Current through Register Vol. 49, No. 6, March 15, 2024
PURPOSE: This proposed amendment revises and
restructures rules relating to assurances of faithful performance required
under section 385.202.3, RSMo.
(1) Each provider who is contractually
obligated to the service contract holder under the terms of a motor vehicle
extended service contract is responsible for maintaining proof of its assurance
of faithful performance and its continuing compliance with the requirements of
section
385.202,
RSMo, with the director.
(2) The
following applies to reimbursement insurance policies used to assure the
faithful performance of a provider's obligations to its contract holders as set
forth in section 385.202.3(1), RSMo:
(A) Any
such policy is acceptable only if it is issued by an insurance company
authorized to transact insurance in this state. As used in this paragraph, the
term "insurance company authorized to transact insurance in this state" means
either an insurance company with a valid certificate of authority from the
director to transact liability insurance or a financially responsible risk
retention group (RRG) meeting the following requirements:
1. Such RRG is registered in good standing
with the director pursuant to sections 375.1080-375.1105, RSMo;
2. Such RRG
3. Such RRG is authorized to transact
liability insurance in this state.
(B) Any such policy is acceptable only if it
assures the satisfaction of all obligations and liabilities of the provider
under the terms of motor vehicle extended service contracts issued while the
reimbursement insurance policy is in effect in the event of nonperformance by
the provider. No policy with any provision imposing a deductible or retention
payable by the policyholder or any claimant under the policy will satisfy this
requirement.
(C) Any such policy
is acceptable only if it contains a provision requiring the insurer issuing
such policy to provide the director with at least sixty (60) days prior notice
of insurer's termination of such policy by delivering notice to the
director.
(3) The
following applies to each funded reserve account as set forth in section
385.202.3(2)(a), RSMo, . Such account may be used to establish compliance with
section 385.202.3(2)(a), RSMo, only if such account satisfies the following
requirements:
(A) Such account is maintained
in cash or cash equivalent
A. A "qualified
United States financial institution" as that term is defined in section
375.246.3(2), RSMo; or
B. Such
other financial institution as specifically approved in writing by the
director; assets of a value sufficient to meet the reserve requirements of
section 385.202.3(2)(a), RSMo;
(B) Such account is maintained exclusively
for the satisfaction of the provider's obligations to contract holders under
Missouri motor vehicle extended service contracts;
(C) Such account is maintained at a qualified
financial institution which is insured by the Federal Deposit Insurance
Corporation; and
(D) Such account
is maintained at a level and in a manner which is consistent with the
requirements of this rule and the laws of this state.
(4) The following applies to financial
security deposits placed in trust with the director as set forth in section
385.202.3(2)(b), RSMo. Such deposit may be used to establish compliance with
section 385.202.3(2)(b), RSMo, only if the deposit satisfies the following
requirements:
(A) The value of such deposit
is at least that amount established under section 385.202.3(2)(b), RSMo;
and
(B) To the extent that such
deposit consists of-
1. A surety bond issued
by an authorized surety, as provided in section 385.202.3(2)(b)a, RSMo, the
bond will be acceptable only if the bond is completed on the Bond of Motor
Vehicle Service Contract Provider Form (Form SC-1), provided by the
director;
2. Cash or securities as
permitted by section 385.202.3(2)(b)b or c, RSMo, such cash or securities will
be acceptable only if the deposit is made with the same depository and upon the
same terms and conditions as the capital deposits of insurance companies
domiciled in this state, except that the amount of the deposit will be
determined by the provisions of section 385.202.3(2)(b), RSMo;
3. A letter of credit, as provided in
section 385.202.3(2)(b)d, RSMo, such letter of credit will be acceptable only
if it complies with the following requirements:
A. The letter of credit is clean,
irrevocable, and unconditional;
B.
The beneficiary is the director and his or her successors in office;
C. The letter of credit is issued by a
qualified financial institution;
D.
The letter of credit contains a statement to the effect that the obligation of
the qualified United States financial institution under the letter of credit is
in no way contingent upon reimbursement with respect thereto; and
E. The letter of credit includes an issue
date and expiration date. The term of the letter of credit will be at least one
(1) year and will be subject to an "evergreen clause" that prevents the
expiration of the letter of credit without due notice from the provider of no
less than thirty (30) days' to the director.
(5) The following applies to each
provider maintaining a net worth of one hundred (100) million dollars and
establishing such net worth through the guaranty of the provider's parent
company, as set forth in section 385.202.3(2)(b), RSMo. To be accepted as proof
that the provider has assured faithful performance of the provider's
obligations to its contract holders, the guarantee will be filed with the
director in a writing that substantially conforms to the Guaranty of Motor
Vehicle Service Contract Obligations Form (Form SC-2), provided by the
director.
*Original authority: 385.218, RSMo
2007.