N.J. Admin. Code § 11:15-2.21

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

Section 11:15-2.21 - Refunds; interyear fund transfers

(a) Any monies for a fund year in excess of the amount necessary to fund all obligations for that fiscal year as certified by an actuary may be declared to be refundable by the fund not sooner than the time periods after the end of the fiscal year as set forth in (b) and (c) below.

(b) The fund may seek approval from the Commissioner to make initial and subsequent refund payments from a claims or loss retention fund account remaining from any year which has been completed for at least the time periods set forth in this subsection and (c) below by submitting a written notification to the Department and Department of Community Affairs at least 30 days prior to the proposed refund. For a fund other than an environmental impairment liability fund, if the Commissioner does not disapprove, in writing, the request to make the refund within the 30 day period, the request shall be deemed approved. The Commissioner may also affirmatively approve the request prior to the expiration of the 30 day period. An environmental impairment liability fund may not refund any monies without the prior approval of the Commissioner. The written notification shall be accompanied by appropriate documentation including, but not limited to, assessment, claims and expense detail; actuarial certification that the loss and loss expense reserves are adequate for the fund to have an overall surplus for that fiscal year; and such other information that the Commissioner may require. For an environmental impairment liability fund, the initial and any subsequent refund for any year from a claim or loss retention trust account may be in any amount subject to the limitation that after the refund, the remaining net current surplus in the account from which the refund is made must equal or exceed 35 percent of unpaid claims for the account for the fiscal year, plus an amount in the fund's debt service account equal to two years' debt service on any outstanding bonds. Unpaid claim reserves, including reserves for incurred but not reported claims, shall be established at full value and not discounted, and shall be so certified by an actuary. For a fund other than an environmental impairment liability fund, the initial and any subsequent refund for any year from a claim or loss retention trust account may be in any amount subject to the limitation that after the refund, the remaining net current surplus in the account from which the refund is made must equal or exceed the surplus retention requirement to be calculated as follows:

1. Fund year paid losses shall be multiplied by the appropriate paid loss factor for the line of coverage and duration of maturity set forth in Exhibit E in the Appendix incorporated herein by reference;

2. Fund year unpaid claim reserves, excluding reserves for incurred but not reported claims, shall be multiplied by the appropriate unpaid claim factor for the line of coverage and duration of maturity set forth in Exhibit E in the Appendix incorporated herein by reference. Unpaid claim reserves, excluding reserves for incurred but not reported claims, shall be established at full value and not discounted;

3. The greater of the results from the calculation set forth in (b)1 and 2 above shall then be reduced by the amount of outstanding losses reported, including incurred but not reported claims, as certified by an actuary. The result of this calculation, but not less than zero, shall be the surplus retention requirement for that fund year.

(c) An environmental impairment liability fund may seek approval pursuant to (b) above to make an initial refund payment from any trust account remaining from any year which has been completed for at least 120 months from the conclusion of the fund year, in the case of any liability or legal or defense services coverages, or at least 12 months from the conclusion of the fund year, in the case of environmental or risk management services coverage; and may seek approval to make subsequent refund payments from a trust account remaining from any year which has been completed for at least 132 months from the conclusion of the fund year, in the case of any liability or legal or defense services coverages, or at least 24 months from the conclusion of the fund year, in the case of any environmental risk management services coverage.

(d) A full and final refund of net current surplus will not be allowed until all case reserves and all unpaid claim reserves are closed. Notwithstanding anything in this section to the contrary, an environmental impairment liability fund may not refund any monies from the account established for purposes of paying the debt on any bonds issued pursuant to 40A:10-38.1.

(e) A refund for any fiscal year shall be paid only in proportion to the member's participation in the fund for such year. Payment of a refund on a previous year shall not be contingent on the member's continued membership in the fund after that year.

(f) At the option of the member the refund may be retained by the fund and applied towards the member's next annual assessment.

(g) In the case of an environmental impairment liability fund, the commissioners or executive committee may appropriate a portion of any refund to the appropriate contingency account subject to the provisions of 11:15-2.1 3(b).

(h) A fund may seek approval from the Commissioner to make interyear fund transfers from a claims or loss retention trust account from any year not sooner than 24 months, or 60 months, in the case of an environmental impairment liability fund, after the end of that year by submitting a written notification to the Department with appropriate documentation as set forth in (b) above at least 30 days prior to the proposed transfer. In the case of a fund other than an environmental impairment liability fund, if the Commissioner does not disapprove, in writing, the request within the 30 day period, the request shall be deemed approved. The Commissioner may also affirmatively approve the request prior to the expiration of the 30 day period. An environmental impairment liability fund may not make an interyear fund transfer without the prior approval of the Commissioner. The interyear fund transfer may be in any amount subject to the limitation that after the transfer, the remaining net current surplus in the account from which the transfer is made must equal or exceed the surplus retention requirement determined pursuant to (b) above, for the particular fund, for that account for the fiscal year. The membership for each fiscal year involving interyear fund transfers must be identical between fiscal years. The Commissioner may waive the identical membership 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, and that the transfer may be made so that any potential dividend shall not be reduced for a member that did not participate in the year receiving the transfer.

N.J. Admin. Code § 11:15-2.21

Amended by R.1989 d.507, effective 9/18/1989.
See: 21 N.J.R. 3051(b), 21 N.J.R. 3017(a).
Requirement at (a) changed from 12 months to 24 months; subsequent refund amounts and time period provisions added, interyear transfer provisions added at (e), surplus requirement tied to claims data at (b).
Amended by R.1995 d.408, effective 8/7/1995.
See: 26 N.J.R. 2725(a), 26 N.J.R. 3592(a), 27 N.J.R. 2938(a).
Added (b)1 and (b)2; renumbered (e) as (f) and provided for waiver of identical membership requirement; and added new (e).
Amended by R.1996 d.534, effective 11/18/1996.
See: 28 N.J.R. 4027(a), 28 N.J.R. 4877(a).
Amended by R.2007 d.84, effective 3/19/2007.
See: 38 N.J.R. 4979(a), 39 N.J.R. 934(c).
In (c), inserted "from the conclusion of the fund year" throughout.