1. A. To ensure the faithful performance of its obligations to its members or subscribers in the event of insolvency, each service warranty association shall, before being issued a license by the Insurance Commissioner and during such time as the association has premiums in force in this state, deposit and maintain securities of the type eligible for deposit by an insurer pursuant to Section 613 of Title 36 of the Oklahoma Statutes. Whenever the market value of the securities deposited with the Commissioner is less than ninety-five percent (95%) of the amount required, the association shall deposit additional securities or otherwise increase the deposit to the amount required. In lieu of the amounts required in Section 613 of Title 36 of the Oklahoma Statutes, such securities shall have at all times a market value as follows:

   1. 1. A new warrantor, before the issuance of its license and before receiving any premiums, shall place and maintain in trust with the Insurance Commissioner the amount of Twenty Thousand Dollars ($20,000.00);
   2. 2. A warrantor which has Three Hundred Thousand Dollars ($300,000.00) or less of gross written premiums in this state shall place and maintain in trust with the Commissioner an amount not less than Fifty Thousand Dollars ($50,000.00);
   3. 3. A warrantor which has more than Three Hundred Thousand Dollars ($300,000.00) but less than Seven Hundred Fifty Thousand Dollars ($750,000.00) or more of gross written premiums in this state shall place and maintain in trust with the Commissioner an amount equal to One Hundred Thousand Dollars ($100,000.00);
   4. 4. A warrantor which has Seven Hundred Fifty Thousand Dollars ($750,000.00) or more of gross written premiums in this state shall place and maintain in trust with the Commissioner an amount equal to One Hundred Thousand Dollars ($100,000.00);
   5. 5. A warranty seller shall, before the issuance of its license, place in trust with the Commissioner an amount not less than One Hundred Thousand Dollars ($100,000.00); and
   6. 6. All warrantors and warranty sellers upon receipt of written notice from the Commissioner, shall have thirty (30) calendar days in which to make additional deposits as the Commissioner deems necessary, up to the maximum amounts provided in this subsection.

2. B.

   1. 1. In lieu of any deposit of securities required under subsection A of this section and subject to the approval of the Commissioner, the service warranty association may file with the Commissioner a surety bond issued by an authorized surety insurer. The bond shall be for the same purpose as the deposit in lieu of which it is filed. The Commissioner may not approve any bond under the terms of which the protection afforded against insolvency is not equivalent to the protection afforded by those securities provided for in subsection A of this section.
   2. 2. When a bond is deposited in lieu of the required securities, no warranties shall be written which provide coverage for a time period beyond the duration of such bond. The bond shall guarantee that the service warranty association will faithfully and truly perform all the conditions of any service warranty contract.
   3. 3. No such bond shall be canceled or subject to cancellation unless at least sixty (60) days' advance notice thereof, in writing, is filed with the Commissioner. In the event that notice of termination of the bond is filed with the Commissioner the service warranty association insured thereunder shall, within thirty (30) days of the filing of notice of termination, provide the Commissioner with a replacement bond meeting the requirements of this subsection or deposit additional securities as required under subsection A of this section. The cancellation of a bond shall not relieve the obligation of the issuer of the bond for claims arising out of contracts issued before cancellation of the bond unless a replacement bond or securities are filed. In no event shall the liability of the issuer under the bond exceed the face amount of the bond. If within thirty (30) days of filing the notice of termination no replacement bond or additional security is provided, the Commissioner shall suspend the license of the association until the deposit requirements are satisfied.
3. C. Securities and bonds posted by an association pursuant to this section are for the benefit of, and subject to action thereon in the event of insolvency or impairment of any association or insurer by, any person or persons sustaining an actionable injury due to the failure of the association to faithfully perform its obligation to its warranty holders.
4. D. The State Treasurer shall be responsible for the safekeeping of all securities deposited with the Commissioner pursuant to the provisions of the Service Warranty Insurance Act. Such securities shall not be subject to taxation, but shall be held exclusively and solely to guarantee the faithful performance by the association of its obligations to its members or subscribers.
5. E. The depositing association, during its solvency, shall have the right to exchange or substitute other securities of like quality and value for securities on deposit, to receive the interest and other income accruing to such securities, and to inspect the deposit at all reasonable times.
6. F. Such deposit or bond shall be maintained unimpaired as long as the association continues in business in this state. Whenever the association ceases to do business in this state and furnishes the Commissioner proof satisfactory to the Commissioner that it has discharged or otherwise adequately provided for all its obligations to its members or subscribers in this state, the Commissioner shall release the deposited securities to the parties entitled thereto, on presentation of the receipts of the Commissioner for such securities, or shall release any bond filed with it in lieu of such deposit.
7. G. No judgment creditor or other claimant of a service warranty association, other than a judgment creditor whose judgment is based on a service warranty contract, shall have the right to levy upon any of the assets or securities held in this state as a deposit pursuant to this section.

Added by Laws 1993, HB 1001, c. 108, § 6, eff. September 1, 1993.