385.302. Registration required, fee--administrator authorized--provider requirements.
Registration required, fee--administrator authorized--providerrequirements.
385.302. 1. It is unlawful for any person to issue, sell or offerfor sale in this state any service contract, unless each provider hasregistered with the director on a form prescribed by the director. Eachprovider shall pay to the director a fee established by the director byrule, but not to exceed three hundred dollars annually.
2. A provider may, but is not required to, appoint an administratoror other designee to be responsible for any or all of the administration ofservice contracts and compliance with sections 385.300 to 385.320.
3. A provider or its designee shall provide a copy of the servicecontract to the service contract holder within a reasonable period of timefollowing the date of purchase.
4. In order to assure the faithful performance of a provider'sobligations to its contract holders, each provider who contractually isobligated to provide service under a service contract shall comply with oneof the following subdivisions:
(1) (a) Maintain a funded reserve account for its obligations underits contract issues and outstanding in this state. The reserve shall notbe less than forty percent of gross consideration received, less claimspaid, on the sale of the service contract for all in-force contracts. Thereserve account shall be subject to examination and review by the director;and
(b) Place in trust with the director a financial security deposit,having a value of not less than five percent of the gross considerationreceived, less claims paid, on the sale of the service contract for allservice contracts issued and in force, but not less than twenty-fivethousand dollars, consisting of one of the following:
a. A surety bond issued by an authorized surety;
b. Securities of the type eligible for deposit by authorized insurersin 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 thedirector; or
(2) (a) Maintain a net worth of one hundred million dollars; and
(b) Provide the director with a copy of the provider's or, if theprovider's financial statements are consolidated with those of its parentcompany, the provider's parent company's most recent Form 10-K filed orForm 20-F with the Securities and Exchange Commission (SEC) within the lastcalendar year, or if the company does not file with the SEC, a copy of thecompany's audited financial statements, which shows a net worth of theprovider or its parent company of at least one hundred million dollars. Ifthe provider's parent company's Form 10-K, Form 20-F, or audited financialstatements are filed to meet the provider's financial stabilityrequirement, then the parent company shall agree to guarantee theobligations of the obligor relating to service contracts sold by theprovider in this state; or
(3) Insure all service contracts under a reimbursement insurancepolicy issued by an insurer authorized to transact insurance in this state.For the purposes of this subsection, the reimbursement insurance policyshall contain the following provisions:
(a) In the event that the provider is unable to fulfill itsobligation under contracts issued in this state for any reason, includinginsolvency, bankruptcy, or dissolution, the insurer will pay losses andunearned fees under such plans directly to the contract holder making aclaim under the contract;
(b) The insurer issuing the contractual liability policy shall assumefull responsibility for the administration of claims in the event of theinability of the provider to do so; and
(c) The policy may be canceled or not renewed by either the insureror the provider not less than sixty days after written notice thereof hasbeen given to the director and provider by the insurer;
(4) The reimbursement insurance referenced in subdivision (3) of thissubsection* shall be obtained from an insurer that is authorized,registered or otherwise permitted to transact insurance in this state or asurplus lines insurer authorized pursuant to the laws of this state andwhich insurer meets one of the following requirements:
(a) Maintain, at the time the policy is filed with the director andcontinuously thereafter:
a. Surplus as to policyholders and paid-in capital of at leastfifteen million dollars; and
b. Annually file copies of the insurer's financial statements, itsNational Association of Insurance Commissioners annual statement, and theactuarial certification if required and filed in the insurer's state ofdomicile; or
(b) Maintain, at the time the policy is filed with the director andcontinuously thereafter:
a. Surplus as to policyholders and paid-in capital of less thanfifteen million dollars but at least equal to ten million dollars;
b. Demonstrate to the satisfaction of the director that the insurermaintains a ratio of net written premiums, wherever written, to surplus asto policyholders and paid-in capital of not greater than three to one; and
c. Annually file copies of the insurer's financial statements, itsNational Association of Insurance Commissioners annual statement, and theactuarial certification if required and filed in the insurer's state ofdomicile.
5. Provider fees collected on service agreements shall not be subjectto premium taxes. Premiums for reimbursement insurance policies shall besubject to applicable taxes.
6. Except for compliance with the provider's registration requirementin subsection 1 of this section, a person marketing, selling, or offeringto sell service contracts for a provider that is registered under thissection is exempt from licensing as a producer under the insurance laws ofthis state.
(L. 2007 H.B. 221)Effective 1-01-08
*Word "above" appears in original rolls.