SCS/SB 902 - This act establishes the Missouri Vehicle Protection Product Act. Under the act, a person would be prohibited from selling or offering for sale a vehicle protection product in Missouri unless the seller, warrantor, and any administrator complies with the provisions of the proposed act. A vehicle protection product warrantor, a seller of a vehicle protection product, or a warranty administrator that complies with the act shall not be subject to any other provisions of the state insurance code. The act allows small loan companies and title loan companies to sell service contracts that are regulated under chapter 385. The proposed act would apply to all warranted products sold or offered for sale on or after January 1, 2009. The failure of any person to comply with the Act before its effective date would not be admissible in any court proceeding, administrative proceeding, arbitration, or alternative dispute resolution proceeding and may not be used to prove that the action of any person or the vehicle protection product was unlawful or otherwise improper. REGISTRATION AND FILING REQUIREMENTS OF WARRANTORS - A person could not act as a warrantor or represent to the public that the person is a warrantor without registering with the Department of Insurance. A warrantor shall file warrantor registration records annually and update them within 30 days of any change. The act delineates what types of information that the registration records must contain. The department shall make information regarding the warrantor's name and the name and address of its designated agent for service of process available to the public. The department may charge each registrant a reasonable fee to offset the cost of processing a registration and maintaining the records. The fee shall not exceed $500 per year. If a registrant failed to register by the renewal deadline established by the department, the department shall give the registrant written notice of the failure and the registrant will have 30 days to complete the renewal before being suspended from acting as a warrantor in Missouri. FINANCIAL RESPONSIBILITY - No vehicle protection product may be sold or offered for sale in Missouri unless the vehicle protection product warrantor acquires insurance under a warranty reimbursement insurance policy or maintains a net worth or stockholder's equity of $50,000,000. WARRANTY REIMBURSEMENT POLICY REQUIREMENTS - Under this act, the warranty reimbursement policy must provide that the insurer would reimburse or pay on behalf of the warrantor all covered sums that the warrantor was legally obligated to pay or would provide all services the warrantor was legally obligated to perform according to the warrantor's contractual obligations under its vehicle protection product warranty. The policy must provide that, if payment due under the warranty were not provided by the warrantor within 60 days after the warranty holder filed proof of loss according to the terms of the warranty, the warranty holder may file proof of loss directly with the warranty reimbursement insurance company for reimbursement. The policy must provide that the premium for the policy would be considered paid if the warranty holder paid for the warranted product and the insurer's liability under the policy shall not be reduced or relieved by a failure of the warrantor, for any reason, to report the issuance of a warranty to the insurer. The act also delineates ceratin requirements regarding cancellation of the policy. DISCLOSURE TO WARRANTY HOLDER - A person could not sell or offer for sale in Missouri a warranted product unless the warranty on the warranty is written in clear, understandable language and was printed or typed in easy-to-read type, size, and style. The warranty shall state that the obligations of the warrantor to the warranty holder are guaranteed under a warranty reimbursement insurance policy or are backed by the warrantor's net assets. The warranty must state that, if a warranty holder must make a claim against a party other than the warrantor, the warranty holder is entitled to make a direct claim against the warranty reimbursement insurer upon the failure of the warrantor to pay any claim or meet any obligation under the terms of the warranty within 60 days after proof of loss was filed with the warrantor. The act delineates other provisions that the warranty must contain. WARRANTY CANCELLATION - The act prohibits a person from selling or offering for sale a vehicle protection product warranty unless it clearly states the terms and conditions governing the cancellation of the sale and warranty. A warrantor may cancel a warranty only if the warranty holder did any of the following: (1) Fails to pay for the warranted product; (2) Makes a material misrepresentation to the seller or warrantor; (3) Commits fraud; or (4) Substantially breaches the warranty holder's duties under the warranty. A warrantor canceling a warranty shall mail written notice of cancellation to the warranty holder at his or her last known address in the warrantor's records at least 30 days before the effective date of a cancellation. The notice shall state the effective date of the cancellation and the reason for it. PROHIBITED ACTS - Unless licensed as an insurance company, a vehicle protection product warrantor could not use in its name, contracts, or literature the word "insurance", "casualty", "surety", or "mutual" or any other words descriptive of the insurance, casualty, or surety business. A warrantor also may not use any name or words in its name that were deceptively similar to the name or description of any insurer or surety or any other vehicle protection product warrantor. A vehicle protection product seller or warrantor may not require as a condition of financing that a retail purchaser of a motor vehicle purchase a vehicle protection product. RECORD KEEPING - A vehicle protection product warrantor must keep accurate accounts, books, and records concerning transactions regulated under the proposed act. The act delineates what the records must include. A warrantor shall retain all required accounts, books, and records pertaining to each warranty holder for at least three years after the specified period of coverage had expired. A warrantor discontinuing business must maintain its records until it furnished the department satisfactory proof that it had discharged all obligations to warranty holders in Missouri. A warrantor would have to make its accounts, books, and records available to department for the purpose of examination. SANCTIONS/ADMINISTRATIVE PENALTIES - Under the act, the Department may conduct examinations of warrantors, administrators, or other people to enforce the proposed act and protect warranty holders in Missouri. The department may take any action that is necessary or appropriate to enforce the act and rules and orders to protect warranty holders in Missouri. RULEMAKING POWER - The act authorizes the department to promulgate rules that are necessary to implement and administer the proposed act. The rules must include disclosure requirements for the benefit of warranty holders, record-keeping requirements, and procedures for public complaints. The act has an effective date of January 1, 2009. This act is substantially similar to SCS/SB 297 (2007) and SB 1058 (2006). STEPHEN J. WITTE