Virginia Law

Specific and aggregate excess insurance may be required as a condition for licensing a group self-insurance association and shall be subject to the following requirements:

1. No contract or policy of excess liability insurance shall be recognized by the commission in considering the ability of an applicant to fulfill its financial obligations under the Act unless this contract or policy:

a. Is issued by an insurer licensed or approved by the commission. However, the commission at its discretion may allow this insurance to be placed with an approved surplus lines insurer;

b. Is not cancellable or terminable for any reason except upon 60 days written notice sent by registered or certified mail to:

(1) The association; and

(2) The commission.

c. Is automatically renewable at the expiration of the policy period except upon 60 days written notice sent, by registered or certified mail to:

(1) The association; and

(2) The commission.

2. If the contract or policy contains any type of commutation clause, it shall provide in substance:

a. That any commutation effected under the policy shall not relieve the underwriter or underwriters of further liability in respect to claims and expenses unknown at the time of such commutation or in regard to claims apparently closed but which may be subsequently revived by or through a competent authority; and

b. That in the event the underwriter proposes to settle liability to the association for any future payments payable as compensation for injuries occurring during the term of the policy by the payment of a lump sum to be fixed as provided in the commutation clause of the policy, not less than 30 days prior notice of this commutation shall be given to the commission by registered or certified mail by the underwriter or its agent.

3. In the event any commutation is effected, the commission shall have the right to direct that this sum either:

a. Be placed in trust for the benefit of the injured employee or dependent entitled to the future payment of benefits, or

b. Be invested by the association in the manner permitted by 14VAC5-370-70 and held along with any income or gains from the investments in a special reserve subject to further order of the commission to assure the future payment of compensation to the employee or dependent entitled to the compensation.

4. No more than one association, which shall be defined as the named insured, shall be covered by any contract or policy of excess liability insurance. Any reinsurance contract issued on any contract or policy of excess liability shall contain a clause providing that, (i) the reinsurance is written expressly for, and for the protection of, the named insured, and (ii) in the event of the aggregate and/or specific excess underwriter's going into liquidation or being otherwise unable to pay to the named insured, the reinsurer of the aggregate and/or specific excess underwriter will pay benefits as may be due under the terms of the reinsurance contract directly to the named insured;

5. Copies of the complete contracts or policies of excess liability insurance, complete with all endorsements thereto, shall be filed with the commission.

The commission may release the association from the excess insurance requirement if the contingency reserve established by the association is in an amount determined by the commission to be adequate.