38.2-1622 - Use of safety fund, repayment, etc.
§ 38.2-1622. Use of safety fund, repayment, etc.
A. The purpose of the safety fund is to provide for the payment of coveredclaims in the event the assessment limit specified in subdivision A 3 of §38.2-1606 is reached.
B. In the event the assets in the safety fund are needed to pay coveredclaims, these assets shall be loaned to the respective account specified in §38.2-1604. This loan shall be the general obligation of the Association.
C. Assets in the safety fund derived from borrowed moneys obtained under theprovisions of subdivision B 7 of § 38.2-1606 shall be lent to an account atthe rate of interest the Association is paying the lender providing suchmoneys. Interest on any other loan shall be compounded quarterly and be basedupon the average ninety-day treasury bill rate for the most recentlycompleted calendar quarter as published in the Federal Reserve Bulletin. Thisrate will be updated quarterly in order to conform with the market rates ofinterest.
D. Loans shall be repaid by levying assessments pursuant to subdivision A 3of § 38.2-1606 against the members for the account on whose behalf the loanwas negotiated. Unless otherwise approved by the Commission, the loan shallbe repaid within six months of its issuance. This assessment in conjunctionwith any other assessments levied, shall not exceed the limit specified insubdivision A 3 of § 38.2-1606.
E. Subject to the approval of the Commission, assets in the safety fund maybe loaned to any account specified in § 38.2-1604 even though the maximumassessment in subdivision A 3 of § 38.2-1606 has not been levied if thedirectors of the Association determine that this action will minimize thecost to the Association in paying covered claims.
F. Excess assets in the safety fund set forth in subsection D of § 38.2-1620may be used to pay the Association's covered claims without the membersincurring a liability to repay the safety fund.
(1986, c. 562; 1998, c. 230.)