House Bill 1286 amends provisions of the Occupations Code relating to the regulation of service contract providers. The bill adds a definition of a "controlling person" of a corporation or other business entity and revises the definition of "administrator" to exclude the service contract provider or an employee of the provider. The bill prohibits a person from operating as an administrator unless registered with the Texas Department of Licensing and Regulation (TDLR), prohibits an administrator from being responsible for the provider's compliance with financial security requirements, and removes a provision authorizing a provider to designate a person other than an administrator to be responsible for administering or selling service contracts or ensuring compliance with state regulations. The bill establishes that a provider's appointment of an administrator does not affect the provider's responsibility for compliance and that an administrator appointed to maintain a provider's records is equally responsible for compliance. The bill imposes additional requirements for registration or renewal and expands the circumstances in which a service contract holder may apply for reimbursement directly to an insurer that provides a reimbursement insurance policy to a provider.
The provisions of the bill take effect January 1, 2006, except for the changes to registration and renewal requirements for administrators, which are effective March 1, 2006.