N.J. Admin. Code § 11:15-2.13

Current through Register Vol. 56, No. 11, June 3, 2024

Section 11:15-2.13 - Establishment of trust fund accounts; transfers or withdrawals prohibited

(a) Pursuant to the terms of the indemnity and trust agreement, each fund shall establish a separate trust fund account in accordance with 11:15-2.6(b)10 from which monies shall be disbursed solely for the payment of claims, allocated claim expenses and excess insurance or reinsurance premiums for each type of liability or risk retained jointly on a self-insured basis. Such accounts shall be designated as claims or loss retention fund accounts.

1. Other than for the purposes specified in (a) above, or as otherwise authorized by this subchapter, no withdrawals may be effected for a claim or loss retention fund without prior written approval of the Commissioner, except for intertrust fund transfers. Intertrust fund transfers, within a fund's fiscal year, may be conducted by the fund at any time, by providing 30 days prior written notification to the Commissioner and the Commissioner of the Department of Community Affairs. If the Commissioner does not disapprove of the transfer, in writing, within 30 days after receiving such written notification, the request for intertrust fund transfer(s) shall be deemed approved. Any intertrust fund transfer request must be supported by appropriate assessment and claim and expense documentation, and be accompanied by a certification signed by an actuary that the amount remaining in the trust fund account after the intertrust fund transfer will be at a level which is reasonable in relation to that account's unpaid losses, along with all documentation in support of such certification. Intertrust fund transfers may be conducted only where each member participates in each and every claim or loss retention fund account during that fund year. The Commissioner may waive the full participation requirement provided the fund demonstrates to the Department that it maintains records of each member's pro rata share of each claim or loss retention fund account for that fund year, and that the transfer shall be made so that any potential dividend shall not be reduced for a member that did not participate in the account receiving the transfer. Notwithstanding anything in this subsection to the contrary, an environmental impairment liability fund may not transfer any monies from the account established for purpose of paying the debt on any bonds issued pursuant to 40A:10-38.1.

(b) An environmental impairment liability fund which issues bonds pursuant to 40A:10-38.1 et seq. shall establish by resolution a separate trust fund account for contingencies to be funded by the proceeds of any bond issue and interest income earned thereon. The resolution shall specify the uses of the contingency account consistent with (b)1 below, and provide a formula for the equitable distribution and return of contingency funds to terminated or withdrawing members in accordance with the procedures and time frames of 11:15-2.2 1.

1. By resolution, an environmental impairment liability fund may transfer funds from a contingency trust fund account to a claims or loss retention trust fund account to pay claims, allocated claim expenses, and excess insurance and reinsurance premiums in a fund year which has an inadequate cash balance. The transaction shall be accounted for as a permanent transfer, and the fund shall notify the Department within 30 days of any such transfers.

2. A fund shall not transfer funds to a claim or loss retention trust fund account from a contingency trust fund account if the transfer would result in a deficit in the contingency trust fund account.

3. If a fund utilizes an amount from a contingency account during a fiscal year, the joint insurance fund commissioners shall, within 10 days of such utilization, submit to the Commissioner and the Commissioner of the Department of Community Affairs a report on the causes of the utilization and the steps taken to prevent a recurrence of such circumstances.

4. The fund shall maintain accounting records on contingency accounts by fund year which shall include:

i. The sources of bond proceeds and interest thereon;

ii. Transfers from the account to a claims or loss retention trust fund account by fund year;

iii. Interest earned, which shall be allocated by the average balance in the contingency account by fund year; and

iv. The pro-rata share of each participating member local unit allocable to each member.

N.J. Admin. Code § 11:15-2.13

Amended by R.1989 d.507, effective 9/18/1989.
See: 21 New Jersey Register 3051(b), 21 New Jersey Register 3017(a).
Provisions added to (a) to allow intertrust fund transfer upon notification of Commissioner.
Amended by R.1995 d.408, effective 8/7/1995.
See: 26 New Jersey Register 2725(a), 26 New Jersey Register 3592(a), 27 New Jersey Register 2938(a).
In (a) provided for waiver of the full participation requirement and added (b)1 through (b)4.