To that end, our compliance experts always have their ear to the ground, staying aware of regulatory news as it happens. In fact, here are two recent regulatory updates from the Automotive F&I side of the business.
After January 1, 2014 a vehicle protection product (VPP) warrantor was arguably required to hold a service contract provider license in Illinois. However, legislation (2017 – Illinois HB 3072) effective January 1, 2018 made clear VPP warrantors backed by a contractual liability policy (CLP) are exempt from service contract regulation in Illinois.
To transition away from the service contract license, a standalone VPP warrantor that had previously obtained a service contract license should provide a letter of withdrawal to the Department that acknowledges that the contractual obligations of any contracts the warrantor sold while registered as a service contract provider will remain in effect until the service contract expires. In addition, companies should also submit the CLP backing the VPP program as well as evidence that the policy is continuous until canceled or until any existing Illinois contracts have expired.
The Nevada Commissioner of Insurance has adopted amendments to the service contract regulations with respect to status reports and transfer fees. Current regulations require a service contract provider give a status report to the holder when certain repairs cannot be completed within three calendar days of the claim. The types of repairs that require a status report are those that are essential to the health and safety of the holder.
The adopted rule revision requires that such status reports also be provided to the Nevada Insurance Commissioner by email no later than three calendar days after the claim. The status reports must contain contact information for the Insurance Commissioner. The status report requirement must be clearly stated in the service contract.
The revised rule also requires a service contract contain: [a] statement that if the holder is not satisfied with the manner in which the provider is handling the claim on the contract, the holder may contact the Commissioner by use of the toll-free telephone number of the Division. The statement must include the current toll-free telephone number of the Division which can be obtained from the Internet website of the Division.
Finally, the revised rule allows a provider to impose a reasonable transfer fee if service contract is transferred at the request of the holder, if such a fee is provided for in the terms of the service contract.