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H. B. No. 250 As IntroducedAs Introduced
129th General Assembly | Regular Session | 2011-2012 |
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Cosponsors:
Representatives Grossman, Stebelton, Beck, Letson
A BILL
To amend section 3905.03 and to enact section 3905.96
of the Revised Code to establish requirements and
procedures for issuing portable electronics
insurance.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That section 3905.03 be amended and section
3905.96 of the Revised Code be enacted to read as follows:
Sec. 3905.03. (A) Section 3905.02 of the Revised Code does
not apply to any of the following:
(1) Any insurer. For purposes of this division, "insurer"
does not include an insurer's officers, directors, employees,
subsidiaries, or affiliates.
(2) Any officer, director, or employee of an insurer or of an
insurance agent, provided the officer, director, or employee does
not receive any commission on policies written or sold to insure
risks residing, located, or to be performed in this state and any
of the following applies:
(a) The activities of the officer, director, or employee are
executive, administrative, managerial, clerical, or any
combination thereof, and are only indirectly related to the sale,
solicitation, or negotiation of insurance.
(b) The function of the officer, director, or employee
relates to underwriting, loss control, inspection, or the
processing, adjusting, investigation, or settling of a claim on a
contract of insurance.
(c) The officer, director, or employee is acting in the
capacity of a special agent or agency supervisor, provided the
activities of the officer, director, or employee are limited to
providing technical advice and assistance to licensed insurance
agents and do not include the sale, solicitation, or negotiation
of insurance.
(3) Any person who secures and furnishes information for
purposes of group life insurance, group property and casualty
insurance, group annuities, or group or blanket accident and
health insurance, or for purposes of enrolling individuals under
plans, issuing certificates under plans, or otherwise assisting in
administering plans, or who performs administrative services
related to mass marketed property and casualty insurance, provided
that no commission is paid to the person for any of the services
described in this division;
(4) Any employer or association, any officer, director, or
employee of an employer or association, or any trustee of an
employee trust plan, to the extent that any such person is engaged
in the administration or operation of an employee benefits program
for the employer's or association's own employees or for the
employees of its subsidiaries or affiliates, if both of the
following apply:
(a) The employee benefits program involves the use of
insurance contracts issued by an insurer.
(b) The employer, association, officer, director, employee,
or trustee is not in any manner compensated, either directly or
indirectly, by the insurer issuing the insurance contracts.
(5) Any employee of an insurer or of an organization employed
by an insurer, if the employee is engaged in the inspection,
rating, or classification of risks or in the supervision of the
training of insurance agents, and is not individually engaged in
the sale, solicitation, or negotiation of insurance;
(6) Any person whose activities in this state are limited to
advertising through communications in printed publications or in
the electronic mass media, the distribution of which is not
limited to residents of this state, if the person does not sell,
solicit, or negotiate insurance covering risks residing, located,
or to be performed in this state;
(7) Any person who is not a resident of this state and who
sells, solicits, or negotiates a contract of insurance covering
commercial property and casualty risks located in more than one
state, if the person is licensed as an insurance agent to sell,
solicit, or negotiate that insurance contract in the state where
the insured maintains its principal place of business and the
contract insures risks located in that state;
(8) Any salaried full-time employee who counsels or advises
the employee's employer with respect to the insurance interests of
the employer or of the employer's subsidiaries or business
affiliates, if the employee does not sell or solicit insurance or
receive a commission;
(9) Any employee of an insurer or of an insurance agent who,
at the direction of the insurer or agent, performs any of the
following activities:
(a) The acceptance of premiums other than the initial
premium;
(b) The gathering of information, such as names, addresses,
expiration dates of current insurance, and names of current
insurers;
(c) The setting of appointments for insurance agents,
provided that the individual setting the appointment does not
communicate any information about insurance;
(d) The servicing of existing insurance policies issued by or
through the employee's employer, provided the servicing is not
part of a solicitation;
(e) The performance of clerical or ministerial duties.
(10) Any employee of a creditor with respect to limited line
credit insurance products, as long as the employee of the creditor
is not paid by, and does not receive a fee, commission, or any
other form of compensation from, an insurance agent or insurance
company.
(11) Any vendor or endorsee of a vendor who sells or offers
to sell portable electronics insurance under a limited lines
license pursuant to section 3905.96 of the Revised Code, as long
as the vendor or endorsee of the vendor only acts within the
limitations provided for in that section.
(B) The superintendent of insurance may adopt rules in
accordance with Chapter 119. of the Revised Code to set forth the
specific acts the performance of which either require or do not
require licensure as an insurance agent.
Sec. 3905.96. (A) As used in this section:
(1) "Customer" means a person who purchases portable
electronics or services.
(2) "Enrolled customer" means a customer who elects coverage
under a portable electronics insurance policy issued to a vendor
of portable electronics by an insurer.
(3) "Endorsee" means an employee or authorized representative
of a vendor authorized to sell or offer portable electronics
insurance.
(4) "Location" means any physical location in this state or
any web site, call center site, or similar location directed to
residents of this state.
(5) "Portable electronics" means an electronic device that is
portable in nature, an accessory of such a device, and any service
related to the use of the device.
(6) "Portable electronics insurance" means insurance
providing coverage for the repair or replacement of portable
electronics, which may be offered on a month-to-month or other
periodic basis as a group or master commercial inland marine
policy issued to a vendor by an insurer, and may cover portable
electronics against loss, theft, inoperability due to mechanical
failure, malfunction, damage, or other applicable perils.
"Portable electronics insurance" does not mean any of the
following:
(a) A consumer goods service contract governed by section
3905.423 of the Revised Code;
(b) A policy of insurance covering a seller's or a
manufacturer's obligations under a warranty;
(c) A homeowner's, renter's, private passenger automobile,
commercial multi-peril, or similar insurance policy.
(7) "Portable electronics transaction" means the sale or
lease of portable electronics by a vendor to a customer or the
sale of a service related to the use of portable electronics by a
vendor to a customer.
(8) "Supervising entity" means an insurer or a business
entity licensed as an insurance agent under section 3905.06 of the
Revised Code that is appointed by an insurer to supervise the
administration of a portable electronics insurance program.
(9) "Vendor" means a person in the business of engaging in
portable electronics transactions directly or indirectly.
(B)(1) A vendor is required to hold a limited lines license
to offer, sell, or solicit coverage under a policy of portable
electronics insurance.
(2) The superintendent shall designate portable electronics
insurance as a limited line of insurance pursuant to division (I)
of section 3905.01 of the Revised Code. The superintendent of
insurance shall issue a limited lines insurance agent license to a
vendor applicant upon submission of a completed application and
payment of any applicable fee required under this chapter. The
application shall be made on forms prescribed and furnished by the
superintendent and shall contain all of the following:
(a) The name, residence address, and other information
required by the superintendent for an employee or officer of the
vendor who is responsible for the vendor's compliance with the
requirements of this section. If the vendor derives more than
fifty per cent of its revenue from the sale of portable
electronics insurance, the vendor shall provide the name,
residence address, and other information required by the
superintendent for all officers, directors, and shareholders of
record who have beneficial ownership of ten per cent or more of
any class of securities registered under the federal securities
laws;
(b) The location of the applicant's home office;
(c) A list of all locations in this state at which the vendor
offers coverage.
(3) Any vendor offering or selling portable electronics
insurance on or before the effective date of this section shall
apply for licensure within ninety days of the application being
made available by the superintendent of insurance. Any vendor not
offering or selling portable electronics insurance on or before
the effective date of this section must apply for and obtain a
license prior to offering or selling portable electronics
insurance.
(4) Licenses issued pursuant to this section shall be valid
for a period of twenty-four months.
(5) Each vendor licensed under this section that is engaged
in portable electronics transactions in this state shall pay to
the superintendent a filing fee prescribed by the superintendent.
For vendors engaged in portable electronic transactions at more
than ten locations in this state, the fee shall not exceed one
thousand dollars for an initial license, and five hundred dollars
for each renewal thereafter. For vendors engaged in portable
electronics transactions at ten or fewer locations in this state,
the fee shall not exceed one hundred dollars for an initial
license and for each renewal thereafter.
(C)(1) A vendor may authorize any endorsee of the vendor to
sell or offer portable electronics insurance to a customer at any
location at which the vendor engages in portable electronics
transactions.
(2) An endorsee is not required to be licensed as an
insurance agent under this chapter if the vendor is licensed under
this section and the insurer issuing the portable electronics
insurance either directly supervises or appoints a supervising
entity to supervise the administration of the portable electronics
insurance program including development of a training program for
endorsees in accordance with division (D) of this section.
(3) No endorsee shall advertise, represent, or otherwise
represent the endorsee's self as an insurance agent licensed under
section 3905.06 of the Revised Code.
(D) Each vendor, or the supervising entity to that vendor,
shall provide a training and education program for all endorsees
who sell or offer portable electronics insurance. The program may
be provided as a web-based training module or in any other
electronic or recorded video form. The training and education
program shall meet all of the following minimum standards:
(1) The training shall be delivered to each endorsee of each
vendor who sells or offers portable electronics insurance and the
endorsee shall complete the training;
(2) If the training is conducted in an electronic form, the
supervising entity shall implement a supplemental education
program regarding portable electronics insurance that is conducted
and overseen by employees of the supervising entity who are
licensed as insurance agents under section 3905.06 of the Revised
Code;
(3) The training and education program must include basic
information about portable electronics insurance.
(E) At every location where a vendor offers portable
electronics insurance to customers, the vendor shall provide
brochures or other written materials to prospective customers that
include all of the following:
(1) A summary of the material terms of the insurance
coverage, including all of the following:
(a) The identity of the insurer;
(b) The identity of the supervising entity;
(c) The amount of any applicable deductible and how it is to
be paid;
(d) Benefits of the coverage;
(e) Key terms and conditions of coverage such as whether
portable electronics may be replaced with a similar make and
model, replaced with a reconditioned device, or repaired with
nonoriginal manufacturer parts or equipment.
(2) A summary of the process for filing a claim, including a
description of how to return portable electronics equipment and
the maximum fee applicable if a customer fails to comply with any
equipment return requirements;
(3) A disclosure that portable electronics insurance may
provide a duplication of coverage already provided by a customer's
homeowner's insurance policy, renter's insurance policy, or other
source of coverage;
(4) A disclosure that the enrollment by the customer in a
portable electronics insurance program is not required to purchase
or lease portable electronics or services;
(5) A disclosure that neither the endorsee nor the vendor is
qualified to evaluate the adequacy of the customer's existing
insurance coverage;
(6) A disclosure that the customer may cancel enrollment for
coverage under a portable electronics insurance policy at any time
and receive a refund of any applicable premium.
(F)(1) The charges for portable electronics insurance may be
billed and collected by the vendor of portable electronics, and
the vendor may receive compensation for performing billing and
collection services, if either of the following conditions are
met:
(a) If the charge to the customer for coverage is not
included in the cost associated with the purchase or lease of
portable electronics or related services, the charge for coverage
is separately itemized on the customer's bill.
(b) If the charge to the customer for coverage is included in
the cost associated with the purchase or lease of portable
electronics or related services, the vendor clearly and
conspicuously discloses to the customer that the charge for
portable electronics insurance coverage is included with the
charge for portable electronics or related services.
(2) All funds received by a vendor from a customer for the
sale of portable electronics insurance shall be considered funds
held in trust by the vendor in a fiduciary capacity for the
benefit of the insurer. Vendors that bill and collect such charges
are not required to maintain those funds in a segregated account
if the vendor is authorized by the insurer to hold those funds in
an alternate manner and the vendor remits the amount of the
charges to the supervising entity within sixty days after
receiving the charges.
(G) If the superintendent has reason to believe that a vendor
or its endorsee has violated this section, the superintendent
shall schedule a hearing on the potential violation and provide
notification of the nature of the potential violation and the
date, time, and place of the hearing to the vendor or endorsee. If
after the hearing the superintendent determines that a vendor or
its endorsee has violated this section, the superintendent may do
either of the following:
(1) Impose a fine not to exceed five hundred dollars per
violation or five thousand dollars in the aggregate for multiple
violations.
(2) Impose any other penalty that the superintendent
considers necessary and reasonable, including either of the
following:
(a) Suspending the vendor's privilege of selling or offering
portable electronics insurance pursuant to this section at
specific location or locations where the violation or violations
occurred;
(b) Suspending or revoking the ability of an endorsee to act
under the license of the vendor.
(H)(1) Except as otherwise provided in divisions (H)(2) and
(3) of this section, an insurer may terminate or otherwise change
the terms and conditions of a policy of portable electronics
insurance only upon providing the vendor policyholder and enrolled
customers with at least sixty days' prior notice. If the insurer
changes the terms and conditions, the insurer shall promptly
provide the vendor policyholder with a revised policy or
endorsement and each enrolled customer with a revised certificate,
endorsement, updated brochure, or other evidence indicating that a
change in the terms and conditions has occurred and a summary of
material changes.
(2) An insurer may terminate an enrolled customer's
enrollment under a portable electronics insurance policy upon
fifteen days' prior notice for discovery of fraud or material
misrepresentation in obtaining coverage or in the presentation of
a claim under the policy.
(3) An insurer may immediately terminate an enrolled
customer's enrollment under a portable electronics insurance
policy for any of the following reasons:
(a) The enrolled customer fails to pay the required premium;
(b) The enrolled customer ceases to have an active service
plan, if applicable, with the vendor of portable electronics;
(c) The enrolled customer exhausts the aggregate limit of
liability, if any, under the terms of the portable electronics
insurance policy and the insurer sends notice of termination to
the customer within thirty calendar days after exhaustion of the
limit. However, if the insurer does not send the notice within the
thirty-day time frame, enrollment shall continue notwithstanding
the aggregate limit of liability until the insurer sends notice of
termination to the enrolled customer.
(4) If a portable electronics insurance policy is terminated
by a vendor policyholder, the vendor policyholder shall provide
notice to each enrolled customer advising the customer of the
termination of the policy and the effective date of the
termination. The written notice shall be mailed or delivered to
the customer at least thirty days prior to the termination.
(5) Notice required pursuant to this section shall be
provided in writing, either via mail or by electronic means.
(a) If notice is provided via mail, it shall be mailed or
delivered to the vendor at the vendor's mailing address and to all
affected enrolled customers at the last known mailing addresses of
those customers on file with the insurer. The insurer or vendor of
portable electronics shall maintain proof of mailing in a form
authorized or accepted by the United States postal service or
other commercial mail delivery service.
(b) If notice is provided electronically, it shall be
transmitted via facsimile or electronic mail to the vendor at the
vendor's facsimile number or electronic mail address and to all
affected enrolled customers at the last known facsimile numbers or
electronic mail addresses of those customers on file with the
insurer. The insurer or vendor shall maintain proof that the
notice was sent.
(I) An enrolled customer may cancel the enrolled customer's
coverage under a portable electronics insurance policy at any
time. Upon cancellation, the insurer shall refund any applicable
unearned premium.
(J) A license issued pursuant to this section shall authorize
the vendor and its endorsees to engage only in those activities
that are expressly permitted by this section.
(K) The superintendent may adopt rules implementing this
section.
Section 2. That existing section 3905.03 of the Revised Code
is hereby repealed.
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