Florida Senate - 2019                        COMMITTEE AMENDMENT
       Bill No. CS for SB 1690
       
       
       
       
       
       
                                Ì232946?Î232946                         
       
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
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       The Committee on Commerce and Tourism (Broxson) recommended the
       following:
       
    1         Senate Amendment (with title amendment)
    2  
    3         Delete lines 39 - 95
    4  and insert:
    5  provided in s. 625.52 and must be maintained in a separate
    6  auditable escrow account for the benefit of warranty holders
    7  residing in this state in a Florida bank, Florida savings and
    8  loan association, or Florida trust company or on deposit with
    9  the department part II of chapter 625. Any escrow or other
   10  agreement between the association and a bank, a savings and loan
   11  association, or a trust company is subject to review by the
   12  office and must state that the purpose of the account is to
   13  protect warranty holders residing in this state. An association
   14  must provide 10 days’ advance notice to the office before any
   15  withdrawal of funds from the escrow account.
   16         (2) An association shall maintain, at a minimum, net assets
   17  equal to one-sixth of the written premiums it receives for the
   18  issuance and delivery of any binder or warranty in force. Net
   19  assets may be less than one-sixth of the premiums written,
   20  provided the association has net assets of not less than
   21  $500,000 and maintains a funded, unearned premium reserve
   22  account consisting of unencumbered assets equal to a minimum of
   23  40 percent of the gross written premiums received by it from all
   24  warranty contracts in force in this state, which must shall be
   25  held in the form of cash or invested in securities for
   26  investments as provided in s. 625.52 and must be maintained in a
   27  separate auditable escrow account for the benefit of warranty
   28  holders residing in this state in a Florida bank, Florida
   29  savings and loan association, or Florida trust company or on
   30  deposit with the department part II of chapter 625. Any escrow
   31  or other agreement between the association and a bank, a savings
   32  and loan association, or a trust company is subject to review by
   33  the office and must state that the purpose of the account is to
   34  protect warranty holders residing in this state. An association
   35  must provide 10 days’ advance notice to the office before any
   36  withdrawal of funds from the escrow account.
   37         (5)An association operating in this state which issues
   38  home warranty or home service contracts in other states must
   39  comply with all financial requirement laws of such other states.
   40         Section 2. Effective January 1, 2020, section 634.346,
   41  Florida Statutes, is created to read:
   42         634.346Home warranty coverage requirements.–
   43         (1)A home warranty sold in this state may not exclude
   44  coverage because of the presence of rust or corrosion unless the
   45  rust or corrosion was a contributing cause of the mechanical
   46  breakdown or failure of a covered appliance, unit, or system.
   47         (2)A home warranty contract providing coverage for wear
   48  and tear failures of components of an HVAC system, which
   49  contains an exclusion of replacement coverage for any other
   50  functional components of the HVAC system on the basis of
   51  operational compatibility or operational efficiency requirements
   52  as set by the manufacturer, must:
   53         (a)Set forth a disclosure in conspicuous boldfaced type
   54  that the home warranty contract does not cover replacement of
   55  functional components of HVAC systems for reasons of
   56  compatibility or efficiency requirements of the manufacturer
   57  unless additional coverage for such circumstance is purchased,
   58  and provide the website or telephone number for the consumer to
   59  contact to add such additional coverage to the home warranty
   60  contract; and
   61         (b)Provide consumers the option to purchase additional
   62  coverage, for an additional charge, for the replacement of
   63  otherwise functional components of an HVAC system necessary to
   64  maintain the compatibility and operating efficiency requirements
   65  of the manufacturer.
   66         Section 3. Subsections (1), (2), and (5) of section
   67  634.406, Florida Statutes, are amended, and subsection (8) is
   68  added to that section, to read:
   69         634.406 Financial requirements.—
   70         (1) An association licensed under this part shall maintain
   71  a funded, unearned premium reserve account, consisting of
   72  unencumbered assets, equal to a minimum of 25 percent of the
   73  gross written premiums received on all warranty contracts in
   74  force which are, wherever written in this state. Such assets
   75  must shall be held for the benefit of warranty holders residing
   76  in this state as provided in s. 625.52 and must be maintained in
   77  a Florida bank, Florida savings and loan association, or Florida
   78  trust company in an escrow account or on deposit with the
   79  department prescribed under ss. 625.301-625.340. Any such escrow
   80  account or other agreement between the association and a bank,
   81  savings and loan association, or trust company is subject to
   82  review by the office and must state that the purpose of the
   83  account is to protect warranty holders residing in this state.
   84  An association must provide 10 days’ advance notice to the
   85  office before any withdrawal of funds from the escrow account.
   86  For contracts in excess of
   87  
   88  ================= T I T L E  A M E N D M E N T ================
   89  And the title is amended as follows:
   90         Delete lines 5 - 19
   91  and insert:
   92         premium reserve account; specifying escrow
   93         requirements for such assets; authorizing the Office
   94         of Insurance Regulation to review agreements between
   95         associations and certain financial institutions;
   96         requiring associations to provide certain notice to
   97         the office before withdrawing escrowed funds;
   98         requiring certain home warranty associations to comply
   99         with other states’ laws; creating s. 634.346, F.S.;
  100         prohibiting home warranties from excluding coverage
  101         because of the presence of rust or corrosion, except
  102         under certain circumstances; specifying requirements
  103         for certain home warranties providing coverage for
  104         HVAC system components; amending s. 634.406, F.S.;
  105         revising the basis for calculating the required assets
  106         in a service warranty association’s premium reserve
  107         account; specifying escrow requirements for such
  108         assets; authorizing the office to review agreements
  109         between associations and certain financial
  110         institutions; requiring associations to provide
  111         certain notice to the office before withdrawing
  112         escrowed funds; revising the basis for calculating a
  113         certain