690C.170 - Contractual liability insurance policy, deposit of security or certain net worth required.
690C.170 Contractual liability insurance policy, deposit of security or certain net worth required. To be issued a certificate of registration, a provider must comply with one of the following:
1. Purchase a contractual liability insurance policy which insures the obligations of each service contract the provider issues, sells or offers for sale. The contractual liability insurance policy must be issued by an insurer authorized to transact insurance in this state or pursuant to the provisions of chapter 685A of NRS.
2. Maintain a reserve account and deposit with the Commissioner security as provided in this subsection. The reserve account must contain at all times an amount of money equal to at least 40 percent of the gross consideration received by the provider for any unexpired service contracts, less any claims paid on those unexpired service contracts. The Commissioner may examine the reserve account at any time. The provider shall also deposit with the Commissioner security in an amount that is equal to $25,000 or 5 percent of the gross consideration received by the provider for any unexpired service contracts, less any claims paid on the unexpired service contracts, whichever is greater. The security must be:
(a) A surety bond issued by a surety company authorized to do business in this state;
(b) Securities of the type eligible for deposit pursuant to NRS 682B.030;
(c) Cash;
(d) An irrevocable letter of credit issued by a financial institution approved by the Commissioner; or
(e) In any other form prescribed by the Commissioner.
3. Maintain, or be a subsidiary of a parent company that maintains, a net worth or stockholders’ equity of at least $100,000,000. Upon request, a provider shall provide to the Commissioner a copy of the most recent Form 10-K report or Form 20-F report filed by the provider or parent company of the provider with the Securities and Exchange Commission within the previous year. If the provider or parent company is not required to file those reports with the Securities and Exchange Commission, the provider shall provide to the Commissioner a copy of the most recently audited financial statements of the provider or parent company. If the net worth or stockholders’ equity of the parent company of the provider is used to comply with the requirements of this subsection, the parent company must guarantee to carry out the duties of the provider under any service contract issued or sold by the provider.
(Added to NRS by 1999, 3337)