2011 Louisiana Laws
Revised Statutes
TITLE 22 — Insurance
RS 22:1806.3 — Requirements for doing business

§1806.3. Requirements for doing business

A. Home service contracts shall not be issued, sold, or offered for sale in this state unless the provider has done each of the following:

(1) Provided a receipt for or other written evidence of the purchase of the home service contract to the contract holder.

(2) Provided a copy of the home service contract to the service contract holder within a reasonable period of time from the date of purchase.

(3) Complied with the provisions of this Part.

B. Each provider of home service contracts sold in this state shall file a registration with the commissioner consisting of its name, full address, telephone number, and contact person, designating a person in this state for service of process, and providing a listing of all officers, all directors, and all owners of ten percent or more of the business. Additionally, the provider shall file a copy of its basic organizational documents, such as articles of incorporation, articles of organization, articles of association, or a partnership agreement. Each application for registration shall be accompanied by the fee required in R.S. 22:821.

C. A registration for purposes of this Section shall be effective for two years, unless the registration is renewed, suspended, or revoked.

D. To renew the registration, no later than ninety days before its registration expires, the provider shall submit a renewal application on the form that the commissioner requires and the renewal fee required in R.S. 22:821. The renewal shall be deemed effective unless acted upon adversely by the commissioner.

E. Each registrant shall notify the commissioner of any material change in the registration information within sixty days of the effective date of such change. The notice shall be accompanied by supporting documentation.

F. In order to assure the faithful performance of a provider's obligations to its contract holders, each provider shall be responsible for complying with the requirements of one of the following Paragraphs:

(1)(a) Maintaining a funded reserve account for its obligations under its contracts issued and outstanding in this state. The reserves shall not be less than forty percent of gross consideration received, then less claims paid, on the sale of the service contract for all in-force contracts. The reserve account shall be subject to examination and review by the commissioner; and

(b) Placing in trust with the commissioner a financial security deposit, having a value of not less than five percent of the gross consideration received, then less claims paid, on the sale of the service contract for all service contracts issued and in force, but not less than twenty-five thousand dollars, consisting of one 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.

(c) If a surety bond is used to comply with the requirements of this Paragraph, the registrant shall annually provide to the commissioner evidence that the required bond remains in full force and effect.

(2)(a) Maintaining, or together with its parent company maintaining, a net worth or stockholders' equity of twenty-five million dollars.

(b) Upon request, provide the commissioner with a copy of the provider's or the provider's parent company's most recent Form 10-K or Form 20-F filed with the Securities and Exchange Commission (SEC) within the last calendar year, or if the company does not file with the SEC, a copy of the company's financial statements, which shows a net worth of the provider or its parent company of at least twenty-five million dollars. If the provider's parent company's Form 10-K or Form 20-F, or 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.

(3) Insuring all service contracts under a reimbursement insurance policy issued by an insurer licensed, registered, or otherwise authorized to do business in this state.

G. Except for the registration requirements of this Section, providers, administrators, and persons marketing, selling, or offering to sell home service contracts are exempt from any licensing requirements of this state and shall not be subject to other registration information or security requirements.

H. The marketing, sale, offering for sale, issuance, making, proposing to make, and administration of home service contracts by providers and related service contract sellers, administrators, and other persons shall be exempt from all provisions of this Insurance Code other than the provisions of this Part.

Acts 2009, No. 101, §1, eff. Jan. 1, 2010; Acts 2010, No. 364, §1.