The Office of Insurance Regulation is updating Chapter 69O-198.

 

DEPARTMENT OF FINANCIAL SERVICES

OIR – Insurance Regulation

RULE NOS.:RULE TITLES:

69O-198.005Financial Requirements

69O-198.011Application for and Issuance of License

69O-198.012Annual Statement

PURPOSE AND EFFECT: The Office of Insurance Regulation is updating Chapter 69O-198, F.A.C.

SUMMARY: Rule 69O-198.005, F.A.C., is amended to update the financial requirements. Rule 69O-198.011 is amended to combine all application requirements in a single rule. Rule 69O-198.012, F.A.C. is amended to update the annual statement requirements.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:

The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the Agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: Agency personnel familiar with the subject matter of the rule amendment have performed an economic analysis of the rule amendment that shows that the rule amendment is unlikely to have an adverse impact on the State economy in excess of the criteria established in Section 120.541(2)(a), Florida Statutes.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.

RULEMAKING AUTHORITY: 634.402 FS.

LAW IMPLEMENTED: 624.424, 634.404, 634.406, 634.407, 634.408, 634.409, 634.413, 634.415, 634.4165 FS.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE SCHEDULED AND ANNOUNCED IN THE FAR.

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Michael Lawrence, Jr., Chief Legal Counsel, Office of Insurance Regulation, [e-mail], [phone].

 

THE FULL TEXT OF THE PROPOSED RULE IS:

 

69O-198.005 Financial Requirements.

Requirements regarding the funded, unearned premium reserve account.

(1) through (4) No change.

(5) The unearned premium reserve account is calculated as follows:

(a) The For all one year contracts, the minimum reserve for all service warranty associations shall be 25 percent of the gross written premium received on all warranty contracts in force, in this state. for which the association is obligated on all contracts wherever issued.

(b) For contracts in excess of two years which are offered by associations having net assets of less than $500,000 and for which premiums are collected in advance for coverage in a subsequent year, 100 percent of the premiums for such subsequent years must be placed in the funded unearned premium reserve account. For all multiyear contracts issued in any state:

1. For companies having less than $500,000 net assets, the reserve shall initially be calculated at 25 percent for the first year premium and 100 percent for each subsequent year’s premium for all gross written premiums for which the association is obligated. As each subsequent year becomes current, 75 percent of that current year’s premium is earned and shall be subtracted from the reserve. The reserve is maintained until the expiration of the multiyear policy.

Example:

The reserve shall be calculated as follows on a three year contract with a selling price of $300.00.

First Year	$225.00
Second Year	$150.00
Third Year	$75.00

2. For companies that have more than $500,000 net assets, the reserve shall be calculated at 25 percent of the gross written premiums for which the association is obligated.

Example:

The reserve shall be calculated as follows on a three year contract with a selling price of $300:

First Year	$75.00
Second Year	$75.00
Third Year	$75.00

(6) The unearned premium reserve account shall be totally funded at all times by unencumbered assets. Those prescribed assets funding the unearned premium reserve shall be clearly designated for this purpose and such reserve account must be a separate auditable account for contracts in force in this state.

(7) No warranty seller may allow its gross written premiums in force for contracts written in this state to exceed a 7-to-1 ratio to net assets Requirements regarding the ratios required by sections 634.406(3) and (4), F.S.

The ratio requirement is a calculation of the ratio of gross written premiums (for which the association is obligated wherever written in any state) to net assets.

(8)(a) All service warranty associations utilizing a funded unearned premium reserve account for contracts in force in this state shall deposit with the Department Office a reserve deposit equal to 10% of the gross written premiums received in force on all Florida warranty contracts in this state.

(b) No change.

(9) Requirements Regarding the Contractual Liability Policy. Contractual liability insurance may be purchased only from an admitted property and casualty insurer whose certificate of authority indicates that it may issue this type of policy and which has been approved by the Office. All insurers issuing contractual liability policies to service warranty associations must, at a minimum, use policy provisions providing policyholder protection substantially equivalent to and not materially in conflict with that provided in the sample contractual liability policy Form OIR-C1-969 form OIR-969, incorporated by reference in Rule 69O-198.011 rule 69O-198.015, F.A.C. A policy is in violation of this subsection only if it is in violation of a statute or rule.

Rulemaking Authority 634.402 FS. Law Implemented 634.406(1), (3), (4), 634.4165 FS. History–New 12-26-88, Formerly 4-67.005, Amended 4-26-90, 3-28-93, 4-3-94, Formerly 4-198.005, Amended ________________.

 

69O-198.011 Application for and Issuance of License and License Continuance.

Substantial rewording of Rule 69O-198.011, F.A.C. follows.  See Florida Administrative Code for present text.

(1) Application for License as a Service Warranty Association

(a) An application for a person applying for a license as a service warranty association consists of the following:

1. Form OIR-C1-997, “Application for License Service Warranty Association,” effective 12/18, hereby incorporated by reference and available at www.flrules.org/XXXXX;

2. Form OIR-A3-455, “Home or Service Warranty Association Surety Bond,” effective 5/20, hereby incorporated by reference and available at www.flrules.org/XXXXX;

3. Form OIR-C1-144, “Service of Process Consent & Agreement,” effective 6/04, hereby incorporated by reference and available at www.flrules.org/XXXXX;

4. Form OIR-C1-905, “Instructions for Furnishing Background Investigative Reports,” effective 6/20, hereby incorporated by reference and available at www.flrules.org/XXXXX;

5. Form OIR-C1-938, “Fingerprint Payment and Submission Procedures,” effective 6/20, hereby incorporated by reference and available at www.flrules.org/XXXXX;

6. Form OIR-C1-969, “Contractual Liability Policy,” effective 5/20, hereby incorporated by reference and available at www.flrules.org/XXXXX;

7. Form OIR-C1-995, “List of Proposed Sales Representatives,” effective 10/05, hereby incorporated by reference and available at www.flrules.org/XXXXX;

8. Form OIR-C1-1423, “Biographical Affidavit,” effective 6/20, hereby incorporated by reference and available at www.flrules.org/XXXXX; and

9. Form OIR-C1-2221, “Management Information Form,” effective 6/20, hereby incorporated by reference and available at www.flrules.org/XXXXX.

(b) A person applying for a license as a service warranty association shall submit forms listed in paragraph (1)(a) as directed by the Office electronically at https://www.floir.com/iportal.

(2) License Continuance for Service Warranty Association

(a)1. A service warranty association’s license shall continue in force as long as the licensee is in compliance with the provisions of chapter 634, part III, F.S.

2. Failure to submit the application for continuance by March 1 shall result in expiration of the license and will require the filing of a new application for licensure.

(b) A licensee seeking to continue operating as a service warranty association shall submit the following:

1. Form OIR-A3-110, “License Continuance Form Service Warranty Association,” effective 5/20, hereby incorporated by reference and available at www.flrules.org/XXXXX, filed electronically at https://www.floir.com/iportal; and

2. A fee of $200.00 filed annually in conjunction with the March 1 filing of the annual statement.

(c) Any licensee who fails to renew a service warranty association license shall immediately cease and desist from engaging in the service warranty business in the state of Florida. The service warranty association shall honor those service warranty contracts in force until the date of expiration or the date of cancellation and a refund is made to the consumer.

(3) Application for License as a Service Warranty Association Manufacturer or Affiliate

(a) An application for a person applying for a license as a service warranty association manufacturer or affiliate consists of the following:

1. Form OIR-C1-989, “Application for License Service Warranty Association Manufacturer or Affiliate,” effective 12/18, hereby incorporated by reference and available at www.flrules.org/XXXXX;

2. Form OIR-C1-144, incorporated by reference in paragraph (1)(a);

3. Form OIR-C1-969, incorporated by reference in paragraph (1)(a); and

4. Form OIR-C1-2221, incorporated by reference in paragraph (1)(a).

(b) A person applying for a license as a service warranty association shall submit forms listed in paragraph (3)(a) as directed by the Office electronically at https://www.floir.com/iportal.

(4) License Continuance for Service Warranty Association Manufacturer or Affiliate

(a)1. A service warranty association manufacturer or affiliate’s license shall continue in force as long as licensee is in compliance with the provisions of chapter 634, part III, F.S.

2. Failure to submit the application for continuance by March 1 shall result in expiration of the license and will require the filing of a new application for licensure.

(b) A licensee seeking to continue operating as a service warranty association manufacturer or affiliate shall submit the following:

1. Form OIR-A3-955, “License Continuance Form Service Warranty Association Manufacturer or Affiliate,” effective 5/20, hereby incorporated by reference and available at www.flrules.org/XXXXX, filed electronically at https://www.floir.com/iportal; and

2. A fee of $500.00 filed annually in conjunction with the March 1 filing of the annual statement.

(c) Any licensee who fails to renew a service warranty association license shall immediately cease and desist from engaging in the service warranty business in the state of Florida. The service warranty association shall honor those service warranty contracts in force until the date of expiration or the date of cancellation and a refund is made to the consumer.

Rulemaking Authority 634.402 FS. Law Implemented 624.424, 634.407, 634.408 FS. History–New 3-28-93, Formerly 4-198.011, Amended ________________.

 

69O-198.012 Annual Statement.

(1) An Annual Statements are Statement is required to be filed with the Office of Insurance Regulation, on or before March 1 of each year, on Form OIR-A3-456, “Annual Statement for Service Warranty Association,” effective 5/20, (05/90) hereby incorporated by reference and available at www.flrules.org/XXXXX, and Form OIR-A3-458, “Annual Statement for Publicly Held Corporation,” effective 5/20, hereby incorporated by reference and available at www.flrules.org/XXXXX.  The filings shall be submitted electronically via the Office’s system at https://www.floir.com/iportal. as incorporated by reference in subsection 69O-198.015(1), F.A.C. If the Annual Statements are statement is not complete to include all information requested in the format provided, they it will not be deemed filed until all deficiencies are corrected.

(2) Forms are available at https://www.floir.com/iportal. All filings shall be submitted electronically to https://www.floir.com/iportal.

Rulemaking Authority 634.402 FS. Law Implemented 624.424, 634.415 FS. History–New 12-26-88, Amended 4-26-90, Formerly 4-67.012, 4-198.012, Amended 7-30-17, ________________.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: : Michael Lawrence, Jr., Chief Legal Counsel

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Financial Services Commission

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: February 2, 2021

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: November 5, 2020