Due to a codification error in the Service Contracts Act, which was enacted in 2007, the Arkansas Department of Insurance pursued an amendment in the state’s 2009 legislative session addressing financial responsibility requirements of service contract providers. According to the Department’s Bulletin 6-2009, the original law required a service contract provider to meet the financial requirements for doing business in that state by only placing a minimum of $25,000 on deposit with the Department. This, according to the DOI, allowed providers to be less financially secure than was intended. The 2009 amendment sets forth the three ways a provider can comply with the Act’s applicable financial requirements which are: a) insure the program through a contractual liability policy; b) place a minimum of $25,000 on deposit with the Department and maintain an unearned premium reserve fund with specified minimums; or c) maintain a net worth of $100 million. This new law was effective July 31, 2009.
