Chapter 2024-140, L.O.F., amended section 634.3077, F.S., and created an exception for home warranty associations. Rule 69O-199.005, F.A.C., is amended to adopt Form OIR-A3-1000 “Home Warranty Association Exception,” which ....

 

DEPARTMENT OF FINANCIAL SERVICES

OIR – Insurance Regulation

RULE NO.:RULE TITLE:

69O-199.005 Financial Requirements Regarding the Funded, Unearned Premium Reserve Account

PURPOSE AND EFFECT: Chapter 2024-140, L.O.F., amended section 634.3077, F.S., and created an exception for home warranty associations. Rule 69O-199.005, F.A.C., is amended to adopt Form OIR-A3-1000 “Home Warranty Association Exception,” which will collect the relevant information from home warranty associations so the Office can appropriately apply the exception.

SUMMARY: Chapter 2024-140, L.O.F., amended section 634.3077, F.S., and created an exception for home warranty associations. If they adhere to strict requirements, they do not have to meet certain financial responsibility requirements, including establish an unearned premium reserve. Rule 69O-199.005, F.A.C., is amended to adopt Form OIR-A3-1000 “Home Warranty Association Exception,” which will collect the relevant information from home warranty associations so the Office can appropriately apply the exception.

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: 634.302, F.S.

LAW IMPLEMENTED: 634.3077, 634.3135, F.S.

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: Kama Monroe, Assistant General Counsel, Office of Insurance Regulation, [e-mail], [phone].

 

THE FULL TEXT OF THE PROPOSED RULE IS:

 

69O-199.005 Financial Requirements Regarding the Funded, Unearned Premium Reserve Account.

(1)-(2) No Change.

(3) The home warranty association must maintain an unearned premium reserve account or contractual liability insurance unless the conditions in (5) are met.

(a) The unearned premium reserve account is calculated as follows: the minimum reserve for all home warranty associations shall be 25 percent of the gross written premium for which the association is obligated on all contracts, issued in this state.

(b)(4) The unearned premium reserve account shall be totally funded and identified 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.

(4)(5) The ratios required by Section 634.3077(2), F.S., are net assets to gross written premiums for which the association is obligated, wherever written, in any state, except that the ratio of net assets to gross written premiums may be less if the association has net assets of not less than $500,000 and maintains a funded, unearned premium reserve account equal to a minimum of 40 percent of the gross written premiums received by it from all warranty contracts in force in this state, or if the conditions in (5) are met.

(5)  A home warranty association need not maintain an unearned premium reserve acccount, or liability insurance, and may allow its premiums to exceed the ratio described in (4), if it, or its parent company if it is a wholly owned subsidiary, submits Form OIR-A3-1000 “Home Warranty Association Exception” effective 07/24, hereby incorporated by reference and available at https://www.flrules.org/Gateway/reference.asp?No=Ref-16772, and all required supporting documentation and the exemption is approved by the Office. 

Rulemaking Authority 634.302 FS. Law Implemented 634.3077, 634.3135 FS. History–New 7-16-92, Formerly 4-199.005, Amended 5-25-21, ______.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Kama Monroe, Assistant General Counsel

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

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: June 12, 2024

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: May 15, 2024