Section 26-49-103 - Requirements for doing business(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;(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.Amended by Laws 2018, ch. 21,§ 1, eff. 3/9/2018.