Surety Bond News

Tennessee State introduced a new law relating to tobacco manufacturers. The new law is referred to as SB 2169 and requires non-participating manufacturers that are not included in the directory of approved tobacco manufacturers to acquire a surety bond in order to be included on the list. These companies do not partake in the State’s master settlement agreement and instead put funds into an escrow account as directed under present legislation. The surety bond must be in a quantity of $100,000 from a corporate surety “located within the United States.” The surety bond is conditioned on the non-participating manufacturer’s execution of all of its responsibilities and obligations under this chapter and the Tennessee Tobacco Manufacturers’ Escrow Fund Act of 1999. SB 2169 became active upon enactment.

Debt-management services are impacted by a new law in Tennessee State which is labeled SB 812. The new law enacts the Uniform Debt Management Services Act of the National Conference of Commissioners of Uniform State Law. SB 812 requires debt-management service providers to acquire a $50,000 surety bond. The Attorney General may amplify or reduce the required amount of the surety bond calculated by specific conditions of the licensee. The new law requires surety companies to receive an “A” rating from a nationally acknowledged rating service and must be licensed within the State. The surety bond runs to the State for the advantage of the state and those who enter into agreements with the provider. The surety bond must be active for a further two years after the registrant stops executing debt-management services in Tennessee. SB 812 authorizes a certificate of insurance or a letter of credit in the place of a surety bond. The new law becomes active on July 1st, 2010.

Modifications have been made to the surety requirements for depository bonds in Tennessee. The new law enacted is named SB 17 and amends the surety qualifications for depository bonds securing state funds. The previous law stated that the surety business must be rated in the uppermost class for claims paying capability by at least two nationally renowned statistical rating services. Alternatively, SB 17 authorizes the surety company to be in one of the two highest categories by one or more rating organizations. The new law also caps the quantity of the surety bond at $30 million or half of all required collateral for a financial establishment acting as a state depository, whichever is less. SB 17 also boosts the notification period for termination by the surety company from 30 days to 60 days.

The State of Tennessee has implemented new legislation regarding viatical settlement providers. The new law is named HB 2296 and requires viatical settlement brokers and providers to attain some confirmation of financial responsibility; a surety bond is authorized for this. The surety bond must be in a quantity of at least $250,000. HB 2296 authorizes a deposit of cash, certificates of deposit, or securities in place of or in combination with the surety bond as satisfactory forms of evidence of financial responsibility. The new law also authorizes the broker to present proof that financial instruments abiding by the new law’s requirements have been submitted with a state where the applicant is licensed. HB 2296 became active on August 17th, 2009.

On 06/13/2008, a new sports promoter law was enacted named HB 2633. The new Tennessee law requires mixed martial arts, boxing, and kickboxing contest promoters to post a license bond in the amount of $25,000. The bond must be from a surety licensed in the state. As an alternative for posting a surety bond, cash or other securities are also acceptable.