Oklahoma 2023 Regular Session

Oklahoma Senate Bill SB541 Compare Versions

Version 1 (Old)

Version 2 (New)

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3		-	SB541 HFLR Page 1
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	3	+	ENGR. S. B. NO. 541 Page 1 1
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28		-
29		-	HOUSE OF REPRESENTATIVES - FLOOR VERSION
30		-
31		-	STATE OF OKLAHOMA
32		-
33		-	1st Session of the 59th Legislature (2023)
34	27
35	28		ENGROSSED SENATE
36	29		BILL NO. 541 By: Montgomery of the Senate
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38	31		and
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40	33		Sneed of the House
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45	38		An Act relating to service warranties; amending
46	39		Sections 3, 4, and 5, Chapter 16, O.S.L. 2022 (15
47	40		O.S. Supp. 2022, Sections 140.4, 140.5, and 140.6),
48	41		which relate to debt waivers, vehicle value
49	42		protection agreements, and enforcement; requiring
50	43		certain administrators to register with the In surance
51	44		Department; requiring registration renewal by certain
52	45		date; requiring certain registrations and
53	46		registration fees to be submitted electronically;
54	47		requiring certain contact information changes to be
55	48		submitted within certain time period; directing
56	49		certain administrators and service warranty
57	50		associations to respond to the Insurance Commissioner
58	51		within certain time period; removing cash payment as
59	52		an acceptable deposit for certain trust with the
60	53		Commissioner; updating statutory reference; amending
61	54		15 O.S. 2021, Sections 141.4, 141.5, 141.8, 141.13,
62	55		as amended by Section 1, Chapter 241, O.S.L. 2017,
63	56		141.14, and 141.33, which relate to qualification for
64	57		license, annual license requirements, serv ice
65	58		warranty forms, annual statements, and claim files;
66	59		requiring certain licen se application and fee be
67	60		submitted electronically by certain service warranty
68	61		association; requiring certain application to include
69	62		declaration; conforming language; establishing fees
70	63		for certain renewal processes; requiring certain
71	64		expired licensees to reapp ly as if a new applicant;
72	65		requiring certain app licants to submit certain
73	66		report; establishing certain fines; requiring certain
74	67		filing of financial statement include information for
	68	+	certain time period; updating statutory language; and
	69	+	providing an effective date.
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76		-	SB541 HFLR Page 2
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	76	+	ENGR. S. B. NO. 541 Page 2 1
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102		-	certain time period; updating statutory language; and
103		-	providing an effective date.
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108	101		BE IT ENACTED BY THE PEOPLE OF THE STAT E OF OKLAHOMA:
109	102		SECTION 1. AMENDATORY Section 3, Chapter 16, O.S.L. 2022
110	103		(15 O.S. Supp. 2022, Section 140.4), is ame nded to read as follows:
111	104		Section 140.4. A. As used in this section:
112	105		1. “Administrator” means a person, other than an insurer or
113	106		creditor that performs administrative or operational functions
114	107		pursuant to debt waiver pr ograms;
115	108		2. “Borrower” means a debtor, retail buyer, or lessee, under a
116	109		finance agreement;
117	110		3. “Creditor” means:
118	111		a. the lender in a loan or credit transaction,
119	112		b. the lessor in a lease transaction,
120	113		c. any retail seller of motor vehicles,
121	114		d. the seller in commercial retail installment
122	115		transactions, or
123	116		e. the assignees of any of the foregoing to whom the
124	117		credit obligation is payable; and
125	118		4. “Debt waiver” includes, but is not limited to:
126	119		a. “guaranteed asset protection waivers” or “GAP waivers”
127	120		means a contractual agreement wherein a creditor
128	121		agrees, with or without a separate charge, to cancel
	122	+	or waive all or part of amounts due on a borrowe r’s
	123	+	financial agreement in the event of a total physical
	124	+	damage loss or unrecovered theft of the motor vehicle,
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130		-	SB541 HFLR Page 3
131		-	BOLD FACE denotes Committee Amendments. 1
	126	+	ENGR. S. B. NO. 541 Page 3 1
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156		-	or waive all or part of amounts due on a borrowe r’s
157		-	financial agreement in the event of a total physical
158		-	damage loss or unrecovered theft of the motor vehicle,
159	151		which an agreement shall be part of, or as a separate
160	152		addendum to, the financial agreement. A GAP waiver
161	153		may also provide, with or without a separate charge, a
162	154		benefit that waives an amount or provides a borrower
163	155		with a credit towards the purchase of a replacement
164	156		motor vehicle,
165	157		b. “excess wear and use waiver” means a contractual
166	158		agreement wherein a creditor agrees, with or without a
167	159		separate charge, to cancel or waive all or part of
168	160		amounts that may become due under a borrower’s lease
169	161		agreement as a result of excessive wear and use of a
170	162		motor vehicle, which an agreement shall be part of, or
171	163		as a separate addendum to, the lease agreement.
172	164		Excess wear and use waivers may also cancel or waive
173	165		amounts due for excess mileage, and
174	166		c. other products as approved by the Insurance
175	167		Commissioner.
176	168		B. 1. No administrator or creditor operating as an
177	169		administrator shall perform or engage in any administrative or
178	170		operational functions of a debt waiver program without first
179	171		registering with the Insurance Department. Registration shall be
	172	+	renewed annually by July 1 5 of each calendar year. All
	173	+	registrations shall be filed and fees shall be paid electronically
	174	+	in the manner and form prescribed by the Commissioner.
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181		-	SB541 HFLR Page 4
182		-	BOLD FACE denotes Committee Amendments. 1
	176	+	ENGR. S. B. NO. 541 Page 4 1
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207		-	renewed annually by July 1 5 of each calendar year. All
208		-	registrations shall be filed and fees shall be paid electronically
209		-	in the manner and form prescribed by the Commissioner.
210	201		2. An administrator or a creditor operating as an administrator
211	202		shall electronically file an updated registration within thirty (30)
212	203		days of any change of n ame, address, or email address.
213	204		3. Every administrator or creditor, upon receipt of a ny inquiry
214	205		from the Commissioner, shall furnish the Commissioner with an
215	206		adequate response to the inquiry within twenty (20) days from the
216	207		date of receipt of the inquiry.
217	208		C. As required for offering debt waivers:
218	209		1. A retail seller shall insure its debt wa iver obligations
219	210		under a contractual liability or other insurance p olicy issued by an
220	211		insurer. A creditor other than retail sellers may insure its debt
221	212		waiver obligations under a contractual liability policy or other
222	213		such policy issued by an insurer. A ny such insurance policy may be
223	214		directly obtained by a creditor or retail seller or may be obtained
224	215		by an administrator to cover a creditor’s or retail seller’s
225	216		obligations. However, retail sellers that are lessors on motor
226	217		vehicles are not required to insure obligations related to debt
227	218		waivers on such leased motor vehicles;
228	219		2. The debt waiver remains a part of the finance agreement upon
229	220		the assignment, sale, or transfer of such finance agreement by the
230	221		creditor;
	222	+	3. Any creditor that offers a debt waiver shall report the sale
	223	+	of, and subsequently forward the funds due to, the designated party
	224	+	or parties; and
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232		-	SB541 HFLR Page 5
233		-	BOLD FACE denotes Committee Amendments. 1
	226	+	ENGR. S. B. NO. 541 Page 5 1
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258		-	3. Any creditor that offers a debt waiver shall report the sale
259		-	of, and subsequently forward the funds due to, the designated party
260		-	or parties; and
261	251		4. Funds received or held by a credito r or administrator that
262	252		belong to an insurer, creditor, or administrator shall be held by
263	253		such creditor or administrator in a fiduciary capacity.
264	254		C. D. Contractual Liability or Other Insurance Policies.
265	255		1. Contractual liability or other insurance policies insuring
266	256		debt waivers shall state the obligation of the insurer to reimburse
267	257		or pay to the creditor any sum s the creditor is legally obligated to
268	258		waive under a debt waiver.
269	259		2. Coverage under a contractual liability or other insurance
270	260		policy insuring a deb t waiver shall also cover any subsequent
271	261		assignee upon the assignment, sale, or transfer of the finance
272	262		agreement.
273	263		3. Coverage under a contractual liability or other insurance
274	264		policy insuring a debt waiver shall remain in effect unless canceled
275	265		or terminated in compliance with applicable insurance laws of this
276	266		state.
277	267		4. The cancelation or termination of a contrac tual liability or
278	268		other insurance policy shall not reduce the insurer’s responsibility
279	269		for debt waivers issued by the creditor prior to the date of
280	270		cancelation or termination and for which the premium has been
281	271		received by the insurer.
	272	+	D. E. Debt waivers shall disclose in writing and in clear,
	273	+	understandable language the following:
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283		-	SB541 HFLR Page 6
284		-	BOLD FACE denotes Committee Amendments. 1
	275	+	ENGR. S. B. NO. 541 Page 6 1
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309		-	D. E. Debt waivers shall disclose in writing and in clear,
310		-	understandable language the following:
311	300		1. The name and add ress of the initial creditor and the
312	301		borrower at the time of sale and identity of any administrator if
313	302		different from the creditor;
314	303		2. The purchase price , if any, and the terms of the debt waiver
315	304		including without limitation, the requirements of protectio n,
316	305		conditions, or exclusions associated with the debt waiver;
317	306		3. That the borrower may cancel the debt waive r within a free
318	307		look period, as specified in the debt waiver, and will be entitled
319	308		to a full refund of the purchase price paid by the borrower, if any,
320	309		as long as no benefits have been provided ;
321	310		4. The procedures the borrower shall follow, if any, t o obtain
322	311		debt waiver benefits under the terms and cond itions of the debt
323	312		waiver including, if applicable, a telephone number or website and
324	313		address where the borrower may apply for debt waiver benefits;
325	314		5. Whether or not the debt waiver may be canceled after the
326	315		free look period and the conditions under whic h it may be canceled
327	316		or terminated including the procedures for requesting any refund of
328	317		amounts paid;
329	318		6. That in order to receive any refund due in the event of a
330	319		borrower’s cancelation of the debt waiver, the borrower, in
331	320		accordance with the term of the debt waiver, shall provide a written
332	321		request to cancel to the creditor, administrator, or other such
	322	+	party. If the cancelation of a debt waiver is due to an early
	323	+	termination of the finance agreement and no benefit has been or will
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334		-	SB541 HFLR Page 7
335		-	BOLD FACE denotes Committee Amendments. 1
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360		-	party. If the cancelation of a debt waiver is due to an early
361		-	termination of the finance agreement and no benefit has been or will
362	350		be provided, then the borrower, in accordance with the terms of the
363	351		debt waiver, shall provide a written request to cancel to the
364	352		creditor or administrator within ninet y (90) days of the occurrence
365	353		of the event terminating the finance agreement;
366	354		7. The methodology for calculating any refund of the unearned
367	355		purchase price of the debt waiver, if any, shal l be due in the event
368	356		of cancelation of the debt waiver or early ter mination of a finance
369	357		agreement; and
370	358		8. That neither the extension of credit, the terms of the
371	359		credit, nor the terms of the related motor vehicle sale or lease,
372	360		may be conditioned upon th e borrower’s purchase of a debt waiver.
373	361		E. F. Cancelation.
374	362		1. Debt waiver agreements may be cancelable or non-cancelable
375	363		following the free look period. Debt waivers shal l provide the
376	364		borrower, if a borrower cancels a debt waiver within the free look
377	365		period, a full refund of the amount the borrower paid, if any, as
378	366		long as no benefits have been provided.
379	367		2. In the event of a borrowe r’s cancelation of the debt waiver
380	368		or upon the early termination of the finance agreement after the
381	369		debt waiver has been in effect beyond the free look period, the
382	370		borrower may be entitled to a refund of the amount the borrower paid
383	371		of the unearned portion of the purchase price, if any, minus a
	372	+	cancelation fee not to exceed Seventy-five Dollars ($75.00), if no
	373	+	benefit has been or will be provided. I n order to receive any
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385		-	SB541 HFLR Page 8
386		-	BOLD FACE denotes Committee Amendments. 1
	375	+	ENGR. S. B. NO. 541 Page 8 1
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411		-	cancelation fee not to exceed Seventy-five Dollars ($75.00), if no
412		-	benefit has been or will be provided. I n order to receive any
413	400		refund due in the event of a borrower’s cancellation of the debt
414	401		waiver, the borrower shall provide a written request to cancel , in
415	402		accordance with the terms of the debt waiver, to the creditor or
416	403		administrator. If the cancelation i s due to the early termination
417	404		of the finance agreement, then the borrower, in accordance with the
418	405		terms of the debt waiver, shall provide a written request to cancel
419	406		to the creditor or administrator within ninety (90) days of the
420	407		occurrence of the event terminating the finance agreement.
421	408		3. If the cancelation of a debt waiver occurs as a result of a
422	409		default under the finance agreement or the repossession of the motor
423	410		vehicle associated with the finance agreement, or any other
424	411		termination of the finance agreement, any refund due may be paid
425	412		directly to the creditor or administrator, unless the borrower can
426	413		show that the finance agreement has been paid in ful l.
427	414		F. G. Exempt Transactions.
428	415		1. Debt waivers offered by state or federal b anks or credit
429	416		unions in compliance with the applicable state or federal law are
430	417		exempt from this act Section 140.2 et seq. of this title .
431	418		2. Subsection D E of this section and Section 5 140.6 of this
432	419		act title shall not apply to debt waivers offered in connection with
433	420		commercial transactions.
	421	+	SECTION 2. AMENDATORY Sec tion 4, Chapter 16, O.S.L. 2022
	422	+	(15 O.S. Supp. 2022, Section 140.5), is amended to read as follows:
	423	+	Section 140.5. A. As used in this section:
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435		-	SB541 HFLR Page 9
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	425	+	ENGR. S. B. NO. 541 Page 9 1
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461		-	SECTION 2. AMENDATORY Sec tion 4, Chapter 16, O.S.L. 2022
462		-	(15 O.S. Supp. 2022, Section 140.5), is amended to read as follows:
463		-	Section 140.5. A. As used in this section:
464	450		1. “Administrator” means the person who may be responsible for
465	451		the administrative or operational function of vehicle value
466	452		protection agreements including, but not limited to, the
467	453		adjudication of claims or benefits requested by contract holders;
468	454		2. “Contract holder” means a person who is the purchaser or
469	455		holder of a vehicle value protection agreement;
470	456		3. “Provider” means a person that is obligated to provide a
471	457		benefit under a vehicle value protection agreement. A provider may
472	458		perform as an administrator or retain the services of a third-party
473	459		administrator; and
474	460		4. “Vehicle value protection agreement ” means a contractual
475	461		agreement that provides a benefit towards either the reduction of
476	462		some or all of the con tract holder’s current finance agreement
477	463		deficiency balance, or towards the purchase or lease of a
478	464		replacement motor vehicle or motor vehicle services, upon t he
479	465		occurrence of an adverse event to the motor vehicle inc luding, but
480	466		not limited to, loss, theft, damage, obsolescence, diminished value,
481	467		or depreciation. These agreements do not include debt waivers.
482	468		These agreements may include, but not be limited to, trade-in-credit
483	469		agreements, diminished value agreements, depreciation benefit
484	470		agreements, or other similarly named agreements.
	471	+	B. 1. No administrator or provider operating as an
	472	+	administrator shall perform or engage in any administrative or
	473	+	operational functions of vehicle value protection agreements without
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512		-	B. 1. No administrator or provider operating as an
513		-	administrator shall perform or engage in any administrative or
514		-	operational functions of vehicle value protection agreements without
515	500		first registering with the Insurance Department. Registration shall
516	501		be renewed annually by July 15
517	502
518	503		of each calendar year. All
519	504		registrations shall be filed and fees shall be paid electronically
520	505		in the manner and form prescribed by the Insurance Commissioner.
521	506		2. An administrator or a provider operating as an administrator
522	507		shall electronically file an updated registration within thirty (30)
523	508		days of any change of name, address, or email address.
524	509		3. Every administrator and provider, upon receipt of any
525	510		inquiry from the Commissioner, shall furnish the Commissioner with
526	511		an adequate response to the inquiry within twenty (20) days from the
527	512		date of receipt of the inquiry.
528	513		C. Requirements for offering vehicle value protection
529	514		agreements:
530	515		1. A provider may utilize an administrator or other designee to
531	516		be responsible for any and all of the adm inistration of vehicle
532	517		value protection agreements in compliance with this act Section
533	518		140.2 et seq. of this title ;
534	519		2. Vehicle value protection agreements shall not be sold un less
535	520		the contract holder has been or will be provided access to a copy of
536	521		that vehicle value protection agreement;
	522	+	3. In order to assure the faithful performance of the
	523	+	provider’s obligations to its contract holders, each provider shall
	524	+	be responsible for complying with the requirements of one of the
	525	+	following:
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538		-	SB541 HFLR Page 11
539		-	BOLD FACE denotes Committee Amendments. 1
	527	+	ENGR. S. B. NO. 541 Page 11 1
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564		-	3. In order to assure the faithful performance of the
565		-	provider’s obligations to its contract holders, each provider shall
566		-	be responsible for complying with the requirements of one of the
567		-	following:
568	552		a. insure all of its vehicle value protection agreements
569	553		under an insurance policy that covers one hundred
570	554		percent (100%) of its claim exposure, satisfies the
571	555		requirements of this act, and contains the following
572	556		provision: “In the event the provider is unable to
573	557		fulfill its obligations under vehicle value protection
574	558		agreements issued in this state for any reason
575	559		including insolvency, bank ruptcy, or dissolution, the
576	560		insurer will pay any losses and unearned fees to the
577	561		person making a claim un der such agreement.” The
578	562		insurance policy shall be issued by an insurer
579	563		licensed, registered, or otherwise authorized to do
580	564		business in this state either:
581	565		(1) at the time the policy is filed with the
582	566		Insurance Commissioner, and con tinuously
583	567		thereafter, (i) maintain surplus as to
584	568		policyholders and paid-in capital no less than
585	569		Fifteen Million Dollars ($15,000,000.00) and (ii)
586	570		annually file copies of the insurer ’s financial
587	571		statements, its National Association of Insurance
	572	+	Commissioners (NAIC) Annual Statement, and the
	573	+	actuarial certification required by and filed in
	574	+	the insurer’s state of domicile, or
588	575
589		-	SB541 HFLR Page 12
590		-	BOLD FACE denotes Committee Amendments. 1
	576	+	ENGR. S. B. NO. 541 Page 12 1
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614	600
615		-	Commissioners (NAIC) Annual Statement, and the
616		-	actuarial certification required by and filed in
617		-	the insurer’s state of domicile, or
618	601		(2) at the time the policy is filed with the
619	602		Commissioner, and continuously thereafter, (i)
620	603		maintain surplus as to policyholders and pai d-in
621	604		capital of less than Fifteen Million Dollars
622	605		($15,000,000.00) but at least equal to Ten
623	606		Million Dollars ($10,000,000.00), (ii)
624	607		demonstrate to the satisfaction of the
625	608		Commissioner that the company maintains a ratio
626	609		of net written premiums, wherever written, to
627	610		surplus as to policyholders and paid-in capital
628	611		of not greater than 3 to 1, and (iii) annually
629	612		file copies of the insurer’s audited financial
630	613		statements, its NAIC Annual Statement, and the
631	614		actuarial certification required by and filed in
632	615		the insurer’s state of domicile,
633	616		b. (1) maintain a funded reserve account for its
634	617		obligations under its contracts issued and
635	618		outstanding in this state. The reserves shall
636	619		not be less than forty percent (40%) of gross
637	620		considerations received, less claims paid, on t he
638	621		sale of the vehicle value protection agreement
	622	+	for all in-force contracts. The reserve account
	623	+	shall be subject to examination and review by the
	624	+	Commissioner, and
639	625
640		-	SB541 HFLR Page 13
641		-	BOLD FACE denotes Committee Amendments. 1
	626	+	ENGR. S. B. NO. 541 Page 13 1
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666		-	for all in-force contracts. The reserve account
667		-	shall be subject to examination and review by the
668		-	Commissioner, and
669	651		(2) place in trust with the Commissioner a financial
670	652		security deposit, having a value not less than
671	653		five percent (5%) of the gross consideration
672	654		received, less claims paid, on the sale of the
673	655		vehicle value protection agreements for all
674	656		vehicle value protection agreements issued and in
675	657		force, but not less than Twenty-five Thousand
676	658		Dollars ($25,000.00), consisting of the
677	659		following:
678	660		(a) a surety bond issued by an authorized
679	661		surety,
680	662		(b) securities of the type eligible for deposit
681	663		by authorized insurers in this state,
682	664		(c) cash,
683	665		(d) a letter of credit issued by a qualified
684	666		financial institution, or
685	667		(e)
686	668		(d) another form of security prescribed by
687	669		regulations issued by the Commissioner, or
688	670		c. (1) maintain, or together with its parent company
689	671		maintain, a net worth or stockholders’ equity of
	672	+	One Hundred Million Dollars ($100,000,000.00), or
	673	+	and
690	674
691		-	SB541 HFLR Page 14
692		-	BOLD FACE denotes Committee Amendments. 1
	675	+	ENGR. S. B. NO. 541 Page 14 1
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716	699
717		-	One Hundred Million Dollars ($100,000,000.00), or
718		-	and
719	700		(2) upon request, provide the Commissioner with a
720	701		copy of the provider’s or the provider’s parent
721	702		company’s most recent Form 10-K or Form 20-F
722	703		filed with the Securities and Exchange Commission
723	704		(SEC) within the last calendar year, or if the
724	705		company does not file with the SEC, a copy of the
725	706		company’s audited financial statements, which
726	707		shows a net worth of the provider or its parent
727	708		company of at least One Hundred Million Dollars
728	709		($100,000,000.00). If the provider’s parent
729	710		company’s Form 10-K, Form 20-F, or financial
730	711		statements are filed to meet the provider’s
731	712		financial security requirement, then the parent
732	713		company shall agree to guarantee the obligations
733	714		of the provider relating to the vehicle value
734	715		protection agreements sold by the provider in
735	716		this state; and
736	717		4. Except for the requirements in paragraph 3 of subsection B C
737	718		of this section, no other financial security requirements shall be
738	719		required for vehicle value protection agreement providers.
739	720		C. D. Vehicle value protection agreements shall disclose in
740	721		writing and in clear, understandable language the following:
	722	+	1. The name and address of the provider, contract holder, and
	723	+	administrator, if any;
741	724
742		-	SB541 HFLR Page 15
743		-	BOLD FACE denotes Committee Amendments. 1
	725	+	ENGR. S. B. NO. 541 Page 15 1
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767	749
768		-	1. The name and address of the provider, contract holder, and
769		-	administrator, if any;
770	750		2. The terms of the vehicle value protection agreement
771	751		including without limitation, the purchase price to be paid by the
772	752		contract holder, the requirements for eligibility, conditions of
773	753		coverage, or exclusions;
774	754		3. That the vehicle value protection agreement may be canceled
775	755		by the contract holder within a free look period as specified in the
776	756		vehicle value protection agreement, and in such an event, the
777	757		contract holder shall be entitled to a full refund of the purchase
778	758		price paid by the contract holder, if any, as long as no benefits
779	759		have been provided;
780	760		4. The procedure the contract holder shall follow, if any, to
781	761		obtain a benefit under the terms and conditions of the vehicle value
782	762		protection agreement including, if applicable, a telephone number or
783	763		website and address where the contract holder may apply for a
784	764		benefit;
785	765		5. Whether or not the vehicle value protection agreement is
786	766		cancelable after the free look period and the conditions under which
787	767		it may be canceled including the procedures for requesting any
788	768		refund of the unearned purchase price paid by the contract holder;
789	769		6. In the event of cancelation, the methodology for calculating
790	770		any refund of the unearned purchase price of the vehicle value
791	771		protection agreement due;
	772	+	7. That neither the extension of credit, the terms of the
	773	+	credit, nor the terms of the related motor vehicle sale or lease may
792	774
793		-	SB541 HFLR Page 16
794		-	BOLD FACE denotes Committee Amendments. 1
	775	+	ENGR. S. B. NO. 541 Page 16 1
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818	799
819		-	7. That neither the extension of credit, the terms of the
820		-	credit, nor the terms of the related motor vehicle sale or lease may
821	800		be conditioned upon the purchase of the vehicle value protection
822	801		agreement; and
823	802		8. Vehicle value protectio n agreements shall state the terms
824	803		and restrictions, or conditions governing cancelation of the vehicle
825	804		value protection agreement pr ior to the termination or expiration
826	805		date of the vehicle va lue protection agreement by either the
827	806		provider or the contract holder. The provider of the vehicle value
828	807		protection agreement shall mail a written notice to the contract
829	808		holder at the last known address of the contract holder contained in
830	809		the records of the provider at least five (5) days prior to
831	810		cancelation by the provider. Prior notice shall not be required if
832	811		the reason for cancelation is nonpayment of the provider fee, a
833	812		material misrepresentation by the contract holder to the provider or
834	813		administrator, or a substantial breach of duties by the contract
835	814		holder relating to the covered product or its use. The notice shall
836	815		state the effective date of cancelation and the reason for the
837	816		cancelation. If a vehicle value protection agreement is canceled by
838	817		the provider for a reason other than nonpayment of the provider fee,
839	818		the provider shall refund the contract holder one hundred percent
840	819		(100%) of the unearned pro rata provider fee paid by the contr act
841	820		holder, if any. If coverage under the vehicle value pr otection
842	821		agreement continues after a claim, then any refund may deduct claims
	822	+	paid. A reasonable administrative fee may be charged by the
	823	+	provider not to exceed Seventy-five Dollars ($75.00).
843	824
844		-	SB541 HFLR Page 17
845		-	BOLD FACE denotes Committee Amendments. 1
	825	+	ENGR. S. B. NO. 541 Page 17 1
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869	849
870		-	paid. A reasonable administrative fee may be charged by the
871		-	provider not to exceed Seventy-five Dollars ($75.00).
872	850		D. E. Subsection C D of this section and Section 5 140.6 of
873	851		this act title shall not apply to vehicle value protection
874	852		agreements offered in connection with a commercial transaction.
875	853		SECTION 3. AMENDATORY Section 5, Chapter 16, O.S.L. 2022
876	854		(15 O.S. Supp. 2022, Section 140.6), is amended to read as follows:
877	855		Section 140.6. The Insurance Commissioner shall promulgate
878	856		rules necessary to enforce the provisions of this act Section 140.2
879	857		et seq. of this title . After proper notice and opportunity for
880	858		hearing the Commissioner may take either or both of the following
881	859		actions:
882	860		1. Order the creditor, provider, administrator, or any other
883	861		person not in compliance with this act Section 140.2 et seq. of this
884	862		title to cease and desist from product related operations which are
885	863		in violation of this act Section 140.2 et seq. of this title; and or
886	864		2. Impose a penalty not to exceed Five Hundred Dollars
887	865		($500.00) per violation and no more than Ten Thousand Dollars
888	866		($10,000.00) for aggregated violations of a similar nature. For
889	867		purposes of this section, “violations of a similar nature” means the
890	868		violation consisted of the same or similar course of conduct,
891	869		action, or practice, irrespective of the number of times the action,
892	870		conduct, or practice which is determined to be a violation of this
893	871		act Section 140.2 et seq. of t his title occurred.
	872	+	SECTION 4. AMENDATORY 15 O.S. 2021, Section 14 1.4, is
	873	+	amended to read as follows:
894	874
895		-	SB541 HFLR Page 18
896		-	BOLD FACE denotes Committee Amendments. 1
	875	+	ENGR. S. B. NO. 541 Page 18 1
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920	899
921		-	SECTION 4. AMENDATORY 15 O.S. 2021, Section 14 1.4, is
922		-	amended to read as follows:
923	900		Section 141.4. A. No person in this state shall act as a
924	901		service warranty association unless licensed by the Insurance
925	902		Commissioner.
926	903		B. A service warranty association shall pay to the Insurance
927	904		Department a license fe e of Four Hundred Dollars ($400.00) for such
928	905		license for each year, or part thereof, the license is in force.
929	906		Each service warranty association applying for a license shall
930	907		electronically submit a complete license application and pay the
931	908		license fee to the Insurance Commissioner in the manner and form
932	909		prescribed by the Commissioner, along with any transaction or other
933	910		applicable fees. Each application shall include a signed
934	911		declaration that under penalty of refusal, suspension, or revocation
935	912		of the license, the information provided in the application is true,
936	913		correct, and complete to the best of the applicant’s knowledge and
937	914		belief.
938	915		C. An insurer, while authorized to transact property or
939	916		casualty insurance in this state, may also transact a servic e
940	917		warranty business without additional qualifications or licensure as
941	918		required by the Service Warranty A ct, but shall be otherwise subject
942	919		to the provisions of the Service Warranty Act.
943	920		D. A service warranty association may appoint an administrator
944	921		or other designee to be re sponsible for any or all of the
	922	+	administration of service warranties and compliance with the Service
	923	+	Warranty Act.
945	924
946		-	SB541 HFLR Page 19
947		-	BOLD FACE denotes Committee Amendments. 1
	925	+	ENGR. S. B. NO. 541 Page 19 1
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971	949
972		-	administration of service warranties and compliance with the Service
973		-	Warranty Act.
974	950		E. The marketing, sale, offering for sale, issuance, making,
975	951		proposing to make and administration of service warranties by
976	952		associations and related service warranty sellers, administrators,
977	953		and other persons shall be exempt from all provisions of the
978	954		Oklahoma Insurance Code.
979	955		F. An agreement which provides specified scheduled mai ntenance
980	956		services over a stated period of time does no t constitute insurance
981	957		or a service warranty .
982	958		SECTION 5. AMENDATORY 15 O.S. 20 21, Section 141.5, is
983	959		amended to read as fol lows:
984	960		Section 141.5. The Insurance Commissioner shall not issue or
985	961		renew a license to any service warranty association unless the
986	962		association:
987	963		1. Is a solvent association;
988	964		2. Furnishes the Insurance Department with satisfactory
989	965		evidence that the management of the association is competent and
990	966		trustworthy and can successfully manage the affairs of the
991	967		association in compliance with law;
992	968		3. Proposes to use and uses in its business a name together
993	969		with a trademark or emblem, if any, which is distinctive and not so
994	970		similar to the name or trademark of any other person already doing
	971	+	business in this state as will te nd to mislead or confuse the
	972	+	public;
	973	+	4. Files the bond required by the Service Warranty Act; and
995	974
996		-	SB541 HFLR Page 20
997		-	BOLD FACE denotes Committee Amendments. 1
	975	+	ENGR. S. B. NO. 541 Page 20 1
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1021	999
1022		-	business in this state as will te nd to mislead or confuse the
1023		-	public;
1024		-	4. Files the bond required by the Service Warranty Act; and
1025	1000		5. Is formed under the laws of this state or another state,
1026	1001		district, territory, or possession of the U nited States, if the
1027	1002		association is other than a natur al person; and
1028	1003		6. Has submitted all annual financi al statements and
1029	1004		administrative fees required by the Service Warranty Act .
1030	1005		SECTION 6. AMENDATORY 15 O.S. 2021, Section 141.8 , is
1031	1006		amended to read as follows:
1032	1007		Section 141.8. Each license issued to a service warranty
1033	1008		association shall expire on November 1 following the date of
1034	1009		issuance. If the association is then qualified un der the provisions
1035	1010		of the Service Warranty Act, its li cense may be renewed annually,
1036	1011		upon its request electronic submission of a renewal application and
1037	1012		fee in the manner and form prescribed by the Insurance Comm issioner
1038	1013		along with any applicable fees , and upon payment to the Insurance
1039	1014		Commissioner of the license fee in the amount of Four Hundred
1040	1015		Dollars ($400.00) in advan ce for each such license year. A license
1041	1016		expired for failure to submit a renewal applicatio n may be
1042	1017		reinstated within ninety (90) days a fter the expiration date by
1043	1018		electronically submitting a fee in an amount that is doub le the
1044	1019		renewal fee and a renewal application in the form and manner
1045	1020		prescribed by the Commissioner along with any transaction or other
	1021	+	applicable fees. The Commissioner s hall require a service warranty
	1022	+	association whose license has been expired for more than ninety (90)
	1023	+	days to reapply as if a new applicant and pay an application fee
1046	1024
1047		-	SB541 HFLR Page 21
1048		-	BOLD FACE denotes Committee Amendments. 1
	1025	+	ENGR. S. B. NO. 541 Page 21 1
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1072	1049
1073		-	applicable fees. The Commissioner s hall require a service warranty
1074		-	association whose license has been expired for more than ninety (90)
1075		-	days to reapply as if a new applicant and pay an application fee
1076	1050		that is double the initial application fee, in addition to any fines
1077	1051		imposed. All applications received after the license has been
1078	1052		expired for more than ninety ( 90) days shall include a detaile d
1079	1053		report of service warranties issued in this state during the period
1080	1054		of expired licensure.
1081	1055		SECTION 7. AMENDATORY 15 O.S. 2021 , Section 141.13, as
1082	1056		amended by Section 1, Chapter 241, O.S.L. 2017, is amended to read
1083	1057		as follows:
1084	1058		Section 141.13. A. No service warranty form or related form
1085	1059		shall be issued or used in this state unless the f orm has been filed
1086	1060		with the Insurance Commis sioner. Service warranty forms shall not
1087	1061		be subject to prior approval and sh all be filed with the Insurance
1088	1062		Commissioner for informational purposes only.
1089	1063		B. Each service warranty contract shall contain a cancellation
1090	1064		cancelation provision. In the event the contract is canceled by the
1091	1065		warranty holder, return of the provider fee shall be base d upon
1092	1066		ninety percent (90%) of the unearned pro rata provid er fee less the
1093	1067		actual cost of any service provided und er the service warran ty
1094	1068		contract. In the event the contract is c anceled by the association,
1095	1069		return of premium shall be based upon one hundred percent (100%) of
	1070	+	unearned pro rata provider fee less the actual cost of any service
	1071	+	provided under the service w arranty contract.
	1072	+	C. Service warranties shall state the name and address of the
	1073	+	service warranty association and shall identify any administr ator if
1096	1074
1097		-	SB541 HFLR Page 22
1098		-	BOLD FACE denotes Committee Amendments. 1
	1075	+	ENGR. S. B. NO. 541 Page 22 1
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1108	1085		11
1109	1086		12
1110	1087		13
1111	1088		14
1112	1089		15
1113	1090		16
1114	1091		17
1115	1092		18
1116	1093		19
1117	1094		20
1118	1095		21
1119	1096		22
1120	1097		23
1121	1098		24
1122	1099
1123		-	unearned pro rata provider fee less the actual cost of any service
1124		-	provided under the service warranty contract.
1125		-	C. Service warranties shall state the name and address of the
1126		-	service warranty association and shall identify any administr ator if
1127	1100		different from the ser vice warranty association, th e service
1128	1101		warranty seller and the service warranty hold er to the extent that
1129	1102		the name of the service warranty holder has been furnished by the
1130	1103		service warranty hold er. For service warranties issue d on and after
1131	1104		July 1, 2017, the identity of the service wa rranty association and
1132	1105		its license number shall be prep rinted on the service warranty or
1133	1106		added at the time of sale so co nsumers can clearly identify the
1134	1107		obligor of the service warranty. Informatio n to be printed at the
1135	1108		time of sale shall be indicated as s uch at the time the service
1136	1109		warranty is filed and a “Jane Doe” specimen shall accompany the
1137	1110		service warranty illustratin g how the service warranty will look
1138	1111		after printing.
1139	1112		Each person and service warranty assoc iation shall
1140	1113		electronically submit, in the form and manner prescribed by the
1141	1114		Commissioner, any change of legal business n ame, “doing business as”
1142	1115		or assumed name, address, or contact email address within thirty
1143	1116		(30) days after the change occurred , and any fees deemed necessary
1144	1117		by the Commissioner. Any submission of a change under this
1145	1118		paragraph received more than thirty (30) days after the change
1146	1119		occurs shall be accompanied by a fee of Fifty Dollars ($50.00 ).
	1120	+	D. The Commissioner sha ll have the authority to immediately
	1121	+	order a service warranty associa tion to stop using any service
	1122	+	warranty contract if the Commissioner determi nes that the form:
	1123	+	1. Violates the Service Warranty Act;
1147	1124
1148		-	SB541 HFLR Page 23
1149		-	BOLD FACE denotes Committee Amendments. 1
	1125	+	ENGR. S. B. NO. 541 Page 23 1
1150	1126		2
1151	1127		3
1152	1128		4
1153	1129		5
1154	1130		6
1155	1131		7
1156	1132		8
1157	1133		9
1158	1134		10
1159	1135		11
1160	1136		12
1161	1137		13
1162	1138		14
1163	1139		15
1164	1140		16
1165	1141		17
1166	1142		18
1167	1143		19
1168	1144		20
1169	1145		21
1170	1146		22
1171	1147		23
1172	1148		24
1173	1149
1174		-	D. The Commissioner sha ll have the authority to immediately
1175		-	order a service warranty associa tion to stop using any service
1176		-	warranty contract if the Commissioner determi nes that the form:
1177		-	1. Violates the Service Warranty Act;
1178	1150		2. Is misleading in any respect; or
1179	1151		3. Is reproduced so that any material provision is
1180	1152		substantially illegible.
1181	1153		E. The Insurance Commissioner may, by order, exempt from the
1182	1154		requirements of this s ection for so long as he or she deems proper
1183	1155		any document or form or type thereof a s specified in such order, t o
1184	1156		which, in his or her discretion , this section may not practicably be
1185	1157		applied, or the filing of which is, in his or her opin ion, not
1186	1158		desirable or necessary for the protection of the public.
1187	1159		SECTION 8. AMENDATORY 15 O.S. 20 21, Section 141.14, is
1188	1160		amended to read as fol lows:
1189	1161		Section 141.14. A. In addition to the license fees provided in
1190	1162		the Service Warranty Act for service warranty associations each
1191	1163		service warranty association and insurer shall annually, on or
1192	1164		before the first day of May, file with the Insurance Commi ssioner
1193	1165		its annual financial sta tement as of a date not earlier than three
1194	1166		hundred sixty-five (365) days prior to the date submitted showing
1195	1167		all gross written provider fees or assessments rec eived by it in
1196	1168		connection with the issuance of service warranties in this state
1197	1169		during the preceding calendar year and other relevant financial
	1170	+	information as deemed necessa ry by the Commissioner. The financial
	1171	+	statements required by this subsection must be:
1198	1172
1199		-	SB541 HFLR Page 24
1200		-	BOLD FACE denotes Committee Amendments. 1
	1173	+	ENGR. S. B. NO. 541 Page 24 1
1201	1174		2
1202	1175		3
1203	1176		4
1204	1177		5
1205	1178		6
1206	1179		7
1207	1180		8
1208	1181		9
1209	1182		10
1210	1183		11
1211	1184		12
1212	1185		13
1213	1186		14
1214	1187		15
1215	1188		16
1216	1189		17
1217	1190		18
1218	1191		19
1219	1192		20
1220	1193		21
1221	1194		22
1222	1195		23
1223	1196		24
1224	1197
1225		-	information as deemed necessa ry by the Commissioner. The financial
1226		-	statements required by this subsection must be:
1227	1198		1. Audited and prepared in accordance with statutory account ing
1228	1199		principles if the applicant complies with the requirements of
1229	1200		subsection A of Secti on 141.6 of this titl e; or
1230	1201		2. Verified under oath of at least tw o of its principal
1231	1202		officers and prepare d in accordance with generally accepted
1232	1203		accounting principles if the applicant utilizes an insura nce policy
1233	1204		which satisfies the requirements of subsecti on B of Section 141.6 of
1234	1205		this title.
1235	1206		B. The Commissioner may lev y a fine of up to One Hundred
1236	1207		Dollars ($100.00) a day for each day an association neglects to file
1237	1208		its financial statement in the form a nd within the time provided by
1238	1209		the Service Warranty Act .
1239	1210		C. In addition to the annual financial statements required to
1240	1211		be filed by subsection A of this sectio n, the Commissioner may
1241	1212		require of licensees, under oath and in t he form prescribed by it
1242	1213		the Commissioner, quarterly statements or special reports which the
1243	1214		Commissioner deems necessary for the proper supervision of l icensees
1244	1215		under the Service Warranty Act.
1245	1216		D. Provider fees and assessments received by associations and
1246	1217		insurers for service warranties shall n ot be subject to the premium
1247	1218		tax provided in Section 624 of Titl e 36 of the Oklahoma Statutes,
1248	1219		but shall be subject to an administrative fee of equal to two
	1220	+	percent (2%) of the gross provider fee received on the sale of all
	1221	+	service warranties issued in thi s state during the preceding
1249	1222
1250		-	SB541 HFLR Page 25
1251		-	BOLD FACE denotes Committee Amendments. 1
	1223	+	ENGR. S. B. NO. 541 Page 25 1
1252	1224		2
1253	1225		3
1254	1226		4
1255	1227		5
1256	1228		6
1257	1229		7
1258	1230		8
1259	1231		9
1260	1232		10
1261	1233		11
1262	1234		12
1263	1235		13
1264	1236		14
1265	1237		15
1266	1238		16
1267	1239		17
1268	1240		18
1269	1241		19
1270	1242		20
1271	1243		21
1272	1244		22
1273	1245		23
1274	1246		24
1275	1247
1276		-	percent (2%) of the gross provider fee received on the sale of all
1277		-	service warranties issued in thi s state during the preceding
1278	1248		calendar quarter. The fees shall b e paid quarterly to t he Insurance
1279	1249		Commissioner. However, licensed associations, licensed insurers and
1280	1250		entities with applications for licensure as a ser vice warranty
1281	1251		association pending with t he Insurance Department that have
1282	1252		contractual liability insurance in place as of March 31, 2009 , from
1283	1253		an insurer which satisfies the requirements of subsections B and C
1284	1254		of Section 141.6 of this title and which covers one hundred percent
1285	1255		(100%) of the claims exposure of the association or insurer on all
1286	1256		contracts written may elec t to pay an annual ad ministrative fee of
1287	1257		Three Thousand Dollars ($3,000.00) in lieu of the two -percent
1288	1258		administrative fee.
1289	1259		SECTION 9. AMENDATORY 15 O.S. 2021, Section 141.33, is
1290	1260		amended to read as follows:
1291	1261		Section 141.33. A. Claim files of service w arranty
1292	1262		associations licensed pursuant to the Service Warranty Act shall be
1293	1263		subject to examination by the Insurance Commi ssioner or by duly
1294	1264		appointed designees. The claim files shall contain all notes and
1295	1265		work papers pertaining to a c laim in such detail t hat pertinent
1296	1266		events and the dates of the events can be reconstructed. In
1297	1267		addition, the Commissioner and authorized empl oyees and examiners
1298	1268		shall have access to any files of a service warranty association
	1269	+	that may relate to a particul ar complaint under in vestigation or to
	1270	+	an inquiry or examination by the Insurance Department.
1299	1271
1300		-	SB541 HFLR Page 26
1301		-	BOLD FACE denotes Committee Amendments. 1
	1272	+	ENGR. S. B. NO. 541 Page 26 1
1302	1273		2
1303	1274		3
1304	1275		4
1305	1276		5
1306	1277		6
1307	1278		7
1308	1279		8
1309	1280		9
1310	1281		10
1311	1282		11
1312	1283		12
1313	1284		13
1314	1285		14
1315	1286		15
1316	1287		16
1317	1288		17
1318	1289		18
1319	1290		19
1320	1291		20
1321	1292		21
1322	1293		22
1323	1294		23
1324	1295		24
1325	1296
1326		-	that may relate to a particul ar complaint under in vestigation or to
1327		-	an inquiry or examination by the Insurance Department.
1328	1297		B. Every service warranty association, upon rec eipt of any
1329	1298		inquiry from the Commissioner, shall, within thirty (30) twenty (20)
1330	1299		days from the date of the inquiry , furnish the Commiss ioner with an
1331	1300		adequate response to the inquiry.
1332	1301		C. Every service warranty associa tion, upon receipt of any
1333	1302		pertinent written communication including, but not limited to,
1334	1303		electronic mail or other forms of written electronic communicati on
1335	1304		or documentation by the service warranty association of a verbal
1336	1305		communication from a claimant which reasonably suggests that a
1337	1306		response is expected, shall, within thirty (30) days after re ceipt
1338	1307		thereof, furnish the claimant with an adequate response to the
1339	1308		communication.
1340	1309		D. Any violation by a service warranty association of this
1341	1310		section shall subject t he service warranty association to disc ipline
1342	1311		including a civil penalty of not less than One Hundred Dollars
1343	1312		($100.00) nor more than Five Thousand Dollar s ($5,000.00).
1344	1313		SECTION 10. This act shall become effective November 1, 2023.
1345	1314
1346		-	COMMITTEE REPORT BY: COMMITTEE ON INSURANCE, dated 04/04/2023 - DO
1347		-	PASS.
	1315	+	ENGR. S. B. NO. 541 Page 27 1
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	1339	+
	1340	+	Passed the Senate the 20th day of March, 2023.
	1341	+
	1342	+
	1343	+
	1344	+	Presiding Officer of the Senate
	1345	+
	1346	+
	1347	+	Passed the House of Representatives the ____ day of __________,
	1348	+	2023.
	1349	+
	1350	+
	1351	+
	1352	+	Presiding Officer of the House
	1353	+	of Representatives
	1354	+