2009 Iowa Code
Title 13 - Commerce
Subtitle 1 - Insurance and Related Regulation
CHAPTER 523C - RESIDENTIAL SERVICE CONTRACTS
523C.11 - RESERVE ACCOUNT.

        523C.11  RESERVE ACCOUNT.
         1.  A service company shall maintain in an independent depository
      a reserve account consisting of unencumbered assets in an amount
      equal to fifty percent of aggregate annual fees collected on
      residential service contracts issued and outstanding in this state,
      if any, less actual expenditures for services rendered under those
      contracts.  The assets shall be held in the form of cash or
      marketable securities.
         2.  The depository shall make its records concerning the service
      company reserve accounts available to the commissioner or a designee
      for inspection on the premises of the depository and, upon request,
      shall produce documents and records which the commissioner determines
      are necessary to verify the value and safety of the assets of the
      reserve account.
         3.  The commissioner may by rule designate institutions authorized
      to act as a depository under this section and may establish
      requirements for reserve accounts, reserve account agreements, or the
      method of valuing marketable securities which the commissioner
      believes necessary to protect the holders of residential service
      contracts issued and outstanding in this state.
         4.  For purposes of this section, "aggregate annual fees" does
      not include the annual fees collected on residential service
      contracts for which the service company has purchased contractual
      liability insurance which demonstrates to the satisfaction of the
      commissioner that one hundred percent of the service company's claim
      exposure related to such service contracts is covered by the
      insurance.  The contractual liability insurance must be obtained from
      an insurer authorized to do business in this state and shall contain
      the following provisions:
         a.  If the service company is unable to fulfill its
      obligations under its contracts issued in this state for any reason,
      including insolvency, bankruptcy, or dissolution, the contractual
      liability insurer will pay losses and unearned premiums under such
      plans directly to the persons making claims under the contracts.
         b.  The insurer issuing the policy shall assume full
      responsibility for the administration of claims in the event of the
      inability of the association to do so.
         c.  The insurer shall not cancel or refuse to renew the policy
      unless sixty days' written notice has been given to the commissioner
      by the insurer before the date of the cancellation or nonrenewal.  

         83 Acts, ch 87, § 12; 88 Acts, ch 1112, § 707, 708; 92 Acts, ch
      1078, § 6
         Referred to in § 523C.1, 523C.9