Section 90. Contribution requirements and distribution of surplus funds

A. For the purpose of funding the liability of a pool the members shall make contributions to the pool in the manner prescribed in the member agreement.

B. At the effective date of the license of the pool and for each subsequent year of operation, at least 25% of the estimated annual contribution payable by each member of the pool shall have been paid into a designated depository. The balance of the annual contribution shall be paid no later than the end of the ninth month of the pool year. At no time shall each member's combined payments be less than the total earned estimated annual contribution due at that time.

Any surplus assets (i.e., those assets in excess of the amount necessary to fulfill all obligations under § 62.1-44.34:16 of the Code of Virginia and this chapter) accumulated within a pool year may be declared refundable by the board. The board shall establish the plan and the dates for payment of these excess assets. Payment of this surplus shall not be made until approved by the commission. Surplus assets accumulated within a pool year shall be used exclusively for the benefit of those members belonging to the pool during that pool year. The accounting of the surplus for each pool year shall provide for a separate itemization of the surplus for each pool year. The surplus assets of one pool year shall not be used to offset the deficiencies of other pool years.

However, the commission shall require that 3.0% or more of a pool's earned contributions for each fiscal accounting period be allocated to a contingency reserve. The contingency reserve shall be used at the direction of the pool's board subject to the approval of the commission. When the commission is satisfied that the contingency reserve is adequate for the needs of the pool, adjustments may be made by the commission as necessary to the contingency reserve or to contributions to the contingency reserve to maintain it at an established amount.

C. At the time of application each pool shall file with the commission the basis for establishing the annual contribution of its members. Such contributions shall be based on reasonable assumptions and certified by an actuary or other person satisfactory to the commission as to the sufficiency of such contributions. Any changes in annual contribution shall be filed in accordance with 14VAC5-385-40 C.

D. Each pool may levy upon its members an additional assessment whenever necessary to supplement the pool's surplus to assure payment of its obligations. A member may be assessed for any fiscal year during which the member participated in the pool. Such assessment may be made after the end of the pool's fiscal year and after the member has discontinued membership in the pool.

E. The board shall submit to the commission a report of the causes of the pool's surplus insufficiency, the assessments necessary to replenish it, and the steps taken to prevent a recurrence of such circumstances. The report shall be submitted within 30 days of any assessment of pool members under subsection D of this section.

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.