Section 904.50  Bond Requirements

a)         All such companies shall procure and maintain in force surety bonds on employees, officers or positions in an amount not less than the amount set forth in the column in subsection (d) headed "Minimum Amount of Bond", based on the amount of admitted assets of the company (as determined from year to year) stated in the annual statement of such company as filed with the Illinois  Division of Insurance.  All surety bonds shall be written with at least a one year discovery period and, if written with less than a 3 year discovery period, shall contain a provision that no cancellation or termination of the bond, whether by or at the request of the insured or by the underwriter, shall take effect prior to the expiration of 90 days after written notice of cancellation or termination has been filed with the Division of Insurance unless an earlier date of cancellation or termination is approved by the Division of Insurance.

b)         Surety bonds required by this Section shall include all employees, officers or positions for the following perils, which may be covered under separate policies:

1)         Dishonesty of employees and officers;

2)         Robbery, burglary, larceny, theft, false pretense, holdup, misplacement, mysterious disappearance, and damage or destruction while property is in any bank or any recognized place of safe deposit, or in transit;

3)         Forgery or alteration.

c)         A surety bond may be written under a deductible form, the amount of the deductible to be not more than the greatest of:

1)         ½ of 1% of the capital and surplus, if a stock company, and, if a company other than stock, its surplus over all liabilities (as determined from year to year) stated in the annual statement of such company filed with the Division of Insurance; or

2)         10% of the total bond requirement as provided in subsection (a).

            Provided, however, the deductible amount shall not in any case exceed $500,000.

d)         If the total bond requirement of a company under subsection (a) is in excess of $100,000, the excess may be written on an excess of loss basis to cover only the peril of dishonesty and may be limited to cover the following officers or employees:

1)         All officers and employees authorized by the Board of Directors to act under the terms and provisions of Section 904.20 of this Part;

until total bond equals $5,000,000.

2)         Officers and employees authorized by the Board of Directors to act under the terms of Section 904.30, except that one or more of the employees of this category may be excluded by action of the Board of Directors;

3)         Such other officers or employees as may be included in the resolution of the Board of Directors authorizing the procurement of coverage on the excess of loss basis.

e)         Surety bonds covering affiliated and/or subsidiary companies substantially under the same management and control may be written to cover the affiliated and/or subsidiary companies jointly.  The total admitted assets of the affiliated and/or subsidiary company having the largest total admitted assets shall be used in calculating the amount of surety cover required under subsection (a).

f)          Surety bonds for any company shall not be procured by such company from affiliated and/or subsidiary companies substantially under the same management and control as the company being bonded.

g)         Notwithstanding any other provision of this Section, any such company may elect to self insure the required surety bond if:

1)         the company has, and maintains at all times while self insured, net admitted assets, in excess of all reserves and other liabilities, of more than $25,000,000;

2)         such self insurance does not cover any officer or director of the company;

3)         the total number of employees covered under such self insurance is not more than 1% of the employees of such company, exclusive of all officers and directors; and

4)         such self insurance is evidenced by a "Certificate of Self Insurance" in an appropriate form, specifically setting forth the liabilities and responsibilities of the company in accordance with this Section and including an addendum setting forth, by name or position, each employee covered, at any time, under the self insurance.

(Source:  Amended at 30 Ill. Reg. 337, effective December 29, 2005)