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.