Florida Senate - 2019 COMMITTEE AMENDMENT
Bill No. SB 1690
Ì229342"Î229342
LEGISLATIVE ACTION
Senate . House
.
.
.
.
.
—————————————————————————————————————————————————————————————————
—————————————————————————————————————————————————————————————————
The Committee on Banking and Insurance (Broxson) recommended the
following:
1 Senate Amendment (with title amendment)
2
3 Delete everything after the enacting clause
4 and insert:
5 Section 1. Subsections (1) and (2) of section 634.3077,
6 Florida Statutes, are amended, and subsection (5) is added to
7 that section, to read:
8 634.3077 Financial requirements.—
9 (1) An association licensed under this part shall maintain
10 a funded, unearned premium reserve account, consisting of
11 unencumbered assets, equal to a minimum of 25 percent of the
12 gross written premiums received by it from all warranty
13 contracts in force in this state. Such assets must shall be held
14 in the form of cash or invested in securities for investments as
15 provided in part II of chapter 625. Such reserve account must be
16 a separate auditable account for contracts in force in this
17 state.
18 (2) An association shall maintain, at a minimum, net assets
19 equal to one-sixth of the written premiums it receives for the
20 issuance and delivery of any binder or warranty in force. Net
21 assets may be less than one-sixth of the premiums written,
22 provided the association has net assets of not less than
23 $500,000 and maintains a funded, unearned premium reserve
24 account consisting of unencumbered assets equal to a minimum of
25 40 percent of the gross written premiums received by it from all
26 warranty contracts in force in this state, which must shall be
27 held in the form of cash or invested in securities for
28 investments as provided in part II of chapter 625. Such reserve
29 account must be a separate auditable account for contracts in
30 force in this state.
31 (5) An association operating in this state that issues home
32 warranty or home service contracts in other states must comply
33 with all financial requirement laws of such other states.
34 Section 2. Effective January 1, 2020, section 634.346,
35 Florida Statutes, is created to read:
36 634.346 Home warranty coverage requirements.–
37 (1) A home warranty sold in this state may not exclude
38 coverage because of the presence of rust or corrosion unless the
39 rust or corrosion was a contributing cause of the mechanical
40 breakdown or failure of a covered appliance, unit, or system.
41 (2) A home warranty contract providing coverage for wear
42 and tear failures of components of an HVAC system, which
43 contains an exclusion of replacement coverage for any other
44 functional components of the HVAC system on the basis of
45 operational compatibility or operational efficiency requirements
46 as set by the manufacturer, must:
47 (a) Set forth a disclosure in conspicuous boldfaced type
48 that the home warranty contract does not cover replacement of
49 functional components of HVAC systems for reasons of
50 compatibility or efficiency requirements of the manufacturer
51 unless additional coverage for such circumstance is purchased,
52 and provide the website or telephone number for the consumer to
53 contact to add such additional coverage to the home warranty
54 contract; and
55 (b) Provide consumers the option to purchase additional
56 coverage, for an additional charge, for the replacement of
57 otherwise functional components of an HVAC system necessary to
58 maintain the compatibility and operating efficiency requirements
59 of the manufacturer.
60 Section 3. Subsections (1), (2), and (5) of section
61 634.406, Florida Statutes, are amended, and subsection (8) is
62 added to that section, to read:
63 634.406 Financial requirements.—
64 (1) An association licensed under this part shall maintain
65 a funded, unearned premium reserve account, consisting of
66 unencumbered assets, equal to a minimum of 25 percent of the
67 gross written premiums received on all warranty contracts in
68 force which are, wherever written in this state. Such reserve
69 account must be a separate auditable account for contracts in
70 force in this state. Such assets must shall be held as
71 prescribed under ss. 625.301-625.340. For contracts in excess of
72 2 years which are offered by associations having net assets of
73 less than $500,000 and for which premiums are collected in
74 advance for coverage in a subsequent year, 100 percent of the
75 premiums for such subsequent years must shall be placed in the
76 funded, unearned premium reserve account.
77 (2) An association utilizing an unearned premium reserve
78 shall deposit with the department a reserve deposit for
79 contracts in force in this state equal to 10 percent of the
80 gross written premium received on all warranty contracts in
81 force in this state. Such reserve deposit must shall be of a
82 type eligible for deposit by insurers under s. 625.52. Request
83 for release of all or part of the reserve deposit may be made
84 quarterly and only after the office has received and approved
85 the association’s current financial statements, as well as a
86 statement sworn to by two officers of the association verifying
87 such release will not reduce the reserve deposit to less than 10
88 percent of the gross written premium. The reserve deposit
89 required under this part must shall be included in calculating
90 the reserve required by subsection (1). The deposit required in
91 s. 634.405(1)(b) must shall be included in calculating the
92 reserve requirements of this section.
93 (5) No warranty seller may allow its gross written premiums
94 in force for contracts written in this state to exceed a 7-to-1
95 ratio to net assets.
96 (8) An association operating in this state that issues
97 service warranty or service contracts in other states must
98 comply with all financial requirement laws of such other states.
99 Section 4. Except as otherwise provided in this act, this
100 act shall take effect July 1, 2019.
101
102 ================= T I T L E A M E N D M E N T ================
103 And the title is amended as follows:
104 Delete everything before the enacting clause
105 and insert:
106 A bill to be entitled
107 An act relating to warranty associations; amending s.
108 634.3077, F.S.; revising the basis for calculating the
109 required assets in a home warranty association’s
110 premium reserve account; requiring that such reserve
111 account be a separate auditable account for contracts
112 in force in this state; requiring certain home
113 warranty associations to comply with other states’
114 laws; creating s. 634.346, F.S.; prohibiting home
115 warranties from excluding coverage because of the
116 presence of rust or corrosion, except under certain
117 circumstances; specifying requirements for certain
118 home warranties providing coverage for HVAC system
119 components; amending s. 634.406, F.S.; revising the
120 basis for calculating the required assets in a service
121 warranty association’s premium reserve account;
122 requiring that such reserve account be a separate
123 auditable account for contracts in force in this
124 state; revising the basis for calculating a certain
125 reserve deposit with the Department of Financial
126 Services; revising the requirements regarding the
127 ratio of gross written premiums to net assets for
128 service warranties; requiring certain service warranty
129 associations to comply with other states’ laws;
130 providing effective dates.