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1 | AN ACT concerning regulation.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Service Contract Act is amended by changing | ||||||||||||||||||||||||||
5 | Sections 10 and 15 as follows:
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6 | (215 ILCS 152/10)
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7 | Sec. 10. Exemptions. Service contract providers and | ||||||||||||||||||||||||||
8 | related service
contract sellers and administrators complying | ||||||||||||||||||||||||||
9 | with this Act are not required
to comply with and are not | ||||||||||||||||||||||||||
10 | subject to any provision of the Illinois Insurance
Code , unless | ||||||||||||||||||||||||||
11 | otherwise provided in this Act . A service contract provider who | ||||||||||||||||||||||||||
12 | is the manufacturer or a wholly-owned
subsidiary of the | ||||||||||||||||||||||||||
13 | manufacturer of the product or the builder, seller, or
lessor | ||||||||||||||||||||||||||
14 | of the product that is the
subject of the service contract is | ||||||||||||||||||||||||||
15 | required to comply only with Sections 30,
35, 45, and 50 of | ||||||||||||||||||||||||||
16 | this Act; except that, a service contract provider who sells
a | ||||||||||||||||||||||||||
17 | motor vehicle, excluding a motorcycle as defined in Section | ||||||||||||||||||||||||||
18 | 1-147 of the
Illinois Vehicle Code, or who leases, but is not | ||||||||||||||||||||||||||
19 | the manufacturer of, the motor
vehicle, excluding a motorcycle | ||||||||||||||||||||||||||
20 | as defined in Section 1-147 of the Illinois
Vehicle Code, that | ||||||||||||||||||||||||||
21 | is the subject of the service contract must comply with this
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22 | Act in its entirety. Contracts for the repair and monitoring of | ||||||||||||||||||||||||||
23 | private alarm
or private security systems regulated under the |
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1 | Private Detective, Private
Alarm, Private Security, | ||||||
2 | Fingerprint Vendor, and Locksmith Act of 2004 are not
required | ||||||
3 | to comply
with this Act and are not subject to any provision of | ||||||
4 | the Illinois Insurance
Code.
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5 | (Source: P.A. 95-613, eff. 9-11-07.)
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6 | (215 ILCS 152/15)
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7 | Sec. 15. Financial requirements. No service contract shall | ||||||
8 | be issued, sold, or offered for sale in this State
unless one | ||||||
9 | of the
following conditions are satisfied:
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10 | (1) (A) The service contract provider is insured under a | ||||||
11 | service contract
reimbursement
insurance policy issued by | ||||||
12 | an insurer authorized to do business in this State
and
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13 | providing that the insurer will pay to, or on behalf of, | ||||||
14 | the service contract
provider all
sums that the service | ||||||
15 | contract provider is legally obligated to pay according
to | ||||||
16 | the
service contract provider's contractual obligations | ||||||
17 | under the service contracts
issued or sold by the service | ||||||
18 | contract provider;
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19 | (B) a true and correct copy of the service contract | ||||||
20 | reimbursement
insurance policy has
been filed with the | ||||||
21 | Director by the service contract provider;
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22 | (C) the service contract states that the obligations of | ||||||
23 | the service
contract provider to
the service contract | ||||||
24 | holder are covered under a service contract reimbursement
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25 | insurance policy; and
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1 | (D) the service contract states the name and address of | ||||||
2 | the issuer of the
service
contract reimbursement insurance | ||||||
3 | policy and states that in the event covered
service
is not | ||||||
4 | provided by the service contract provider within 60 days of | ||||||
5 | proof of
loss by
the service contract holder, the service | ||||||
6 | contract holder may file directly with
the
service contract | ||||||
7 | reimbursement insurance company.
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8 | (2) (A) The service contract provider maintains a funded | ||||||
9 | reserve account
for its obligations
under its service | ||||||
10 | contracts issued and outstanding in this State. The | ||||||
11 | reserves
shall not
be less than 40% of the gross | ||||||
12 | consideration received, less claims paid,
for all
service | ||||||
13 | contracts sold and then in force;
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14 | (B) the service contract provider places in trust with | ||||||
15 | the Director a
financial security
deposit, having a value | ||||||
16 | of not less than 5% of the gross
consideration
received, | ||||||
17 | less claims paid, for all service contracts sold and then | ||||||
18 | in force,
but not less
than $25,000, consisting of | ||||||
19 | securities of the
type
eligible for deposit by authorized | ||||||
20 | insurers in this State and ;
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21 | (C) the service contract provider provides the | ||||||
22 | Director with an audited
financial
statement annually of | ||||||
23 | the service contract revenues and claims ; and .
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24 | (D) the service contract provider shall pay, for the | ||||||
25 | privilege of doing business in this State, a tax equal to | ||||||
26 | 0.5% of the gross consideration received; the tax shall be |
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1 | remitted to the Director in accordance with the provisions | ||||||
2 | of Section 409 of the Illinois Insurance Code.
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3 | (3) (A) The service contract provider, or its parent | ||||||
4 | company in accordance
with subdivision (3)(B), maintains a | ||||||
5 | net worth or stockholders' equity of
$100,000,000; and
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6 | (B) the service contract provider provides the | ||||||
7 | Director with a copy of the
service contract provider's or | ||||||
8 | the service contract provider's parent company's
most | ||||||
9 | recent Form 10-K or Form 20-F filed with the
Securities and | ||||||
10 | Exchange Commission within the last calendar year or, if
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11 | the service contract provider does not file with the | ||||||
12 | Securities and Exchange
Commission, a copy of the service | ||||||
13 | contract provider's or the service contract
provider's | ||||||
14 | parent company's audited financial statements that shows a | ||||||
15 | net worth
of the service contract provider or its parent | ||||||
16 | company of at least
$100,000,000. If the service contract | ||||||
17 | provider's parent company's Form 10-K,
Form 20-F, or | ||||||
18 | audited financial statements are filed to meet the service
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19 | provider's financial stability requirement, then the | ||||||
20 | parent company shall agree
to guarantee the obligations of | ||||||
21 | the provider relating to service contracts
issued by the | ||||||
22 | service contract provider in this State ; and .
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23 | (C) the service contract provider shall pay, for the | ||||||
24 | privilege of doing business in this State, a tax equal to | ||||||
25 | 0.5% of the gross consideration received; the tax shall be | ||||||
26 | remitted to the Director in accordance with the provisions |
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1 | of Section 409 of the Illinois Insurance Code. | ||||||
2 | (Source: P.A. 90-711, eff. 8-7-98.)
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