Florida Senate - 2017                        COMMITTEE AMENDMENT
       Bill No. SB 794
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                  Comm: RCS            .                                
                  03/14/2017           .                                

       The Committee on Banking and Insurance (Brandes) recommended the
    1         Senate Amendment (with title amendment)
    3         Delete lines 21 - 78
    4  and insert:
    5  and maintain an unearned premium reserve if it secures purchases
    6  and maintains contractual liability insurance in accordance with
    7  the following:
    8         1. Coverage of The insurance covers 100 percent of the its
    9  claim exposure and is obtained from an insurer that is approved
   10  by the office and that which holds a certificate of authority
   11  under s. 624.401 to do business within this state, or such
   12  coverage is secured through a risk retention group that is
   13  authorized to do business within this state under s. 627.943 or
   14  s. 627.944. Such insurer or risk retention group shall maintain
   15  a surplus as to policyholders of at least $15 million.
   16         2. If the service agreement company does not meet its
   17  contractual obligations, the contractual liability insurance
   18  policy binds its issuer to pay or cause to be paid to the
   19  service agreement holder all legitimate claims and cancellation
   20  refunds for all service agreements issued by the service
   21  agreement company while the policy was in effect. This
   22  requirement also applies to those service agreements for which
   23  no premium has been remitted to the insurer.
   24         3. If the issuer of the contractual liability policy is
   25  fulfilling the service agreements covered by the contractual
   26  liability policy and the service agreement holder cancels the
   27  service agreement, the issuer must make a full refund of
   28  unearned premium to the consumer, subject to the cancellation
   29  fee provisions of s. 634.121(3). The sales representative and
   30  agent must refund to the contractual liability policy issuer
   31  their unearned pro rata commission.
   32         4. The policy may not be canceled, terminated, or
   33  nonrenewed by the insurer or the service agreement company
   34  unless a 90-day written notice thereof has been given to the
   35  office by the insurer before the date of the cancellation,
   36  termination, or nonrenewal.
   37         5. The service agreement company must provide the office
   38  with the claims statistics.
   40  All funds or premiums remitted to an insurer by a motor vehicle
   41  service agreement company under this part shall remain in the
   42  care, custody, and control of the insurer and shall be counted
   43  as an asset of the insurer; provided, however, this requirement
   44  does not apply when the insurer and the motor vehicle service
   45  agreement company are affiliated companies and members of an
   46  insurance holding company system. If the motor vehicle service
   47  agreement company chooses to comply with this paragraph but also
   48  maintains a reserve to pay claims, such reserve shall only be
   49  considered an asset of the covered motor vehicle service
   50  agreement company and may not be simultaneously counted as an
   51  asset of any other entity.
   52         (11)(a) A service agreement company offering service
   53  agreements providing vehicle protection expenses may meet the
   54  requirements for this part only by maintaining contractual
   55  liability insurance covering 100 percent of its vehicle
   56  protection claim exposure in accordance with paragraph (8)(b),
   57  which insurance must be issued by an insurance company not
   58  affiliated with the service agreement company, unless the
   59  insurance company had issued a contractual liability insurance
   60  policy to a service agreement company on or before January 1,
   61  2002. Service agreements providing vehicle protection expenses
   62  may be sold only to a service agreement holder that has in-force
   63  comprehensive motor vehicle insurance coverage for the vehicle
   64  to be covered by the service agreement.
   65         Section 2. Paragraph (b) of subsection (3) of section
   66  634.121, Florida Statutes, is amended to read:
   67         634.121 Forms, required procedures, provisions.—
   68         (3)
   69         (b) After the service agreement has been in effect for 60
   70  days, it may not be canceled by the insurer or service agreement
   71  company unless:
   72         1. There has been a material misrepresentation or fraud at
   73  the time of sale of the service agreement;
   74         2. The agreement holder has failed to maintain the motor
   75  vehicle as prescribed by the manufacturer;
   76         3. The odometer has been tampered with or disabled and the
   77  agreement holder has failed to repair the odometer; or
   78         4. For nonpayment of premium by the agreement holder, in
   79  which case the service agreement company shall provide the
   80  agreement holder notice of cancellation by certified mail.
   82  If the service agreement is canceled by the insurer or service
   83  agreement company, the return of premium must not be less than
   84  100 percent of the paid unearned pro rata premium, less any
   85  claims paid on the agreement. If, after 60 days, the service
   86  agreement is canceled by the service agreement holder, lender,
   87  finance company, or creditor, the insurer or service agreement
   88  company shall return directly to the agreement holder not less
   89  than 90 percent of the unearned pro rata premium, less any
   90  claims paid on the agreement. Cancellations initiated by
   91  lenders, creditors, or finance companies are valid only if
   92  authorized by the terms of the service agreement. The service
   93  agreement company remains responsible for full refunds to the
   94  consumer on canceled service agreements. However, the
   95  salesperson and agent are responsible for the refund of the
   96  unearned pro rata commission. A service agreement company may
   97  effectuate refunds through the issuing salesperson or agent in
   98  accordance with paragraphs (c) and (d).
  100  ================= T I T L E  A M E N D M E N T ================
  101  And the title is amended as follows:
  102         Delete line 5
  103  and insert:
  104         company to obtain and maintain a license; amending s.
  105         634.121, F.S.; requiring specified refunds by insurers
  106         or service agreement companies if service agreements
  107         are canceled by lenders, finance companies, or
  108         creditors after a specified timeframe; providing a
  109         limitation on such cancellations; providing an