385.202. Issuance of contracts, criteria--registration required--duties of providers--exemption from state licensure.
Issuance of contracts, criteria--registration required--duties ofproviders--exemption from state licensure.
385.202. 1. Motor vehicle extended service contracts shall not beissued, sold, or offered for sale in this state unless the provider or itsdesignee has:
(1) Provided a receipt for the purchase of the motor vehicle extendedservice contract to the contract holder at the date of purchase;
(2) Provided a copy of the motor vehicle extended service contract tothe service contract holder within a reasonable period of time from thedate of purchase; and
(3) Complied with the provisions of sections 385.200 to 385.220.
2. All providers of motor vehicle extended service contracts sold inthis state shall file a registration with the director on a form, at a feeand at a frequency prescribed by the director.
3. In order to assure the faithful performance of a provider'sobligations to its contract holders, each provider who is contractuallyobligated to provide service under a motor vehicle extended servicecontract shall:
(1) Insure all motor vehicle extended service contracts under areimbursement insurance policy issued by an insurer authorized to transactinsurance in this state; or
(2) (a) Maintain a funded reserve account for its obligation underits contracts issued and outstanding in this state. The reserves shall notbe less than forty percent of gross consideration received, less claimspaid, on the sale of the motor vehicle extended service contract for allin-force contracts. The reserve account shall be subject to examinationand review by the director; and
(b) Place in trust with the director a financial security deposit,having a value of not less than five percent of the gross considerationreceived, less claims paid, on the sale of the motor vehicle extendedservice contract for all motor vehicle extended service contracts issuedand in force, but not less than twenty-five thousand dollars, consisting ofone of the following:
a. A surety bond issued by an authorized surety;
b. Securities of the type eligible for deposit by authorized insurersin this state;
c. Cash;
d. A letter of credit issued by a qualified financial institution; or
e. Another form of security prescribed by regulations issued by thedirector; or
(3) (a) Maintain a net worth of one hundred million dollars; and
(b) Upon request, provide the director with a copy of the provider'sor, if the provider's financial statements are consolidated with those ofits parent company, the provider's parent company's most recent Form 10-Kfiled with the Securities and Exchange Commission (SEC) within the lastcalendar year, or if the company does not file with the SEC, a copy of thecompany's audited financial statements, which shows a net worth of theprovider or its parent company of at least one hundred million dollars. Ifthe provider's parent company's Form 10-K or audited financial statementsare filed to meet the provider's financial stability requirement, then theparent company shall agree to guarantee the obligations of the obligorrelating to motor vehicle extended service contracts sold by the providerin this state.
4. Provider fees collected on motor vehicle extended servicecontracts shall not be subject to premium taxes. Premiums forreimbursement insurance policies shall be subject to applicable premiumtaxes.
5. Except for the registration requirement in subsection 2 of thissection, persons marketing, selling, or offering to sell motor vehicleextended service contracts for providers that comply with sections 385.200to 385.220 are exempt from this state's licensing requirements.
6. Providers complying with the provisions of sections 385.200 to385.220 are not required to comply with other provisions of chapter 374 or375, RSMo, or any other provisions governing insurance companies, except asspecifically provided.
(L. 2007 H.B. 221)