RS 22:454 Insolvency deposit
§454. Insolvency deposit
A. Prior to the issuance of any certificate of authority under this Subpart, each applicant shall deposit with the commissioner safekeeping receipts or trust receipts from insured banking or other financial institutions chartered to do business in the state of Louisiana, evidencing that the applicant has deposited with said institutions one million dollars, or such other amount as may be authorized by Subsection E of this Section, in cash to guarantee its financial responsibility. No single deposit shall exceed the insured deposit limit of any such banking or financial institution.
B. Each receipt or other evidence of deposit or security shall contain a restriction which shall read as follows:
"ACKNOWLEDGEMENT OF RESTRICTION
The cash or other deposit evidenced by this receipt shall be held by the issuer or its successors or assigns, to demonstrate to the Louisiana Department of Insurance that the owner-payee of the receipt is financially responsible and capable of performing its obligations as a self-insurer. This certificate shall be renewed and renegotiated between the issuer and the owner-payee without the necessity of the receipt's release or surrender and funds evidenced hereby shall remain on deposit at or with the issuing institution, its successors or assigns, until notice of release or a demand of payment signed by the duly authorized elected incumbent commissioner of insurance of the state of Louisiana, or his duly authorized deputy, has been presented to issuer. Any issuer making payment to the commissioner upon his written demand and upon a showing of good cause shall not be liable in any manner to the owner-payee or any other person for having made such disbursement of funds. Interest earned on the funds evidenced hereby shall be paid to the owner-payee on a regular periodic basis as agreed to by the issuer and the owner-payee."
C.(1) In lieu of the one million dollar aggregate deposit or deposits required by Subsection A of this Section, each self-insurer applying for a certificate of authority may deposit with the commissioner an irrevocable letter or letters of credit issued in his favor in the amount of one million dollars in the aggregate, which shall be issued and maintained subject to the terms and conditions hereinafter set forth. The letter or letters of credit shall be issued by an insured banking or other insured financial institution chartered to do business in the state of Louisiana.
(2) Each letter of credit shall be issued for a term of three years from the date thereof. Once issued, the letter of credit shall not be cancelled regardless of the financial status of the applicant or the financial institution during the term thereof. Every letter of credit shall contain a provision providing for the automatic extension, renewal, or reissuance after the initial three-year term, from year to year, unless notice to the contrary by the issuing financial institution is given to the commissioner by registered mail not less than ninety days prior to the expiration date. Upon receipt of notice that the letter or letters of credit will not be renewed, the commissioner shall have the following options:
(a) He may convert the letter or letters of credit to a cash deposit by calling for funding or payment in full thereon.
(b) He may accept a substitute letter or letters of credit if they meet the requirements of this Section.
(c) He may convert the letter or letters of credit to a cash deposit and suspend the certificate of authority issued to the self-insurer.
D.(1) No letter or letters of credit issued as provided for in this Section shall be revoked, cancelled, terminated, substituted, or withdrawn by any issuing bank or financial institution without the written approval of, and ninety days prior written notice to, the commissioner, such notice to be given by registered mail, return receipt requested. Upon receipt of any such notice, the commissioner may exercise the powers and options granted in Subsection C of this Section with respect to the letter or letters of credit. The commissioner shall give written notice of the option to be exercised to the issuing financial institution and the self-insurer at least ten days prior to termination of the letter or letters of credit. The issuer of the letter or letters of credit shall fully fund the letter or letters of credit within twenty-four hours after receipt of notice to do so by the commissioner.
(2) Upon failure of any bank or financial institution to fund any letter or letters of credit, the commissioner shall apply to the Nineteenth Judicial District Court in and for the parish of East Baton Rouge for a rule to show cause why the letter or letters of credit should not be funded.
E. Repealed by Acts 2009, No. 503, §2.
Acts 1984, No. 857, §1; Acts 1990, No. 902, §1; Redesignated from R.S. 22:3004 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009; Acts 2009, No. 503, §2.
NOTE: Former R.S. 22:454 redesignated as R.S. 22:183 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009.