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| To amend section 3905.03 and to enact section 3905.96 | 1 |
| of the Revised Code to establish requirements and | 2 |
| procedures for issuing portable electronics | 3 |
| insurance. | 4 |
| Section 1. That section 3905.03 be amended and section | 5 |
| 3905.96 of the Revised Code be enacted to read as follows: | 6 |
| Sec. 3905.03. (A) Section 3905.02 of the Revised Code does | 7 |
| not apply to any of the following: | 8 |
| (1) Any insurer. For purposes of this division, "insurer" | 9 |
| does not include an insurer's officers, directors, employees, | 10 |
| subsidiaries, or affiliates. | 11 |
| (2) Any officer, director, or employee of an insurer or of an | 12 |
| insurance agent, provided the officer, director, or employee does | 13 |
| not receive any commission on policies written or sold to insure | 14 |
| risks residing, located, or to be performed in this state and any | 15 |
| of the following applies: | 16 |
| (a) The activities of the officer, director, or employee are | 17 |
| executive, administrative, managerial, clerical, or any | 18 |
| combination thereof, and are only indirectly related to the sale, | 19 |
| solicitation, or negotiation of insurance. | 20 |
| (b) The function of the officer, director, or employee | 21 |
| relates to underwriting, loss control, inspection, or the | 22 |
| processing, adjusting, investigation, or settling of a claim on a | 23 |
| contract of insurance. | 24 |
| (c) The officer, director, or employee is acting in the | 25 |
| capacity of a special agent or agency supervisor, provided the | 26 |
| activities of the officer, director, or employee are limited to | 27 |
| providing technical advice and assistance to licensed insurance | 28 |
| agents and do not include the sale, solicitation, or negotiation | 29 |
| of insurance. | 30 |
| (3) Any person who secures and furnishes information for | 31 |
| purposes of group life insurance, group property and casualty | 32 |
| insurance, group annuities, or group or blanket accident and | 33 |
| health insurance, or for purposes of enrolling individuals under | 34 |
| plans, issuing certificates under plans, or otherwise assisting in | 35 |
| administering plans, or who performs administrative services | 36 |
| related to mass marketed property and casualty insurance, provided | 37 |
| that no commission is paid to the person for any of the services | 38 |
| described in this division; | 39 |
| (4) Any employer or association, any officer, director, or | 40 |
| employee of an employer or association, or any trustee of an | 41 |
| employee trust plan, to the extent that any such person is engaged | 42 |
| in the administration or operation of an employee benefits program | 43 |
| for the employer's or association's own employees or for the | 44 |
| employees of its subsidiaries or affiliates, if both of the | 45 |
| following apply: | 46 |
| (a) The employee benefits program involves the use of | 47 |
| insurance contracts issued by an insurer. | 48 |
| (b) The employer, association, officer, director, employee, | 49 |
| or trustee is not in any manner compensated, either directly or | 50 |
| indirectly, by the insurer issuing the insurance contracts. | 51 |
| (5) Any employee of an insurer or of an organization employed | 52 |
| by an insurer, if the employee is engaged in the inspection, | 53 |
| rating, or classification of risks or in the supervision of the | 54 |
| training of insurance agents, and is not individually engaged in | 55 |
| the sale, solicitation, or negotiation of insurance; | 56 |
| (6) Any person whose activities in this state are limited to | 57 |
| advertising through communications in printed publications or in | 58 |
| the electronic mass media, the distribution of which is not | 59 |
| limited to residents of this state, if the person does not sell, | 60 |
| solicit, or negotiate insurance covering risks residing, located, | 61 |
| or to be performed in this state; | 62 |
| (7) Any person who is not a resident of this state and who | 63 |
| sells, solicits, or negotiates a contract of insurance covering | 64 |
| commercial property and casualty risks located in more than one | 65 |
| state, if the person is licensed as an insurance agent to sell, | 66 |
| solicit, or negotiate that insurance contract in the state where | 67 |
| the insured maintains its principal place of business and the | 68 |
| contract insures risks located in that state; | 69 |
| (8) Any salaried full-time employee who counsels or advises | 70 |
| the employee's employer with respect to the insurance interests of | 71 |
| the employer or of the employer's subsidiaries or business | 72 |
| affiliates, if the employee does not sell or solicit insurance or | 73 |
| receive a commission; | 74 |
| (9) Any employee of an insurer or of an insurance agent who, | 75 |
| at the direction of the insurer or agent, performs any of the | 76 |
| following activities: | 77 |
| (a) The acceptance of premiums other than the initial | 78 |
| premium; | 79 |
| (b) The gathering of information, such as names, addresses, | 80 |
| expiration dates of current insurance, and names of current | 81 |
| insurers; | 82 |
| (c) The setting of appointments for insurance agents, | 83 |
| provided that the individual setting the appointment does not | 84 |
| communicate any information about insurance; | 85 |
| (d) The servicing of existing insurance policies issued by or | 86 |
| through the employee's employer, provided the servicing is not | 87 |
| part of a solicitation; | 88 |
| (e) The performance of clerical or ministerial duties. | 89 |
| (10) Any employee of a creditor with respect to limited line | 90 |
| credit insurance products, as long as the employee of the creditor | 91 |
| is not paid by, and does not receive a fee, commission, or any | 92 |
| other form of compensation from, an insurance agent or insurance | 93 |
| company. | 94 |
| (11) Any vendor or endorsee of a vendor who sells or offers | 95 |
| to sell portable electronics insurance under a limited lines | 96 |
| license pursuant to section 3905.96 of the Revised Code, as long | 97 |
| as the vendor or endorsee of the vendor only acts within the | 98 |
| limitations provided for in that section. | 99 |
| (B) The superintendent of insurance may adopt rules in | 100 |
| accordance with Chapter 119. of the Revised Code to set forth the | 101 |
| specific acts the performance of which either require or do not | 102 |
| require licensure as an insurance agent. | 103 |
| Sec. 3905.96. (A) As used in this section: | 104 |
| (1) "Customer" means a person who purchases portable | 105 |
| electronics or services. | 106 |
| (2) "Enrolled customer" means a customer who elects coverage | 107 |
| under a portable electronics insurance policy issued to a vendor | 108 |
| of portable electronics by an insurer. | 109 |
| (3) "Endorsee" means an employee or authorized representative | 110 |
| of a vendor authorized to sell or offer portable electronics | 111 |
| insurance. | 112 |
| (4) "Location" means any physical location in this state or | 113 |
| any web site, call center site, or similar location directed to | 114 |
| residents of this state. | 115 |
| (5) "Portable electronics" means an electronic device that is | 116 |
| portable in nature, an accessory of such a device, and any service | 117 |
| related to the use of the device. | 118 |
| (6) "Portable electronics insurance" means insurance | 119 |
| providing coverage for the repair or replacement of portable | 120 |
| electronics, which may be offered on a month-to-month or other | 121 |
| periodic basis as a group or master commercial inland marine | 122 |
| policy issued to a vendor by an insurer, and may cover portable | 123 |
| electronics against loss, theft, inoperability due to mechanical | 124 |
| failure, malfunction, damage, or other applicable perils. | 125 |
| "Portable electronics insurance" does not mean any of the | 126 |
| following: | 127 |
| (a) A consumer goods service contract governed by section | 128 |
| 3905.423 of the Revised Code; | 129 |
| (b) A policy of insurance covering a seller's or a | 130 |
| manufacturer's obligations under a warranty; | 131 |
| (c) A homeowner's, renter's, private passenger automobile, | 132 |
| commercial multi-peril, or similar insurance policy. | 133 |
| (7) "Portable electronics transaction" means the sale or | 134 |
| lease of portable electronics by a vendor to a customer or the | 135 |
| sale of a service related to the use of portable electronics by a | 136 |
| vendor to a customer. | 137 |
| (8) "Supervising entity" means an insurer or a business | 138 |
| entity licensed as an insurance agent under section 3905.06 of the | 139 |
| Revised Code that is appointed by an insurer to supervise the | 140 |
| administration of a portable electronics insurance program. | 141 |
| (9) "Vendor" means a person in the business of engaging in | 142 |
| portable electronics transactions directly or indirectly. | 143 |
| (B)(1) A vendor is required to hold a limited lines license | 144 |
| to offer, sell, or solicit coverage under a policy of portable | 145 |
| electronics insurance. | 146 |
| (2) The superintendent shall designate portable electronics | 147 |
| insurance as a limited line of insurance pursuant to division (I) | 148 |
| of section 3905.01 of the Revised Code. The superintendent of | 149 |
| insurance shall issue a limited lines insurance agent license to a | 150 |
| vendor applicant upon submission of a completed application and | 151 |
| payment of any applicable fee required under this chapter. The | 152 |
| application shall be made on forms prescribed and furnished by the | 153 |
| superintendent and shall contain all of the following: | 154 |
| (a) The name, residence address, and other information | 155 |
| required by the superintendent for an employee or officer of the | 156 |
| vendor who is responsible for the vendor's compliance with the | 157 |
| requirements of this section. If the vendor derives more than | 158 |
| fifty per cent of its revenue from the sale of portable | 159 |
| electronics insurance, the vendor shall provide the name, | 160 |
| residence address, and other information required by the | 161 |
| superintendent for all officers, directors, and shareholders of | 162 |
| record who have beneficial ownership of ten per cent or more of | 163 |
| any class of securities registered under the federal securities | 164 |
| laws; | 165 |
| (b) The location of the applicant's home office; | 166 |
| (c) A list of all locations in this state at which the vendor | 167 |
| offers coverage. | 168 |
| (3) Any vendor offering or selling portable electronics | 169 |
| insurance on or before the effective date of this section shall | 170 |
| apply for licensure within ninety days of the application being | 171 |
| made available by the superintendent of insurance. Any vendor not | 172 |
| offering or selling portable electronics insurance on or before | 173 |
| the effective date of this section must apply for and obtain a | 174 |
| license prior to offering or selling portable electronics | 175 |
| insurance. | 176 |
| (4) Licenses issued pursuant to this section shall be valid | 177 |
| for a period of twenty-four months. | 178 |
| (5) Each vendor licensed under this section that is engaged | 179 |
| in portable electronics transactions in this state shall pay to | 180 |
| the superintendent a filing fee prescribed by the superintendent. | 181 |
| For vendors engaged in portable electronic transactions at more | 182 |
| than ten locations in this state, the fee shall not exceed one | 183 |
| thousand dollars for an initial license, and five hundred dollars | 184 |
| for each renewal thereafter. For vendors engaged in portable | 185 |
| electronics transactions at ten or fewer locations in this state, | 186 |
| the fee shall not exceed one hundred dollars for an initial | 187 |
| license and for each renewal thereafter. | 188 |
| (C)(1) A vendor may authorize any endorsee of the vendor to | 189 |
| sell or offer portable electronics insurance to a customer at any | 190 |
| location at which the vendor engages in portable electronics | 191 |
| transactions. | 192 |
| (2) An endorsee is not required to be licensed as an | 193 |
| insurance agent under this chapter if the vendor is licensed under | 194 |
| this section and the insurer issuing the portable electronics | 195 |
| insurance either directly supervises or appoints a supervising | 196 |
| entity to supervise the administration of the portable electronics | 197 |
| insurance program including development of a training program for | 198 |
| endorsees in accordance with division (D) of this section. | 199 |
| (3) No endorsee shall advertise, represent, or otherwise | 200 |
| represent the endorsee's self as an insurance agent licensed under | 201 |
| section 3905.06 of the Revised Code. | 202 |
| (D) Each vendor, or the supervising entity to that vendor, | 203 |
| shall provide a training and education program for all endorsees | 204 |
| who sell or offer portable electronics insurance. The program may | 205 |
| be provided as a web-based training module or in any other | 206 |
| electronic or recorded video form. The training and education | 207 |
| program shall meet all of the following minimum standards: | 208 |
| (1) The training shall be delivered to each endorsee of each | 209 |
| vendor who sells or offers portable electronics insurance and the | 210 |
| endorsee shall complete the training; | 211 |
| (2) If the training is conducted in an electronic form, the | 212 |
| supervising entity shall implement a supplemental education | 213 |
| program regarding portable electronics insurance that is conducted | 214 |
| and overseen by employees of the supervising entity who are | 215 |
| licensed as insurance agents under section 3905.06 of the Revised | 216 |
| Code; | 217 |
| (3) The training and education program must include basic | 218 |
| information about portable electronics insurance. | 219 |
| (E) At every location where a vendor offers portable | 220 |
| electronics insurance to customers, the vendor shall provide | 221 |
| brochures or other written materials to prospective customers that | 222 |
| include all of the following: | 223 |
| (1) A summary of the material terms of the insurance | 224 |
| coverage, including all of the following: | 225 |
| (a) The identity of the insurer; | 226 |
| (b) The identity of the supervising entity; | 227 |
| (c) The amount of any applicable deductible and how it is to | 228 |
| be paid; | 229 |
| (d) Benefits of the coverage; | 230 |
| (e) Key terms and conditions of coverage such as whether | 231 |
| portable electronics may be replaced with a similar make and | 232 |
| model, replaced with a reconditioned device, or repaired with | 233 |
| nonoriginal manufacturer parts or equipment. | 234 |
| (2) A summary of the process for filing a claim, including a | 235 |
| description of how to return portable electronics equipment and | 236 |
| the maximum fee applicable if a customer fails to comply with any | 237 |
| equipment return requirements; | 238 |
| (3) A disclosure that portable electronics insurance may | 239 |
| provide a duplication of coverage already provided by a customer's | 240 |
| homeowner's insurance policy, renter's insurance policy, or other | 241 |
| source of coverage; | 242 |
| (4) A disclosure that the enrollment by the customer in a | 243 |
| portable electronics insurance program is not required to purchase | 244 |
| or lease portable electronics or services; | 245 |
| (5) A disclosure that neither the endorsee nor the vendor is | 246 |
| qualified to evaluate the adequacy of the customer's existing | 247 |
| insurance coverage; | 248 |
| (6) A disclosure that the customer may cancel enrollment for | 249 |
| coverage under a portable electronics insurance policy at any time | 250 |
| and receive a refund of any applicable premium. | 251 |
| (F)(1) The charges for portable electronics insurance may be | 252 |
| billed and collected by the vendor of portable electronics, and | 253 |
| the vendor may receive compensation for performing billing and | 254 |
| collection services, if either of the following conditions are | 255 |
| met: | 256 |
| (a) If the charge to the customer for coverage is not | 257 |
| included in the cost associated with the purchase or lease of | 258 |
| portable electronics or related services, the charge for coverage | 259 |
| is separately itemized on the customer's bill. | 260 |
| (b) If the charge to the customer for coverage is included in | 261 |
| the cost associated with the purchase or lease of portable | 262 |
| electronics or related services, the vendor clearly and | 263 |
| conspicuously discloses to the customer that the charge for | 264 |
| portable electronics insurance coverage is included with the | 265 |
| charge for portable electronics or related services. | 266 |
| (2) All funds received by a vendor from a customer for the | 267 |
| sale of portable electronics insurance shall be considered funds | 268 |
| held in trust by the vendor in a fiduciary capacity for the | 269 |
| benefit of the insurer. Vendors that bill and collect such charges | 270 |
| are not required to maintain those funds in a segregated account | 271 |
| if the vendor is authorized by the insurer to hold those funds in | 272 |
| an alternate manner and the vendor remits the amount of the | 273 |
| charges to the supervising entity within sixty days after | 274 |
| receiving the charges. | 275 |
| (G) If the superintendent has reason to believe that a vendor | 276 |
| or its endorsee has violated this section, the superintendent | 277 |
| shall schedule a hearing on the potential violation and provide | 278 |
| notification of the nature of the potential violation and the | 279 |
| date, time, and place of the hearing to the vendor or endorsee. If | 280 |
| after the hearing the superintendent determines that a vendor or | 281 |
| its endorsee has violated this section, the superintendent may do | 282 |
| either of the following: | 283 |
| (1) Impose a fine not to exceed five hundred dollars per | 284 |
| violation or five thousand dollars in the aggregate for multiple | 285 |
| violations. | 286 |
| (2) Impose any other penalty that the superintendent | 287 |
| considers necessary and reasonable, including either of the | 288 |
| following: | 289 |
| (a) Suspending the vendor's privilege of selling or offering | 290 |
| portable electronics insurance pursuant to this section at | 291 |
| specific location or locations where the violation or violations | 292 |
| occurred; | 293 |
| (b) Suspending or revoking the ability of an endorsee to act | 294 |
| under the license of the vendor. | 295 |
| (H)(1) Except as otherwise provided in divisions (H)(2) and | 296 |
| (3) of this section, an insurer may terminate or otherwise change | 297 |
| the terms and conditions of a policy of portable electronics | 298 |
| insurance only upon providing the vendor policyholder and enrolled | 299 |
| customers with at least sixty days' prior notice. If the insurer | 300 |
| changes the terms and conditions, the insurer shall promptly | 301 |
| provide the vendor policyholder with a revised policy or | 302 |
| endorsement and each enrolled customer with a revised certificate, | 303 |
| endorsement, updated brochure, or other evidence indicating that a | 304 |
| change in the terms and conditions has occurred and a summary of | 305 |
| material changes. | 306 |
| (2) An insurer may terminate an enrolled customer's | 307 |
| enrollment under a portable electronics insurance policy upon | 308 |
| fifteen days' prior notice for discovery of fraud or material | 309 |
| misrepresentation in obtaining coverage or in the presentation of | 310 |
| a claim under the policy. | 311 |
| (3) An insurer may immediately terminate an enrolled | 312 |
| customer's enrollment under a portable electronics insurance | 313 |
| policy for any of the following reasons: | 314 |
| (a) The enrolled customer fails to pay the required premium; | 315 |
| (b) The enrolled customer ceases to have an active service | 316 |
| plan, if applicable, with the vendor of portable electronics; | 317 |
| (c) The enrolled customer exhausts the aggregate limit of | 318 |
| liability, if any, under the terms of the portable electronics | 319 |
| insurance policy and the insurer sends notice of termination to | 320 |
| the customer within thirty calendar days after exhaustion of the | 321 |
| limit. However, if the insurer does not send the notice within the | 322 |
| thirty-day time frame, enrollment shall continue notwithstanding | 323 |
| the aggregate limit of liability until the insurer sends notice of | 324 |
| termination to the enrolled customer. | 325 |
| (4) If a portable electronics insurance policy is terminated | 326 |
| by a vendor policyholder, the vendor policyholder shall provide | 327 |
| notice to each enrolled customer advising the customer of the | 328 |
| termination of the policy and the effective date of the | 329 |
| termination. The written notice shall be mailed or delivered to | 330 |
| the customer at least thirty days prior to the termination. | 331 |
| (5) Notice required pursuant to this section shall be | 332 |
| provided in writing, either via mail or by electronic means. | 333 |
| (a) If notice is provided via mail, it shall be mailed or | 334 |
| delivered to the vendor at the vendor's mailing address and to all | 335 |
| affected enrolled customers at the last known mailing addresses of | 336 |
| those customers on file with the insurer. The insurer or vendor of | 337 |
| portable electronics shall maintain proof of mailing in a form | 338 |
| authorized or accepted by the United States postal service or | 339 |
| other commercial mail delivery service. | 340 |
| (b) If notice is provided electronically, it shall be | 341 |
| transmitted via facsimile or electronic mail to the vendor at the | 342 |
| vendor's facsimile number or electronic mail address and to all | 343 |
| affected enrolled customers at the last known facsimile numbers or | 344 |
| electronic mail addresses of those customers on file with the | 345 |
| insurer. The insurer or vendor shall maintain proof that the | 346 |
| notice was sent. | 347 |
| (I) An enrolled customer may cancel the enrolled customer's | 348 |
| coverage under a portable electronics insurance policy at any | 349 |
| time. Upon cancellation, the insurer shall refund any applicable | 350 |
| unearned premium. | 351 |
| (J) A license issued pursuant to this section shall authorize | 352 |
| the vendor and its endorsees to engage only in those activities | 353 |
| that are expressly permitted by this section. | 354 |
| (K) The superintendent may adopt rules implementing this | 355 |
| section. | 356 |
| Section 2. That existing section 3905.03 of the Revised Code | 357 |
| is hereby repealed. | 358 |