Oklahoma 2024 Regular Session

Oklahoma Senate Bill SB541 Compare Versions

Version 1 (Old)

Version 2 (New)

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3	28
4		-	An Act
5		-	ENROLLED SENATE
	29	+	HOUSE OF REPRESENTATIVES - FLOOR VERSION
	30	+
	31	+	STATE OF OKLAHOMA
	32	+
	33	+	1st Session of the 59th Legislature (2023)
	34	+
	35	+	ENGROSSED SENATE
6	36		BILL NO. 541 By: Montgomery of the Senate
7	37
8	38		and
9	39
10	40		Sneed of the House
11	41
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14	45		An Act relating to service warranties; amending
15	46		Sections 3, 4, and 5, Chapter 16, O.S.L. 2022 (15
16		-	O.S. Supp. ~~2023~~, Sections 140.4, 140.5, and 140.6),
	47	+	O.S. Supp. 2022, Sections 140.4, 140.5, and 140.6),
17	48		which relate to debt waivers, vehicle value
18	49		protection agreements, and enforcement; requiring
19	50		certain administrators to register with the In surance
20	51		Department; requiring registration renewal by certain
21	52		date; requiring certain registrations and
22	53		registration fees to be submitted electronically;
23	54		requiring certain contact information changes to be
24	55		submitted within certain time period; directing
25	56		certain administrators and service warranty
26	57		associations to respond to the Insurance Commissioner
27	58		within certain time period; removing cash payment as
28	59		an acceptable deposit for certain trust with the
29	60		Commissioner; updating statutory reference; amending
30	61		15 O.S. 2021, Sections 141.4, 141.5, 141.8, 141.13,
31	62		as amended by Section 1, Chapter 241, O.S.L. 2017,
32	63		141.14, and 141.33, which relate to qualification for
33	64		license, annual license requirements, serv ice
34	65		warranty forms, annual statements, and claim files;
35	66		requiring certain licen se application and fee be
36	67		submitted electronically by certain service warranty
37	68		association; requiring certain application to include
38	69		declaration; conforming language; establishing fees
39	70		for certain renewal processes; requiring certain
40	71		expired licensees to reapp ly as if a new applicant;
41	72		requiring certain app licants to submit certain
42	73		report; establishing certain fines; requiring certain
43	74		filing of financial statement include information for
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44	102		certain time period; updating statutory language; and
45	103		providing an effective date.
46	104
47	105
48		-	ENR. S. B. NO. 541 Page 2
49	106
50	107
51		-	SUBJECT: Service warranties
52		-
53	108		BE IT ENACTED BY THE PEOPLE OF THE STAT E OF OKLAHOMA:
54		-
55	109		SECTION 1. AMENDATORY Section 3, Chapter 16, O.S.L. 2022
56		-	(15 O.S. Supp. 2023, Section 140.4), is amended to read as follows:
57		-
	110	+	(15 O.S. Supp. 2022, Section 140.4), is ame nded to read as follows:
58	111		Section 140.4. A. As used in this section:
59		-
60	112		1. “Administrator” means a person, other than an insurer or
61	113		creditor that performs administrative or operational functions
62	114		pursuant to debt waiver pr ograms;
63		-
64	115		2. “Borrower” means a debtor, retail buyer, or lessee, under a
65	116		finance agreement;
66		-
67	117		3. “Creditor” means:
68		-
69	118		a. the lender in a loan or credit transaction,
70		-
71	119		b. the lessor in a lease transaction,
72		-
73	120		c. any retail seller of motor vehicles,
74		-
75	121		d. the seller in commercial retail installment
76	122		transactions, or
77		-
78	123		e. the assignees of any of the foregoing to whom the
79	124		credit obligation is payable; and
80		-
81	125		4. “Debt waiver” includes, but is not limited to:
82		-
83	126		a. “guaranteed asset protection waivers” or “GAP waivers”
84	127		means a contractual agreement wherein a creditor
85	128		agrees, with or without a separate charge, to cancel
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86	156		or waive all or part of amounts due on a borrowe r’s
87	157		financial agreement in the event of a total physical
88	158		damage loss or unrecovered theft of the motor vehicle,
89	159		which an agreement shall be part of, or as a separate
90	160		addendum to, the financial agreement. A GAP waiver
91		-
92		-	ENR. S. B. NO. 541 Page 3
93	161		may also provide, with or without a separate charge, a
94	162		benefit that waives an amount or provides a borrower
95	163		with a credit towards the purchase of a replacement
96	164		motor vehicle,
97		-
98	165		b. “excess wear and use waiver” means a contractual
99	166		agreement wherein a creditor agrees, with or without a
100	167		separate charge, to cancel or waive all or part of
101	168		amounts that may become due under a borrower’s lease
102	169		agreement as a result of excessive wear and use of a
103	170		motor vehicle, which an agreement shall be part of, or
104	171		as a separate addendum to, the lease agreement.
105	172		Excess wear and use waivers may also cancel or waive
106	173		amounts due for excess mileage, and
107		-
108	174		c. other products as approved by the Insurance
109	175		Commissioner.
110		-
111	176		B. 1. No administrator or creditor operating as an
112	177		administrator shall perform or engage in any administrative or
113	178		operational functions of a debt waiver program without first
114	179		registering with the Insurance Department. Registration shall be
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115	207		renewed annually by July 1 5 of each calendar year. All
116	208		registrations shall be filed and fees shall be paid electronically
117	209		in the manner and form prescribed by the Commissioner.
118		-
119	210		2. An administrator or a creditor operating as an administrator
120	211		shall electronically file an updated registration within thirty (30)
121	212		days of any change of n ame, address, or email address.
122		-
123	213		3. Every administrator or creditor, upon receipt of a ny inquiry
124	214		from the Commissioner, shall furnish the Commissioner with an
125	215		adequate response to the inquiry within twenty (20) days from the
126	216		date of receipt of the inquiry.
127		-
128	217		C. As required for offering debt waivers:
129		-
130	218		1. A retail seller shall insure its debt wa iver obligations
131	219		under a contractual liability or other insurance p olicy issued by an
132	220		insurer. A creditor other than retail sellers may insure its debt
133	221		waiver obligations under a contractual liability policy or other
134	222		such policy issued by an insurer. A ny such insurance policy may be
135		-
136		-	ENR. S. B. NO. 541 Page 4
137	223		directly obtained by a creditor or retail seller or may be obtained
138	224		by an administrator to cover a creditor’s or retail seller’s
139	225		obligations. However, retail sellers that are lessors on motor
140	226		vehicles are not required to insure obligations related to debt
141	227		waivers on such leased motor vehicles;
142		-
143	228		2. The debt waiver remains a part of the finance agreement upon
144	229		the assignment, sale, or transfer of such finance agreement by the
145	230		creditor;
146	231
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147	258		3. Any creditor that offers a debt waiver shall report the sale
148	259		of, and subsequently forward the funds due to, the designated party
149	260		or parties; and
150		-
151	261		4. Funds received or held by a credito r or administrator that
152	262		belong to an insurer, creditor, or administrator shall be held by
153	263		such creditor or administrator in a fiduciary capacity.
154		-
155	264		C. D. Contractual Liability or Other Insurance Policies.
156		-
157	265		1. Contractual liability or other insurance policies insuring
158	266		debt waivers shall state the obligation of the insurer to reimburse
159	267		or pay to the creditor any sum s the creditor is legally obligated to
160	268		waive under a debt waiver.
161		-
162	269		2. Coverage under a contractual liability or other insurance
163	270		policy insuring a deb t waiver shall also cover any subsequent
164	271		assignee upon the assignment, sale, or transfer of the finance
165	272		agreement.
166		-
167	273		3. Coverage under a contractual liability or other insurance
168	274		policy insuring a debt waiver shall remain in effect unless canceled
169	275		or terminated in compliance with applicable insurance laws of this
170	276		state.
171		-
172	277		4. The cancelation or termination of a contrac tual liability or
173	278		other insurance policy shall not reduce the insurer’s responsibility
174	279		for debt waivers issued by the creditor prior to the date of
175	280		cancelation or termination and for which the premium has been
176	281		received by the insurer.
177	282
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179		-	ENR. S. B. NO. 541 Page 5
180	309		D. E. Debt waivers shall disclose in writing and in clear,
181	310		understandable language the following:
182		-
183	311		1. The name and add ress of the initial creditor and the
184	312		borrower at the time of sale and identity of any administrator if
185	313		different from the creditor;
186		-
187	314		2. The purchase price , if any, and the terms of the debt waiver
188	315		including without limitation, the requirements of protectio n,
189	316		conditions, or exclusions associated with the debt waiver;
190		-
191	317		3. That the borrower may cancel the debt waive r within a free
192	318		look period, as specified in the debt waiver, and will be entitled
193	319		to a full refund of the purchase price paid by the borrower, if any,
194	320		as long as no benefits have been provided ;
195		-
196	321		4. The procedures the borrower shall follow, if any, t o obtain
197	322		debt waiver benefits under the terms and cond itions of the debt
198	323		waiver including, if applicable, a telephone number or website and
199	324		address where the borrower may apply for debt waiver benefits;
200		-
201	325		5. Whether or not the debt waiver may be canceled after the
202	326		free look period and the conditions under whic h it may be canceled
203	327		or terminated including the procedures for requesting any refund of
204	328		amounts paid;
205		-
206	329		6. That in order to receive any refund due in the event of a
207	330		borrower’s cancelation of the debt waiver, the borrower, in
208	331		accordance with the term of the debt waiver, shall provide a written
209	332		request to cancel to the creditor, administrator, or other such
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210	360		party. If the cancelation of a debt waiver is due to an early
211	361		termination of the finance agreement and no benefit has been or will
212	362		be provided, then the borrower, in accordance with the terms of the
213	363		debt waiver, shall provide a written request to cancel to the
214	364		creditor or administrator within ninet y (90) days of the occurrence
215	365		of the event terminating the finance agreement;
216		-
217	366		7. The methodology for calculating any refund of the unearned
218	367		purchase price of the debt waiver, if any, shal l be due in the event
219	368		of cancelation of the debt waiver or early ter mination of a finance
220	369		agreement; and
221		-
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223		-	ENR. S. B. NO. 541 Page 6
224	370		8. That neither the extension of credit, the terms of the
225	371		credit, nor the terms of the related motor vehicle sale or lease,
226	372		may be conditioned upon th e borrower’s purchase of a debt waiver.
227		-
228	373		E. F. Cancelation.
229		-
230	374		1. Debt waiver agreements may be cancelable or non-cancelable
231	375		following the free look period. Debt waivers shal l provide the
232	376		borrower, if a borrower cancels a debt waiver within the free look
233	377		period, a full refund of the amount the borrower paid, if any, as
234	378		long as no benefits have been provided.
235		-
236	379		2. In the event of a borrowe r’s cancelation of the debt waiver
237	380		or upon the early termination of the finance agreement after the
238	381		debt waiver has been in effect beyond the free look period, the
239	382		borrower may be entitled to a refund of the amount the borrower paid
240	383		of the unearned portion of the purchase price, if any, minus a
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241	411		cancelation fee not to exceed Seventy-five Dollars ($75.00), if no
242	412		benefit has been or will be provided. I n order to receive any
243	413		refund due in the event of a borrower’s cancellation of the debt
244	414		waiver, the borrower shall provide a written request to cancel , in
245	415		accordance with the terms of the debt waiver, to the creditor or
246	416		administrator. If the cancelation i s due to the early termination
247	417		of the finance agreement, then the borrower, in accordance with the
248	418		terms of the debt waiver, shall provide a written request to cancel
249	419		to the creditor or administrator within ninety (90) days of the
250	420		occurrence of the event terminating the finance agreement.
251		-
252	421		3. If the cancelation of a debt waiver occurs as a result of a
253	422		default under the finance agreement or the repossession of the motor
254	423		vehicle associated with the finance agreement, or any other
255	424		termination of the finance agreement, any refund due may be paid
256	425		directly to the creditor or administrator, unless the borrower can
257	426		show that the finance agreement has been paid in ful l.
258		-
259	427		F. G. Exempt Transactions.
260		-
261	428		1. Debt waivers offered by state or federal b anks or credit
262	429		unions in compliance with the applicable state or federal law are
263	430		exempt from this act Section 140.2 et seq. of this title .
264		-
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266		-	ENR. S. B. NO. 541 Page 7
267	431		2. Subsection D E of this section and Section 5 140.6 of this
268	432		act title shall not apply to debt waivers offered in connection with
269	433		commercial transactions.
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271	461		SECTION 2. AMENDATORY Sec tion 4, Chapter 16, O.S.L. 2022
272		-	(15 O.S. Supp. 2023, Section 140.5), is amended to read as follows:
273		-
	462	+	(15 O.S. Supp. 2022, Section 140.5), is amended to read as follows:
274	463		Section 140.5. A. As used in this section:
275		-
276	464		1. “Administrator” means the person who may be responsible for
277	465		the administrative or operational function of vehicle value
278	466		protection agreements including, but not limited to, the
279	467		adjudication of claims or benefits requested by contract holders;
280		-
281	468		2. “Contract holder” means a person who is the purchaser or
282	469		holder of a vehicle value protection agreement;
283		-
284	470		3. “Provider” means a person that is obligated to provide a
285	471		benefit under a vehicle value protection agreement. A provider may
286	472		perform as an administrator or retain the services of a third-party
287	473		administrator; and
288		-
289	474		4. “Vehicle value protection agreement ” means a contractual
290	475		agreement that provides a benefit towards either the reduction of
291	476		some or all of the con tract holder’s current finance agreement
292	477		deficiency balance, or towards the purchase or lease of a
293	478		replacement motor vehicle or motor vehicle services, upon t he
294	479		occurrence of an adverse event to the motor vehicle inc luding, but
295	480		not limited to, loss, theft, damage, obsolescence, diminished value,
296	481		or depreciation. These agreements do not include debt waivers.
297	482		These agreements may include, but not be limited to, trade-in-credit
298	483		agreements, diminished value agreements, depreciation benefit
299	484		agreements, or other similarly named agreements.
300	485
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301	512		B. 1. No administrator or provider operating as an
302	513		administrator shall perform or engage in any administrative or
303	514		operational functions of vehicle value protection agreements without
304	515		first registering with the Insurance Department. Registration shall
305	516		be renewed annually by July 15
306	517
307	518		of each calendar year. All
308	519		registrations shall be filed and fees shall be paid electronically
309	520		in the manner and form prescribed by the Insurance Commissioner.
310		-
311		-
312		-	ENR. S. B. NO. 541 Page 8
313	521		2. An administrator or a provider operating as an administrator
314	522		shall electronically file an updated registration within thirty (30)
315	523		days of any change of name, address, or email address.
316		-
317	524		3. Every administrator and provider, upon receipt of any
318	525		inquiry from the Commissioner, shall furnish the Commissioner with
319	526		an adequate response to the inquiry within twenty (20) days from the
320	527		date of receipt of the inquiry.
321		-
322	528		C. Requirements for offering vehicle value protection
323	529		agreements:
324		-
325	530		1. A provider may utilize an administrator or other designee to
326	531		be responsible for any and all of the adm inistration of vehicle
327	532		value protection agreements in compliance with this act Section
328	533		140.2 et seq. of this title ;
329		-
330	534		2. Vehicle value protection agreements shall not be sold un less
331	535		the contract holder has been or will be provided access to a copy of
332	536		that vehicle value protection agreement;
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333	563
334	564		3. In order to assure the faithful performance of the
335	565		provider’s obligations to its contract holders, each provider shall
336	566		be responsible for complying with the requirements of one of the
337	567		following:
338		-
339	568		a. insure all of its vehicle value protection agreements
340	569		under an insurance policy that covers one hundred
341	570		percent (100%) of its claim exposure, satisfies the
342	571		requirements of this act, and contains the following
343	572		provision: “In the event the provider is unable to
344	573		fulfill its obligations under vehicle value protection
345	574		agreements issued in this state for any reason
346	575		including insolvency, bank ruptcy, or dissolution, the
347	576		insurer will pay any losses and unearned fees to the
348	577		person making a claim un der such agreement.” The
349	578		insurance policy shall be issued by an insurer
350	579		licensed, registered, or otherwise authorized to do
351	580		business in this state either:
352		-
353	581		(1) at the time the policy is filed with the
354	582		Insurance Commissioner, and con tinuously
355		-
356		-	ENR. S. B. NO. 541 Page 9
357	583		thereafter, (i) maintain surplus as to
358	584		policyholders and paid-in capital no less than
359	585		Fifteen Million Dollars ($15,000,000.00) and (ii)
360	586		annually file copies of the insurer ’s financial
361	587		statements, its National Association of Insurance
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362	615		Commissioners (NAIC) Annual Statement, and the
363	616		actuarial certification required by and filed in
364	617		the insurer’s state of domicile, or
365		-
366	618		(2) at the time the policy is filed with the
367	619		Commissioner, and continuously thereafter, (i)
368	620		maintain surplus as to policyholders and pai d-in
369	621		capital of less than Fifteen Million Dollars
370	622		($15,000,000.00) but at least equal to Ten
371	623		Million Dollars ($10,000,000.00), (ii)
372	624		demonstrate to the satisfaction of the
373	625		Commissioner that the company maintains a ratio
374	626		of net written premiums, wherever written, to
375	627		surplus as to policyholders and paid-in capital
376	628		of not greater than 3 to 1, and (iii) annually
377	629		file copies of the insurer’s audited financial
378	630		statements, its NAIC Annual Statement, and the
379	631		actuarial certification required by and filed in
380	632		the insurer’s state of domicile,
381		-
382	633		b. (1) maintain a funded reserve account for its
383	634		obligations under its contracts issued and
384	635		outstanding in this state. The reserves shall
385	636		not be less than forty percent (40%) of gross
386	637		considerations received, less claims paid, on t he
387	638		sale of the vehicle value protection agreement
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388	666		for all in-force contracts. The reserve account
389	667		shall be subject to examination and review by the
390	668		Commissioner, and
391		-
392	669		(2) place in trust with the Commissioner a financial
393	670		security deposit, having a value not less than
394	671		five percent (5%) of the gross consideration
395	672		received, less claims paid, on the sale of the
396	673		vehicle value protection agreements for all
397	674		vehicle value protection agreements issued and in
398	675		force, but not less than Twenty-five Thousand
399		-
400		-	ENR. S. B. NO. 541 Page 10
401	676		Dollars ($25,000.00), consisting of the
402	677		following:
403		-
404	678		(a) a surety bond issued by an authorized
405	679		surety,
406		-
407	680		(b) securities of the type eligible for deposit
408	681		by authorized insurers in this state,
409		-
410	682		(c) cash,
411		-
412	683		(d) a letter of credit issued by a qualified
413	684		financial institution, or
414		-
415	685		(e)
416		-
417	686		(d) another form of security prescribed by
418	687		regulations issued by the Commissioner, or
419		-
420	688		c. (1) maintain, or together with its parent company
421	689		maintain, a net worth or stockholders’ equity of
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422	717		One Hundred Million Dollars ($100,000,000.00), or
423	718		and
424		-
425	719		(2) upon request, provide the Commissioner with a
426	720		copy of the provider’s or the provider’s parent
427	721		company’s most recent Form 10-K or Form 20-F
428	722		filed with the Securities and Exchange Commission
429	723		(SEC) within the last calendar year, or if the
430	724		company does not file with the SEC, a copy of the
431	725		company’s audited financial statements, which
432	726		shows a net worth of the provider or its parent
433	727		company of at least One Hundred Million Dollars
434	728		($100,000,000.00). If the provider’s parent
435	729		company’s Form 10-K, Form 20-F, or financial
436	730		statements are filed to meet the provider’s
437	731		financial security requirement, then the parent
438	732		company shall agree to guarantee the obligations
439	733		of the provider relating to the vehicle value
440	734		protection agreements sold by the provider in
441	735		this state; and
442		-
443		-
444		-	ENR. S. B. NO. 541 Page 11
445	736		4. Except for the requirements in paragraph 3 of subsection B C
446	737		of this section, no other financial security requirements shall be
447	738		required for vehicle value protection agreement providers.
448		-
449	739		C. D. Vehicle value protection agreements shall disclose in
450	740		writing and in clear, understandable language the following:
451	741
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452	768		1. The name and address of the provider, contract holder, and
453	769		administrator, if any;
454		-
455	770		2. The terms of the vehicle value protection agreement
456	771		including without limitation, the purchase price to be paid by the
457	772		contract holder, the requirements for eligibility, conditions of
458	773		coverage, or exclusions;
459		-
460	774		3. That the vehicle value protection agreement may be canceled
461	775		by the contract holder within a free look period as specified in the
462	776		vehicle value protection agreement, and in such an event, the
463	777		contract holder shall be entitled to a full refund of the purchase
464	778		price paid by the contract holder, if any, as long as no benefits
465	779		have been provided;
466		-
467	780		4. The procedure the contract holder shall follow, if any, to
468	781		obtain a benefit under the terms and conditions of the vehicle value
469	782		protection agreement including, if applicable, a telephone number or
470	783		website and address where the contract holder may apply for a
471	784		benefit;
472		-
473	785		5. Whether or not the vehicle value protection agreement is
474	786		cancelable after the free look period and the conditions under which
475	787		it may be canceled including the procedures for requesting any
476	788		refund of the unearned purchase price paid by the contract holder;
477		-
478	789		6. In the event of cancelation, the methodology for calculating
479	790		any refund of the unearned purchase price of the vehicle value
480	791		protection agreement due;
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481	818
482	819		7. That neither the extension of credit, the terms of the
483	820		credit, nor the terms of the related motor vehicle sale or lease may
484	821		be conditioned upon the purchase of the vehicle value protection
485	822		agreement; and
486		-
487		-
488		-	ENR. S. B. NO. 541 Page 12
489	823		8. Vehicle value protectio n agreements shall state the terms
490	824		and restrictions, or conditions governing cancelation of the vehicle
491	825		value protection agreement pr ior to the termination or expiration
492	826		date of the vehicle va lue protection agreement by either the
493	827		provider or the contract holder. The provider of the vehicle value
494	828		protection agreement shall mail a written notice to the contract
495	829		holder at the last known address of the contract holder contained in
496	830		the records of the provider at least five (5) days prior to
497	831		cancelation by the provider. Prior notice shall not be required if
498	832		the reason for cancelation is nonpayment of the provider fee, a
499	833		material misrepresentation by the contract holder to the provider or
500	834		administrator, or a substantial breach of duties by the contract
501	835		holder relating to the covered product or its use. The notice shall
502	836		state the effective date of cancelation and the reason for the
503	837		cancelation. If a vehicle value protection agreement is canceled by
504	838		the provider for a reason other than nonpayment of the provider fee,
505	839		the provider shall refund the contract holder one hundred percent
506	840		(100%) of the unearned pro rata provider fee paid by the contr act
507	841		holder, if any. If coverage under the vehicle value pr otection
508	842		agreement continues after a claim, then any refund may deduct claims
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509	870		paid. A reasonable administrative fee may be charged by the
510	871		provider not to exceed Seventy-five Dollars ($75.00).
511		-
512	872		D. E. Subsection C D of this section and Section 5 140.6 of
513	873		this act title shall not apply to vehicle value protection
514	874		agreements offered in connection with a commercial transaction.
515		-
516	875		SECTION 3. AMENDATORY Section 5, Chapter 16, O.S.L. 2022
517		-	(15 O.S. Supp. 2023, Section 140.6), is amended to read as follows:
518		-
	876	+	(15 O.S. Supp. 2022, Section 140.6), is amended to read as follows:
519	877		Section 140.6. The Insurance Commissioner shall promulgate
520	878		rules necessary to enforce the provisions of this act Section 140.2
521	879		et seq. of this title . After proper notice and opportunity for
522	880		hearing the Commissioner may take either or both of the following
523	881		actions:
524		-
525	882		1. Order the creditor, provider, administrator, or any other
526	883		person not in compliance with this act Section 140.2 et seq. of this
527	884		title to cease and desist from product related operations which are
528	885		in violation of this act Section 140.2 et seq. of this title; and or
529		-
530		-
531		-	ENR. S. B. NO. 541 Page 13
532	886		2. Impose a penalty not to exceed Five Hundred Dollars
533	887		($500.00) per violation and no more than Ten Thousand Dollars
534	888		($10,000.00) for aggregated violations of a similar nature. For
535	889		purposes of this section, “violations of a similar nature” means the
536	890		violation consisted of the same or similar course of conduct,
537	891		action, or practice, irrespective of the number of times the action,
538	892		conduct, or practice which is determined to be a violation of this
539	893		act Section 140.2 et seq. of t his title occurred.
540	894
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541	921		SECTION 4. AMENDATORY 15 O.S. 2021, Section 14 1.4, is
542	922		amended to read as follows:
543		-
544	923		Section 141.4. A. No person in this state shall act as a
545	924		service warranty association unless licensed by the Insurance
546	925		Commissioner.
547		-
548	926		B. A service warranty association shall pay to the Insurance
549	927		Department a license fe e of Four Hundred Dollars ($400.00) for such
550	928		license for each year, or part thereof, the license is in force.
551	929		Each service warranty association applying for a license shall
552	930		electronically submit a complete license application and pay the
553	931		license fee to the Insurance Commissioner in the manner and form
554	932		prescribed by the Commissioner, along with any transaction or other
555	933		applicable fees. Each application shall include a signed
556	934		declaration that under penalty of refusal, suspension, or revocation
557	935		of the license, the information provided in the application is true,
558	936		correct, and complete to the best of the applicant’s knowledge and
559	937		belief.
560		-
561	938		C. An insurer, while authorized to transact property or
562	939		casualty insurance in this state, may also transact a servic e
563	940		warranty business without additional qualifications or licensure as
564	941		required by the Service Warranty Act, but shall be otherwise subject
565	942		to the provisions of the Service Warranty Act.
566		-
567	943		D. A service warranty association may appoint an administrator
568	944		or other designee to be re sponsible for any or all of the
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569	972		administration of service warranties and compliance with the Service
570	973		Warranty Act.
571		-
572	974		E. The marketing, sale, offering for sale, issuance, making,
573	975		proposing to make and administration of service warranties by
574		-
575		-	ENR. S. B. NO. 541 Page 14
576	976		associations and related service warranty sellers, administrators,
577	977		and other persons shall be exempt from all provisions of the
578	978		Oklahoma Insurance Code.
579		-
580	979		F. An agreement which provides specified scheduled mai ntenance
581	980		services over a stated period of time does no t constitute insurance
582	981		or a service warranty .
583		-
584	982		SECTION 5. AMENDATORY 15 O.S. 20 21, Section 141.5, is
585	983		amended to read as fol lows:
586		-
587	984		Section 141.5. The Insurance Commissioner shall not issue or
588	985		renew a license to any service warranty association unless the
589	986		association:
590		-
591	987		1. Is a solvent association;
592		-
593	988		2. Furnishes the Insurance Department with satisfactory
594	989		evidence that the management of the association is competent and
595	990		trustworthy and can successfully manage the affairs of the
596	991		association in compliance with law;
597		-
598	992		3. Proposes to use and uses in its business a name together
599	993		with a trademark or emblem, if any, which is distinctive and not so
600	994		similar to the name or trademark of any other person already doing
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601	1022		business in this state as will te nd to mislead or confuse the
602	1023		public;
603		-
604	1024		4. Files the bond required by the Service Warranty Act; and
605		-
606	1025		5. Is formed under the laws of this state or another state,
607	1026		district, territory, or possession of the U nited States, if the
608	1027		association is other than a natur al person; and
609		-
610	1028		6. Has submitted all annual financi al statements and
611	1029		administrative fees required by the Service Warranty Act .
612		-
613	1030		SECTION 6. AMENDATORY 15 O.S. 2021, Section 141.8 , is
614	1031		amended to read as follows:
615		-
616	1032		Section 141.8. Each license issued to a service warranty
617	1033		association shall expire on November 1 following the date of
618		-
619		-	ENR. S. B. NO. 541 Page 15
620	1034		issuance. If the association is then qualified un der the provisions
621	1035		of the Service Warranty Act, its li cense may be renewed annually,
622	1036		upon its request electronic submission of a renewal application and
623	1037		fee in the manner and form prescribed by the Insurance Comm issioner
624	1038		along with any applicable fees , and upon payment to the Insurance
625	1039		Commissioner of the license fee in the amount of Four Hundred
626	1040		Dollars ($400.00) in advan ce for each such license year. A license
627	1041		expired for failure to submit a renewal applicatio n may be
628	1042		reinstated within ninety (90) days a fter the expiration date by
629	1043		electronically submitting a fee in an amount that is doub le the
630	1044		renewal fee and a renewal application in the form and manner
631	1045		prescribed by the Commissioner along with any transaction or other
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632	1073		applicable fees. The Commissioner s hall require a service warranty
633	1074		association whose license has been expired for more than ninety (90)
634	1075		days to reapply as if a new applicant and pay an application fee
635	1076		that is double the initial application fee, in addition to any fines
636	1077		imposed. All applications received after the license has been
637	1078		expired for more than ninety ( 90) days shall include a detaile d
638	1079		report of service warranties issued in this state during the period
639	1080		of expired licensure.
640		-
641	1081		SECTION 7. AMENDATORY 15 O.S. 2021 , Section 141.13, as
642	1082		amended by Section 1, Chapter 241, O.S.L. 2017, is amended to read
643	1083		as follows:
644		-
645	1084		Section 141.13. A. No service warranty form or related form
646	1085		shall be issued or used in this state unless the f orm has been filed
647	1086		with the Insurance Commis sioner. Service warranty forms shall not
648	1087		be subject to prior approval and sh all be filed with the Insurance
649	1088		Commissioner for informational purposes only.
650		-
651	1089		B. Each service warranty contract shall contain a cancellation
652	1090		cancelation provision. In the event the contract is canceled by the
653	1091		warranty holder, return of the provider fee shall be base d upon
654	1092		ninety percent (90%) of the unearned pro rata provid er fee less the
655	1093		actual cost of any service provided under the service warran ty
656	1094		contract. In the event the contract is c anceled by the association,
657	1095		return of premium shall be based upon one hundred percent (100%) of
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658	1123		unearned pro rata provider fee less the actual cost of any service
659	1124		provided under the service warranty contract.
660		-
661		-
662		-	ENR. S. B. NO. 541 Page 16
663	1125		C. Service warranties shall state the name and address of the
664	1126		service warranty association and shall identify any administr ator if
665	1127		different from the ser vice warranty association, th e service
666	1128		warranty seller and the service warranty holder to the extent that
667	1129		the name of the service warranty holder has been furnished by the
668	1130		service warranty hold er. For service warranties issue d on and after
669	1131		July 1, 2017, the identity of the service wa rranty association and
670	1132		its license number shall be preprinted on the service warranty or
671	1133		added at the time of sale so co nsumers can clearly identify the
672	1134		obligor of the service warranty. Informatio n to be printed at the
673	1135		time of sale shall be indicated as s uch at the time the service
674	1136		warranty is filed and a “Jane Doe” specimen shall accompany the
675	1137		service warranty illustratin g how the service warranty will look
676	1138		after printing.
677		-
678	1139		Each person and service warranty assoc iation shall
679	1140		electronically submit, in the form and manner prescribed by the
680	1141		Commissioner, any change of legal business n ame, “doing business as”
681	1142		or assumed name, address, or contact email address within thirty
682	1143		(30) days after the change occurred , and any fees deemed necessary
683	1144		by the Commissioner. Any submission of a change under this
684	1145		paragraph received more than thirty (30) days after the change
685	1146		occurs shall be accompanied by a fee of Fifty Dollars ($50.00 ).
686	1147
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687	1174		D. The Commissioner sha ll have the authority to immediately
688	1175		order a service warranty associa tion to stop using any service
689	1176		warranty contract if the Commissioner determi nes that the form:
690		-
691	1177		1. Violates the Service Warranty Act;
692		-
693	1178		2. Is misleading in any respect; or
694		-
695	1179		3. Is reproduced so that any material provision is
696	1180		substantially illegible.
697		-
698	1181		E. The Insurance Commissioner may, by order, exempt from the
699	1182		requirements of this s ection for so long as he or she deems proper
700	1183		any document or form or type thereof a s specified in such order, t o
701	1184		which, in his or her discretion , this section may not practicably be
702	1185		applied, or the filing of which is, in his or her opin ion, not
703	1186		desirable or necessary for the protection of the public.
704		-
705		-
706		-	ENR. S. B. NO. 541 Page 17
707	1187		SECTION 8. AMENDATORY 15 O.S. 20 21, Section 141.14, is
708	1188		amended to read as fol lows:
709		-
710	1189		Section 141.14. A. In addition to the license fees provided in
711	1190		the Service Warranty Act for service warranty associations each
712	1191		service warranty association and insurer shall annually, on or
713	1192		before the first day of May, file with the Insurance Commi ssioner
714	1193		its annual financial sta tement as of a date not earlier than three
715	1194		hundred sixty-five (365) days prior to the date submitted showing
716	1195		all gross written provider fees or assessments rec eived by it in
717	1196		connection with the issuance of service warranties in this state
718	1197		during the preceding calendar year and other relevant financial
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	1200	+	BOLD FACE denotes Committee Amendments. 1
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719	1225		information as deemed necessa ry by the Commissioner. The financial
720	1226		statements required by this subsection must be:
721		-
722	1227		1. Audited and prepared in accordance with statutory account ing
723	1228		principles if the applicant complies with the requirements of
724	1229		subsection A of Secti on 141.6 of this titl e; or
725		-
726	1230		2. Verified under oath of at least tw o of its principal
727	1231		officers and prepare d in accordance with generally accepted
728	1232		accounting principles if the applicant utilizes an insura nce policy
729	1233		which satisfies the requirements of subsecti on B of Section 141.6 of
730	1234		this title.
731		-
732	1235		B. The Commissioner may lev y a fine of up to One Hundred
733	1236		Dollars ($100.00) a day for each day an association neglects to file
734	1237		its financial statement in the form a nd within the time provided by
735	1238		the Service Warranty Act .
736		-
737	1239		C. In addition to the annual financial statements required to
738	1240		be filed by subsection A of this sectio n, the Commissioner may
739	1241		require of licensees, under oath and in t he form prescribed by it
740	1242		the Commissioner, quarterly statements or special reports which the
741	1243		Commissioner deems necessary for the proper supervision of l icensees
742	1244		under the Service Warranty Act.
743		-
744	1245		D. Provider fees and assessments received by associations and
745	1246		insurers for service warranties shall n ot be subject to the premium
746	1247		tax provided in Section 624 of Titl e 36 of the Oklahoma Statutes,
747	1248		but shall be subject to an administrative fee of equal to two
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	1250	+	SB541 HFLR Page 25
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748	1276		percent (2%) of the gross provider fee received on the sale of all
749		-
750		-	ENR. S. B. NO. 541 Page 18
751	1277		service warranties issued in thi s state during the preceding
752	1278		calendar quarter. The fees shall b e paid quarterly to t he Insurance
753	1279		Commissioner. However, licensed associations, licensed insurers and
754	1280		entities with applications for licensure as a ser vice warranty
755	1281		association pending with t he Insurance Department that have
756	1282		contractual liability insurance in place as of March 31, 2009 , from
757	1283		an insurer which satisfies the requirements of subsections B and C
758	1284		of Section 141.6 of this title and which covers one hundred percent
759	1285		(100%) of the claims exposure of the association or insurer on all
760	1286		contracts written may elec t to pay an annual ad ministrative fee of
761	1287		Three Thousand Dollars ($3,000.00) in lieu of the two -percent
762	1288		administrative fee.
763		-
764	1289		SECTION 9. AMENDATORY 15 O.S. 2021, Section 141.33, is
765	1290		amended to read as follows:
766		-
767	1291		Section 141.33. A. Claim files of service w arranty
768	1292		associations licensed pursuant to the Service Warranty Act shall be
769	1293		subject to examination by the Insurance Commi ssioner or by duly
770	1294		appointed designees. The claim files shall contain all notes and
771	1295		work papers pertaining to a c laim in such detail t hat pertinent
772	1296		events and the dates of the events can be reconstructed. In
773	1297		addition, the Commissioner and authorized empl oyees and examiners
774	1298		shall have access to any files of a service warranty association
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775	1326		that may relate to a particul ar complaint under in vestigation or to
776	1327		an inquiry or examination by the Insurance Department.
777		-
778	1328		B. Every service warranty association, upon rec eipt of any
779	1329		inquiry from the Commissioner, shall, within thirty (30) twenty (20)
780	1330		days from the date of the inquiry , furnish the Commiss ioner with an
781	1331		adequate response to the inquiry.
782		-
783	1332		C. Every service warranty associa tion, upon receipt of any
784	1333		pertinent written communication including, but not limited to,
785	1334		electronic mail or other forms of written electronic communicati on
786	1335		or documentation by the service warranty association of a verbal
787	1336		communication from a claimant which reasonably suggests that a
788	1337		response is expected, shall, within thirty (30) days after re ceipt
789	1338		thereof, furnish the claimant with an adequate response to the
790	1339		communication.
791		-
792		-
793		-	ENR. S. B. NO. 541 Page 19
794	1340		D. Any violation by a service warranty association of this
795	1341		section shall subject t he service warranty association to disc ipline
796	1342		including a civil penalty of not less than One Hundred Dollars
797	1343		($100.00) nor more than Five Thousand Dollar s ($5,000.00).
	1344	+	SECTION 10. This act shall become effective November 1, 2023.
798	1345
799		-	SECTION 10. This act shall become effective November 1, 202 4.
800		-
801		-
802		-	ENR. S. B. NO. 541 Page 20
803		-	Passed the Senate the 20th day of March, 2023.
804		-
805		-
806		-
807		-	Presiding Officer of the Senate
808		-
809		-
810		-	Passed the House of Representatives the 24th day of April, 2024.
811		-
812		-
813		-
814		-	Presiding Officer of the House
815		-	of Representatives
816		-
817		-	OFFICE OF THE GOVERNOR
818		-	Received by the Office of the Governor this _______ _____________
819		-	day of _________________ __, 20_______, at _______ o'clock _______ M.
820		-	By: _________________________________
821		-	Approved by the Governor of the State of Oklahoma this _______ __
822		-	day of _________________ __, 20_______, at _______ o'clock _______ M.
823		-
824		-	_________________________________
825		-	Governor of the State of Oklahoma
826		-
827		-
828		-	OFFICE OF THE SECRETARY OF STATE
829		-	Received by the Office of the Secretary of State this _______ ___
830		-	day of _________________ _, 20 _______, at _______ o'clock _______ M.
831		-	By: _________________________________
	1346	+	COMMITTEE REPORT BY: COMMITTEE ON INSURANCE, dated 04/04/2023 - DO
	1347	+	PASS.