51.1-514 - Policies to provide for accounting to Board; advance premium deposit reserve.
§ 51.1-514. Policies to provide for accounting to Board; advance premiumdeposit reserve.
A. Each policy purchased by the Board shall provide for an accounting to theBoard not later than 120 days after the end of each policy year. Theaccounting shall include (i) the amounts of premiums actually accrued underthe policy during the policy year, (ii) the total amount of all mortality andother claim charges incurred during the policy year, and (iii) the amounts ofthe insurer's expenses and risk charges for the policy year.
B. Any portion of the excess of the total of item (i) over the sum of items(ii) and (iii) may, with the approval of the Board, be held by the insurancecompany in an advance premium deposit reserve to be used by the company forcharges under the policy only. Any expenses incurred by the Board on behalfof the group insurance program may be deducted from the advance premiumdeposit reserve. The advance premium deposit reserve shall bear interest at arate to be determined in advance of each policy year by the insurancecompany. The rate shall be subject to Board approval as being consistent withthe rates generally used by the company for similar funds held under othergroup life insurance policies. Any portion of the excess not held by theinsurance company shall be held by the Board to be used for charges under thepolicy only. If the Board determines that the advance premium depositreserve, together with any portion of the excess accumulated and held by theBoard, has attained an amount estimated to make satisfactory provision foradverse fluctuations in future charges under the policy, any further excessshall inure to the benefit of the Commonwealth and other employersparticipating in the group insurance program as determined 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.
(1960, c. 604, § 51-111.67:7; 1970, c. 476; 1973, c. 523; 1978, c. 841; 1983,c. 457; 1990, c. 832; 1991, c. 700; 1997, c. 273.)