(a) Before soliciting any applications for insurance required under Section 27-27-15, as qualification for the original certificate of authority, the incorporators of the proposed mutual insurer shall file with the commissioner a corporate surety bond in the penalty of $15,000.00 in favor of the State of Alabama and for the use and benefit of the state and of applicant members and creditors of the corporation. The bond shall be conditioned as follows:
(1) Upon payment of any loss suffered by applicants who have cancelled or lapsed existing insurance policies due to misrepresentation by the incorporators or by persons soliciting such applications under authorization by the corporation, to the effect that the making of such application for insurance and prepayment of premiums in such proposed insurer provides insurance protection prior to issuance of a certificate of authority to such insurer by the commissioner; and
(2) That in event the corporation fails to complete its organization and secure a certificate of authority issued by the commissioner within one year after the date of its certificate of incorporation, all premiums collected in advance from applicant members will be promptly returned to them, all other indebtedness of the corporation, other than any compensation to directors, officers, or solicitors of insurance applications, will be paid and for payment of costs incurred by the state in event of any legal proceedings for liquidation or dissolution of the corporation.
(b) In lieu of such a bond, the incorporators may deposit with the commissioner $15,000.00 in cash, or its equivalent, or in United States government bonds at par value, to be held in trust upon the same conditions as required for the bond.
(c) Any such bond filed or deposit, or remaining portion thereof, held under this section shall be released and discharged upon settlement and termination of all liabilities against it under this section.