Regulations 15 O.S. § 140.2 -140.7

Disclaimer: The following is an overview of the laws pertaining to the requirements for a provider to register to offer Financial Protection Products.  Refer to the OSCN webpage to research all the statues.

Lines of Authority:

Financial Protection Products consists of two lines of authority; Vehicle Value Protection Agreements (VVPA)and/or Debt Waivers (DW).  Applicants may register for one line or both lines of authority using the Financial Protection Products forms.

15 § 140.2. Financial Protection Products Definitions

“Motor vehicle” means self-propelled or towed vehicles designed for personal or commercial use including, but not limited to, automobiles, trucks, motorcycles, recreational vehicles, all-terrain vehicles, snowmobiles, campers, boards, personal watercraft, and related trailers.

“Motor vehicle financial protection product” means an agreement defined herein that protects a consumer’s financial interest in his or her current or future motor vehicle and includes, but is not limited to, debt waiver and vehicle value protection agreements.  A motor vehicle financial protection product shall not mean a service warranty or vehicle protection product warranty.

“Commercial” means a transaction wherein the motor vehicle will primarily be used for business purposes rather than personal.

“Commissioner” means the Insurance Commissioner.

“Consumer” means an individual purchaser of a motor vehicle or borrower under a finance agreement and includes a borrower or contract holder as herein defined as applicable.

“Finance agreement” means a loan, retail installment sales contract, or lease for the purchase, refinancing, or lease of a motor vehicle.

“Free look period” means the period of time from the effective date of the motor vehicle financial protection product until the date the motor vehicle financial protection product may be canceled without penalty, fees, or costs.  This period of time shall not be shorter than thirty (30) days.

“Insurer” means an insurance company licensed, registered, or otherwise authorized to issue contractual liability insurance under the insurance laws of this state.

“Person” means an individual, company, association, organization, partnership, business trust, corporation, and every form of legal entity.

15 § 140.5(A). VVPA Definitions

“Administrator” means the person who may be responsible for the administrative or operational function of vehicle value protection agreements including, but not limited to, the adjudication of claims or benefits requested by contract holders.

“Contract holder” means a person who is the purchaser or holder of a vehicle value protection agreement

“Provider” means a person that is obligated to provide a benefit under a vehicle value protection agreement.  A provider may perform as an administrator or retain the services of a third-party administrator.

“Vehicle value protection agreement” means a contractual agreement that provides a benefit towards either the reduction of some or all of the contract holder’s current finance agreement deficiency balance, or towards the purchase or lease of a replacement motor vehicle or motor vehicle services, upon the occurrence of an adverse event to the motor vehicle including, but not limited to, loss, theft, damage, obsolescence, diminished value, or depreciation.  These agreements do not include debt waivers.  These agreements may include, but not be limited to, trade-in-credit agreements, diminished value agreements, depreciation benefit agreements, or other similarly named agreements.

15 § 140.5(D). Commercial Transactions

Subsection D, (disclosure requirements), of this section and Section 140.6 (enforcement) of this title shall not apply to vehicle value protection agreements offered in connection with a commercial transaction.

Fees:

$0.00 due to the Commissioner, $15.00 fee to file via OPTins.

Cycle – registration expires annually on July 15^th following the date of issuance unless renewed electronically via OPTins.

15 § 140.5(B). Registration

1. No administrator or provider operating as an administrator shall perform or engage in any administrative or operational functions of vehicle value protection agreements without first registering with the Insurance Department. Registration shall be renewed annually by July 15 of each calendar year. All registrations shall be filed and fees shall be paid electronically in the manner and form prescribed by the Insurance Commissioner.
2. An administrator or a provider operating as an administrator shall electronically file an updated registration within thirty (30) days of any change of name, address, or email address.
3. Every administrator and provider, upon receipt of any inquiry from the Commissioner, shall furnish the Commissioner with an adequate response to the inquiry within twenty (20) days from the date of receipt of the inquiry.

15 § 140.5(C). Requirements for offering VVPAs:

1. A provider may utilize an administrator or other designee to be responsible for any and all of the administration of vehicle value protection agreements in compliance with Section 140.2 et seq. of this title.
2. Vehicle value protection agreements shall not be sold unless the contract holder has been or will be provided access to a copy of that vehicle value protection agreement.
3. In order to assure the faithful performance of the provider’s obligations to its contract holders, each provider shall be responsible for complying with the requirements of one of the following:
   • Insure all VVPA agreements under an insurance policy that covers one hundred percent (100%) of its claim exposure, satisfies the requirements of this act, and contains the following provision: In the event the provider is unable to fulfill its obligations under vehicle value protection agreements issued in this state for any reason including insolvency, bankruptcy, or dissolution, the insurer will pay any losses and unearned fees to the person making a claim under such agreement.” The insurance policy shall be issued by an insurer licensed, registered, or otherwise authorized to do business in this state either:
     • • at the time the policy is filed with the Insurance Commissioner, and continuously thereafter, (i) maintain surplus as to policyholders and paid-in capital no less than Fifteen Million Dollars ($15,000,000.00) and (ii) annually file copies of the insurer’s financial statements, its National Association of Insurance Commissioners (NAIC) Annual Statement, and the actuarial certification required by and filed in the insurer’s state of domicile, or
       • At the time the policy is filed with the Commissioner, and continuously thereafter, (i) maintain surplus as to policyholders and paid-in capital of less than Fifteen Million Dollars ($15,000,000.00) but at least equal to Ten Million Dollars ($10,000,000.00), (ii) demonstrate to the satisfaction of the Commissioner that the company maintains a ratio of net written premiums, wherever written, to surplus as to policyholders and paid-in capital of not greater than 3 to 1, and (iii) annually file copies of the insurer’s audited financial statements, its NAIC Annual Statement, and the actuarial certification required by and filed in the insurer’s state of domicile.
   • Maintain a funded reserve account for its obligations under its contracts issued and outstanding in this state.  The reserves shall not be less than forty percent (40%) of gross considerations received, less claims paid, on the sale of the vehicle value protection agreement for all in-force contracts; and place in trust with the Commissioner a financial security deposit, having a value not less than five percent (5%) of the gross consideration received, less claims paid, on the sale of the vehicle value protection agreements for all vehicle value protection agreements issued and in force, but not less than Twenty-five Thousand Dollars ($25,000.00), consisting of one of the following:
     • a surety bond issued by an authorized surety,
     • securities of the type eligible for deposit by authorized insurers in this state,
     • a letter of credit issued by a qualified financial institution, or
     • another form of security prescribed by regulations issued by the Commissioner.
   • Maintain, or together with its parent company maintain, a net worth or stockholders’ equity of One Hundred Million Dollars ($100,000,000.00).
     • • Upon request, provide the Commissioner with a copy of the provider’s or the provider’s parent company’s most recent Form 10-K or Form 20-F filed with the Securities and Exchange Commission (SEC) within the last calendar year, or if the company does not file with the SEC, a copy of the company’s audited financial statements, which shows a net worth of the provider or its parent company of at least One Hundred Million Dollars ($100,000,000.00).  If the provider’s parent company’s Form 10-K, Form 20-F, or financial statements are filed to meet the provider’s financial security requirement, then the parent company shall agree to guarantee the obligations of the provider relating to the vehicle value protection agreements sold by the provider in this state.

Financial Protection Products Forms

(forms will be posted at a later date)