23-92-415. Licensing of employer service assurance organizations.

23-92-415. Licensing of employer service assurance organizations. (a)(1) No employer service assurance organization shall provide any service relating to the regulation of professional employer organizations, and no state agency, professional employer organization, or insurer shall utilize the services of the organization for those purposes unless the organization has obtained a license from the Insurance Commissioner. (2) No state agency, professional employer organization, or insurer shall use the services of an employer service assurance organization unless the organization has obtained a license from the commissioner. (b) No employer service assurance organization shall refuse to supply any services for which it is licensed in Arkansas to any state agency, professional employer organization, or insurer authorized to do business in Arkansas and offering to pay the fair and usual compensation for the services. (c)(1) An employer service assurance organization applying for a license shall include with its application: (A) A copy of its: (i) Constitution, charter, or articles of organization, agreement, association, or incorporation; and (ii) Bylaws, plan of operation, and any other rules or regulations governing the conduct of its business; (B) A list of its members and subscribers; (C) The name and address of one (1) or more residents of this state upon whom notices, process affecting it, or orders of the commissioner may be served; (D) A statement showing its technical qualifications for acting in the capacity for which it seeks a license; (E)(i) Financial assurance acceptable to the commissioner, including: (a)(1) A surety bond issued by a corporate surety in favor of a trust, maintained at a national bank with the bank serving as trustee, in an amount of not less than one million dollars ($1,000,000) or an equivalent amount of cash or other security acceptable to the commissioner on behalf of each professional employer organization for which the employer service assurance organization provides an affidavit under § 23-92-414. (2) The security under subdivision (c)(1)(E)(i)(a )(1 ) of this section shall be held by the trust to compensate for payment of claims made by clients, employees, insurers, or taxing authorities in accordance with the employer service assurance organization's policies and procedures, as approved by the commissioner, and if the professional employer organization fails to pay wages, taxes, insurance premiums, and contributions to employee retirement plans as promised in its professional employer organization service arrangement or as required by law; and (b) A surety bond issued by a corporate surety in favor of the State of Arkansas in the amount of not less than one hundred thousand dollars ($100,000), the terms and conditions of which shall be approved by the commissioner. (ii) The one hundred thousand dollar ($100,000) surety bond shall be conditioned so that any professional employer organization for which the employer service assurance organization provides an affidavit under § 23-92-414 and each member, employee, shareholder, or officer or a person, firm, partnership, corporation, or association operating as an agent of the professional employer organization will not violate rules, regulations, or orders lawfully promulgated by the commissioner under this subchapter or fail to pay any wages due under any contract made by the professional employer organization in the conduct of its business under this subchapter; (F) License fees as provided by § 23-61-401 for rate service organizations; and (G) Any other relevant information and documents that the commissioner may require. (2)(A) Every organization that has applied for a license shall notify the commissioner of every material change in facts or in the documents on which its application was based. (B) Any amendment to a document filed under this section shall become effective thirty (30) days after it is filed. (3)(A) If the commissioner finds that the applicant and the natural persons through whom it acts are competent, trustworthy, and technically qualified to provide the services proposed and that all requirements of the law are met, he or she shall issue a license specifying the authorized activity of the applicant. (B) The commissioner shall not issue a license if the proposed activity would tend to create a monopoly or to lessen substantially the competition in any market. (4) Licenses issued under this section shall remain in effect until the licensee withdraws from the state or until the license is suspended or revoked if an employer service assurance organization under § 23-92-416 continues the license each calendar year, upon the following activity by the licensee: (A) Payment on or before January 1 of a continuation fee as provided in § 23-61-401 for rate service organizations; (B) Filing of a letter requesting continuation of its license for the following calendar year; and (C) Submission of information that may be required by the commissioner.