New York Senate Bill 7465 (companion to Assembly Bill 10258) would give specific authority to the Commissioner of Insurance to inquire into the affairs and transactions of service contract providers and would require that such entities reply “promptly and truthfully”, and in some instances, in the form of a sworn statement by a company officer. The legislation also deems funds held by a provider in a reserve account to now be “fiduciary” in nature and would require that such an account be specifically labeled as such. The bill proposes changes to disclosure requirements concerning contract termination and refunds as well as proposes changes to the definition of such terms as “incidental damages” and “accidental damage from handling”.
The legislation would also establish new requirements for insurers writing reimbursement insurance covering service contract programs, by requiring that such insurers establish a contingency reserve fund into which 40% of net premiums received for service contract reimbursement insurance policies must be deposited, less deposits in the unearned premium reserve fund maintained generally by the insurer under applicable provisions of the insurance code.
This legislation proposes additional changes affecting service contract providers, administrators and insurers.
