2023 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.