a |
| 24 | service agreement company must be in compliance with this part, |
| 25 | with applicable rules of the commission, with related sections |
| 26 | of the Florida Insurance Code, and with its charter powers and |
| 27 | must comply with the following: |
| 28 | (9)(a) In meeting the requirements of this part, except as |
| 29 | provided in paragraph (b), a service agreement company may not |
| 30 | utilize both the 50-percent reserve and contractual liability |
| 31 | insurance simultaneously. However, a company may have |
| 32 | contractual liability coverage on service agreements previously |
| 33 | sold and sell new service agreements covered by the 50-percent |
| 34 | reserve, and the converse of this is also allowed. A service |
| 35 | agreement company must be able to distinguish how each |
| 36 | individual service agreement is covered. |
| 37 | (b) A service agreement company that maintains net assets |
| 38 | of at least $7.5 million may use the 50 percent reserve or the |
| 39 | contractual liability coverage for specific blocks of new |
| 40 | service agreements. For purposes of this subsection, the term |
| 41 | "specific blocks of new service agreements" means the service |
| 42 | agreements sold by a single designated licensed salesperson. A |
| 43 | service agreement company must be able to distinguish how each |
| 44 | individual service agreement is covered. |
| 45 | Section 2. Subsection (4) of section 634.136, Florida |
| 46 | Statutes, is amended to read: |
| 47 | 634.136 Office records required.--Each licensed motor |
| 48 | vehicle service contract company, as a minimum requirement for |
| 49 | permanent office records, shall maintain: |
| 50 | (4) A detailed service agreement register, in numerical |
| 51 | order by service agreement number, of agreements in force, which |
| 52 | register shall include the following information: service |
| 53 | agreement number, date of issue, issuing dealer, name of |
| 54 | agreement holder, description of motor vehicle, service |
| 55 | agreement period and mileage, gross premium, commission to |
| 56 | salespersons, commission to dealer, and net premium, and whether |
| 57 | the agreement is covered by contractual liability insurance or |
| 58 | the unearned premium reserve account. |
| 59 | Section 3. This act shall take effect July 1, 2005. |