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Committee hears bill to align financial‑responsibility options for service‑contract and protection‑product providers
Summary
Senate Bill 5,108 would let protection‑product guarantee providers and motor‑vehicle service‑contract providers use the same three options to demonstrate financial responsibility as general service‑contract providers (reimbursement insurance, funded reserve plus trust, or $100,000,000 net worth). The Office of the Insurance Commissioner and industry groups testified in support.
Senate Bill 5,108 would extend to protection‑product guarantee providers and providers of service contracts on motor vehicles the same three options for demonstrating financial responsibility that general service‑contract providers currently have: (1) insure all service contracts under a reimbursement insurance policy; (2) maintain a funded reserve account and place a financial security deposit in trust with the Office of the Insurance Commissioner; or (3) maintain a net worth (stockholder equity) of at least $100,000,000.
Under the bill, reimbursement insurance may either fully insure a provider’s contractual obligations or insure only for a provider’s default or failure to perform. If an insurer’s policy only pays in the event of nonperformance, the holder of the contract may apply directly to the reimbursement insurer for payment or performance due if the provider does not perform within 30 days; if the provider has ceased operations, the holder can apply immediately.
Tyler Langford, policy analyst with the Office of the Insurance Commissioner, testified in support and said OIC worked closely with the Service Contract Industry Council to refine the bill language. Travis Moore, general counsel for the Service Contract Industry Council, also urged the committee to pass the bill and said it would improve market stability and consumer protections by bringing Washington in line with other states.
Moore acknowledged this was the third legislative attempt at related changes, saying earlier versions prompted close work with OIC after a veto of a different prior bill; he said the current language reflects that collaboration and aims to preserve consumer protections while adding flexibility for providers.
The committee closed the public hearing on SB 5,108 at the conclusion of testimony; no committee vote was recorded in the hearing transcript.
