An Act Regarding Service Contracts
Sec. 1. 24-A MRSA §3, sub-§§2 and 3, as enacted by PL 1997, c. 592, §9, are amended to read:
Sec. 2. 24-A MRSA §3, sub-§4 is enacted to read:
Sec. 3. 24-A MRSA §601, sub-§29 is enacted to read:
Sec. 4. 24-A MRSA c. 89 is enacted to read:
§ 7101. Short title; purpose; scope
The types of agreements referred to in subsections 3 and 4 and service contracts governed by this chapter are not insurance and are not required to comply with any provision of the insurance laws of this State other than as expressly made applicable in this chapter as long as the service contract provider and administrator have registered with the superintendent as required by section 7103, subsection 4.
§ 7102. Definitions
As used in this chapter, unless the context otherwise indicates, the following terms have the following meanings.
Notwithstanding any other provision of law, service contracts are not insurance in this State and may not be regulated as insurance except for a contract or agreement providing indemnification for a loss caused by misplacement, theft, collision, fire or other peril typically covered in the comprehensive section of an automobile insurance policy or by a homeowner's policy or a marine or inland marine policy.
§ 7103. Requirements for doing business
(1) To all in-force service contract holders, if the registrant is a provider. Such registrant shall also cease issuing new service contracts in this State and may not renew existing service contracts unless authorized by the terms of a run-off plan approved by the superintendent; and
(2) To all providers for which it acts as an administrator, and to all in-force service contract holders of those providers, if the registrant is an administrator. Such registrant shall also cease acting as an administrator as to all service contract programs that it has contracted for in this State.
This section may not be construed to require a provider or administrator to apply for and obtain a license under chapter 16, subchapter 2-A.
(1) At the time the policy is filed with the superintendent and continuously thereafter:
(a) Maintains surplus as to policyholders and paid-in capital of at least $15,000,000; and
(b) Files annually copies of the insurer's or risk retention group's as audited financial statements, its annual statement under section 423 and the actuarial certification required by and filed in the insurer's state of domicile; or
(2) At the time the policy is filed with the superintendent and continuously thereafter:
(a) Maintains surplus as to policyholders and paid-in capital of at least $10,000,000;
(b) Demonstrates to the satisfaction of the superintendent that the insurer maintains a ratio of net written premiums, wherever written, to surplus as to policyholders and paid-in capital of not greater than 3 to 1; and
(c) Files annually copies of the insurer's audited financial statements, its annual statement under section 423 and the actuarial certification required by and filed in the insurer's state of domicile; or
§ 7104. Reimbursement insurance policy
§ 7105. Required provisions; service contracts
§ 7106. Record-keeping requirements
§ 7107. Cancellation of reimbursement insurance policy
An insurer that issued a reimbursement insurance policy may not cancel or nonrenew the policy for any reason, including at the request of the policyholder, until the insurer has delivered a notice of such action to the superintendent at least 45 days before such action. The cancellation or nonrenewal of a reimbursement insurance policy does not reduce the insurer's obligations as to service contracts issued by providers prior to the date of cancellation or nonrenewal.
§ 7108. Obligation of reimbursement insurance policy insurers
§ 7109. Enforcement provisions
After receipt of the notice, the person has 30 days to comply with the superintendent's request for correction, and if the person fails to comply the superintendent shall notify the person of the findings of noncompliance and require the person to show cause, on a date set by the superintendent, why its registration should not be suspended, revoked or refused. If on that date the person does not present good and sufficient reason why its authority to do business in this State should not be suspended, revoked or refused, the superintendent may suspend or refuse the registration of the person to do business in this State until satisfactory evidence is furnished to the superintendent that the suspension or refusal should be withdrawn or the superintendent may revoke the authority of the person to do business in this State.
§ 7110. Unfair methods of competition; unfair and deceptive acts and practices
(1) Knowingly misrepresenting to service contract holders relevant facts or service contract provisions related to coverages at issue;
(2) Failing to acknowledge with reasonable promptness pertinent written communications with respect to claims arising under its service contracts;
(3) Failing to develop and maintain documented claim files supporting decisions made regarding liability;
(4) Refusing to pay claims without conducting a reasonable investigation;
(5) Failing, in the case of claims denials, to provide an accurate explanation of the basis for those actions; or
(6) Failing to adopt and implement reasonable standards to ensure that the repairs of a repairer owned by or required to be used by the provider are performed in a competent and professional manner.
(1) The provider's affiliation with a motor vehicle manufacturer;
(2) The provider's possession of information regarding a motor vehicle owner's current motor vehicle manufacturer's original equipment warranty;
(3) The expiration of a motor vehicle owner's current motor vehicle manufacturer's original equipment warranty; or
(4) A requirement that a motor vehicle owner register for a new motor vehicle service contract with the provider in order to maintain coverage under the motor vehicle owner's current motor vehicle service contract or manufacturer's original equipment warranty.
§ 7111. Rule-making authority
The superintendent may adopt rules necessary to implement this chapter. Rules adopted pursuant to this section are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A.
§ 7112. Transition
The exemptions in section 7101, subsection 3 are effective immediately upon the effective date of this chapter and extend to contracts that are already in force. All other service contracts entered into, renewed or offered for sale in this State on or after January 1, 2012 must comply with this chapter. The exemptions in section 7101, subsection 4 apply to all service contracts entered into, renewed or offered for sale on or after the provider's registration date.
Sec. 5. Election before January 1, 2012. A service contract provider may elect to implement the requirements of the Maine Revised Statutes, Title 24-A, chapter 89 before January 1, 2012. If a provider applies for registration with the Superintendent of Insurance on or before December 31, 2011, it may elect to make its in-force contracts subject to the requirements of Title 24-A, chapter 89. If a provider conforms its in-force contracts to the requirements and sends notice to all of its existing contract holders in this State making the required disclosures on or before December 31, 2011, the exemptions in Title 24-A, section 7101, subsection 4 apply to all service contracts entered into, renewed or offered for sale before the provider's registration date.
Sec. 6. Appropriations and allocations. The following appropriations and allocations are made.
PROFESSIONAL AND FINANCIAL REGULATION, DEPARTMENT OF
Administrative Services - Professional and Financial Regulation 0094
Initiative: Allocates funds for costs related to the review of service contract provider or administrator initial and renewal registrations.
|OTHER SPECIAL REVENUE FUNDS||2011-12||2012-13|
|OTHER SPECIAL REVENUE FUNDS TOTAL||$3,159||$4,012|
Insurance - Bureau of 0092
Initiative: Allocates funds for one half-time Assistant Insurance Analyst position and related costs to review service contract provider or administrator initial and renewal registrations.
|OTHER SPECIAL REVENUE FUNDS||2011-12||2012-13|
POSITIONS - FTE COUNT
|OTHER SPECIAL REVENUE FUNDS TOTAL||$27,221||$40,618|
|PROFESSIONAL AND FINANCIAL REGULATION, DEPARTMENT OF|
OTHER SPECIAL REVENUE FUNDS
|DEPARTMENT TOTAL - ALL FUNDS||$30,380||$44,630|
Sec. 7. Effective date. This Act takes effect January 1, 2012.