Ala. Admin. Code r. 482-3-004-.07 - Use Of Surety Bond In Lieu Of Trusting
(1) A surety bond may be used in lieu of
establishing and maintaining a merchandise and services trust. The surety bond,
its form, and amount must be approved by the Commissioner prior to use and
written through an insurance company authorized to transact surety insurance in
Alabama.
(2) The amount of the
initial surety bond must be not less than the aggregate value of outstanding
liabilities on undelivered preneed contracts of the certificate holder as of
the end its last fiscal year. For purposes of determining the amount of the
surety bond, "outstanding liabilities" means the original retail amount of
services and cash advances and the actual cost to the certificate holder to
provide the undelivered merchandise sold on each contract written after April
30, 2002. The surety bond shall be in an amount sufficient to cover the
outstanding liability at the time each contract is executed.
(3) After initial approval, the amount of the
bond shall be increased or decreased as necessary to correlate with changes in
the outstanding liabilities for the previous calendar quarter and the projected
liability for the immediately following quarter.
Notes
Author: Commissioner of Insurance
Statutory Authority: Code of Ala. 1975, ยงยง 27-2-17, 27-17A-1 to -57 (2014).
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