(a)A provider may, but is not required to, appoint an
administrator or other designee to be responsible for any or all
of the administration of service contracts and compliance with
this article.
(b)Service contracts shall not be issued, sold or offered
for sale in this state unless the provider has:
(i)Provided a receipt for, or other written evidence
of, the purchase of the service contract to the contract holder;
and
(ii)Provided a copy of the service contract to the
service contract holder within a reasonable period of time from
the date of purchase.
(c)Each provider of service contracts sold in this state
shall file a registration with the commissioner on a form
prescribed by the commissioner. Each provider shall:
(i)Pay to the commissioner a fee in the amount of
two hundred dol
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(a) A provider may, but is not required to, appoint an
administrator or other designee to be responsible for any or all
of the administration of service contracts and compliance with
this article.
(b) Service contracts shall not be issued, sold or offered
for sale in this state unless the provider has:
(i) Provided a receipt for, or other written evidence
of, the purchase of the service contract to the contract holder;
and
(ii) Provided a copy of the service contract to the
service contract holder within a reasonable period of time from
the date of purchase.
(c) Each provider of service contracts sold in this state
shall file a registration with the commissioner on a form
prescribed by the commissioner. Each provider shall:
(i) Pay to the commissioner a fee in the amount of
two hundred dollars ($200.00) annually;
(ii) Verify compliance annually with the faithful
performance requirements specified in subsection (d) of this
section on a form prescribed by the commissioner.
(d) In order to assure the faithful performance of a
provider’s obligations to its service contract holders, each
provider shall be responsible for complying with the
requirements of any one (1) of the following paragraphs:
(i) Insure all service contracts under a
reimbursement insurance policy issued by an insurer authorized
to transact insurance in this state or issued pursuant to
chapter 11 of this code;
(ii) Maintain a funded reserve account for its
obligations under its service contracts issued and outstanding
in this state. The reserves shall not be less than forty percent
(40%) of the gross consideration received, less claims paid, on
the sale of the service contract for all in force contracts. The
reserve account shall be subject to examination and review by
the commissioner. The provider shall also place in trust with
the commissioner a financial security deposit, having a value of
not less than five percent (5%) of the gross consideration
received, less claims paid, on the sale of the service contract
for all service contracts issued and in force, but not less than
twenty-five thousand dollars ($25,000.00), consisting of one (1)
of the following:
(A) A surety bond issued by an authorized
surety;
(B) Securities of the type eligible for deposit
by authorized insurers in this state;
(C) Cash;
(D) A letter of credit issued by a qualified
financial institution; or
(E) Another form of security prescribed by
regulations issued by the commissioner.
(iii) Maintain, or its parent company maintain, a net
worth or stockholders’ equity of at least one hundred million
dollars ($100,000,000.00). The provider shall also upon request,
provide the commissioner with a copy of provider’s or the
provider’s parent company’s most recent Form 10-K or Form 20-F
filed with the securities and exchange commission within the
last calendar year, or if the company does not file with the
securities and exchange commission, a copy of the provider’s or
the provider’s parent company’s financial statements, which show
a net worth of the provider or its parent company of at least
one hundred million dollars ($100,000,000.00). If the provider’s
parent company’s Form 10-K, Form 20-F or financial statements
are filed to meet the provider’s financial stability
requirement, then the parent company shall agree to guarantee
the obligations of the provider relating to service contracts
sold by the provider in this state.
(e) Service contracts shall require the provider to permit
the original service contract holder to return the service
contract within twenty (20) days of the date the service
contract was mailed to the service contract holder or within ten
(10) days of delivery if the service contract is delivered to
the service contract holder at the time of sale or within a
longer time period permitted under the service contract. Upon
return of the service contract to the provider within the
applicable time period, if no claim has been made under the
service contract prior to its return to the provider, the
service contract is void and the provider shall refund to the
service contract holder, or credit the account of the service
contract holder, with the full purchase price of the service
contract. The right to void the service contract provided in
this subsection is not transferable and shall apply only to the
original service contract purchaser, and only if no claim has
been made prior to its return to the provider. A ten percent
(10%) penalty per month shall be added to a refund that is not
paid or credited within forty-five (45) days after return of the
service contract to the provider.
(f) Provider fees collected on service contracts shall not
be subject to premium taxes. Premiums for reimbursement
insurance policies shall be subject to applicable taxes.
(g) Except for the registration requirement in subsection
(c) of this section, providers and related service contract
sellers, administrators and other persons marketing, selling or
offering to sell service contracts are exempt from any licensing
requirements of this state.
(h) The marketing, sale, offering for sale, issuance,
making, proposing to make and administration of service
contracts by providers and related service contract sellers,
administrators and other persons shall be exempt from all other
provisions of this state’s insurance law.