Okla. Stat. tit. 36, § 36-6753

responsibilities.

A. Home service contracts shall not be issued, sold or offered

for sale in this state unless the provider has:

1. Provided a receipt for, or other written evidence of, the

purchase of the home service contract to the contract holder; and

2. Provided a copy of the home service contract to the service

contract holder within a reasonable period of time from the date of

purchase.

B. Each provider of home service contracts sold in this state

shall file a registration with, and on a form prescribed by, the

Insurance Commissioner consisting of their name, full corporate

physical street address, telephone number, contact person and a

designated person in this state for service of process. Each

provider shall pay to the Commissioner a fee in the amount of One

Thousand Two Hundred Dollars ($1,200.00) upon initial registration

and every three (3) years thereafter. Each provider shall pay to

the Commissioner an Antifraud Assessment Fee of Two Thousand Two

Hundred Fifty Dollars ($2,250.00) upon initial registration and

every three (3) years thereafter. The registration need only be

updated by written notification to the Commissioner if material

changes occur in the registration on file. A proper registration is

de facto a license to conduct business in Oklahoma and may be

suspended as provided in Section 6755 of this title. Fees received

from home service contract providers shall not be subject to any

premium tax, but shall be subject to an administrative fee equal to

two percent (2%) of the gross fees received on the sale of all home

service contracts issued in this state during the preceding calendar

quarter. The fees shall be paid quarterly to the Commissioner and

submitted along with a report on a form prescribed by the

Commissioner. However, service contract providers may elect to pay

an annual administrative fee of Three Thousand Dollars ($3,000.00)

in lieu of the two-percent administrative fee, if the provider

maintains an insurance policy or policies as provided in paragraph 3

of subsection C of this section.

C. In order to assure the faithful performance of a provider's

obligations to its contract holders, each provider shall be

responsible for complying with the requirements of paragraph 1, 2 or

3 of this subsection:

1. a. maintain a funded reserve account for its obligations

under its contracts issued and outstanding in this

state. The reserves shall not be less than forty

percent (40%) of gross consideration received, less

claims paid, on the sale of the service contract for

all in-force contracts. The reserve account shall be

Oklahoma Statutes - Title 36. Insurance Page 1358

subject to examination and review by the Commissioner,

and

b. place in trust with the Commissioner a financial

security deposit, having a value of not less than five

percent (5%) of the gross consideration received, less

claims paid, on the sale of the service contract for

all service contracts issued and in force, but not

less than Twenty-five Thousand Dollars ($25,000.00),

consisting of one of the following:

(1) a surety bond issued by an authorized surety,

(2) securities of the type eligible for deposit by

authorized insurers in this state,

(3) a letter of credit issued by a qualified

financial institution, or
paid, on the sale of the service contract for

all service contracts issued and in force, but not

less than Twenty-five Thousand Dollars ($25,000.00),

consisting of one of the following:

(1) a surety bond issued by an authorized surety,

(2) securities of the type eligible for deposit by

authorized insurers in this state,

(3) a letter of credit issued by a qualified

financial institution, or

(4) another form of security prescribed by rule

promulgated by the Commissioner;

2. a. maintain, or together with its parent company

maintain, a net worth or stockholders' equity of

Twenty-five Million Dollars ($25,000,000.00),

excluding goodwill, intangible assets, customer lists

and affiliated receivables, 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 (SEC) within the

last calendar year, or if the company does not file

with the SEC, a copy of the company's financial

statements, which shows a net worth of the provider or

its parent company of at least Twenty-five Million

Dollars ($25,000,000.00) based upon Generally Accepted

Accounting Principles (GAAP) accounting standards. If

the provider's parent company's Form 10-K, Form 20-F,

or financial statements are filed to meet the

provider's financial stability requirement, then the

parent company shall agree to guarantee the

obligations of the provider relating to service

contracts sold by the provider in this state; or

3. Purchase one or more insurance policies which collectively

cover one hundred percent (100%) of its claim exposure. The

insurance shall be obtained from one or more insurers that are

licensed, registered, or otherwise authorized to do business in this

state, that is rated B++ or better by A.M. Best Company, Inc., and

that meets the requirements of subsection D of this section. For

the purposes of this paragraph, the insurance policy or policies

shall contain the following provisions:

a. in the event that the provider is unable to fulfill

its obligation under contracts issued in this state

Oklahoma Statutes - Title 36. Insurance Page 1359

for any reason including insolvency, bankruptcy, or

dissolution, the insurer shall pay losses and unearned

premiums under such plans directly to the person

making the claim under the contract,

b. the insurer issuing the insurance policy shall assume

full responsibility for the administration of claims

in the event of the inability of the provider to do

so, and

c. the policy shall not be canceled or not renewed by

either the insurer or the provider unless sixty (60)

days' written notice thereof has been given to the

Commissioner by the insurer before the date of such

cancellation or nonrenewal.

D. Each insurer providing an insurance policy used to satisfy

the financial responsibility requirements of paragraph 3 of

subsection C of this section shall meet one of the following

standards:

1. The insurer shall, at the time the policy is filed with the

Commissioner, and continuously thereafter:

a. maintain surplus as to policyholders and paid-in

capital of at least Fifteen Million Dollars

($15,000,000.00), and

b. annually file copies of the audited financial

statements of the insurer, its National Association of

Insurance Commissioners (NAIC) Annual Statement, and

the actuarial certification required by and filed in

the state of domicile of the insurer; or

2. The insurer shall, at the time the policy is filed with the

Commissioner, and continuously thereafter:

a. maintain surplus as to policyholders and paid-in

capital of less than Fifteen Million Dollars

($15,000,000.00),

b. demonstrate to the satisfaction of the Commissioner

that the company maintains a ratio of net written

premiums, wherever written, to surplus as to

policyholders and paid-in capital of not greater than

three to one, and
ed with the

Commissioner, and continuously thereafter:

a. maintain surplus as to policyholders and paid-in

capital of less than Fifteen Million Dollars

($15,000,000.00),

b. demonstrate to the satisfaction of the Commissioner

that the company maintains a ratio of net written

premiums, wherever written, to surplus as to

policyholders and paid-in capital of not greater than

three to one, and

c. annually file copies of the audited financial

statements of the insurer, its NAIC Annual Statement,

and the actuarial certification required by and filed

in the state of domicile of the insurer.

E. Except for the registration requirements in subsection B of

this section, providers, administrators and other persons marketing,

selling or offering to sell home service contracts are exempt from

any licensing requirements of this state and shall not be subject to

other registration information or security requirements. Home

service contract providers as defined in Section 6752 of this title

Oklahoma Statutes - Title 36. Insurance Page 1360

and properly registered under this law are exempt from any treatment

pursuant to the Service Warranty Act. Home service contract

providers applying for registration under the Oklahoma Home Service

Contract Act that have not been registered in the preceding twelve

(12) months under the Oklahoma Home Service Contract Act may be

subject to a thirty-day prior review before their registration is

deemed complete. Said applications shall be deemed complete after

thirty (30) days unless the Commissioner takes action in that period

under Section 6755 of this title, for cause shown, to suspend their

registration.

F. The marketing, sale, offering for sale, issuance, making,

proposing to make and administration of home service contracts by

providers and related service contract sellers, administrators, and

other persons including but not limited to real estate licensees,

shall be exempt from all other provisions of the Insurance Code.