In those instances in which the Commissioner in his or her judgment shall deem it to be in the best interests of the citizens of this state, no certificate of authority shall be issued by the Commissioner to any foreign and alien insurer nor shall any certificate of authority be renewed for any such insurer unless such insurer shall deposit with the Commissioner securities eligible for the investment of capital funds in such amount as the Commissioner shall require. This deposit and the deposit required by paragraph (1) of subsection (b) of Code Section 33-3-8 shall be administered as provided for in Chapter 12 of this title. Deposits under this Code section shall be held for the protection of the insurer's policyholders in this state and others in this state entitled to the proceeds of its policies.
(Code 1933, § 56-310, enacted by Ga. L. 1960, p. 289, § 1; Ga. L. 1967, p. 765, § 1; Ga. L. 1972, p. 1015, § 14; Ga. L. 2016, p. 519, § 1/HB 884; Ga. L. 2019, p. 337, § 1-17/SB 132.)
The 2019 amendment, effective July 1, 2019, substituted "In those instances" for "On and after July 1, 1967, in those instances" at the beginning of this Code section.
Cross references.- Administration of deposits, T. 33, C. 12.
Law reviews.- For article discussing restrictions on the establishment and transaction of business by a foreign insurer in Georgia with emphasis on threshold requirements for establishment by alien insurers, see 27 Mercer L. Rev. 629 (1976).
JUDICIAL DECISIONS
Editor's notes.
- In light of the similarity of the statutory provisions, decisions under former Code 1933, Ch. 56-3 are included in the annotations for this Code section.
Purpose of deposit.
- The bonds which a foreign insurance corporation doing business in this state is required to deposit are to prevent a suit against a dissolved corporation from being futile and unavailing. Manufacturing Lumbermen's Underwriters v. South Ga. Ry., 57 Ga. App. 699, 196 S.E. 244 (1938) (decided under former Code 1933, Ch. 56-3).
The former statute as to the depositing of bonds and retaining them so long as there is a pending claim in the state and the former statute providing for the prosecution of pending suits after the dissolution of a foreign corporation are a part of the general scheme of the Georgia law to protect Georgia citizens in the collection of just claims against foreign corporations which are dissolved and which have their principal assets in another state. Manufacturing Lumbermen's Underwriters v. South Ga. Ry., 57 Ga. App. 699, 196 S.E. 244 (1938) (decided under former Code 1933, Ch. 56-3).
Local action necessary for appropriation of deposit.
- A suit brought in a local court is a condition precedent to the appropriation of the bonds deposited by a foreign insurance corporation held by the state treasurer to the payment of a fire loss. Manufacturing Lumbermen's Underwriters v. South Ga. Ry., 57 Ga. App. 699, 196 S.E. 244 (1938) (decided under former Code 1933, Ch. 56-3).
The death of a nonresident fire insurance company does not terminate a suit. Manufacturing Lumbermen's Underwriters v. South Ga. Ry., 57 Ga. App. 699, 196 S.E. 244 (1938) (decided under former Code 1933, Ch. 56-3).
Deposit remains subject to claims of Georgia citizens over foreign receivers.
- Nonresident fire insurance companies doing business in this state are required to deposit certain bonds. These bonds are for the protection of the citizens of Georgia who have insurance with the nonresident company, and if the foreign company ceases to do business, the bonds remain on deposit until such company shall have settled all claims against it in this state, and are subject to the claims of Georgia citizens under certain prescribed conditions. As long as there are any claimants to these bonds under the laws of Georgia, a receiver in another state would have no right to interfere with proceedings of the courts of Georgia instituted to assert the rights of a Georgia claimant in whose behalf the bonds were deposited. Manufacturing Lumbermen's Underwriters v. South Ga. Ry., 57 Ga. App. 699, 196 S.E. 244 (1938) (decided under former Code 1933, Ch. 56-3).
Cited in Preferred Ins. Co. v. Bentley, 223 Ga. 735, 157 S.E.2d 737 (1967); Garamendi v. Ryles, 204 Ga. App. 747, 420 S.E.2d 633 (1992).
OPINIONS OF THE ATTORNEY GENERAL
General scheme of Georgia law to protect Georgia citizens.
- This section and the provision requiring insurers to extinguish all liability before releasing deposits securing the liability are part of the general scheme of Georgia law to protect Georgia citizens in the collection of just claims against foreign corporations which are dissolved and which have their principal assets in other states. 1965-66 Op. Att'y Gen. No. 66-25.
Federal National Mortgage Association participation certificates are authorized securities and may be accepted for deposit under this section. 1969 Op. Att'y Gen. No. 69-346.
Termination of liability allowing release of deposit may be by reinsurance.
- The extinguishment of liability provision of former Ga. L. 1887, p. 113; Civil Code 1895, §§ 2039, 2041; Civil Code 1910, §§ 2423, 2425; Code 1933, §§ 56-323, 56-324; Code 1933, § 56-1108, enacted by Ga. L. 1960, p. 289, § 1 (see O.C.G.A. § 33-12-8(1)) was intended to mean that an insurer, before being allowed to take down its deposits, must extinguish, that is, put an end to all of its liability for the security of which the deposit is held and that, in addition to any other means by which this might be accomplished, it could also be accomplished by the means of reinsurance; to be accomplished by reinsurance would require a reinsurance contract whereby a second insurer is substituted for the first or withdrawing insurer, with the consent of the insured, which, of course, would release the first insurer from all liability to the insured. 1965-66 Op. Att'y Gen. No. 66-25.
Priority of claims.
- Claims under policies for losses incurred take priority over claims for the refund of unearned premiums against general or special deposits posted by insurance companies pursuant to O.C.G.A. §§ 33-3-8(b) and33-3-9. 1984 Op. Att'y Gen. No. 84-5.
RESEARCH REFERENCES
Am. Jur. 2d.
- 43 Am. Jur. 2d, Insurance, §§ 37, 46.
C.J.S.- 44 C.J.S., Insurance, §§ 82 et seq., 142, 178, 194 et seq.