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

To amend sections 3901.043, 3901.51, and 3905.24, to

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enact section 3905.422, and to repeal sections

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3957.01, 3957.02, 3957.03, 3957.04, 3957.05,

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3957.06, 3957.07, 3957.08, 3957.09, 3957.10,

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3957.11, 3957.12, 3957.13, 3957.14, 3957.15,

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3957.16, 3957.17, 3957.18, 3957.19, and 3957.99 of

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the Revised Code to regulate the sale of home

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service contracts as consumer transactions rather

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than as the sale of insurance.

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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 3905.422 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, or	18
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 the	26
Revised Code:	27

(A) "Clearing corporation" has the same meaning as in section	28
1308.01 of the Revised Code, except that with respect to	29
securities issued by institutions organized or existing under the	30
laws of any foreign country or securities used to meet the deposit	31
requirements pursuant to the laws of a foreign country as a	32
condition of doing business in that country, "clearing	33
corporation" includes a corporation that is organized or existing	34
under the laws of any foreign country and is legally qualified	35
under those laws to effect transactions in securities by	36
computerized book-entry.	37

(B) "Direct participant" means a bank, trust company, or	38
other entity that maintains an account in its name in a clearing	39
corporation and through which an insurance company participates in	40
a clearing corporation.	41

(C) "Federal reserve book-entry system" means the	42
computerized systems sponsored by the United States department of	43
the treasury and agencies and instrumentalities of the United	44
States for holding and transferring securities of the United	45
States government and agencies and instrumentalities in federal	46
reserve banks through banks that are members of the federal	47
reserve system or that otherwise have access to these computerized	48
systems.	49

(D) "Member bank" means a national or state bank or a trust	50
company that is a member of the federal reserve system and through	51
which an insurance company participates in the federal reserve	52
book-entry system.	53

(E) "Provisions of the insurance laws of this state" means	54
provisions of Title XXXIX of the Revised Code related to the	55
deposit of securities for the benefit and security of	56
policyholders, and includes, but is not limited to, sections	57
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 Revised	62
Code.	63

(F) "Securities" has the same meaning as in section 1308.01	64
of the Revised Code.	65

Sec. 3905.24.  (A)(1) All records and other information	66
obtained by the superintendent of insurance or the	67
superintendent's deputies, examiners, assistants, or other	68
employees, or agents relating to an investigation of an applicant	69
for licensure under this chapter, or of an agent, solicitor,	70
broker, or other person licensed or appointed under this chapter	71
or Chapter 3951., 3957., or 3959. of the Revised Code, are	72
confidential and are not public records as defined in section	73
149.43 of the Revised Code until the applicant, licensee, or	74
appointee is provided notice and opportunity for hearing pursuant	75
to Chapter 119. of the Revised Code with respect to such records	76
or information. If no administrative action is initiated with	77
respect to a particular matter about which the superintendent	78
obtained records or other information as part of an investigation,	79
all such records and information relating to that matter shall	80
remain confidential for three years after the file on the matter	81
is closed.	82

(2) Division (A)(1) of this section applies only to	83
investigations that could result in administrative action under	84
Title XVII or XXXIX or Chapter 119. of the Revised Code.	85

(B) The records and other information described in division	86
(A) of this section shall remain confidential for all purposes	87
except when it is appropriate for the superintendent and the	88
superintendent's deputies, examiners, assistants, or other	89
employees, or agents to take official action regarding the affairs	90
of the applicant, licensee, or appointee or in connection with	91
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 subject	95
of this section with the chief deputy rehabilitator, the chief	96
deputy liquidator, other deputy rehabilitators and liquidators,	97
and any other person employed by, or acting on behalf of, the	98
superintendent pursuant to Chapter 3901. or 3903. of the Revised	99
Code, with other local, state, federal, and international	100
regulatory and law enforcement agencies, with local, state, and	101
federal prosecutors, and with the national association of	102
insurance commissioners and its affiliates and subsidiaries,	103
provided that the recipient agrees to maintain the confidential	104
status of the confidential record or other information and has	105
authority to do so;	106

(2) Disclose records and other information that are the	107
subject of this section in the furtherance of any regulatory or	108
legal action brought by or on behalf of the superintendent or the	109
state, resulting from the exercise of the superintendent's	110
official duties.	111

(D) Notwithstanding divisions (A), (B), and (C) of this	112
section, the superintendent may authorize the national association	113
of insurance commissioners and its affiliates and subsidiaries by	114
agreement to share confidential records and other information	115
received pursuant to division (C)(1) of this section with local,	116
state, federal, and international regulatory and law enforcement	117
agencies and with local, state, and federal prosecutors, provided	118
that the recipient agrees to maintain the confidential status of	119
the confidential record or other information and has authority to	120
do so.	121

(E) Notwithstanding divisions (A), (B), and (C) of this	122
section, the chief deputy rehabilitator, the chief deputy	123
liquidator, and other deputy rehabilitators and liquidators may	124
disclose records and other information that are the subject of	125
this section in the furtherance of any regulatory or legal action	126
brought by or on behalf of the superintendent, the rehabilitator,	127
the liquidator, or the state resulting from the exercise of the	128
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 of	133
confidentiality in the records and other information that are the	134
subject of this section shall occur as a result of sharing or	135
receiving records or other information as authorized in divisions	136
(C)(1), (D), and (F) of this section.	137

(2) The disclosure of records or other information in	138
connection with a regulatory or legal action pursuant to divisions	139
(C)(2) and (E) of this section does not prohibit an insurer or any	140
other person from taking steps to limit the dissemination of the	141
record or other information to persons not involved in or the	142
subject of the regulatory or legal action on the basis of any	143
recognized privilege arising under any other section of the	144
Revised Code or the common law.	145

(H) Employees or agents of the department of insurance shall	146
not be required by any court in this state to testify in a civil	147
action, if the testimony concerns any matter related to records or	148
other information considered confidential under this section of	149
which they have knowledge.	150

Sec. 3905.422. (A) As used in this section:

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(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.	158

(2) "Appliance" includes a stove, refrigerator, dishwasher,	159
and any similar piece of equipment.	160

(3) "Structural component" includes the roof, foundation,	161
basement, walls, ceiling, and similar components of a home.	162

(4) "System" includes the heating, cooling, plumbing,	163
electrical system, and similar systems of a home.	164

(B) A home service contract is not insurance and its sale or	165
issuance is not governed by the laws of this state relating to	166
insurance, except a home service contract issued by a licensed	167
property and casualty insurance company as an insurance policy	168
shall be governed by the laws of this state relating to insurance.	169

(C) The sale or other issuance of a home service contract	170
constitutes a consumer transaction for purposes of Chapter 1345.	171
of the Revised Code. A person who purchases or is entitled to the	172
benefits of a home service contract is a consumer as defined in	173
division (D) of section 1345.01 of the Revised Code.	174

Section 2. That existing sections 3901.043, 3901.51, and	175
3905.24 and sections        Sec. 3957.01. ,        Sec. 3957.02. ,        Sec. 3957.03. ,        Sec. 3957.04. ,        Sec. 3957.05. ,	176
Sec. 3957.06. ,        Sec. 3957.07. ,        Sec. 3957.08. ,        Sec. 3957.09. ,        Sec. 3957.10. ,        Sec. 3957.11. ,        Sec. 3957.12. ,	177
Sec. 3957.13. ,        Sec. 3957.14. ,        Sec. 3957.15. ,        Sec. 3957.16. ,        Sec. 3957.17. ,        Sec. 3957.18. ,        Sec. 3957.19. , and	178
Sec. 3957.99.  of the Revised Code are hereby repealed.	179

Section 3. No home warranty company established and operating	180
in this state on the effective date of this act pursuant to a	181
certificate of authority issued by the Superintendent of Insurance	182
under Chapter 3957. of the Revised Code shall sell, offer to sell,	183
or solicit offers for, home service contracts on or after the	184
effective date of this act as contracts regulated by Chapter 3957.	185
of the Revised Code.	186

All home service contracts issued pursuant to Chapter 3957.	187
of the Revised Code and outstanding on the effective date of this	188
act shall be consummated. The interpretation and fulfillment of	189
the terms and conditions of these outstanding contracts, and of	190
any home service contract sold or issued by a home warranty	191
company on or after the effective date of this act, is subject to	192
Chapter 1345. of the Revised Code on and after the act's effective	193
date, rather than to Ohio's Insurance Law.	194

A home warranty company with outstanding home service	195
contracts in this state on the effective date of this act shall	196
maintain a single reserve sufficient to provide for its liability	197
to furnish repair and replacement services under those contracts.	198
The amount of this reserve shall be calculated according to sound	199
actuarial principles.	200

The repeal of Chapter 3957. of the Revised Code pursuant to	201
this act does not: (1) invalidate any home service contract issued	202
by a home warranty company prior to the effective date of this	203
act; (2) discharge any liability based on the acts or conduct of a	204
home warranty company or its agents or employees prior to the	205
effective date of this act; (3) discharge or otherwise affect any	206
other liability incurred by a home warranty company prior to the	207
effective date of this act; or (4) affect a home warranty	208
company's conduct of business in accordance with other provisions	209
of state and federal law.	210

The repeal of Chapter 3957. of the Revised Code pursuant to	211
this act does not affect the authority of licensed property and	212
casualty insurers to issue home service contracts in accordance	213
with the Ohio Insurance Law.	214

Section 4.  Section 3901.043 of the Revised Code is presented	215
in this act as a composite of the section as amended by both Sub.	216
H.B. 370 and Am. Sub. S.B. 67 of the 122nd General Assembly. The	217
General Assembly, applying the principle stated in division (B) of	218
section 1.52 of the Revised Code that amendments are to be	219
harmonized if reasonably capable of simultaneous operation, finds	220
that the composite is the resulting version of the section in	221
effect prior to the effective date of the section as presented in	222
this act.	223

Section 5.  Section 3905.492 (3905.24) of the Revised Code is	224
presented in this act as a composite of the section as amended and	225
renumbered by Sub. S.B. 129 and amended by Am. Sub. S.B. 138, both	226
of the 124th General Assembly. The General Assembly, applying the	227
principle stated in division (B) of section 1.52 of the Revised	228
Code that amendments are to be harmonized if reasonably capable of	229
simultaneous operation, finds that the composite is the resulting	230
version of the section in effect prior to the effective date of	231
the section as presented in this act.	232