Existing law regulates home protection companies, which issue contracts for the repair or replacement of a component, system, or appliance of a home. Existing law requires a home protection company to file an annual statement exhibiting its conditions and affairs, as specified, and an annual statement of financial condition. Existing law requires a home protection company to maintain a reserve for unearned premiums in an amount not less than 40% of the aggregate premiums charged on its current contracts. Existing law requires the Insurance Commissioner to examine the affairs of a home protection company before licensure and at other times as appears necessary, and prohibits the commissioner from conducting more than one financial examination of a home protection company in a 5-year period, unless specified requirements are met. Existing law authorizes the commissioner to extend the period between examinations up to 2 additional years if the commissioner determines that conditions warrant the extension, as specified, including the company’s net worth.

This bill would authorize the commissioner to extend the period between examinations to up to 3 additional years and allow the commissioner to also consider the availability of examiners as a condition that could warrant an extension.