Cal. Code Regs. Tit. 10, § 5015 - ILOC Demand Procedures

(a) Upon the establishment of a claim reserve connected to the Bond, Surety shall be authorized to make Demand upon the Corporation for an amount equal to the Loss incurred, and reasonably expected to be incurred within the next sixty calendar sixty (60) days by the Surety.

(b) Demand shall be made in writing, and shall include a statement that a Claim reserve has been established, shall explain why the Claim reserve has been established, and shall specify the amount of the Demand.

(c) Corporation shall mail to Surety, not later than ten (10) calendar days from receipt of Demand, either the amount included in the Demand or an explanation of why the amount requested in the Demand will not be paid by the Corporation. The only reasons for refusing to pay the amount included in the Demand are:

(1) No Claim reserve has been established for the Bond covered by the ILOC.

(2) The amount requested in the Demand lacks reasonable supporting documentation.

(d) After payment has been made by a Corporation, if any net amount is recovered by Surety from any other source, excluding reinsurance, Corporation is entitled, upon actual receipt by the Surety, to the percentage of said net amount which equals the ILOC funds paid as a percentage of Loss paid by the Corporation. Subrogation efforts shall be discontinued by Surety only after providing Corporation with written documentation substantiating insolvency or the inability to pay on the part of Principal or others who agreed to indemnify the Surety, unless otherwise mutually agreed by the Surety and Corporation. In the event of discontinuation of subrogation efforts by Surety, the Surety will assign all of its right, title and interest to recovery to the Corporation.

Notes

Cal. Code Regs. Tit. 10, § 5015

Note: Authority cited: Section 14022(b), Corporations Code. Reference: Sections 14002,14055, 14071 and 14071.5, Corporations Code.

1. New section filed 2-15-94 as an emergency; operative 2-15-94 (Register 94, No. 7). A Certificate of Compliance must be transmitted to OAL by 6-15-94 or emergency language will be repealed by operation of law on the following day.
2. Repealed by operation of Government Code section 11346.1(g) (Register 95, No. 7).
3. New section filed 4-17-95 as an emergency; operative 4-17-95 (Register 95, No. 16). A Certificate of Compliance must be transmitted to OAL by 8-15-95 or emergency language will be repealed by operation of law on the following day.
4. Certificate of Compliance as to 4-17-95 order transmitted to OAL 6-12-95 and filed 7-25-95 (Register 95, No. 30).