Alabama 2023 Regular Session

Alabama House Bill HB215 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	HB215INTRODUCED
2	2	Page 0
3	3	JPCWFN-1
4	4	By Representative Ingram
5	5	RFD: Insurance
6	6	First Read: 23-Mar-23
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11	11	5 JPCWFN-1 01/09/2023 FC (L) ma 2022-5207
12	12	Page 1
13	13	SYNOPSIS:
14	14	Under existing law, motor vehicle value
15	15	protection agreements are authorized in motor vehicle
16	16	consumer credit financing transactions to pay
17	17	deficiency balances due under certain conditions.
18	18	Under existing law, the provider of a motor
19	19	vehicle value protection agreement is required to
20	20	insure its agreement under an insurance policy or meet
21	21	certain other financial requirements.
22	22	This bill would clarify that the insurance
23	23	policy would be for the purpose of paying or
24	24	reimbursing obligations under a motor vehicle value
25	25	protection agreement in the event the provider fails to
26	26	perform the obligations.
27	27	A BILL
28	28	TO BE ENTITLED
29	29	AN ACT
30	30	Relating to consumer credit financing in the sale or
31	31	lease of motor vehicles; to amend Section 8-37A-4 of the Code
32	32	of Alabama 1975, as added by Act 2022-179 of the 2022 Regular
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62	62	Session, relating to motor vehicle value protection agreements
63	63	and the requirements of a provider of the agreements to insure
64	64	performance of the obligations of the provider; to further
65	65	clarify the requirements of an insurance policy maintained by
66	66	the provider for this purpose.
67	67	BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
68	68	Section 1. Section 8-37A-4 of the Code of Alabama
69	69	1975, as added by Act 2022-179 of the 2022 Regular Session, is
70	70	amended to read as follows:
71	71	"§8-37A-4
72	72	In order to assure the faithful performance of the
73	73	obligations of a provider to its contract holders, the
74	74	provider shall comply with one of the following:
75	75	(1)a. Insure all of its motor vehicle value protection
76	76	agreements under an insurance policy that pays or reimburses
77	77	the obligations of a provider under any motor vehicle value
78	78	protection agreements of the provider in the event the
79	79	provider fails to perform its obligations. The insurance
80	80	policy shall be issued by an insurer licensed, registered, or
81	81	otherwise authorized to do business in this state at the time
82	82	the policy is filed with the Commissioner of Insurance and
83	83	continuously thereafter, that meets one of the following
84	84	criteria:
85	85	1. Has a surplus as to policyholders and paid-in
86	86	capital of at least fifteen million dollars ($15,000,000).
87	87	2. Has a surplus as to policyholders and paid-in
88	88	capital of not less than ten million dollars ($10,000,000),
89	89	and evidence to the satisfaction of the commissioner that the
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119	119	company maintains a ratio of net written premiums, wherever
120	120	written, to surplus as to policyholders and paid-in capital of
121	121	not greater than three to one.
122	122	b. In addition, the insurer shall annually file with
123	123	the commissioner copies of the insurer's audited financial
124	124	statements, its NAIC Annual Statement, and the actuarial
125	125	certification required by and filed in the insurer's state of
126	126	domicile.
127	127	(2)a. Maintain a funded reserve account for its
128	128	obligations under its contracts issued and outstanding in this
129	129	state. The reserves shall not be less than 40 percent of gross
130	130	consideration received, less claims paid, on the sale of the
131	131	motor vehicle value protection agreement for all in-force
132	132	contracts. The reserve account shall be subject to examination
133	133	and review by the Superintendent of Banks; and
134	134	b. Place in trust with the superintendent a financial
135	135	security deposit, having a value of not less than five percent
136	136	of the gross consideration received, less claims paid, on the
137	137	sale of the motor vehicle value protection agreements for all
138	138	agreements issued and in force, but not less than twenty-five
139	139	thousand dollars ($25,000) consisting of one of the following:
140	140	1. A surety bond issued by an authorized surety.
141	141	2. Securities of the type eligible for deposit by
142	142	authorized insurers in this state.
143	143	3. Cash.
144	144	4. A letter of credit issued by a qualified financial
145	145	institution.
146	146	5. Another form of security prescribed by regulations
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176	176	issued by the superintendent.
177	177	(3)a. Maintain, or together with its parent company
178	178	maintain, a net worth or stockholders' equity of one hundred
179	179	million dollars ($100,000,000); and
180	180	b. Upon request, provide the Superintendent of Banks
181	181	with a copy of the provider's or the provider's parent
182	182	company's most recent Form 10-K or Form 20-F filed with the
183	183	Securities and Exchange Commission (SEC) within the last
184	184	calendar year, or if the company does not file with the SEC, a
185	185	copy of the company's audited financial statements that shows
186	186	a net worth of the provider or its parent company of at least
187	187	one hundred million dollars ($100,000,000). If the provider's
188	188	parent company's Form 10-K, Form 20-F, or financial statements
189	189	are filed to meet the provider's financial security
190	190	requirement, then the parent company shall agree to guarantee
191	191	the obligations of the provider relating to motor vehicle
192	192	value protection agreements sold by the provider in this
193	193	state."
194	194	Section 2. This act shall become effective immediately
195	195	following its passage and approval by the Governor, or its
196	196	otherwise becoming law.
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