NECESSITY, FUNCTION, AND CONFORMITY:
that makers of service contracts who repair, replace, or maintain consumer
products register with the Commissioner to be exempt from the definition of
casualty insurance. This administrative regulation establishes the filing
requirements for that registration.
insurance" is defined by
(2) "Maker of a service contract" or "maker"
is the entity contractually obligated under the terms of the service
Registration Required. A maker of a service contract seeking exemption from the
definition of casualty insurance shall register with the commissioner by
(1) The name and address of its
principal office; and
of financial security demonstrated by one (1) of the following:
(a) Evidence of at least $100,000,000 dollars
in net worth; or
Evidence of an
insurance policy or performance bond that:
Shall not be terminated unless at least thirty (30) days prior written notice
is given to the commissioner;
States that the holder of a service contract shall be entitled to make a direct
claim against the insurer upon the failure of the maker to pay any claim within
sixty (60) days after the claim has been filed with the maker; and
Assures performance of the duties of the maker for all service contracts issued
in Kentucky; or
b. Is written for
an amount of $50,000 or twenty-five (25) percent of the maker's annual revenues
from the service contracts issued in Kentucky, whichever is greater.
Establishing Evidence for Registration. A maker of a service
contract providing evidence required by Section 2 of this administrative
regulation may submit:
(1) A current annual
(2) A copy of its 10K or
20F form as filed with the Securities Exchange Commission;
(3) A financial statement audited by an
independent certified public accountant in conformity with generally accepted
accounting practices; or
of the insurance policy or performance bond, accompanied by the following
information, signed and certified under oath by an officer of the company:
(a) The amount of annual revenues from the
sales of service contracts in Kentucky for the previous year ending December
(b) A projection of the
revenue from service contracts to be sold in Kentucky for the current
Changes to Registration. A registered maker of a service
contract shall immediately notify the commissioner in writing of any change
(1) Decrease the net worth of the
maker below $100,000,000 dollars; or
(2) Result in the termination of the
insurance policy or performance bond.
Registration Approval, Renewal,
Cessation, and Revocation.
(1) If the initial
registration has not been affirmatively accepted or rejected by the
commissioner within thirty (30) days of filing, registration requirements shall
be determined as met.
(2) After the
initial registration, each maker of a service contract shall file an updated
report annually, on or before March 1.
(3) If a maker ceases issuing service
contracts, the maker shall continue to file annual reports through the duration
of all outstanding service contracts.
(4) If at any time, the maker fails to
demonstrate compliance with this administrative regulation, the commissioner
may revoke the maker's registration. Upon revocation of registration, the maker
shall immediately cease issuing service contracts to consumers in