Surplus - guarantee fund deposit - regulations

(1) No corporation subject to the provisions of part 1 of this article and this part 3 shall be permitted to do any business in this state unless, in addition to the other requirements of law, it has and maintains surplus in an amount not less than five percent of the corporation's subscription income collected in the preceding year, not exceeding two million dollars, plus two and one-half percent of such income exceeding two million dollars but not exceeding ten million dollars, plus one percent of such income exceeding ten million dollars; but, in no event shall such surplus be less than one hundred thousand dollars. All corporations subject to the provisions of part 1 of this article and this part 3 shall place on deposit with the commissioner a guarantee fund of cash or approved securities in an amount determined by such formula, but not less than one hundred thousand dollars nor more than one million five hundred thousand dollars. Any amount of said surplus required by this subsection (1) and subsection (3) of this section in excess of one million five hundred thousand dollars shall be maintained by the corporation at all times, but shall not be required to be placed on deposit with the commissioner.

(2) The cash or securities representing the guarantee fund required by this section shall be deposited with the commissioner under joint control in the same manner as prescribed in sections 10-3-206, 10-3-210, and 10-3-211.

(3) The regulations authorized in this subsection (3) are to be promulgated to avoid situations where the transactions of a corporation subject to the provisions of part 1 of this article and this part 3 would create undue financial risks to its subscribers or the people of this state. The commissioner may by regulation establish standards consistent with the risk-based capital models applicable to hospital, medical, and dental service or indemnity corporations developed or adopted by the national association of insurance commissioners which require any such corporation to maintain a greater minimum level of surplus than the specified dollar minimums established by subsection (1) of this section. Such minimum level of surplus shall reflect the type, volume, and nature of the business being transacted. Such regulations may additionally require the submission of an opinion by a qualified actuary which states whether or not the surplus level of the entity is sufficient.