Fla. Admin. Code Ann. R. 69O-198.005 - Financial Requirements
Requirements regarding the funded, unearned premium reserve account.
(1) "Gross Written Premiums"
means the total amount of premiums paid, paid or to be paid by the consumer for
the entire period of the service warranty, inclusive of commissions, for which
the association is obligated under service warranties issued.
(2) Written contracts are required on all
sales made between the service warranty association and the consumer. The
serially pre-numbered contract shall include the selling price to the ultimate
consumer, issuing sales representative, date issued, name of warranty holder
and their street address, warranty period, and other pertinent information
relative to the transaction. Copies of all warranty contracts shall be
maintained by the association for a period of at least four years after
expiration of the contract.
(3)
Each service warranty association shall maintain a warranty register. The
register shall include at least the following items.
(a) Contract number;
(b) Date issued;
(c) Issuing sales representative;
(d) Name of warranty holder and their street
address;
(e) Warranty
period;
(f) Net Premium;
(g) Commission to sales
representative;
(h) Gross premium;
and,
(i) Location of
Property.
(4) The gross
premium shall be the greater of either the total amount of premium paid by the
ultimate consumer (selling price), inclusive of commissions, or that selling
price paid for the warranty by the retail store or sales representative plus
any commission.
(5) The unearned
premium reserve account is calculated as follows:
(a) 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.
(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.
(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, unless it meets the requirement of Section
634.406(4),
F.S.
(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 a reserve deposit equal to 10% of
the gross written premiums received on all warranty contracts in this
state.
(b) The deposit required in
Section 634.405(1),
F.S., may be used in the funding of the 10% reserve deposit required under
Section 634.406(1),
F.S.
Notes
Rulemaking Authority 634.402 FS. Law Implemented 634.406(1), (3), (4), 634.4165 FS.
New 12-26-88, Formerly 4-67.005, Amended 4-26-90, 3-28-93, 4-3-94, Formerly 4-198.005, Amended 5-25-21.
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