N.Y. ISC Law § 7903 — New York Code / Act ISC / Article 79 / Section 7903
Requirements for doing business
Status: in_force

§ 7903. Requirements for doing business. (a) Notwithstanding any other\nprovision of this chapter to the contrary, the marketing, sale, offering\nfor sale, issuance, making, proposing to make and administration of\nservice contracts by any provider, administrator or other person, shall\nbe exempt from all other provisions of this chapter. A provider may, but\nis not required to, appoint an administrator or other designee to be\nresponsible for any or all of the administration of service contracts\nand compliance with this article. Notwithstanding any other provision of\nthis article, a provider of a service contract, as defined in paragraphs\ntwo and three of subsection (k) of section seven thousand nine hundred\ntwo of this article, shall, at least thirty days prior to the effective\ndate of an initial provider fee, or a change in a provider fee, file the\namount of the provider fee with the superintendent and such filing shall\nbe open to public inspection; and provided further that the provider fee\nshall not exceed the amount filed. The requirement to file the amount of\nthe provider fee with the superintendent in this subsection shall not\napply to fees set forth in any agreement to which an authorized insurer\nis a party.\n  (b) Service contracts shall not be issued, sold or offered for sale in\nthis state unless the provider:\n  (1) provides a receipt for, or other written evidence of, the purchase\nof the service contract and a copy of the terms and conditions of the\nservice contract to the service contract holder where the sale takes\nplace in a retail store or other place of business. A copy of the\nservice contract in all cases shall be provided to the service contract\nholder within a reasonable period of time after the date of purchase of\nthe service contract; and\n  (2) otherwise complies with this article.\n  (c) In order to assure the faithful performance of a provider's\nobligations to its contract holders, each provider who is contractually\nobligated to provide service under a service contract shall comply with\none of the following three paragraphs of this subsection:\n  (1) insure the performance of its obligations under all service\ncontracts pursuant to a service contract reimbursement insurance policy\nissued by an insurer authorized to issue service contract reimbursement\ninsurance in this state or procured by an excess line licensee pursuant\nto section two thousand one hundred eighteen of this chapter. Each\nprovider may maintain a maximum of five service contract reimbursement\ninsurance policies insuring its service contracts actively offered. In\nthe event the provider fails to insure its obligations pursuant to this\nparagraph or in the event that such insurance shall lapse or be\nterminated, the provider shall comply with either paragraph two or three\nof this subsection within forty-five days of the insurance lapse or\ntermination;\n  (2) (A) maintain a funded reserve account for its obligations under\nits service contracts issued and outstanding in this state, which\nreserve account (i) contains reserves in an amount not less than forty\npercent of the gross consideration received upon the sale of, less\nclaims paid under, all its service contracts then in force, but not less\nthan zero, and (ii) shall be subject to examination and review by the\nsuperintendent; and\n  (B) place in trust with the superintendent a financial security\ndeposit, having a value of not less than five percent of the gross\nconsideration received upon the sale of, less claims paid under, all\nservice contracts issued and then in force, but not less than fifty\nthousand dollars, consisting of one or more of the following:\n  (i) a surety bond issued by an authorized surety;\n  (ii) securities of the type eligible for deposit by authorized\ninsurers in this state;\n  (iii) cash; or\n  (iv) a letter of credit issued by a qualified United States financial\ninstitution; or\n  (3) (A) maintain a net worth or stockholders' equity of at least one\nhundred million dollars; and\n  (B) provide the superintendent with a copy of the financial statements\nof the provider, either on a stand alone basis or consolidated with its\nconsolidated affiliates, included in its or its direct or indirect\nparent company's most recent annual report on form 10-K or form 20-F\nfiled with the securities and exchange commission within the last\ncalendar year, or if the provider or its direct or indirect parent\ncompany is not required to file such reports with the securities and\nexchange commission, a copy of the audited financial statements of the\nprovider, either on a stand alone basis or consolidated with its\nconsolidated affiliates. If the net worth or stockholders' equity of the\nprovider, either on a stand alone basis or consolidated with its\nconsolidated affiliates, as shown in the foregoing financial statements\nis at least one hundred million dollars, the provider shall be deemed to\nmeet the requirements of this paragraph and there shall be no\nrequirement of a guarantee, reimbursement insurance, or other form of\nfinancial stability arrangement. In the event the net worth or\nstockholders' equity of the provider, either on a stand alone basis or\nconsolidated with its consolidated affiliates, is not at least one\nhundred million dollars, or the net worth or stockholders' equity of the\nprovider, as aforesaid, is not determinable from the foregoing audited\nfinancial statements, the provider shall comply with paragraph one or\ntwo of this subsection within forty-five days of becoming aware of such\ndeficiency. If the provider's direct or indirect parent company's form\n10-K, form 20-F, or audited financial statements are filed to meet the\nprovider's financial stability requirement, then the parent company\nshall agree to guarantee the obligations of the provider relating to\nservice contracts sold by the provider in this state.\n  (d) Premium taxes. (1) Provider fees shall not be subject to premium\ntaxes.\n  (2) Premiums collected on service contract reimbursement insurance\npolicies shall be subject to applicable premium taxes.\n  (e) Service contracts shall require every provider to permit the\nservice contract holder to return the contract within at least twenty\ndays of the date of mailing of the service contract or within at least\nten days if the service contract is delivered at the time of the sale or\nwithin a longer time period permitted under the contract. If no claim\nhas been made under the contract, the contract shall be void and the\nprovider shall refund to the contract holder the full purchase price of\nthe contract. A ten percent penalty per month shall be added to a refund\nthat is not made within thirty days of return of the contract to the\nprovider. The provisions of this subsection only apply to the original\npurchaser of the service contract.\n