A surety bond regulation was recently amended with the passing of a new bill in the state of Wyoming on February 21, 2019.
There are two kinds of surety bonds for trust companies that have been affected by House Bill 30.
- Trust Companies Surety Bond for Pledge Capital Accounts
- Fidelity Bonds
The changes made are as follows:
- Emphasis on supervised trust companies
- The minimum bond amount for Trust Companies Surety Bond for Pledge Capital Accounts has been increased from $100,000 to $1,000,000
- In the case of fidelity bonds, chartered family trust company has been replaced with supervised trust companies
Supervised trust companies are public trust companies or chartered family trust companies. A private family trust company is not included in this category.
Chartered family trust companies are businesses that have been granted by the State Banking Commissioner of Wyoming the authority to act and operate as a supervised trust company.
Supervised trust companies act as fiduciaries. They are engaged in the business of trust and estate administration.
What is a Trust Company Surety Bond for Pledge Capital Accounts?
It is an irrevocable pledge of the supervised trust company’s capital account to the State Banking Commissioner of Wyoming.
Investments that have been pledged should be held in a state or nationally chartered bank or savings and loan association that has a principal office in Wyoming.
As financial security, this bond will be used to cover costs incurred by the State Banking Commissioner of Wyoming in receivership or liquidation of the trust company should it become unsafe or unsound.
This bond is a legal agreement that involves the supervised trust company (Principal), People of the State of Wyoming (Obligee), and the Surety (surety bond provider).
Since the Surety will stand as the financial guarantor of the trust company, the Surety will be indebted to the Obligee along with the Principal if a claim is made against the bond.
What is a Fidelity Bond?
This surety bond is for the directors or managers of the supervised trust company. Whether the directors or managers receive salaries or not, each one must have this bond.
The purpose of a fidelity bond is to indemnify the supervised trust company against losses obtained due to the fraudulent acts committed by the bonded persons.
For fidelity bonds, the Principal will be the director or manager and the Obligee will be the supervised trust company.
Fidelity bonds will be obtained and paid for by the supervised trust company.
What happens if a claim arises?
A claim can be made against the bond if the Principal violates any of the bonded conditions.
If a claim occurs, the Surety will not pay a claimant immediately. A claim will undergo a series of steps to verify its validity.
The Surety will first conduct an investigation. During the investigation, the Surety will require the claimant to provide the necessary details and important documents that will support the claim. The Surety will also ask the Principal to provide his or her own evidence as well.
Once the validity of the claim has been established, the Surety will immediately pay the claimant.
Under the indemnity agreement, the Principal must reimburse the payments made by the Surety soon after.
How much do Wyoming Trust Companies Bond cost?
The bond amounts are as follows:
- Trust Companies Surety Bond for Pledge Capital Accounts – Minimum of $1,000,000
- Fidelity Bonds – varies
The bond premium for these bonds will be the amount that the supervised trust companies will pay the Surety.
Bond premiums will depend on the creditworthiness of the supervised trust companies. Bond premiums will usually range from 1% to 8% of the bond amount.
How can I get a Wyoming Trust Company Bond?
The first step is to APPLY FOR THIS SURETY BOND HERE.
You will be asked to submit a few documents needed for the pre-qualification process. An underwriter will check your business/job history, credit history, and financial stability.
Once the bond has been written, the bond premium paid, and the indemnity agreement signed, the bond will be sent to you.