Virginia House Bill 304 became law upon approval by the Governor on February 29, 2016. This bill authorizes the State Corporation Commission (SCC), which regulates home service contract providers, to deny an initial license application based on its review of the financial statements and any reports, certificates, or other documents filed with the SCC. Current law requires that an applicant demonstrate minimum net worth (surplus) of $100,000 – and this legislation clarifies that audited financial statements may be required to make this assessment.
The measure also changes the license renewal cycle for home service contract providers from a biennial process to an annual process beginning July 1, 2017, and revises the application fee from $1,000 biennially to $500 annually. Other provisions (i) clarify that the Virginia reserve requirement for such companies is determined by taking the gross consideration received for all home service contracts, less the claims paid, and then multiplying the remainder by 40 percent; (ii) replaces a reference to “premiums” with “provider fees” because home service contracts are not insurance; and (iii) amends the provision dealing with filing of audited financial statements to allow for statements prepared in accordance with generally accepted accounting principles.