NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

Only the most recent FIR version, excluding attachments, is available on the Intranet. Previously issued FIRs and attachments may be obtained from the LFC office in Suite 101 of the State Capitol Building North.

(Parenthesis ( ) Indicate Expenditure Decreases)

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

Public Regulation Commission (PRC)

Attorney General's Office (AG)

SUMMARY

Synopsis of SCORC Amendment

The SCORC clarifies the bill by adding the "contractually" in front of obligated to better define the meaning of "provider."

Synopsis of Original Bill

SB556 imposes restrictions and requirements on the sale of service contracts and the terms of the contracts. SB556 provides rights for consumers including rights of cancellation. SB556 authorizes the superintendent of insurance to administer the Act, to promulgate rules and regulations, and to

enforce the act against issuers who violate the Act. SB566 imposes financial security requirements on issuers and establishes civil penalties which may be imposed by the superintendent for violations.

Significant Issues

The AG notes that this is a new and comprehensive regulatory approach to the business of service contracts.

FISCAL IMPLICATIONS

There is an annual registration fee of $500. The PRC estimates that there will be approximately 100 registrants thereby generating $50,00 in revenues.

ADMINISTRATIVE IMPLICATIONS

The PRC will have to establish registration requirements and monitor compliance. They do not request additional staff or resources.

DW/ar:jsp