AI-assisted research summary: Certain legal service insurance corporations must deposit or maintain securities with the Treasurer of the State, or may file an approved surety bond instead.
(a) To assure the faithful performance of its obligations in the event of insolvency, each corporation authorized under Section 27-43-8 shall, through the commissioner, deposit and maintain with the Treasurer of the State securities of the type eligible for deposit by insurers under Section 27-6-3, which securities shall have at all times a market value as follows: (1) An insurer which has transacted no legal expense insurance in this state prior to January 1, 1982, shall, prior to the issuance of its certificate of authority and before receiving any premiums, place in trust with the Treasurer of the State, through the commissioner an initial amount of $50,000.00; (2) An insurer transacting a legal expense insurance business in this state prior to January 1, 1982, and having in force in this state less than $300,000.00 of gross written premiums, membership fees, or similar charges shall place in trust with the Treasurer of the State, through the commissioner, a sum equal to 50 percent of the gross premiums in force or $50,000.00, whichever is less; (3) An insurer transacting a legal expense insurance business in this state prior to January 1, 1982, and having in force in this state more than $300,000.00 but less than $750,000.00 of gross written premiums, membership fees, or similar charges in this state shall place in trust with the Treasurer of the State, through the commissioner, an amount not less than $75,000.00; and (4) An insurer transacting a legal expense insurance business in this state prior to January 1, 1982, and having in force in this state $750,000.00 or more of gross written premiums, membership fees, or similar charges in this state shall place in trust with the Treasurer of the State, through the commissioner, an amount equal to $100,000.00. (b) In lieu of any deposit of securities required under subsection (a) of this section and subject to the commissioner’s approval, a legal service insurance corporation may file with the Treasurer of the State a surety bond issued by a surety insurer authorized to serve as surety under the provisions of Chapter 24 of this title. The bond shall be for the same purpose as the deposit in lieu of which it is filed. The department shall 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. (c) Securities or bonds posted pursuant to this section shall be for the benefit of and subject to action thereon in the event of insolvency or impairment of any legal service insurance corporation by any person or persons sustaining an actionable injury due to the failure of the corporation to faithfully perform its obligations to its insureds. (d) The state shall be responsible for the safekeeping of all securities deposited with the Treasurer of the State under this chapter. Such securities shall not, on account of being in this state, be subject to taxation, but shall be held exclusively and solely to guarantee the legal service insurance corporation’s performance of its obligations to its insureds. (e) Such deposit or bond shall be maintained unimpaired as long as the legal service insurance corporation continues in business in this state. Whenever the corporation 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 insureds in this state, the Treasurer of the State shall release the deposited securities to the parties entitled thereto, on presentation of the Treasurer’s receipts for such securities, or shall release any bond filed with it in lieu of such deposit. (f) The commissioner may at any time enter an order increasing the amount of the deposit or bond specified under subsections (a) and (b) of this section if he finds that there has been a substantial change in the facts, including an increase in the amounts of premiums, membership fees, or similar charges in force in this state on which the original determination was based. The commissioner shall hold a hearing within 30 days after receiving a request from the corporation submitted within 30 days after being notified of the modification order. Failure to meet the new requirements within 30 days after final decision or after the expiration of the 30-day period for submitting the hearing request constitutes a ground for rehabilitation.