HB 367 — Home and Service Warranty Association Financial Requirements

F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HBCS/HB 367 2025 A bill to be entitled An act relating to home and service warranty association financial requirements;

revisingmaking thetechnical circumstanceschanges; under which home warranty associations are not required to set up unearned premium reserves;

revising the requirements for certain contractual liability policies purchased by home warranty associations;

revising the circumstances under which certain service warranty associations are not required to establish unearned premium reserves or to maintain contractual liability insurance and are authorized to allow their premiums to exceed specified ratios;

revising the requirements for certain contractual liability policies purchased by service warranty associations;

634.3077 Financial requirements.— Page(3) 1An association may not be required to set up an unearned premium reserve if it has purchased contractual liability insurance which demonstrates to the satisfaction of 8the CODING:office that 100 percent of its claim exposure is covered by such insurance.

Such contractual liability insurance shall be Page 1 of 8 CODING:

hb367-02-c2hb367-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HBCS/HB 367 2025 (3)obtained Anfrom associationan mayinsurer notor beinsurers requiredthat tohold seta upcertificate anof unearnedauthority premiumto reservedo ifbusiness itwithin hasthe purchasedstate contractualor liabilityfrom insurancean whichinsurer demonstratesor toinsurers theapproved satisfactionby of the office thatas 100financially percentcapable of itsmeeting claimthe exposureobligations isincurred coveredpursuant byto suchthe insurance.policy or policies.

Such contractual liability insurance shall be obtained from an insurer or insurers that hold a certificate of authority to do business within the state or from an insurer or insurers approved by the office as financially capable of meeting the obligations incurred pursuant to the policy or policies.

(c) The policy or policies may not be canceled or not renewed by the insurer or insurers or the association unless 60 days' written notice thereof has been given to the office by the Pageinsurer 2or insurers before the date of 8such CODING:cancellation or nonrenewal.

(d) The contractual liability insurance policy or policies shall insure all home warranty contracts that were issued while the policy or policies were was in effect whether or not the Page 2 of 8 CODING:

hb367-02-c2hb367-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HBCS/HB 367 2025 insurerpremium orhas insurersbeen beforeremitted to the dateinsurer of such cancellation or nonrenewal.insurers.

(d) The contractual liability insurance policy or policies shall insure all home warranty contracts that were issued while the policy or policies were was in effect whether or not the premium has been remitted to the insurer or insurers.

(e) The policy or policies may either pay 100 percent of claims as they are incurred, or pay 100 percent of claims due in the event of the association's failure to pay claims when due.

(a) In the event that the service warranty association does not fulfill its obligation under contracts issued in this state for any reason, including insolvency, bankruptcy, or Pagedissolution, 3the ofcontractual 8liability CODING:insurer or insurers will pay losses and unearned premium refunds under such plans directly to the person making a claim under the contract.

(b) The insurer or insurers issuing the contractual liability policy or policies shall assume full responsibility for the administration of claims in the event of the inability of the association to do so.

(c) The policy or policies may not be canceled or not Page 3 of 8 CODING:

hb367-02-c2hb367-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HBCS/HB 367 2025 dissolution,renewed theby contractualeither liabilitythe insurer or insurers willor paythe lossesassociation andunless unearned60 premiumdays' refundswritten undernotice suchthereof planshas directlybeen given to the personoffice makingby athe claiminsurer underor insurers before the contract.date of such cancellation or nonrenewal.

(b) The insurer or insurers issuing the contractual liability policy or policies shall assume full responsibility for the administration of claims in the event of the inability of the association to do so.

(c) The policy or policies may not be canceled or not renewed by either the insurer or insurers or the association unless 60 days' written notice thereof has been given to the office by the insurer or insurers before the date of such cancellation or nonrenewal.

The salesperson or agent shall refund to the contractual liability policy issuer or issuers the Pageunearned 4pro ofrata 8commission. CODING:

Words stricken are deletions;

words underlined are additions.

hb367-02-c2 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 367 2025 unearned pro rata commission.

An association must be able to distinguish how each individual servicePage warranty4 isof covered.8 CODING:

(g)Words Thestricken policy or policies may either pay 100 percent of claims as they are incurred,deletions; or pay 100 percent of claims due in the event of the association's failure to pay claims when due.

words underlined are additions.

hb367-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/HB 367 2025 service warranty is covered.

1.(a) Holds licenses issued pursuant to the provisions of part I and this part;, and 2.(b) Maintains net assets of at least $2.5 million;, and 3.(c) Utilizes contractual liability insurance which reimburses the service warranty association for 100 percent of its paid claims;, and (b)(d) The insurer or insurers issuing the contractual liability insurance policy or policies maintain maintains a policyholder surplus of at least $100 million and are is rated Page"A" 5or ofhigher 8by CODING:A.M.

Words stricken are deletions;

words underlined are additions.

hb367-02-c2 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 367 2025 "A" or higher by A.M.

or 2.Page 5 of 8 CODING:

Words stricken are deletions;

words underlined are additions.

hb367-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/HB 367 2025 2.

In conjunction with the warranty association's filing of the quarterly and annual reports, provide provides, on a form prescribed by the commission, a statement certifying the gross written premiums in force reported by the warranty association and a statement that all of the warranty association's gross written premium in force is covered under the contractual Pageliability 6policy or policies, regardless of 8whether CODING:it has been reported.

(7) An association licensed under this part and holding no other license under part I or part II of this chapter is not required to establish an unearned premium reserve or maintain contractual liability insurance and may allow its premiums to exceed the ratio to net assets limitation of this section if the association complies with the following:

(a) The association or, if the association is a direct or indirect wholly owned subsidiary of a parent corporation, its parent corporation has, and maintains at all times, a minimum Page 6 of 8 CODING:

hb367-02-c2hb367-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HBCS/HB 367 2025 liabilitynet policyworth orof policies,at regardlessleast of$100 whethermillion itand hasprovides beenthe reported.office with one of the following: