18 Del. Admin. Code § 1405-6.0

Current through Register Vol. 28, No. 5, November 1, 2024

Section 1405-6.0 - Surplus Requirements

6.1 When a fully-insured association or MEWA submits its initial application as required under subsection 4.1 with the Department, it shall have a minimum surplus that is not less than $500,000, regardless of whether the insurer directly bills certificate holders for premiums on behalf of the association or MEWA or if the association or MEWA bills its members for premiums and remits the premiums to the insurer.

6.2 A fully insured association or MEWA shall continue to maintain the required minimum surplus indicated in subsection 6.1 so long as it continues to provide a health benefit plan in Delaware.

6.3 One year after the application for licensure pursuant to subsection 4.1 is approved and on every July 1 thereafter, a fully insured association or MEWA shall produce documentation of its annual premium for the preceding policy year and an estimate of its annual premium for the following year.

6.4 Surplus funds required under this Section are not to be used to fund the fully insured association or MEWA's normal operations, including providing a health benefit plan to its members. This unimpaired free surplus shall be in the form of cash or marketable securities.

6.5 The Commissioner may require additional surplus funds, based on the coverages and exposures involved.

6.6 If the level of surplus falls below the amounts specified in subsection 6.1, the fully insured association or MEWA shall notify the Commissioner within five days and shall file with the Commissioner within 45 days a plan to return the surplus to the required level. This plan shall include a report of the causes of the association's or MEWA's insufficiency, the assessments necessary to replenish the minimum surplus and the steps taken to prevent a recurrence of such circumstances.

6.7 In addition to the minimum surplus required in subsection 6.1, the fully insured association or MEWA shall obtain a surety bond sufficient to cover 20% of its annual premium for Delaware members, and shall comply with the following:

6.7.1 For the first year of operation, the fully insured association or MEWA shall obtain a surety bond in the amount of $500,000.00 to ensure the association's or MEWA's contractual obligations to its health benefit plan members:

6.7.2 Every surety bond obtained by a fully insured association or MEWA shall be:

6.7.2.1 In a form to be approved by the Commissioner;

6.7.2.2 Issued by an insurer or surety licensed to transact such business in Delaware, or by a surplus lines insurer on Delaware's approved list; and

6.7.2.3 Provided, by certified copy, to the Commissioner at the time of initial application under subsection 4.1 and annually thereafter; and

6.7.3 A fully insured association or MEWA shall notify the Department within five days of any cancellation or termination of its surety bond.

18 Del. Admin. Code § 1405-6.0

22 DE Reg. 509 (12/1/2018) (Final)