2006 New York Code - Requirements For Doing Business.

 
    §  7903.  Requirements  for  doing  business. (a) Nothwithstanding 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.
    (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.