New regulations in Texas mean a new surety bond on the market.
The Texas legislature recently enacted new requirements governing companies that provide identity recovery services. Traditionally, these contracts in Texas required an insurance policy and a client reimbursement account. The new regulations add a layer of fiscal protection. Now, providers must also obtain either a surety bond, a letter of credit, a CD or cash as a means of financial security.
The bond amount must be at least $25,000, or “an amount equal to 5 percent of the gross consideration of the provider received from consumers from the sale of all identity recovery service contracts issued and outstanding in this state, minus any claims,” according to the bill. Beyond that, identity recovery services providers must maintain, or have a parent company that maintains, a net worth or stockholders’ equity of at least $100 million.
The new regulations will apply to identity recovery service contracts entered into after Jan. 1, 2010. Visit the Texas legislature’s bill lookup website to learn more or read the bill in full.