OIR Rule Development Workshop: ‘Motor Vehicle Service Agreement Companies’ Definition Would Include ‘Motor Vehicle Manufacturers’

 

On Tuesday February 17, 2009, a Colodny Fass representative attended a Rule Development Workshop held at the Florida Office of Insurance Regulation (“OIR”) in Tallahassee, FL.  The focus of the Workshop was to incorporate “Motor Vehicle Manufacturers” as a new category of Motor Vehicle Service Agreement Companies under the existing Rules applicable to “Motor Vehicle Service Agreement Companies.” 

To view the Workshop notice, click here.

The following Rules would be affected by the new category:

69O-200.003: Licensing of Companies that Administer and Market Service Agreements
69O-200.004: Qualification to Obtain and Hold a License
69O-200.005: Use of the Statutory Deposit
69O-200.006: Contractual Liability Insurers
69O-200.009: Form Filings
69O-200.011: Disapproval of Forms
69O-200.013: Rate Filings
69O-200.014: Exemption From Financial Examination
69O-200.015: Forms Incorporated by Reference
69O-200.016: New Car Motor Vehicle Service Agreements Issued on Used Cars

Marc Ito from the OIR presided over the workshop.

The Florida Legislature recently amended Chapter 634 of Florida law to change the definition of “Motor Vehicle Manufacturer.”  The proposed Rule changes addressed at the Workshop clarify the language already set forth in Chapter 690-200, which regulates licensing and operation of Motor Vehicle Service Agreement Companies.

A company may be subject to the new Rules if it is a  “Motor Vehicle Manufacturer,” which is defined as an entity that:

• Manufactures or produces motor vehicles and sells motor vehicles under its own name or label
• Is a subsidiary of an entity that manufactures or produces motor vehicles
• Is a corporation that owns 100 percent of an entity that manufactures or produces motor vehicle
• For purposes of this subsection, an “entity” qualifies as a “subsidiary” if 25 percent or more of its voting securities are directly or indirectly owned by an entity that manufactures or produces motor vehicles and sells motor vehicles under its own name or label.      

The OIR has provided Forms that will be used in order to administer the changes in the proposed Rules and amended statutes:

• Form OIR-A3-1983 pertains to the Application for License for a Motor Vehicle Service Agreement Company-Manufacturer
• Form OIR-A3-1984 A pertains to Motor Vehicle Manufacturer Interrogatories (annual yes/no report)
• Form OIR-A3-1984 B pertains to Annual Statistical Reporting for Motor Vehicle Manufacturers
• Form OIR-A3-1985 pertains to the Exemption from the Field Examination (invoice) required by Section 634.141, F.S.

Because the proposed changes would affect reserve issues and deposit requirements of already-licensed companies, Workshop attendees raised concerns over whether there were transition Rules or Forms for those companies. 

Amy Groszos of the OIR suggested that a new paragraph be added to the proposed Rule in order to clearly state that currently-licensed companies need not reapply, and therefore could be grandfathered in under the proposed changes.   All that would be required to accomplish this is for the currently-licensed company to state (in the form of a letter) that it meets the new definition.  The OIR would then certify and authorize the release of pre-submitted deposits under the former Rule(s). 

Although the reserve issue should only affect a very small number of companies, Ms. Groszos stressed that the OIR will work with both new and old companies during this transitional period. 

Due to anticipated transition issues and the late publication of the proposed Rule changes, the OIR is leaving the record open for comment for two weeks, concluding at 5:00 p.m. on March 3.  Comments should be emailed to Mark Ito and copied to Amy Groszos at: marcito@floir.com and amygroszos@floir.com, respectively.

 

Please note that the material above is a brief summary of the discussion and events that took place during the workshop relating to the proposed Rule changes.  It is not intended to be a comprehensive review of any particular issues relating to the policies and/or Rule(s) discussed.  Further, this report should not be relied upon for making any specific decisions. 

Should you have any questions about any of the above matters, please do not hesitate to contact Colodny Fass.  This office will continue to follow this and other issues related to actions taken by the Florida Office of Insurance Regulation in regards to this and other matters, and provide information on, and analysis of,  those issues and events as they arise.

 

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