Florida Senate - 2012 COMMITTEE AMENDMENT
Bill No. SB 1262
Barcode 157488
LEGISLATIVE ACTION
Senate . House
Comm: FAV .
01/26/2012 .
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The Committee on Banking and Insurance (Oelrich) recommended the
following:
1 Senate Amendment (with title amendment)
2
3 Delete everything after the enacting clause
4 and insert:
5 Section 1. Subsection (8) of section 634.011, Florida
6 Statutes, is amended to read:
7 634.011 Definitions.—As used in this part, the term:
8 (8) “Motor vehicle service agreement” or “service
9 agreement” means any contract or agreement indemnifying the
10 service agreement holder for the motor vehicle listed on the
11 service agreement and arising out of the ownership, operation,
12 and use of the motor vehicle against loss caused by failure of
13 any mechanical or other component part, or any mechanical or
14 other component part that does not function as it was originally
15 intended; however, nothing in this part shall prohibit or affect
16 the giving, free of charge, of the usual performance guarantees
17 by manufacturers or dealers in connection with the sale of motor
18 vehicles. Transactions exempt under s. 624.125 are expressly
19 excluded from this definition and are exempt from the provisions
20 of this part. Service agreements that are sold to persons other
21 than consumers and that cover motor vehicles used for commercial
22 purposes are excluded from this definition and are exempt from
23 regulation under the Florida Insurance Code. The term “motor
24 vehicle service agreement” includes any contract or agreement
25 that provides:
26 (a) For the coverage or protection defined in this
27 subsection and which is issued or provided in conjunction with
28 an additive product applied to the motor vehicle that is the
29 subject of such contract or agreement;
30 (b) For payment of vehicle protection expenses.
31 1.a. “Vehicle protection expenses” means a preestablished
32 flat amount payable for the loss of or damage to a vehicle or
33 expenses incurred by the service agreement holder for loss or
34 damage to a covered vehicle, including, but not limited to,
35 applicable deductibles under a motor vehicle insurance policy;
36 temporary vehicle rental expenses; expenses for a replacement
37 vehicle that is at least the same year, make, and model of the
38 stolen motor vehicle; sales taxes or registration fees for a
39 replacement vehicle that is at least the same year, make, and
40 model of the stolen vehicle; or other incidental expenses
41 specified in the agreement.
42 b. “Vehicle protection product” means a product or system
43 installed or applied to a motor vehicle or designed to prevent
44 the theft of the motor vehicle or assist in the recovery of the
45 stolen motor vehicle.
46 2. Vehicle protection expenses shall be payable in the
47 event of loss or damage to the vehicle as a result of the
48 failure of the vehicle protection product to prevent the theft
49 of the motor vehicle or to assist in the recovery of the stolen
50 motor vehicle. Vehicle protection expenses covered under the
51 agreement shall be clearly stated in the service agreement form,
52 unless the agreement provides for the payment of a
53 preestablished flat amount, in which case the service agreement
54 form shall clearly identify such amount.
55 3. Motor vehicle service agreements providing for the
56 payment of vehicle protection expenses shall either:
57 a. Reimburse a service agreement holder for the following
58 expenses, at a minimum: deductibles applicable to comprehensive
59 coverage under the service agreement holder’s motor vehicle
60 insurance policy; temporary vehicle rental expenses; sales taxes
61 and registration fees on a replacement vehicle that is at least
62 the same year, make, and model of the stolen motor vehicle; and
63 the difference between the benefits paid to the service
64 agreement holder for the stolen vehicle under the service
65 agreement holder’s comprehensive coverage and the actual cost of
66 a replacement vehicle that is at least the same year, make, and
67 model of the stolen motor vehicle; or
68 b. Pay a preestablished flat amount to the service
69 agreement holder.
70
71 Payments shall not duplicate any benefits or expenses paid to
72 the service agreement holder by the insurer providing
73 comprehensive coverage under a motor vehicle insurance policy
74 covering the stolen motor vehicle; however, the payment of
75 vehicle protection expenses at a preestablished flat amount of
76 $5,000 or less does not duplicate any benefits or expenses
77 payable under any comprehensive motor vehicle insurance policy;
78 or
79 (c)1. For the payment for paintless dent-removal services
80 provided by a company whose primary business is providing such
81 services.
82 2. “Paintless dent-removal” means the process of removing
83 dents, dings, and creases, including hail damage, from a vehicle
84 without affecting the existing paint finish, but does not
85 include services that involve the replacement of vehicle body
86 panels or sanding, bonding, or painting.
87 Section 2. Paragraph (b) of subsection (3) of section
88 634.121, Florida Statutes, is amended, and paragraphs (c), (d),
89 and (e) are added to that subsection, to read:
90 634.121 Forms, required procedures, provisions.—
91 (3)
92 (b) After the service agreement has been in effect for 60
93 days, it may not be canceled by the insurer or service agreement
94 company unless:
95 1. There has been a material misrepresentation or fraud at
96 the time of sale of the service agreement;
97 2. The agreement holder has failed to maintain the motor
98 vehicle as prescribed by the manufacturer;
99 3. The odometer has been tampered with or disabled and the
100 agreement holder has failed to repair the odometer; or
101 4. For nonpayment of premium by the agreement holder, in
102 which case the service agreement company shall provide the
103 agreement holder notice of cancellation by certified mail.
104
105 If the service agreement is canceled by the insurer or service
106 agreement company, the return of premium must not be less than
107 100 percent of the paid unearned pro rata premium, less any
108 claims paid on the agreement. If, after 60 days, the service
109 agreement is canceled by the service agreement holder, the
110 insurer or service agreement company shall return directly to
111 the agreement holder not less than 90 percent of the unearned
112 pro rata premium, less any claims paid on the agreement. The
113 service agreement company remains responsible for full refunds
114 to the consumer on canceled service agreements. However, the
115 salesperson and agent are responsible for the refund of the
116 unearned pro rata commission. A service agreement company may
117 effectuate refunds through the issuing salesperson or agent in
118 accordance with paragraphs (c) and (d).
119 (c) If the service agreement company effectuates refunds
120 through the issuing salesperson or agent, the service agreement
121 company must send the unearned pro rata premium refund due, less
122 any unearned pro rata commission, to the salesperson or agent
123 effectuating the refund. Upon receipt, the salesperson or agent
124 must refund the unearned pro rata premium, including any
125 unearned pro rata commission, and the sales tax refund owed to
126 the service agreement holder.
127 (d) The salesperson, agent, or service agreement company
128 shall maintain a copy of one of the following documents, as
129 applicable, demonstrating that the refund owed pursuant to
130 paragraph (c) has been refunded:
131 1. A copy of the front and back of the cancelled check for
132 the applicable refund amount owed to the service agreement
133 holder;
134 2. A copy of the front of the check for the applicable
135 refund amount owed to the service agreement holder and a copy of
136 the statement from the bank account on which the check was drawn
137 showing that the check was cashed;
138 3. A copy of the front of the check issued by the service
139 agreement company to the salesperson or agent in the amount of
140 the service agreement company’s portion of the refund owed to
141 the service agreement holder and a copy of the statement from
142 the bank account on which the check was drawn showing that the
143 check was cashed;
144 4. A copy of a completed buyer’s order demonstrating that
145 the applicable refund amount owed to the service agreement
146 holder was credited toward the purchase or lease of another
147 vehicle;
148 5. Any document received from or sent to a lender, finance
149 company, or creditor demonstrating that a loan or amount
150 financed by the agreement holder was decreased by the amount of
151 the applicable refund amount owed to the service agreement
152 holder; or
153 6. Any other evidence approved by the office in a written
154 communication to a person licensed pursuant to this part
155 demonstrating that the applicable refund amount due to the
156 service agreement holder was properly made.
157
158 A salesperson or agent effectuating a refund shall maintain a
159 copy of the documentation required by this paragraph and shall
160 provide a copy to the service agreement company within 45 days
161 after a request is made by the department or the office to
162 either the service agreement company or the salesperson.
163 (e) If the office finds that a salesperson or agent
164 exhibits a pattern or practice of failing to properly effectuate
165 refunds owed or to maintain and remit to the service agreement
166 company the documentation required by paragraph (d), the office
167 shall notify the department of its finding.
168 Section 3. Section 634.141, Florida Statutes, is amended to
169 read:
170 634.141 Examination of companies.—
171 (1) Motor vehicle service agreement companies licensed
172 under this part may be subject to periodic examination by the
173 office in the same manner and subject to the same terms and
174 conditions as apply applies to insurers under part II of chapter
175 624. The office is not required to conduct periodic examinations
176 pursuant to this section, but may examine a service agreement
177 company at its discretion. An examination conducted pursuant to
178 this section may cover a period of only the most recent 5 years.
179 The costs of examinations conducted pursuant to ss.
180 624.316(2)(e) and 624.3161(3) may not exceed 10 percent of the
181 companies’ reported net income for the prior year. The
182 commission may by rule establish provisions whereby a company
183 may be exempted from examination.
184 (2) The office shall determine whether to conduct an
185 examination of a company by considering:
186 (a) The amount of time that the company has been
187 continuously licensed and operating under the same management
188 and control.
189 (b) The company’s history of compliance with applicable
190 law.
191 (c) The number of consumer complaints against the company.
192 (d) The financial condition of the company, demonstrated by
193 the financial reports submitted pursuant to s. 634.137.
194 Section 4. Section 634.2855, Florida Statutes, is created
195 to read:
196 634.2855 Unauthorized entities; gifts and grants.—A
197 governmental unit, public agency, institution, person, firm, or
198 legal entity may provide money to the department to enable the
199 department to pursue unauthorized entities operating in
200 violation of this part. The department may transfer funds to the
201 office to investigate, discipline, sanction, and take all action
202 consistent with this part relative to unauthorized entities. All
203 donations or grants of moneys to the department shall be
204 deposited into the Insurance Regulatory Trust Fund and shall be
205 separately accounted for in accordance with this section. Moneys
206 deposited into the Insurance Regulatory Trust Fund pursuant to
207 this section may be appropriated by the Legislature, pursuant to
208 chapter 216, for the purpose of enabling the department or the
209 office to carry out the provisions of this section.
210 Notwithstanding s. 216.301 and pursuant to s. 216.351, any
211 balance of moneys deposited into the Insurance Regulatory Trust
212 Fund pursuant to this section remaining at the end of any fiscal
213 year shall be available for carrying out the duties and
214 responsibilities of the department or the office.
215 Section 5. Subsection (5) of section 634.312, Florida
216 Statutes, is amended to read:
217 634.312 Forms; required provisions and procedures.—
218 (5) Each home warranty contract shall contain a
219 cancellation provision. Any home warranty agreement may be
220 canceled by the purchaser within 10 days after purchase. The
221 refund must be 100 percent of the gross premium paid, less any
222 claims paid on the agreement. A reasonable administrative fee
223 may be charged, not to exceed 5 percent of the gross premium
224 paid by the warranty agreement holder. After the home warranty
225 agreement has been in effect for 10 days, if the contract is
226 canceled by the warranty holder, a return of premium shall be
227 based upon 90 percent of unearned pro rata premium less any
228 claims that have been paid. If the contract is canceled by the
229 association for any reason other than for fraud or
230 misrepresentation, a return of premium shall be based upon 100
231 percent of unearned pro rata premium, less any claims paid on
232 the agreement. A home warranty association may effectuate a
233 refund through the issuing sales representative.
234 Section 6. Section 634.314, Florida Statutes, is amended to
235 read:
236 634.314 Examination of associations.—
237 (1) Home warranty associations licensed under this part may
238 be subject to periodic examinations by the office, in the same
239 manner and subject to the same terms and conditions as apply to
240 insurers under part II of chapter 624 of the insurance code. The
241 office is not required to conduct periodic examinations pursuant
242 to this section, but may examine a home warranty company at its
243 discretion. An examination conducted pursuant to this section
244 may cover a period of only the most recent 5 years. The costs of
245 examinations conducted pursuant to ss. 624.316(2)(e) and
246 624.3161(3) may not exceed 10 percent of the companies’ reported
247 net income for the prior year.
248 (2) The office shall determine whether to conduct an
249 examination of a home warranty association by considering:
250 (a) The amount of time that the association has been
251 continuously licensed and operating under the same management
252 and control.
253 (b) The association’s history of compliance with applicable
254 law.
255 (c) The number of consumer complaints against the
256 association.
257 (d) The financial condition of the association,
258 demonstrated by the financial reports submitted pursuant to s.
259 634.313.
260 Section 7. Section 634.3385, Florida Statutes, is created
261 to read:
262 634.3385 Unauthorized entities; gifts and grants.—A
263 governmental unit, public agency, institution, person, firm, or
264 legal entity may provide money to the department to enable the
265 department to pursue unauthorized entities operating in
266 violation of this part. The department may transfer funds to the
267 office to investigate, discipline, sanction, and take all action
268 consistent with this part relative to unauthorized entities. All
269 donations or grants of moneys to the department shall be
270 deposited into the Insurance Regulatory Trust Fund and shall be
271 separately accounted for in accordance with this section. Moneys
272 deposited into the Insurance Regulatory Trust Fund pursuant to
273 this section may be appropriated by the Legislature, pursuant to
274 chapter 216, for the purpose of enabling the department or the
275 office to carry out the provisions of this section.
276 Notwithstanding s. 216.301 and pursuant to s. 216.351, any
277 balance of moneys deposited into the Insurance Regulatory Trust
278 Fund pursuant to this section remaining at the end of any fiscal
279 year shall be available for carrying out the duties and
280 responsibilities of the department or the office.
281 Section 8. Section 634.414, Florida Statutes, is amended to
282 read:
283 634.414 Forms; required provisions.—
284 (1) Each service warranty contract shall contain a
285 cancellation provision. If the contract is canceled by the
286 warranty holder, return of premium shall be based upon no less
287 than 90 percent of unearned pro rata premium less any claims
288 that have been paid or less the cost of repairs made on behalf
289 of the warranty holder. If the contract is canceled by the
290 association, return of premium shall be based upon 100 percent
291 of unearned pro rata premium, less any claims paid or the cost
292 of repairs made on behalf of the warranty holder. Service
293 warranty associations may effectuate refunds through the issuing
294 sales representative.
295 (2) Refunds owed pursuant to this section may be made by
296 cash, check, store credit, gift card, or other similar means.
297 Upon request of the service warranty holder, the refund shall be
298 remitted by check.
299 (3)(2) By July 1, 2011, each service warranty contract sold
300 in this state must be accompanied by a written disclosure to the
301 consumer that the rate charged for the contract is not subject
302 to regulation by the office. A service warranty association may
303 comply with this requirement by including such disclosure in its
304 service warranty contract form or in a separate written notice
305 provided to the consumer at the time of sale.
306 Section 9. Section 634.416, Florida Statutes, is amended to
307 read:
308 634.416 Examination of associations.—
309 (1)(a) Service warranty associations licensed under this
310 part may be subject to periodic examination by the office, in
311 the same manner and subject to the same terms and conditions
312 that apply to insurers under part II of chapter 624. The office
313 is not required to conduct periodic examinations pursuant to
314 this section, but may examine a service warranty company at its
315 discretion. An examination conducted pursuant to this section
316 may cover a period of only the most recent 5 years. The costs of
317 examinations conducted pursuant to ss. 624.316(2)(e) and
318 624.3161(3) may not exceed 10 percent of the companies’ reported
319 net income for the prior year.
320 (b) The office shall determine whether to conduct an
321 examination of a service warranty association by considering:
322 1. The amount of time that the association has been
323 continuously licensed and operating under the same management
324 and control.
325 2. The association’s history of compliance with applicable
326 law.
327 3. The number of consumer complaints against the
328 association.
329 4. The financial condition of the association, demonstrated
330 by the financial reports submitted pursuant to s. 634.313.
331 (2) The rate charged a service warranty association by the
332 office for examination may be adjusted to reflect the amount
333 collected for the Form 10-K filing fee as provided in this
334 section.
335 (3) On or before May 1 of each year, an association may
336 submit to the office the Form 10-K, as filed with the United
337 States Securities and Exchange Commission pursuant to the
338 Securities Exchange Act of 1934, as amended. Upon receipt and
339 review of the most current Form 10-K, the office may waive the
340 examination requirement; if the office determines not to waive
341 the examination, such examination will be limited to that
342 examination necessary to ensure compliance with this part. The
343 Form 10-K shall be accompanied by a filing fee of $2,000 to be
344 deposited into the Insurance Regulatory Trust Fund.
345 (4) The office is not required to examine an association
346 that has less than $20,000 in gross written premiums as
347 reflected in its most recent annual statement. The office may
348 examine such an association if it has reason to believe that the
349 association may be in violation of this part or is otherwise in
350 an unsound financial condition. If the office examines an
351 association that has less than $20,000 in gross written
352 premiums, the examination fee may not exceed 5 percent of the
353 gross written premiums of the association.
354 Section 10. Section 634.4385, Florida Statutes, is created
355 to read:
356 634.4385 Unauthorized entities; gifts and grants.—A
357 governmental unit, public agency, institution, person, firm, or
358 legal entity may provide money to the department to enable the
359 department to pursue unauthorized entities operating in
360 violation of this part. The department may transfer funds to the
361 office to investigate, discipline, sanction, and take all action
362 consistent with this part relative to unauthorized entities. All
363 donations or grants of moneys to the department shall be
364 deposited into the Insurance Regulatory Trust Fund and shall be
365 separately accounted for in accordance with this section. Moneys
366 deposited into the Insurance Regulatory Trust Fund pursuant to
367 this section may be appropriated by the Legislature, pursuant to
368 chapter 216, for the purpose of enabling the department or the
369 office to carry out the provisions of this section.
370 Notwithstanding s. 216.301 and pursuant to s. 216.351, any
371 balance of moneys deposited into the Insurance Regulatory Trust
372 Fund pursuant to this section remaining at the end of any fiscal
373 year shall be available for carrying out the duties and
374 responsibilities of the department or the office.
375 Section 11. This act shall take effect July 1, 2012.
376
377 ================= T I T L E A M E N D M E N T ================
378 And the title is amended as follows:
379 Delete everything before the enacting clause
380 and insert:
381 A bill to be entitled
382 An act relating to warranty associations; amending s.
383 634.011, F.S.; revising the definition of the term
384 “motor vehicle service agreement”; amending s.
385 634.121, F.S.; providing criteria for a motor vehicle
386 service agreement company to effectuate refunds
387 through the issuing salesperson or agent; requiring
388 the salesperson, agent, or service agreement company
389 to maintain a copy of certain documents; requiring a
390 salesperson or agent to provide a copy of a document
391 to the service agreement company if requested by the
392 Department of Financial Services or the Office of
393 Insurance Regulation; requiring the office to provide
394 to the department findings that a salesperson or agent
395 exhibits a pattern or practice of failing to
396 effectuate refunds or to maintain and remit to the
397 service agreement company the required documentation;
398 amending s. 634.141, F.S.; authorizing rather than
399 requiring the office to examine service agreement
400 companies; limiting the examination period to the most
401 recent 5 years; limiting the cost of certain
402 examinations; removing the requirement that the
403 Financial Services Commission establish rules for
404 conducting examinations; removing the criteria for
405 determining whether an examination is warranted;
406 creating s. 634.2855, F.S.; authorizing a governmental
407 entity, public agency, institution, person, firm, or
408 legal entity to provide money to the department to
409 pursue unauthorized entities operating as motor
410 vehicle service agreement companies; providing
411 requirements for the deposit of the money; providing
412 that funds remaining at the end of any fiscal year
413 shall be available for carrying out duties and
414 responsibilities of the department or the office;
415 amending s. 634.312, F.S.; authorizing a home warranty
416 association to effectuate a refund through the issuing
417 sales representative; amending s. 634.314, F.S.;
418 authorizing rather than requiring the office to
419 examine home warranty associations; limiting the
420 examination period to the most recent 5 years;
421 limiting the cost of certain examinations; removing
422 the requirement that the commission establish rules
423 for conducting examinations; removing the criteria for
424 determining whether an examination is warranted;
425 creating s. 634.3385, F.S.; authorizing a governmental
426 entity, public agency, institution, person, firm, or
427 legal entity to provide money to the department to
428 pursue unauthorized entities operating as home
429 warranty associations; providing that funds remaining
430 at the end of any fiscal year shall be available for
431 carrying out duties and responsibilities of the
432 department or the office; amending s. 634.414, F.S.;
433 authorizing service warranty associations to
434 effectuate refunds through the issuing sales
435 representative; authorizing a service warranty
436 association to issue refunds by cash, check, store
437 credit, gift card, or other similar means; amending s.
438 634.416, F.S.; authorizing rather than requiring the
439 office to examine service warranty associations;
440 limiting the examination period to the most recent 5
441 years; limiting the costs of certain examinations;
442 removing the requirement that the commission establish
443 rules for conducting examinations; removing the
444 criteria for determining whether an examination is
445 warranted; removing provisions relating to the rates
446 charged a to service warranty association for
447 examinations; removing the provision authorizing the
448 office to waive the examination requirement upon
449 receipt and review of the Form 10-K; creating s.
450 634.4385, F.S.; authorizing a governmental entity,
451 public agency, institution, person, firm, or legal
452 entity to provide money to the department to pursue
453 unauthorized entities operating as service warranty
454 associations; providing that funds remaining at the
455 end of any fiscal year shall be available for carrying
456 out duties and responsibilities of the department or
457 the office; providing an effective date.