The state of Texas has enacted SB 778. The law establishes financial requirements for providers of identity recovery service contracts, which requires an insurance policy and reserve account reimbursement for the client. The new law also requires financial security in the form of a deposit of cash, a surety bond, securities, a letter of credit or another form of security. This security amount can not be less than $25,000 or 5% of the total consideration the provider received from consumers from the sale of all identity recovery service contracts written and outstanding in the State; if there are any claims paid greater, that will meet the requirement as well. With this new law in place, the provider or its parent company can sustain a net worth or stockholderâ€™s equity of at least $100 million. SB 778 will become effective on January 1, 2010.
Eric is the Chief Marketing Officer of JW Surety Bonds. With years of experience in the surety industry, he is also a contributing author to the surety bond blog.