20-1095.04 Filing of surety bond, securities or bonds

20-1095.04. Filing of surety bond, securities or bonds

A. To ensure faithful performance of its obligations to contract holders, every service company electing to comply with section 20-1095.03, subsection A, paragraph 3, subdivision (a), before the issuance of a permit, shall file with or for the benefit of the director a surety bond that complies with subsection C of this section and that at all times has a value of at least one hundred thousand dollars.

B. The service company may file alternatives to a surety bond in the form of securities eligible for the investment of capital funds of domestic insurers under this title or bonds of the United States government.

C. A surety bond that is filed under subsection A of this section must be issued by a surety insurer licensed to do business in this state and must be for the same purpose as required in subsection A of this section. The surety bond is subject to the approval of the director. The surety insurer shall not cancel the bond or subject the bond to cancellation unless thirty days' written notice is given to the director.

D. If securities or bonds of the United States government are filed as an alternative to a surety bond, the securities or bonds shall be irrevocably pledged to the director. The service company is entitled to any accrued interest earned from the securities or bonds.

E. The service company shall not impair or encumber the surety bond, securities or bonds of the United States government filed under this section and shall pledge the same to the director. The service company shall maintain the surety bond, securities or bonds of the United States government in force until such time as all of the service company's contractual obligations to contract holders are fulfilled.

F. Notwithstanding sections 20-116 and 35-155, a service company may not use a cash deposit to comply with this section.