282(3) 283An association will not be required to establish an unearned premium reserve if it has purchased contractual liability insurance which demonstrates to the satisfaction of the office that 100 percent of its claim exposure is covered by such policy. The contractual liability insurance shall be obtained from an insurer that holds a certificate of authority to do business within the state. For the purposes of this subsection, the contractual liability policy shall contain the following provisions:359(a) 360In 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 dissolution, the contractual liability insurer will pay losses and unearned premium refunds under such plans directly to the person making a claim under the contract.
411(b) 412The insurer issuing the contractual liability policy shall assume full responsibility for the administration of claims in the event of the inability of the association to do so.
440(c) 441The policy may not be canceled or not renewed by either the insurer or the association unless 60 days’ written notice thereof has been given to the office by the insurer before the date of such cancellation or nonrenewal.
480(d) 481The contractual liability insurance policy shall insure all service warranty contracts which were issued while the policy was in effect whether or not the premium has been remitted to the insurer.
512(e) 513In the event the issuer of the contractual liability policy is fulfilling the service warranty covered by policy and in the event the service warranty holder cancels the service warranty, it is the responsibility of the contractual liability policy issuer to effectuate a full refund of unearned premium to the consumer. This refund shall be subject to the cancellation fee provisions of s. 576634.414577. The salesperson or agent shall refund to the contractual liability policy issuer the unearned pro rata commission. 595(f) 596An association may not utilize both the unearned premium reserve and contractual liability insurance simultaneously. However, an association shall be allowed to have contractual liability coverage on service warranties previously sold and sell new service warranties covered by the unearned premium reserve, and the converse of this shall also be allowed. An association must be able to distinguish how each individual service warranty is covered.
661(4) 662No warrantor may allow its gross written premiums in force to exceed a 7-to-1 ratio to net assets; however, a company may exceed this requirement if the company:690(a) 691Holds licenses issued pursuant to the provisions of part I and this part, and
705(b) 706Maintains net assets of at least $2.5 million, and
715(c) 716Utilizes contractual liability insurance which reimburses the service warranty association for 100 percent of its paid claims, and
734(d) 735The insurer issuing the contractual liability insurance policy maintains a policyholder surplus of at least $100 million and is rated “A” or higher by A.M. Best Company.
788(6) 789An association that holds a license under this part may allow its premiums for service warranties written under this part to exceed the ratio to net assets limitations of this section if the association meets all of the following:828(a) 829Maintains net assets of at least $750,000.
837(b) 838Uses a contractual liability insurance policy approved by the office that:8491. 850Reimburses the service warranty association for 100 percent of its claims liability and is issued by an insurer that maintains a policyholder surplus of at least $100 million; or
8792. 880Complies with subsection (3) and is issued by an insurer that maintains a policyholder surplus of at least $200 million.
900(c) 901The insurer issuing the contractual liability insurance policy:9091. 910Is rated “A” or higher by A.M. Best Company or an equivalent rating by another national rating service acceptable to the office.
9322. 933In conjunction with the warranty association’s filing of the quarterly and annual reports, 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 liability policy, regardless of whether it has been reported.
996(7) 997An 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:1054(a) 1055The 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 net worth of at least $100 million and provides the office with the following:10981. 1099A copy of the association’s annual audited financial statements or the audited consolidated financial statements of the association’s parent corporation, prepared by an independent certified public accountant in accordance with generally accepted accounting principles, which clearly demonstrate the net worth of the association or its parent corporation to be $100 million and a quarterly written certification to the office that such entity continues to maintain the net worth required under this paragraph.
11712. 1172The association’s, or its parent corporation’s, Form 10-K, Form 10-Q, or Form 20-F as filed with the United States Securities and Exchange Commission or such other documents required to be filed with a recognized stock exchange, which shall be provided on a quarterly and annual basis within 10 days after the last date each such report must be filed with the Securities and Exchange Commission, the National Association of Security Dealers Automated Quotation system, or other recognized stock exchange.
1251Failure to timely file the documents required under this paragraph may, at the discretion of the office, subject the association to suspension or revocation of its license under this part. An association or parent corporation demonstrating compliance with subparagraphs 1. and 2. must maintain outstanding debt obligations, if any, rated in the top four rating categories by a recognized rating service.
1312(b) 1313If the net worth of a parent corporation is used to satisfy the net worth provisions of paragraph (a), the following provisions must be met:13381. 1339The parent corporation must guarantee all service warranty obligations of the association, wherever written, on a form approved in advance by the office. No cancellation, termination, or modification of the guarantee shall become effective unless the parent corporation provides the office written notice at least 90 days before the effective date of the cancellation, termination, or modification and the office approves the request in writing. Prior to the effective date of cancellation, termination, or modification of the guarantee, the association must demonstrate to the satisfaction of the office compliance with all applicable provisions of this part, including whether the association will meet the requirements of this section by the purchase of contractual liability insurance, establishing required reserves, or other method allowed under this section. If the association or parent corporation does not demonstrate to the satisfaction of the office compliance with all applicable provisions of this part, it shall immediately cease writing new and renewal business upon the effective date of the cancellation, termination, or modification.
15052. 1506The association must maintain at all times net assets of at least $750,000.
