INDEMNITY BONDS OF DIRECTORS, OFFICERS, AND EMPLOYEES.

(a) An association shall maintain a blanket indemnity bond with an adequate corporate surety protecting the association from loss by or through dishonest or criminal action or omission, including fraud, theft, robbery, or burglary, by an officer or employee of the association or a director of the association when the director performs the duties of an officer or employee.

(b) An association that employs a collection agent who is not covered by the bond required by Subsection (a) shall provide for the bonding of the agent in an amount equal to at least twice the average monthly collection of the agent unless the agent is an institution insured by the Federal Deposit Insurance Corporation. An association shall require a collection agent to settle with the association at least monthly.

(c) The board and the commissioner must approve:

(1) the amount and form of the bond; and

(2) the sufficiency of the surety.

(d) The bond must provide that a cancellation by the surety or the insured is not effective until the earlier of:

(1) the date the commissioner approves for the cancellation; or

(2) the 31st day after the date written notice of the cancellation is given to the commissioner.