§481X-4  Financial responsibility. 
A provider shall comply with the requirements under any one of the following
paragraphs, and shall not be subject to any other financial security
requirements under state law:



(1)  The provider shall insure all service contracts
under a contractual liability insurance policy issued by an insurer authorized
to transact insurance in this State or issued pursuant to part III of article 8
of chapter 431;



(2)  The provider shall:



(A)  Maintain a funded reserve account for all
obligations under service contracts issued and in force in this State.  The
reserves shall not be less than forty per cent of the gross consideration
received from the sale of the service contract, less claims paid, for all in
force contracts.  The reserve account shall be subject to examination by the
commissioner; and



(B)  Place in trust with the commissioner, for
all service contracts issued and in force in this State, a financial security
deposit having a value that is the larger of $25,000 or five per cent of the
gross consideration received, less claims paid for the sale of the service
contracts.  The financial security deposit shall consist of one of the
following:



(i)  A surety bond issued by an authorized
surety;



(ii)  Securities of the type eligible for deposit
by authorized insurers in this State;



(iii)  Cash;



(iv)  A letter of credit issued by a qualified
financial institution; or



(v)  Another form of security authorized by the
commissioner by rule; or



(3)  The provider or its parent company shall:



(A)  Maintain a net worth or stockholders'
equity of at least $100,000,000; and



(B)  Upon request, provide the commissioner
with a copy of the provider's or the provider's parent company's most recent
Form 10-K or Form 20-F filed with the Securities and Exchange Commission within
the last calendar year, or if the company does not file with the Securities and
Exchange Commission, a copy of the provider's or the provider's parent
company's audited financial statements.



If the financial responsibility requirement under
this paragraph is to be maintained by the provider's parent company, the parent
company shall guarantee the provider's obligations under service contracts sold
by the provider in this State. [L 2000, c 221, pt of §2; am L 2006, c 154, §45]