Bill Text: GA HB820 | 2011-2012 | Regular Session | Comm Sub

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Bill Title: Guaranteed asset protection waivers; retail seller's requirements to insure waiver obligations; provide exception

Spectrum: Partisan Bill (Republican 7-0)

Status: (Engrossed - Dead) 2012-03-14 - Senate Read Second Time [HB820 Detail]

Download: Georgia-2011-HB820-Comm_Sub.html

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12 LC 37 1383S

House Bill 820 (COMMITTEE SUBSTITUTE)

By: Representatives Maxwell of the 17th, Smith of the 131st, Ehrhart of the 36th, Davis of the 109th, Rice of the 51st, and others

A BILL TO BE ENTITLED
AN ACT

To amend Title 33 of the Official Code of Georgia Annotated, relating to insurance, so as to provide requirements of retail installment sellers to be exempted from reinsurance requirements relating to vehicle service agreements or extended warranty agreements; to provide for an exception to a retail installment seller's requirement to insure its guaranteed asset protection waiver obligations under a contractual liability policy or other such policy; to provide for related matters; to repeal conflicting laws; and for other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

SECTION 1.

Title 33 of the Official Code of Georgia Annotated, relating to insurance, is amended by revising paragraph (1) of subsection (b) of Code Section 33-7-6, relating to property insurance, contract requirements, rules and regulation, and exemption, as follows:

"(1) Any contract, agreement, or instrument whereby a person assumes the risk of and the expense or portion thereof for the mechanical breakdown or mechanical failure of a motor vehicle, or for the removal of dents, dings, or creases in a motor vehicle without affecting the existing paint finish using paintless dent repair techniques or the removal of small windshield chips and cracks without replacement of the entire windshield, and shall include those agreements commonly known as vehicle service agreements or extended warranty agreements, if made by a person other than the motor vehicle manufacturer in exchange for a separately stated charge or the cost of the contract or contracts is included on a nonidentifiable basis in the cost of a motor vehicle sold in conjunction therewith, except that this provision shall not apply to:

(A) An an agreement underwritten by an insurer licensed to transact insurance in this state, either directly or through a reinsurance contract or, without regard to the requirement that the insurance cannot be obtained from an insurer authorized to do business in this state as required by Code Section 33-5-21, to an agreement underwritten by a surplus lines insurer which has not been rejected by the Commissioner for such purpose; and

(B) Those agreements commonly known as vehicle service agreements or extended warranty agreements which are issued, sold, or offered for sale by a retail installment seller, as defined in Code Section 10-1-31, provided that such retail installment seller:

(i) Maintains, or has a parent company maintain, a net worth or stockholders' equity of at least $100 million, provided the parent company guarantees the obligations of the retail installment seller arising from vehicle service agreements or extended warranty agreements underwritten pursuant to this subparagraph;

(ii) Complies with the registration requirement prescribed by the Commissioner through regulation;

(iii) Files with the Commissioner a true and correct copy of the vehicle service agreement or extended warranty agreement in a form that is consistent with the terms prescribed by the Commissioner through regulation;

(iv) Files a copy of its Form 10-K or Form 20-F disclosure statements, or if it does not file such statements with the United States Securities and Exchange Commission, a copy of its audited financial statements reported on a GAAP basis. If the retail installment seller's financial statements are consolidated with those of its parent company, then the retail installment seller may comply with this provision by filing the statements of its parent company. The statement shall be filed with the Commissioner 30 days prior to the retail installment seller's initial offering or delivering of a service agreement or extended warranty agreement, and thereafter, the statement shall be filed with the Commissioner annually; and

(v) Upon the request of the Commissioner, posts a security deposit or surety bond in an amount not to exceed $250,000.00 and in the manner prescribed by the Commissioner through regulation."

SECTION 2.

Said title is further amended by revising Code Section 33-63-4, relating to offering, selling, or providing to borrowers guaranteed asset protection waivers, as follows:

"33-63-4.

(a) Guaranteed asset protection waivers may be offered, sold, or provided to borrowers in this state in compliance with this chapter.

(b) Guaranteed asset protection waivers may, at the option of the creditor, be sold for a single payment or may be offered with a monthly or periodic payment option.

(c) Notwithstanding any other provision of law, any cost to the borrower for a guaranteed asset protection waiver entered into in compliance with the federal Truth in Lending Act, 15 U.S.C. Section 1601, et seq., and its implementing regulations, as they may be amended from time to time, must shall be separately stated and is not to be considered a finance charge or interest.

(d) A retail installment seller must shall insure its guaranteed asset protection waiver obligations under a contractual liability or other insurance policy issued by an insurer, except as provided in subsection (i) of this Code section. A creditor other than a retail installment seller may insure its guaranteed asset protection waiver obligations under a contractual liability policy or other such policy issued by an insurer. Any such insurance policy may be directly obtained by a creditor or retail installment seller or may be procured by an administrator to cover a creditor's or retail installment seller's obligations. However, retail installment sellers that are lessors on motor vehicles are not shall not be required to insure obligations related to guaranteed asset protection waivers on such leased vehicles.

(e) The guaranteed asset protection waiver shall remain a part of the finance agreement upon the assignment, sale, or transfer of such finance agreement by the creditor.

(f) Neither the extension of credit, the term of credit, nor the term of the related motor vehicle sale or lease may be conditioned upon the purchase of a guaranteed asset protection waiver.

(g) Any creditor that offers a guaranteed asset protection waiver must shall report the sale of, and forward funds received on, all such waivers to the designated party, if any, as prescribed in any applicable administrative services agreement, contractual liability policy, other insurance policy or other specified program documents.

(h) Funds received or held by a creditor or administrator and belonging to an insurer, creditor, or administrator pursuant to the terms of a written agreement must shall be held by such creditor or administrator in a fiduciary capacity.

(i) A retail installment seller shall not be required to insure its guaranteed asset protection waiver obligations under a contractual liability policy or other such policy issued by an insurer if the retail installment seller does both of the following:

(1) Maintains, or has a parent company that maintains, a net worth or stockholders' equity of at least $100 million, provided the parent company guarantees the obligations of the retail installment seller arising from guaranteed asset protection waivers underwritten pursuant to this subsection; and

(2) Files a copy of its Form 10-K or Form 20-F disclosure statements, or, if it does not file with the United States Securities and Exchange Commission, a copy of its audited financial statements reported on generally accepted accounting principles. If the retail installment seller's financial statements are consolidated with those of its parent company, then the retail installment seller may comply with the provisions of this paragraph by filing the statements of its parent company. The statement shall be filed with the Commissioner at least 30 days prior to the retail installment seller's initial offering or delivering a guaranteed asset protection waiver, and thereafter the statement shall be filed with the Commissioner annually."

SECTION 3.

All laws and parts of laws in conflict with this Act are repealed.