Nevada Administrative Code Chapter 682B - Insurance: Deposits
🏛️ Overview of NAC Chapter 682B – Insurance: Deposits
NAC Chapter 682B establishes regulations governing the deposits that insurers must make to the Nevada Commissioner of Insurance. These deposits serve as a safeguard to ensure that insurers can meet their obligations to policyholders, particularly in the event of insolvency. The chapter outlines the types of deposits, the securities eligible for deposit, and the procedures for managing and releasing these deposits.
📘 Key Provisions
1. Authorized Deposits (NRS 682B.010)
Required Deposits: Insurers must make deposits through the Commissioner to obtain and maintain authority to transact insurance in Nevada.
Deposits from Other Jurisdictions: Domestic insurers may also make deposits in Nevada if required by the laws of other states, provinces, or countries where they are authorized to transact insurance.
Additional Deposits: Insurers may make additional deposits beyond the required amounts as permitted under NRS 682B.080.
2. Securities Eligible for Deposit (NRS 682B.030)
Eligible Securities: Deposits must consist of good interest-bearing or dividend-paying securities that are eligible for investment by domestic insurers under NRS Chapter 682A.
Real Property-Backed Securities: Evidences of indebtedness secured by real property are eligible for deposit only if the real property is situated within Nevada and the indebtedness is a first lien against the property, other than for real property taxes.
3. Deposits Through Commissioner (NRS 682B.040)
Mandatory Deposits: Except as otherwise provided, all deposits must be made through the Commissioner.
Account for Division of Insurance: An account is created in the State Agency Fund for Bonds, where all money received by the Commissioner is deposited with the State Treasurer.
State's Responsibility: The State of Nevada is responsible for the safekeeping of all securities or other assets deposited and shall bear the costs of the depository.
4. Special Deposits (NAC 682B.020)
Determination of Amount: The Commissioner may require an insurer to make a special deposit based on factors such as the amount of business transacted in Nevada, the financial strength of the insurer, and the ability to fulfill policy obligations.
Disposition: The special deposit must be deposited, released, and maintained in accordance with NRS 682B.015.
5. Excess Deposits (NRS 682B.080)
Additional Deposits: Insurers may deposit assets exceeding the required amount by up to 20% or $20,000, whichever is larger, to absorb fluctuations in the value of assets and facilitate asset exchange.
Release of Excess: During the solvency of the insurer, excess deposits may be released upon the insurer's request. During insolvency, excess deposits are released only as provided in NRS 682B.120.
⚖️ Relevant Case Law
While specific case law directly interpreting NAC Chapter 682B is limited, the following general principles apply:
Enforcement Authority: Courts have upheld the authority of the Nevada Division of Insurance to regulate and enforce provisions related to insurance deposits, including the determination and management of required and special deposits.
Protection of Policyholders: The primary purpose of these deposit requirements is to protect policyholders by ensuring that insurers have sufficient assets to meet their obligations.
State's Role: The state's responsibility for the safekeeping of deposited assets underscores its role in maintaining the financial integrity of the insurance market in Nevada.
✅ Compliance Tips
Timely Deposits: Ensure that all required deposits are made promptly to maintain authority to transact insurance in Nevada.
Eligible Securities: Verify that the securities used for deposits meet the eligibility criteria outlined in NRS 682B.030.
Special Deposits: Be prepared to make special deposits if required by the Commissioner, based on the factors specified in NAC 682B.020.
Monitor Excess Deposits: Regularly assess the value of deposited assets and make additional deposits as needed to maintain compliance with the required amounts.
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