Illinois General Assembly - Full Text of SB1731
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Full Text of SB1731  98th General Assembly




State of Illinois
2013 and 2014


Introduced 2/15/2013, by Sen. William R. Haine


215 ILCS 152/10
215 ILCS 152/15

    Amends the Service Contract Act. Includes in certain conditions that a service contract provider must meet in order to issue, sell, or offer to sell a service contract in this State a requirement that the service contract provider shall pay, for the privilege of doing business in this State, a tax equal to 0.5% of the gross consideration received. Provides that the tax shall be remitted to the Director of Insurance in accordance with the provisions of the Illinois Insurance Code concerning the annual privilege tax payable by companies and makes a corresponding change.

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SB1731LRB098 08753 RPM 38878 b

1    AN ACT concerning regulation.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Service Contract Act is amended by changing
5Sections 10 and 15 as follows:
6    (215 ILCS 152/10)
7    Sec. 10. Exemptions. Service contract providers and
8related service contract sellers and administrators complying
9with this Act are not required to comply with and are not
10subject to any provision of the Illinois Insurance Code, unless
11otherwise provided in this Act. A service contract provider who
12is the manufacturer or a wholly-owned subsidiary of the
13manufacturer of the product or the builder, seller, or lessor
14of the product that is the subject of the service contract is
15required to comply only with Sections 30, 35, 45, and 50 of
16this Act; except that, a service contract provider who sells a
17motor vehicle, excluding a motorcycle as defined in Section
181-147 of the Illinois Vehicle Code, or who leases, but is not
19the manufacturer of, the motor vehicle, excluding a motorcycle
20as defined in Section 1-147 of the Illinois Vehicle Code, that
21is the subject of the service contract must comply with this
22Act in its entirety. Contracts for the repair and monitoring of
23private alarm or private security systems regulated under the



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1Private Detective, Private Alarm, Private Security,
2Fingerprint Vendor, and Locksmith Act of 2004 are not required
3to comply with this Act and are not subject to any provision of
4the Illinois Insurance Code.
5(Source: P.A. 95-613, eff. 9-11-07.)
6    (215 ILCS 152/15)
7    Sec. 15. Financial requirements. No service contract shall
8be issued, sold, or offered for sale in this State unless one
9of the following conditions are satisfied:
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
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;
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;
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
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.
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;
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;
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 .
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.
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
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
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
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 .
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.)