As Introduced

125th General Assembly
Regular Session
2003-2004
H. B. No. 243


REPRESENTATIVES Raussen, Buehrer, Hollister, Reidelbach, S. Patton, Barrett, McGregor, Kearns, Willamowski, Gibbs, Fessler



A BILL
To amend sections 3901.043, 3901.51, and 3905.24, to 1
enact section 3905.421, and to repeal sections 2
3957.01, 3957.02, 3957.03, 3957.04, 3957.05, 3
3957.06, 3957.07, 3957.08, 3957.09, 3957.10, 4
3957.11, 3957.12, 3957.13, 3957.14, 3957.15, 5
3957.16, 3957.17, 3957.18, 3957.19, and 3957.99 of 6
the Revised Code to regulate the sale of home 7
service contracts as consumer transactions rather 8
than as the sale of insurance.9


BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

       Section 1. That sections 3901.043, 3901.51, and 3905.24 be 10
amended and section 3905.421 of the Revised Code be enacted to 11
read as follows:12

       Sec. 3901.043.  The superintendent of insurance may adopt 13
rules in accordance with Chapter 119. of the Revised Code to 14
establish reasonable fees for any service or transaction performed 15
by the department of insurance pursuant to section 1751.03, 16
3901.321, 3901.341, 3907.09, 3907.10, 3907.11, 3907.12, 3911.011, 17
3913.40, 3915.14, 3917.06, 3918.07, 3923.02, 3935.04, 3937.03, or18
3953.28, 3957.12, or 3957.13 of the Revised Code or any provision 19
in sections 3913.01 to 3913.23 or in Chapter 3905. of the Revised 20
Code, if no fee is otherwise provided under Title XVII or XXXIX of 21
the Revised Code for such service or transaction. Any fee 22
collected pursuant to those rules shall be paid into the state 23
treasury to the credit of the department of insurance operating 24
fund.25

       Sec. 3901.51.  As used in sections 3901.51 to 3901.55 of the26
Revised Code:27

       (A) "Clearing corporation" has the same meaning as in section 28
1308.01 of the Revised Code, except that with respect to29
securities issued by institutions organized or existing under the30
laws of any foreign country or securities used to meet the deposit31
requirements pursuant to the laws of a foreign country as a32
condition of doing business in that country, "clearing33
corporation" includes a corporation that is organized or existing34
under the laws of any foreign country and is legally qualified35
under those laws to effect transactions in securities by36
computerized book-entry.37

       (B) "Direct participant" means a bank, trust company, or38
other entity that maintains an account in its name in a clearing39
corporation and through which an insurance company participates in40
a clearing corporation.41

       (C) "Federal reserve book-entry system" means the42
computerized systems sponsored by the United States department of43
the treasury and agencies and instrumentalities of the United44
States for holding and transferring securities of the United45
States government and agencies and instrumentalities in federal46
reserve banks through banks that are members of the federal47
reserve system or that otherwise have access to these computerized48
systems.49

       (D) "Member bank" means a national or state bank or a trust50
company that is a member of the federal reserve system and through51
which an insurance company participates in the federal reserve52
book-entry system.53

       (E) "Provisions of the insurance laws of this state" means54
provisions of Title XXXIX of the Revised Code related to the55
deposit of securities for the benefit and security of56
policyholders, and includes, but is not limited to, sections57
3901.18, 3901.74, 3901.75, 3901.86, 3903.73, 3907.07, 3909.03,58
3909.09, 3909.17, 3913.01, 3913.04, 3919.13, 3919.36, 3919.37,59
3919.41, 3925.07, 3927.02, 3927.06, 3929.01, 3929.07, 3929.08,60
3929.09, 3929.10, 3929.11, 3941.30, 3941.31, 3941.32, 3941.33,61
3941.34, 3941.42, 3953.06, and 3953.11, and 3957.03 of the Revised62
Code.63

       (F) "Securities" has the same meaning as in section 1308.0164
of the Revised Code.65

       Sec. 3905.24.  (A)(1) All records and other information66
obtained by the superintendent of insurance or the67
superintendent's deputies, examiners, assistants, or other68
employees, or agents relating to an investigation of an applicant69
for licensure under this chapter, or of an agent, solicitor,70
broker, or other person licensed or appointed under this chapter71
or Chapter 3951., 3957., or 3959. of the Revised Code, are72
confidential and are not public records as defined in section73
149.43 of the Revised Code until the applicant, licensee, or74
appointee is provided notice and opportunity for hearing pursuant75
to Chapter 119. of the Revised Code with respect to such records76
or information. If no administrative action is initiated with77
respect to a particular matter about which the superintendent78
obtained records or other information as part of an investigation,79
all such records and information relating to that matter shall80
remain confidential for three years after the file on the matter81
is closed.82

       (2) Division (A)(1) of this section applies only to83
investigations that could result in administrative action under84
Title XVII or XXXIX or Chapter 119. of the Revised Code.85

       (B) The records and other information described in division86
(A) of this section shall remain confidential for all purposes87
except when it is appropriate for the superintendent and the88
superintendent's deputies, examiners, assistants, or other89
employees, or agents to take official action regarding the affairs90
of the applicant, licensee, or appointee or in connection with91
actual or potential criminal proceedings.92

       (C) Notwithstanding divisions (A) and (B) of this section,93
the superintendent may do either of the following:94

       (1) Share records and other information that are the subject95
of this section with the chief deputy rehabilitator, the chief96
deputy liquidator, other deputy rehabilitators and liquidators,97
and any other person employed by, or acting on behalf of, the98
superintendent pursuant to Chapter 3901. or 3903. of the Revised99
Code, with other local, state, federal, and international100
regulatory and law enforcement agencies, with local, state, and101
federal prosecutors, and with the national association of102
insurance commissioners and its affiliates and subsidiaries,103
provided that the recipient agrees to maintain the confidential104
status of the confidential record or other information and has105
authority to do so;106

       (2) Disclose records and other information that are the107
subject of this section in the furtherance of any regulatory or108
legal action brought by or on behalf of the superintendent or the109
state, resulting from the exercise of the superintendent's110
official duties.111

       (D) Notwithstanding divisions (A), (B), and (C) of this112
section, the superintendent may authorize the national association113
of insurance commissioners and its affiliates and subsidiaries by114
agreement to share confidential records and other information115
received pursuant to division (C)(1) of this section with local,116
state, federal, and international regulatory and law enforcement117
agencies and with local, state, and federal prosecutors, provided118
that the recipient agrees to maintain the confidential status of119
the confidential record or other information and has authority to120
do so.121

       (E) Notwithstanding divisions (A), (B), and (C) of this122
section, the chief deputy rehabilitator, the chief deputy123
liquidator, and other deputy rehabilitators and liquidators may124
disclose records and other information that are the subject of125
this section in the furtherance of any regulatory or legal action126
brought by or on behalf of the superintendent, the rehabilitator,127
the liquidator, or the state resulting from the exercise of the128
superintendent's official duties in any capacity.129

       (F) Nothing in this section shall prohibit the superintendent 130
from receiving records and other information in accordance with 131
section 3901.045 of the Revised Code.132

       (G)(1) No waiver of any applicable privilege or claim of133
confidentiality in the records and other information that are the134
subject of this section shall occur as a result of sharing or135
receiving records or other information as authorized in divisions136
(C)(1), (D), and (F) of this section.137

       (2) The disclosure of records or other information in138
connection with a regulatory or legal action pursuant to divisions139
(C)(2) and (E) of this section does not prohibit an insurer or any140
other person from taking steps to limit the dissemination of the141
record or other information to persons not involved in or the142
subject of the regulatory or legal action on the basis of any143
recognized privilege arising under any other section of the144
Revised Code or the common law.145

       (H) Employees or agents of the department of insurance shall146
not be required by any court in this state to testify in a civil147
action, if the testimony concerns any matter related to records or148
other information considered confidential under this section of149
which they have knowledge.150

       Sec. 3905.421. (A) As used in this section:151

       (1) "Home service contract" means a contract, however 152
described or denominated by the issuer of the contract, whereby, 153
for a predetermined fee, a person undertakes to repair or replace 154
all or any part of any structural component, appliance, or system 155
of a home necessitated by wear and tear, deterioration, or 156
inherent defect that occurs on or after the effective date of the 157
home service contract. "Home service contract" does not include 158
either of the following:159

       (a) A performance guarantee given by either the builder of a 160
home or the manufacturer or seller of a structural component, 161
appliance, or system of a home;162

       (b) A service contract, guarantee, or warranty relating to 163
the repair or service of a structural component, appliance, or 164
system of a home, issued by a person that has serviced or repaired 165
the structural component, appliance, or system.166

       (2) "Appliance" includes a stove, refrigerator, dishwasher, 167
and any similar piece of equipment.168

       (3) "Structural component" includes the roof, foundation, 169
basement, walls, ceiling, and similar components of a home.170

       (4) "System" includes the heating, cooling, plumbing, 171
electrical system, and similar systems of a home.172

       (B) A home service contract is not insurance and its sale or 173
issuance is not governed by the laws of this state relating to 174
insurance.175

       (C) The sale or other issuance of a home service contract 176
constitutes a consumer transaction for purposes of Chapter 1345. 177
of the Revised Code. A person who purchases a home service 178
contract is a consumer as defined in division (D) of section 179
1345.01 of the Revised Code.180

       Section 2. That existing sections 3901.043, 3901.51, and 181
3905.24 and sections        Sec. 3957.01. ,        Sec. 3957.02. ,        Sec. 3957.03. ,        Sec. 3957.04. ,        Sec. 3957.05. , 182
       Sec. 3957.06. ,        Sec. 3957.07. ,        Sec. 3957.08. ,        Sec. 3957.09. ,        Sec. 3957.10. ,        Sec. 3957.11. ,        Sec. 3957.12. , 183
       Sec. 3957.13. ,        Sec. 3957.14. ,        Sec. 3957.15. ,        Sec. 3957.16. ,        Sec. 3957.17. ,        Sec. 3957.18. ,        Sec. 3957.19. , and 184
       Sec. 3957.99.  of the Revised Code are hereby repealed.185

       Section 3. No home warranty company established and operating 186
in this state on the effective date of this act pursuant to a 187
certificate of authority issued by the Superintendent of Insurance 188
under Chapter 3957. of the Revised Code shall sell, offer to sell, 189
or solicit offers for, home service contracts on or after the 190
effective date of this act as contracts regulated by Chapter 3957. 191
of the Revised Code.192

       All home service contracts issued pursuant to Chapter 3957. 193
of the Revised Code and outstanding on the effective date of this 194
act shall be consummated. The interpretation and fulfillment of 195
the terms and conditions of these outstanding contracts, and of 196
any home service contract sold or issued by a home warranty 197
company on or after the effective date of this act, is subject to 198
Chapter 1345. of the Revised Code on and after the act's effective 199
date, rather than to Ohio's Insurance Law.200

       A home warranty company with outstanding home service 201
contracts in this state on the effective date of this act shall 202
maintain a single reserve sufficient to provide for its liability 203
to furnish repair and replacement services under those contracts. 204
The amount of this reserve shall be calculated according to sound 205
actuarial principles.206

        The repeal of Chapter 3957. of the Revised Code pursuant to 207
this act does not: (1) invalidate any home service contract issued 208
by a home warranty company prior to the effective date of this 209
act; (2) discharge any liability based on the acts or conduct of a 210
home warranty company or its agents or employees prior to the 211
effective date of this act; (3) discharge or otherwise affect any 212
other liability incurred by a home warranty company prior to the 213
effective date of this act; or (4) affect a home warranty 214
company's conduct of business in accordance with other provisions 215
of state and federal law.216

       The repeal of Chapter 3957. of the Revised Code pursuant to 217
this act does not affect the authority of licensed property and 218
casualty insurers to issue home service contracts in accordance 219
with the Ohio Insurance Law.220

       Section 4.  Section 3901.043 of the Revised Code is presented 221
in this act as a composite of the section as amended by both Sub. 222
H.B. 370 and Am. Sub. S.B. 67 of the 122nd General Assembly. The 223
General Assembly, applying the principle stated in division (B) of 224
section 1.52 of the Revised Code that amendments are to be 225
harmonized if reasonably capable of simultaneous operation, finds 226
that the composite is the resulting version of the section in 227
effect prior to the effective date of the section as presented in 228
this act.229

       Section 5.  Section 3905.492 (3905.24) of the Revised Code is 230
presented in this act as a composite of the section as amended and 231
renumbered by Sub. S.B. 129 and amended by Am. Sub. S.B. 138, both 232
of the 124th General Assembly. The General Assembly, applying the233
principle stated in division (B) of section 1.52 of the Revised234
Code that amendments are to be harmonized if reasonably capable of235
simultaneous operation, finds that the composite is the resulting236
version of the section in effect prior to the effective date of237
the section as presented in this act.238