Illinois § 15

§ 15.

Financial requirements. No service contract shall be issued, sold, or offered for sale in this State unless one of the following conditions are satisfied: (1) (A) The service contract provider is insured under a service contract reimbursement insurance policy issued by an insurer authorized to do business in this State and providing that the insurer will pay to, or on behalf of, the service contract provider all sums that the service contract provider is legally obligated to pay according to the service contract provider's contractual obligations under the service contracts issued or sold by the service contract provider; (B) a true and correct copy of the service contract reimbursement insurance policy has been filed with the Director by the service contract provider; (C) the service contract states that the obligations of the service contract provider to the service contract holder are covered under a service contract reimbursement insurance policy; and (D) the service contract states the name and address of the issuer of the service contract reimbursement insurance policy and states that in the event covered service is not provided by the service contract provider within 60 days of proof of loss by the service contract holder, the service contract holder may file directly with the service contract reimbursement insurance company. (2) (A) The service contract provider maintains a funded reserve account for its obligations under its service contracts issued and outstanding in this State. The reserves shall not be less than 40% of the gross consideration received, less claims paid, for all service contracts sold and then in force; (B) the service contract provider places in trust with the Director a financial security deposit, having a value of not less than 5% of the gross consideration received, less claims paid, for all service contracts sold and then in force, but not less than $25,000, consisting of securities of the type eligible for deposit by authorized insurers in this State and; (C) the service contract provider provides the Director with an audited financial statement annually of the service contract revenues and claims. (3) (A) The service contract provider, or its parent company in accordance with subdivision (3)(B), maintains a net worth or stockholders' equity of $100,000,000; and (B) the service contract provider provides the Director with a copy of the service contract provider's or the service contract provider's parent company's most recent Form 10-K or Form 20-F filed with the Securities and Exchange Commission within the last calendar year or, if the service contract provider does not file with the Securities and Exchange Commission, a copy of the service contract provider's or the service contract provider's parent company's audited financial statements that shows a net worth of the service contract provider or its parent company of at least $100,000,000. If the service contract provider's parent company's Form 10-K, Form 20-F, or audited financial statements are filed to meet the service provider's financial stability requirement, then the parent company shall agree to guarantee the obligations of the provider relating to service contracts issued by the service contract provider in this State. (Source: P.A. 90-711, eff. 8-7-98.)