Florida Regulations 69K-5.0016: Preneed License; Financial Requirements
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(1) For the purposes of this section, “”Total preneed contracts”” is defined as the total retail value of all outstanding preneed contracts.
(2) A Preneed Licensee or applicant must meet and maintain the following requirements on an annual basis, demonstrating its ability to discharge its liabilities as they become due in the normal course of business and must have sufficient funds available to perform its obligation under its existing preneed contracts.
(a) A Preneed Licensee or applicant must submit its most recent year-end financial statements (including a balance sheet and income statement) with the Preneed License application and annually thereafter as provided in Florida Statutes § 497.453(1) The financial statements must be prepared in accordance with generally accepted accounting principles (GAAP) as those principles have been defined by the Florida Board of Accountancy in chapter 61H1-20, F.A.C. If the applicant does not have the minimum net worth as set forth in paragraph (2)(b) or lacks sufficient liquid assets to satisfy current liabilities or does not appear to have any substantial long-term assets, the Department shall request additional financial information concerning financial statements and the statement of cash flows.
(b) The Preneed Licensee’s financial statements must demonstrate the following levels of net worth:
1. Preneed Licensee that has total preneed contracts $100,000 or less-$10,000 net worth;
2. Preneed Licensee that has total preneed contracts of $100,001 to $200,000-$20,000 net worth;
3. Preneed Licensee that has total preneed contracts of $200,001 to $400,000-$40,000 net worth;
4. Preneed Licensee that has total preneed contracts of $400,001 to 600,000-$60,000 net worth;
5. Preneed Licensee that has total preneed contracts of $600,001 to $800,000-$80,000 net worth;
6. Preneed Licensee that has total preneed contracts in excess of $800,000-$100,000 net worth.
(c) In the case of a Preneed Licensee or applicant offering preneed sales through a subsidiary agent, as provided in Fl. Admin. Code R. 69K-5.0015, the Preneed Licensee or applicant shall execute a guarantee agreement with respect to any contract obligations resulting from preneed sales of such a selling agent.
(3) If the Preneed Licensee or applicant does not meet the financial requirements in paragraph (2)(b), above, the entity may voluntarily submit to the Board additional evidence or agree to additional oversight as to its meeting the requirements of subsection (2), above, and as a condition of receiving and retaining a Preneed License.
Such additional evidence or oversight agreement shall include as appropriate:
(a) Agreement to submit monthly financial statements of the entity;
(b) Agreement to submit quarterly financial statements of the entity;
(c) Appraisal of the entity’s property or broker’s opinion of value of entity’s assets;
(d) Credit report of the entity or its principal owners;
(e) Subordination of debt agreement from the entity’s principal owners;
(f) Indemnification/subrogation agreement binding the entity and principal owners;
(g) Guarantee agreement for the entity from its principal owners;
(h) Written explanation of past financial activity;
(i) Submission of a twelve month projected business plan which shall include:
1. Statement of cash flows;
2. Proforma income statement with sources of revenue identified; and,
3. Marketing initiatives;
(j) Submission of previous Department examination reports;
(k) 100% voluntary trusting agreement by the entity;
Upon the Board’s review of such additional information or agreements, submitted as stated above, the Board shall issue a Preneed License if such information or agreement results in the Board determining that the applicant or preneed license meets the requirements of sections 497.452 and 497.453, F.S.
Rulemaking Authority 497.103 FS. Law Implemented 497.452, 497.453 FS. History-New 5-21-95, Amended 12-7-98, 10-18-99, 12-12-00, 6-26-02, Formerly 3F-5.0016, Amended 9-5-18.
Terms Used In Florida Regulations 69K-5.0016
- Appraisal: A determination of property value.
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Contract: A legal written agreement that becomes binding when signed.
- Credit report: A detailed report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness. Source: OCC
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Oversight: Committee review of the activities of a Federal agency or program.
(a) A Preneed Licensee or applicant must submit its most recent year-end financial statements (including a balance sheet and income statement) with the Preneed License application and annually thereafter as provided in Florida Statutes § 497.453(1) The financial statements must be prepared in accordance with generally accepted accounting principles (GAAP) as those principles have been defined by the Florida Board of Accountancy in chapter 61H1-20, F.A.C. If the applicant does not have the minimum net worth as set forth in paragraph (2)(b) or lacks sufficient liquid assets to satisfy current liabilities or does not appear to have any substantial long-term assets, the Department shall request additional financial information concerning financial statements and the statement of cash flows.
(b) The Preneed Licensee’s financial statements must demonstrate the following levels of net worth:
1. Preneed Licensee that has total preneed contracts $100,000 or less-$10,000 net worth;
2. Preneed Licensee that has total preneed contracts of $100,001 to $200,000-$20,000 net worth;
3. Preneed Licensee that has total preneed contracts of $200,001 to $400,000-$40,000 net worth;
4. Preneed Licensee that has total preneed contracts of $400,001 to 600,000-$60,000 net worth;
5. Preneed Licensee that has total preneed contracts of $600,001 to $800,000-$80,000 net worth;
6. Preneed Licensee that has total preneed contracts in excess of $800,000-$100,000 net worth.
(c) In the case of a Preneed Licensee or applicant offering preneed sales through a subsidiary agent, as provided in Fl. Admin. Code R. 69K-5.0015, the Preneed Licensee or applicant shall execute a guarantee agreement with respect to any contract obligations resulting from preneed sales of such a selling agent.
(3) If the Preneed Licensee or applicant does not meet the financial requirements in paragraph (2)(b), above, the entity may voluntarily submit to the Board additional evidence or agree to additional oversight as to its meeting the requirements of subsection (2), above, and as a condition of receiving and retaining a Preneed License.
Such additional evidence or oversight agreement shall include as appropriate:
(a) Agreement to submit monthly financial statements of the entity;
(b) Agreement to submit quarterly financial statements of the entity;
(c) Appraisal of the entity’s property or broker’s opinion of value of entity’s assets;
(d) Credit report of the entity or its principal owners;
(e) Subordination of debt agreement from the entity’s principal owners;
(f) Indemnification/subrogation agreement binding the entity and principal owners;
(g) Guarantee agreement for the entity from its principal owners;
(h) Written explanation of past financial activity;
(i) Submission of a twelve month projected business plan which shall include:
1. Statement of cash flows;
2. Proforma income statement with sources of revenue identified; and,
3. Marketing initiatives;
(j) Submission of previous Department examination reports;
(k) 100% voluntary trusting agreement by the entity;
Upon the Board’s review of such additional information or agreements, submitted as stated above, the Board shall issue a Preneed License if such information or agreement results in the Board determining that the applicant or preneed license meets the requirements of sections 497.452 and 497.453, F.S.
Rulemaking Authority 497.103 FS. Law Implemented 497.452, 497.453 FS. History-New 5-21-95, Amended 12-7-98, 10-18-99, 12-12-00, 6-26-02, Formerly 3F-5.0016, Amended 9-5-18.