Florida Senate - 2017                                     SB 794
       By Senator Brandes
       24-00941-17                                            2017794__
    1                        A bill to be entitled                      
    2         An act relating to motor vehicle service agreement
    3         companies; amending s. 634.041, F.S.; revising
    4         qualifications for a motor vehicle service agreement
    5         company to obtain and maintain a license; providing an
    6         effective date.
    8  Be It Enacted by the Legislature of the State of Florida:
   10         Section 1. Paragraph (b) of subsection (8) and paragraph
   11  (a) of subsection (11) of section 634.041, Florida Statutes, are
   12  amended to read:
   13         634.041 Qualifications for license.—To qualify for and hold
   14  a license to issue service agreements in this state, a service
   15  agreement company must be in compliance with this part, with
   16  applicable rules of the commission, with related sections of the
   17  Florida Insurance Code, and with its charter powers and must
   18  comply with the following:
   19         (8)
   20         (b) A service agreement company does not have to establish
   21  and maintain an unearned premium reserve if it purchases and
   22  maintains contractual liability insurance in accordance with the
   23  following:
   24         1. The insurance covers 100 percent of its claim exposure
   25  and is obtained from an insurer approved by the office which
   26  holds a certificate of authority under s. 624.401 or a risk
   27  retention group that is authorized to do business within this
   28  state under s. 627.943 or s. 627.944 and maintains a surplus to
   29  policyholders of at least $15 million.
   30         2. If the service agreement company does not meet its
   31  contractual obligations, the contractual liability insurance
   32  policy binds its issuer to pay or cause to be paid to the
   33  service agreement holder all legitimate claims and cancellation
   34  refunds for all service agreements issued by the service
   35  agreement company while the policy was in effect. This
   36  requirement also applies to those service agreements for which
   37  no premium has been remitted to the insurer.
   38         3. If the issuer of the contractual liability policy is
   39  fulfilling the service agreements covered by the contractual
   40  liability policy and the service agreement holder cancels the
   41  service agreement, the issuer must make a full refund of
   42  unearned premium to the consumer, subject to the cancellation
   43  fee provisions of s. 634.121(3). The sales representative and
   44  agent must refund to the contractual liability policy issuer
   45  their unearned pro rata commission.
   46         4. The policy may not be canceled, terminated, or
   47  nonrenewed by the insurer or the service agreement company
   48  unless a 90-day written notice thereof has been given to the
   49  office by the insurer before the date of the cancellation,
   50  termination, or nonrenewal.
   51         5. The service agreement company must provide the office
   52  with the claims statistics.
   54  All funds or premiums remitted to an insurer by a motor vehicle
   55  service agreement company under this part shall remain in the
   56  care, custody, and control of the insurer and shall be counted
   57  as an asset of the insurer; provided, however, this requirement
   58  does not apply when the insurer and the motor vehicle service
   59  agreement company are affiliated companies and members of an
   60  insurance holding company system. If the motor vehicle service
   61  agreement company chooses to comply with this paragraph but also
   62  maintains a reserve to pay claims, such reserve shall only be
   63  considered an asset of the covered motor vehicle service
   64  agreement company and may not be simultaneously counted as an
   65  asset of any other entity.
   66         (11)(a) A service agreement company offering service
   67  agreements providing vehicle protection expenses may meet the
   68  requirements for this part only by maintaining contractual
   69  liability insurance covering 100 percent of its vehicle
   70  protection claim exposure in accordance with paragraph (8)(b),
   71  which insurance must be issued by an insurance company not
   72  affiliated with the service agreement company, unless the
   73  insurance company had issued a contractual liability insurance
   74  policy to a service agreement company on or before January 1,
   75  2002. Service agreements providing vehicle protection expenses
   76  may be sold only to a service agreement holder that has in-force
   77  comprehensive motor vehicle insurance coverage for the vehicle
   78  to be covered by the service agreement.
   79         Section 2. This act shall take effect July 1, 2017.