Section 50. Security deposit

A. Except as provided in subsection B of this section, each group self-insurance pool licensed by the commission shall maintain with the State Treasurer a security deposit of acceptable securities in an amount equal to 20% of the annual aggregate contributions or $100,000, whichever is greater, for each pool plan year. The commission may, from time to time, release or reduce the security deposit requirement. The security deposit shall be held by the State Treasurer and shall be subject to the provisions of Article 7 (§ 38.2-1045 et seq.) of Chapter 10 of Title 38.2 of the Code of Virginia.

For the purposes of this chapter, acceptable securities shall be (i) investments allowed by §§ 2.2-4500 (legal investments for public sinking funds) and 2.2-4501 of the Code of Virginia (legal investments for other public funds); (ii) securities issued by other states, other than Virginia, and their municipalities or political subdivisions rated A or better by Moody's Investors Services, Inc., or Standard and Poor's, Inc.; (iii) revenue bonds rated Aa (AA) or better by Moody's Investors Services, Inc., or Standard and Poor's, Inc. that are bonds issued by municipalities or political subdivisions of this Commonwealth or any other state; (iv) securities issued by the Federal Home Loan Bank; and (v) securities issued by the Federal Intermediate Credit Banks.

In addition to the minimum security deposit required by this section, the commission may require additional securities it considers appropriate after giving consideration to such factors as excess insurance and the financial ability of the group to meet its obligations under § 62.1-44.34:16 of the Code of Virginia.

B. As an alternative to the security deposit required by subsection A of this section, a group self-insurance pool may have an appropriate endorsement attached to its contracts for excess insurance. The endorsement shall provide that in the event the group self-insurance pool fails to pay its liabilities under § 62.1-44.34:18 of the Code of Virginia, the excess coverage insurer shall become liable immediately for 100% of the total liability and shall make payment as directed by the commission.

Historical Notes

Derived from Volume 19, Issue 02, eff. October 1, 2002.

Statutory Authority

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