14 Va. Admin. Code § 5-385-40

Current through Register Vol. 40, No. 22, June 17, 2024

Section 14VAC5-385-40 - Application for license; additional requirements

A. An application submitted by a pool shall be accompanied by the following items, which shall be subject to the approval of the commission:

1. A copy of the articles of incorporation, constitution, or other instrument, which sets forth the powers of the pool.

2. A copy of the bylaws or the governing rules of the proposed pool, which may be included as part of the documents provided pursuant to subdivision 1 of this subsection.

3. A copy of the forms to be used for the member agreement and power of attorney, if any.

4. A copy of a financial plan, which sets forth in specific terms:

a. The insurance coverages to be offered by the group self-insurance pool, applicable deductible levels, and the maximum level of claims that the pool will self-insure;

b. The amount of reserves to be set aside for the payment of claims and the methods used to determine their sufficiency; funds and reserves should be identified by exposure areas;

c. A confirmation of excess insurance, if any, issued by a licensed insurer in an amount acceptable to the commission. However, the commission at its discretion may allow this insurance to be placed with an approved surplus lines insurer; and

d. A confirmation of aggregate excess insurance, if any, issued by a licensed insurer in an amount acceptable to the commission. However, the commission at its discretion may allow this insurance to be placed with an approved surplus lines insurer.

5. A copy of a plan of management, which provides for all of the following:

a. The means of establishing the governing authority of the pool;

b. The responsibility of the governing authority for determining and collecting contributions to the pool, holding and investing assets, maintaining reserves, paying claims, levying and collecting assessments for deficiencies, disposing of surpluses, and the administration of the pool in the event of termination or insolvency;

c. The basis upon which new members may be admitted to, and existing members may leave, the pool. This shall include the requirement that each member, as a condition for initial and continued coverage, submit a financial statement in a form acceptable to the commission, which demonstrates the solvency of the prospective member and its ability to meet its financial obligations; and

d. Such other items as are necessary or desirable for the operation of the pool.

6. Designation of the initial or interim board and the administrator, together with pertinent biographical information for each member of the board and for the administrator or the principal officer or officers of the corporation serving as administrator. This information is to be submitted in a form acceptable to the commission.

7. The address in this Commonwealth where the books and records of the pool will be maintained at all times.

8. Information showing that the pool has, within its own organization or by contract with an approved service agent, sufficient facilities and competent personnel to service its program with respect to underwriting matters, compilation of statistics, loss prevention, safety engineering, and claims adjusting. Copies of all executed service agreements shall be filed with the commission.

9. A confirmation of a fidelity bond covering the administrator and its employees in a form and amount acceptable to the commission.

10. A projection of administrative expenses for the first year of operation as a total dollar amount and as a percentage of the estimated annual contributions.

11. Proof of net worth of the pool of at least $100,000.

B. An application submitted by a group self-insurance pool shall be accompanied by a composite listing of the estimated annual gross contributions of each organizing member of the pool individually and in the aggregate for the pool, which, in the aggregate, shall be not less than 10 times the largest deductible being covered. The pool shall maintain a net worth in an amount equal to not less than 20% of the annual aggregate contributions for contracts currently in force; however, the minimum required net worth shall at no time be less than $100,000.

C. Any subsequent revisions to items submitted under the provisions of 14VAC5-385-30 and this section shall be filed with the commission within 30 days of such revision and shall be subject to approval by the commission.

14 Va. Admin. Code § 5-385-40

Derived from Virginia Register Volume 19, Issue 2, eff. October 1, 2002.

Statutory Authority

§§ 12.1-13, 38.2-223, and 62.1-44.34:12 of the Code of Virginia.