Every administrator shall possess and maintain a deposit in favor of this state to be held in trust for the benefit and protection of insureds and insurers whose monies the administrator handles consisting of cash, securities eligible for investment pursuant to chapter 3, articles 1 and 2 of this title, or a surety bond in a form acceptable to the director and issued by a corporate surety authorized to transact business in this state. The amount of the deposit shall be ten per cent of the amount of total funds handled unless the director determines that a lesser amount is adequate for the protection of the public but in no case shall the bond be less than five thousand dollars. The amount of the deposit shall be determined by the total funds handled by the administrator during the preceding year, or if no funds were handled during the preceding year, the amount of funds reasonably estimated to be handled during the current calendar year by the administrator. The amount of such deposit is payable on the failure of the administrator to pay benefits it is legally obligated to pay and shall provide protection to the insurers and insureds against loss by reason of acts of fraud or dishonesty and may include individual bonds or schedule or blanket forms of bonds.