§ 38.2-1705. Assessments
A. For the purpose of providing the funds necessary to carry out the powers and duties of the Association, the board of directors shall assess the member insurers, separately for each account, at any time and for any amounts as the board finds necessary. Assessments shall be due not less than thirty days after written notice has been given to the member insurers. Interest shall be compounded quarterly and be based upon the average ninety day treasury bill rate for the most recently completed calendar quarter as published in the Federal Reserve Bulletin. Interest will accrue on and after the due date.
B. There shall be two classes of assessments, as follows:
1. Class A assessments shall be made for the purpose of meeting administrative and legal costs and other expenses, including the cost of examinations conducted under the authority of § 38.2-1708 E. Class A assessments may be made whether or not related to a particular impaired or insolvent insurer.
2. Class B assessments shall be made to the extent necessary to carry out the powers and duties of the Association under § 38.2-1704 with regard to an impaired or an insolvent insurer.
C. 1. The amount of any Class A assessment shall be determined by the board and may be made on a pro-rata or nonpro-rata basis. If pro rata, the board may provide that it be credited against future Class B assessments. A nonpro-rata assessment shall not exceed $200 per member insurer in any one calendar year. With respect to any insurer that became impaired or insolvent after January 1, 1991, the amount of any Class B assessment shall be allocated for assessment purposes among the accounts pursuant to an allocation formula which may be based on the premiums or reserves of the impaired or insolvent insurer or any other standard deemed by the board in its sole discretion as being fair and reasonable under the circumstances.
2. Class B assessments against member insurers for each account shall be in the proportion that the premiums received on business in this Commonwealth by each assessed member insurer on policies or contracts covered by each account for the three most recent calendar years for which information is available preceding the year in which the insurer became impaired or insolvent bear to such premiums received on business in this Commonwealth for such calendar years by all assessed member insurers.
3. Assessments for funds to meet the requirements of the Association with respect to an impaired or insolvent insurer shall not be made until necessary to implement the purposes of this chapter. Classification of assessments under subsection B of this section and computation of assessments under this subsection shall be made with a reasonable degree of accuracy, recognizing that exact determinations may not always be possible.
D. The Association may abate or defer, in whole or in part, the assessment of a member insurer if, in the opinion of the board, payment of the assessment would endanger the ability of the member insurer to fulfill its contractual obligations. In the event an assessment against a member insurer is abated or deferred in whole or in part, the amount by which the assessment is abated or deferred may be assessed against the other member insurers in a manner consistent with the basis for assessments set forth in this section.
E. The total of all assessments upon a member insurer for each account shall not in any one calendar year exceed two percent of the member insurer's premiums received on the policies covered by the account in this Commonwealth during the calendar year preceding the assessment. If the maximum assessment, together with the other assets of the Association in any account, does not provide in any one year in any account an amount sufficient to carry out the responsibilities of the Association, the necessary additional funds shall be assessed as soon as permitted by this chapter.
F. The board may refund to member insurers, in proportion to the contribution of each insurer to that account, the amount the assets of the account exceed the amount the board finds necessary to fulfill the Association's obligations during the coming year. In determining the refunds, assets accruing from net realized gains and income from investments shall be included. A reasonable amount may be retained in any account to provide funds for the continuing expenses of the Association and for future losses if refunds are impractical.
G. It shall be proper for any member insurer to consider the amount reasonably necessary to meet its Class A assessment obligations in determining its premium rates and policyowner dividends for any class of insurance covered by this chapter.
H. The Association shall issue to each insurer paying an assessment under this chapter, other than a Class A assessment, a certificate of contribution in a form prescribed by the Commission, for the amount of the assessment paid, excluding interest penalties. All outstanding certificates shall be of equal priority without reference to amounts or dates of issue. A certificate of contribution may be shown by the insurer on its financial statement as an asset. This shall be shown in a form, in an amount, and for a period of time approved by the Commission.
(1976, c. 330, § 38.1-482.23; 1980, c. 186; 1986, c. 562; 1992, c. 299.)
Sections: Previous 38.2-1700 38.2-1701 38.2-1702 38.2-1703 38.2-1704 38.2-1705 38.2-1706 38.2-1707 38.2-1708 38.2-1709 38.2-1710 38.2-1711 38.2-1712 38.2-1713 38.2-1714 NextLast modified: April 16, 2009