51.1-1139 - Policies to provide for accounting to Board; advance premium deposit reserve.
§ 51.1-1139. Policies to provide for accounting to Board; advance premiumdeposit reserve.
A. Each insurance product purchased by the Board or contract foradministrative services related to a self-funded product shall provide for anaccounting to the Board not later than 120 days after the end of each productyear. For an insurance product, the accounting shall include (i) the amountsof premiums actually accrued under the policy during the policy year, (ii)the total amount of all claim charges incurred during the policy year, and(iii) the amount of fees accrued under the policy during the year plus thetotal amount of all claim charges incurred during the policy year. For aself-insured product, the accounting shall include the total amount of allclaim charges incurred during the product year, the total amount of thirdparty administrator expenses, and the total amount of other charges foradministrative services.
B. Any portion of the excess of the total of clause A (i) over clause A (iii)may, with the approval of the Board, be held by the insurance company in anadvance premium deposit reserve to be used by the company for charges underthe policy only. Any expenses incurred by the Board in connection with theadministration of the disability benefits provisions of the program may bededucted from the advance premium deposit reserve. The advance premiumdeposit reserve shall bear interest at a rate to be determined in advance ofeach policy year by the insurance company. The rate shall be subject to Boardapproval as being consistent with the rates generally used by the company forsimilar funds held under other disability insurance policies. Any portion ofthe excess not held by the insurance company shall be held by the Board to beused for charges under the policy only. If the Board determines that theadvance premium deposit reserve, together with any portion of the excessaccumulated and held by the Board, has attained an amount estimated to makesatisfactory provision for adverse fluctuations in future charges under thepolicy, any further excess shall inure to the benefit of the Commonwealth asdetermined by the Board.
C. For purposes of this section, the insurance company may combine andconsolidate the policies issued by it as directed by the Board.
(1998, c. 774; 2006, c. 641.)