Surety Insurance For You
Updates to the Binder of Standard Forms to include Illinois specific material for the ERISA Dishonesty Bond have been posted. Details on the latest updates are on the Countrywide Filings page.
 | The Binder of Standard Fidelity and Forgery Forms is accessible online for Members, Subscribers, and Claims Advisors. Hard copy order form for non-Members:
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 | Filing Requirements in Massachusetts, New Hampshire and West Virginia
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 | Statutory and Regulatory Provisions Governing Fidelity and Surety Filing Requirements – Rate and Form Filing Status By Jurisdiction SFAA?s Rate and Form Filing Chart has been updated for recent statutory changes. |
For Members only (or navigate to Member Services / Regulatory)
SFAA Comments on Arkansas Pharmacy Benefit Managers Regulations
SFAA submitted comments to the Arkansas Insurance Department (Department) to address proposed regulations that would require pharmacy benefit managers (PBM) to post a $1 million license bond. The proposed rules would permit direct actions on the bond. If the bond amount would cause the PBM significant financial hardship, the Insurance Commissioner could reduce the amount required. We explained the surety?s underwriting process and noted that the high bond amount could reduce the bond?s availability. Similarly, we explained that the proposed regulations contain a broad obligation in the bond?s conditions with regard to complying with any statute. We recommended that the scope of the bond?s conditions be limited to compliance with the applicable laws and regulations for PBMs. SFAA offered to work with the Department on these issues to improve the bond?s availability. The proposed rules also provide that a PBM that furnishes a $1 million bond under the PBM regulation need not furnish a $25,000 bond under the TPA regulation.
Members should visit Advocacy / General Info (Members) for more information.
SFAA Addresses Changes to Georgia Bond Requirements for Livestock Sales
SFAA Addresses Changes to Georgia Bond Requirements for Livestock Sales SFAA submitted comments to the Georgia Department of Agriculture (Department) to address proposed regulations that implement a new law that permits livestock dealers and auction operators to obtain a letter of credit, certificate of deposit, or “other written instrument” in lieu of the bond. SFAA promoted the value of bonds in comparison to other forms of security based on the surety?s prequalification of the bond principal and the financial protection offered in the event of a default. The proposed rules also implement a change in the law that deleted the specified bond amounts for a livestock auction operator and for dealers purchasing livestock at an auction. Instead, the amount of the bond or other security will be determined through a memorandum of agreement with the Department, which must be sufficient to secure the performance of the dealer or the operator’s obligations. To ensure that the amount of financial protection is the same, the amount required should be the same regardless of the form of security that is furnished.
Members should visit Advocacy / General Info (Members) for more information.
SFAA Addresses Surety Qualifications and Bonding Obligation for California Workers? Compensation Collateral Requirements
SFAA submitted comments to the California Department of Insurance (Department) to address proposed rules that would allow surety bonds to be posted to collateralize up to 20% of the funds required to be set aside for the California deductible under a workers’ compensation deductible policy. We questioned the requirement for the surety to have a rating of at least an “A” from A.M. Best, Fitch Ratings, or Standard & Poor’s, or at least an A3 rating from Moody’s Investor Service as sureties already are subject to financial regulation and licensure from the Department. The rating requirement needlessly restricts the sureties that can provide the bond.
SFAA also recommended that the bond?s condition should be clarified to reflect a specific obligation as the proposed rules currently provide for unconditional payments. The surety also would have ten days to pay the amount owed under a written demand for payment from the insurer. SFAA also advised the Department on the value of bonds in comparison to the other forms of security permitted under the proposed rules.
The surety could not be affiliated with the insurer that issued the worker’s compensation deductible policy. The surety must provide 90 days’ notice for cancellation or nonrenewal of the bond and the collateral would have to be replaced within 30 days of the effective date.
Members should visit Advocacy / General Info (Members) for more information.
Commercial Lines Modernization Bills Moving in the States
Members should visit Advocacy / General Info (Members) for more information.
| Regulatory reports for June 2018 have been posted on rules affecting Commercial |
For Members only (or from the menu, select “Advocacy” / “Federal/State Regulations“)
 | SFAA Addresses Coverage for Virtual Currency in Money Transmitter License Bond Rules |
SFAA submitted comments to the Washington Department of Financial Institutions to address proposed rules for money transmitters that expanded the meaning of money transmission to include the transmission of virtual currency. The bond?s existing condition requires the surety to secure the licensee?s compliance with this law. SFAA explained the risks in underwriting virtual currency transmissions due to the volatile fluctuations in the value of the currency. Virtual currency is subject to minimal regulation, is vulnerable to cyberattacks, and the accounts are not insured by the Federal Deposit Insurance Corporation. Underwriting these risks could increase the surety?s exposure by amounts that are difficult to quantify or identify so that the surety bond?s coverage should not be extended to cover them since it could negatively affect the bond?s availability.
Members should visit Advocacy / General Info (Members) for more information.
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