NY Ins L § 7903 (2021)
2021 New York Laws ISC - Insurance Article 79 - Service Contracts 7903 - Requirements for Doing Business.

§ 7903. Requirements for doing business. (a) Notwithstanding any other provision of this chapter to the contrary, the marketing, sale, offering for  sale,  issuance,  making,  proposing  to make and administration of service contracts by any provider, administrator or other person,  shall be exempt from all other provisions of this chapter. 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. Notwithstanding any other provision of this article, a provider of a service contract, as defined in paragraphs two  and  three of subsection (k) of section seven thousand nine hundred two of this article, shall, at least thirty days prior to the  effective date of an initial provider fee, or a change in a provider fee, file the amount of the provider fee with the superintendent and such filing shall be open to public inspection; and provided further that the provider fee shall not exceed the amount filed. The requirement to file the amount of the  provider  fee  with the superintendent in this subsection shall not apply to fees set forth in any agreement to which an authorized  insurer is a party.  (b) Service contracts shall not be issued, sold or offered for sale in this state unless the provider:  (1) provides a receipt for, or other written evidence of, the purchase of  the  service  contract and a copy of the terms and conditions of the service contract to the service contract holder  where  the  sale  takes place  in  a  retail  store  or  other  place of business. A copy of the service contract in all cases shall be provided to the service  contract holder  within a reasonable period of time after the date of purchase of the service contract; and  (2) otherwise complies with this article.  (c) In order to  assure  the  faithful  performance  of  a  provider's obligations  to its contract holders, each provider who is contractually obligated to provide service under a service contract shall comply  with one of the following three paragraphs of this subsection:  (1)  insure  the  performance of all its obligations under all service contracts pursuant to a service contract reimbursement insurance  policy issued  by an insurer authorized to issue service contract reimbursement insurance in this state or procured by an excess line licensee  pursuant to  section  two  thousand  one hundred eighteen of this chapter. In the event the provider fails to insure  its  obligations  pursuant  to  this paragraph  or  in  the  event  that  such  insurance  shall  lapse or be terminated, the provider shall comply with either paragraph two or three of this subsection within forty-five days  of  the  insurance  lapse  or termination;  (2)  (A)  maintain  a funded reserve account for its obligations under its service contracts  issued  and  outstanding  in  this  state,  which reserve  account  (i) contains reserves in an amount not less than forty percent of the gross consideration  received  upon  the  sale  of,  less claims paid under, all its service contracts then in force, but not less than  zero,  and  (ii) shall be subject to examination and review by the superintendent; and  (B) place in  trust  with  the  superintendent  a  financial  security deposit,  having  a  value  of  not  less than five percent of the gross consideration received upon the sale of, less  claims  paid  under,  all service  contracts  issued  and  then  in force, but not less than fifty thousand dollars, consisting of one or more of the following:  (i) a surety bond issued by an authorized surety;  (ii) securities  of  the  type  eligible  for  deposit  by  authorized insurers in this state;  (iii) cash; or  (iv)  a letter of credit issued by a qualified United States financial institution; or  (3)  (A)  maintain a net worth or stockholders' equity of at least one hundred million dollars; and  (B) provide the superintendent with a copy of the financial statements of the provider, either on a stand alone basis or consolidated with  its consolidated  affiliates,  included  in  its  or  its direct or indirect parent company's most recent annual report on form  10-K  or  form  20-F filed  with  the  securities  and  exchange  commission  within the last calendar year, or if the provider  or  its  direct  or  indirect  parent company  is  not  required  to file such reports with the securities and exchange commission, a copy of the audited financial statements  of  the provider,  either  on  a  stand  alone  basis  or  consolidated with its consolidated affiliates. If the net worth or stockholders' equity of the provider, either on  a  stand  alone  basis  or  consolidated  with  its consolidated  affiliates, as shown in the foregoing financial statements is at least one hundred million dollars, the provider shall be deemed to meet  the  requirements  of  this  paragraph  and  there  shall  be   no requirement  of  a  guarantee, reimbursement insurance, or other form of financial  stability  arrangement.  In  the  event  the  net  worth   or stockholders'  equity  of the provider, either on a stand alone basis or consolidated with its consolidated  affiliates,  is  not  at  least  one hundred million dollars, or the net worth or stockholders' equity of the provider,  as  aforesaid, is not determinable from the foregoing audited financial statements, the provider shall comply with  paragraph  one  or two  of this subsection within forty-five days of becoming aware of such deficiency. If the provider's direct or indirect parent  company's  form 10-K,  form  20-F, or audited 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.  (d) Premium taxes. (1) Provider fees shall not be subject  to  premium taxes.  (2)  Premiums  collected  on  service contract reimbursement insurance policies shall be subject to applicable premium taxes.  (e) Service contracts shall  require  every  provider  to  permit  the service  contract  holder  to return the contract within at least twenty days of the date of mailing of the service contract or within  at  least ten days if the service contract is delivered at the time of the sale or within  a  longer  time period permitted under the contract. If no claim has been made under the contract, the contract shall  be  void  and  the provider  shall refund to the contract holder the full purchase price of the contract. A ten percent penalty per month shall be added to a refund that is not made within thirty days of return of  the  contract  to  the provider.  The  provisions of this subsection only apply to the original purchaser of the service contract.