La. Admin. Code tit. 37 § XIII-1119

Current through Register Vol. 50, No. 6, June 20, 2024

Section XIII-1119 - Board of Trustees

A. Except upon approval of the commissioner, the fund's administrator, service company, or any owner, officer, employee of, or any other person affiliated with, such administrator or service company shall not serve on the board of trustees of the fund.

B. All trustees shall be residents of this state or officers of corporations authorized to do business in this state.

C. The board of trustees of each group shall ensure that all claims are paid promptly and take all necessary precautions to safeguard the assets of the group, including all of the following:

1. maintain responsibility for all monies collected or disbursed from the group and segregate all monies into a claims fund account and an administrative fund account. At least 70 percent of the premium, as determined by the commissioner, shall be designated for the sole purpose of paying claims, allocated claims expenses, and special fund contributions, including second injury and other loss related funds. This shall be called the claims fund account. The remaining net premium shall be designated for the payment of taxes, general regulatory fees, assessments, and administrative costs. This shall be called the administrative fund account. The commissioner may approve an administrative fund account of more than 30 percent and a claims fund account of less than 70 percent only if the group shows to the commissioner's satisfaction that:

a. more than 30 percent is needed for an effective safety and loss control program; or

b. the group's aggregate excess insurance attaches at less than 70 percent;

2. maintain minutes of its meetings;

3. designate an administrator to carry out the policies established by the board of trustees and to provide day-to-day management of the group, and delineate in the written minutes of its meetings the areas of authority it delegates to the administrator;

4. retain an independent certified public accountant to prepare the statement of financial condition required by §1107. A and B hereof;

5. the trustees shall cause to be adopted a set of by-laws or shall enter into a trust agreement which shall govern the operation of the fund.

D. The board of trustees shall not:

1. extend credit to individual members for payment of a premium, except pursuant to payment plans approved by the commissioner;

2. borrow any monies from the group or in the name of the group, except in the ordinary course of business, without first obtaining prior approval from the commissioner.

La. Admin. Code tit. 37, § XIII-1119

Promulgated by the Department of Insurance, Office of the Commissioner, LR 18:1403 (December 1992).

AUTHORITY NOTE: Promulgated in accordance with R.S. 23:1193.