Section 750.685 - Indemnification insurance or bond required(1) Except as otherwise provided in this section, no legal expense plan shall be issued, sold or offered for sale in this state unless the organization offering the plan is insured under an insurance contract that provides indemnification for the services under the plan, or reimbursement for services performed under a service contract, in the event of default of the organization. Any such insurance shall be issued only by an insurer authorized to do business in this state.(2) Instead of holding insurance under subsection (1) of this section, an organization offering an access plan described in subsection (5) of this section may post a bond or provide evidence of deposit pursuant to this subsection. The bond or other deposit is to be held in trust to the Director of the Department of Consumer and Business Services for the protection of members of the plan and other affected persons. The initial security bond or other deposit required for an access plan for at least the first full year of operation shall be in the amount of $10,000. The amount of deposit shall be adjusted annually and shall be in an amount equal to 10 percent of the gross written prepaid fees collected from plan members in the preceding calendar year, to a maximum of $50,000. The bond or other deposit is to be held in a bank authorized to do business in this state and insured by the Federal Deposit Insurance Corporation or in a savings and loan association insured by the Federal Deposit Insurance Corporation.(3) Instead of holding insurance under subsection (1) of this section, an organization offering a comprehensive plan described in subsection (5) of this section may post a bond or provide evidence of deposit pursuant to this subsection. The bond or other deposit is to be held in trust to the director for the protection of members of the plan and other affected persons. The initial security bond or other deposit required for a comprehensive plan for at least the first full year of operation shall be in the amount of $25,000. The amount of deposit shall be adjusted annually and shall be in an amount equal to 10 percent of the gross written prepaid fees collected from plan members in the preceding calendar year, to a maximum of $100,000. The bond or other deposit is to be held in a bank authorized to do business in this state and insured by the Federal Deposit Insurance Corporation or in a savings and loan association insured by the Federal Deposit Insurance Corporation.(4) Property used as security shall be held in trust and shall remain unencumbered, and shall have at all times a market value of at least 95 percent of the amount specified. Any bond issued in lieu of security shall be cancelable only upon 30 days' advance written notice filed with the director. Securities or bonds deposited pursuant to this section shall be for the benefit of and subject to action thereon in the event of insolvency of the plan by any person sustaining actionable injury due to failure of the organization to faithfully perform its obligations to its members.(5) For purposes of this section: (a) "Access plan" means a plan that provides legal advice or consultation on legal matters that can be reasonably handled over the phone or by a limited review of routine legal documents.(b) "Comprehensive plan" means a plan that provides legal advice and consultation regarding more complex or time-consuming matters and may include advice and representation in and regarding administrative and civil or criminal judicial proceedings.1989 c.331 §19; 1999 c.107 §18