This rule is promulgated by the Arkansas Commissioner of Insurance pursuant to Ark. Code Ann. § 23-61-108, Ark. Code Ann. §§ 25-15-201, et seq., and the Service Contracts Act, codified at Ark. Code Ann. §§ 4-114-101, et seq.
The purposes of this rule are to create a legal framework within which service contracts are defined, may be sold, and are regulated in this state, to add significant consumer protections, and to eliminate unnecessary administration.
A service contract, as defined in the Service Contracts Act and this rule, is not insurance and is not subject to the Arkansas Insurance Code. The Service Contracts Act and this rule do not apply to the agreements and transactions set forth in Ark. Code Ann. § 4-114-102(c).
Service contracts shall not be issued, sold, or offered for sale in this state unless the provider or its designee has complied with the requirements of Ark. Code Ann. § 4-114-104(b). Each provider of service contracts sold in this state shall file a registration with the Insurance Commissioner annually, on or before October 1st of each year, using the form attached to this rule or a substantially similar form. Each provider shall pay to the commissioner a fee in the amount of two hundred dollars ($200) upon initial registration and every year thereafter. The registration shall be updated by written notification to the commissioner if material changes occur in the registration. In addition to the registration, each provider of service contracts sold in this state must also submit a Certificate of Compliance, using the form attached to this rule or a substantially similar form.
In order to assure the faithful performance of a provider's obligations to its contract holders, each provider shall comply with the financial requirements of Ark. Code Ann. § 4-114-104(d).
A service contract issued, sold, or offered for sale in this state shall be written in clear, understandable language that is easy to read and must conspicuously disclose the requirements of Ark. Code Ann. § 4-114-106.
It is a violation of this rule and the Service Contracts Act for a provider to engaged in any act prohibited by Ark. Code Ann. § 4-114-107.
A provider shall keep accurate accounts, books, and records concerning transactions regulated under the Service Contracts Act. Providers must comply with all recordkeeping requirements set forth in Ark. Code Ann. § 4-114-108.
The commissioner may conduct investigations or examinations of providers, administrators, insurers, or other persons to enforce the provisions of the Service Contracts Act and this rule and to protect service contract holders in this state. The commissioner may take any action that is necessary and appropriate to enforce the provisions of the Service Contracts Act and this rule, including but not limited to, the actions authorized by Ark. Code Ann. § 4-114-111.
Upon request by the commissioner, a provider shall submit to the commissioner any requested documents or other evidence of compliance with the Service Contracts Act and this rule.
If any provision of this rule or its application to any person or circumstance is for any reason held to be invalid, the remainder of the rule and the application of the provision to other persons or circumstances shall not be affected.
The effective date of this Rule is October 1, 2007.
054.00.07 Ark. Code R. 007