Virginia Law

Article 2. Additional Funds Paid to the Association.

The purpose of this article is to provide directions and guidelines for the control and use of funds provided pursuant to § 38.2-225 or any other sources of funds not specified in Article 1 (§ 38.2-1700 et seq.) of this chapter.

1986, c. 562.

The Association shall maintain a separate asset account to be known as the safety fund for the purpose of meeting the Association's objectives as specified in § 38.2-1700.

1986, c. 562.

A. The safety fund, at the discretion of the Commission, shall receive penalty payments levied against member insurers made pursuant to subsection B of § 38.2-225 or any other payments approved by the Commission.

B. The Commission may approve the payment of funds to the Association provided the balance in the safety fund account does not exceed two percent of the total of all member insurer's premium received in this Commonwealth for classes of insurance covered by the accounts specified in subsection A of § 38.2-1702.

C. Investment income earned on assets held in the safety fund shall be credited to the safety fund provided the balance of the safety fund does not exceed three percent of the total of all member insurer's premium received in this Commonwealth for classes of insurance covered by the accounts specified in subsection A of § 38.2-1702 unless otherwise determined by the Commission.

D. In the event the safety fund balance exceeds the amount specified in subsection C of this section, at the discretion of the Commission the difference shall be paid to the state treasury to the credit of the Literary Fund or shall be subject to subsection F of § 38.2-1720.

E. In the event the fund is dissolved, remaining assets in the safety fund will be distributed to the state treasury to the credit of the Literary Fund.

1986, c. 562.

The assets of the safety fund may be invested in securities set forth in § 38.2-1415.

1986, c. 562.

A. The purpose of the safety fund is to provide for the payment of covered claims in the event the assessment limit specified in subsection E of § 38.2-1705 is reached.

B. In the event the assets of the safety fund are needed to pay covered claims, these assets shall be loaned to the respective account listed in subsection A of § 38.2-1702. This loan shall be the general obligation of the Association members and shall be evidenced by an agreement approved by the Commission.

C. Interest on this loan shall be compounded quarterly and be based upon the average ninety-day treasury bill rate for the most recently completed calendar quarter as published in the Federal Reserve Bulletin. This rate will be updated quarterly in order to conform with market rates of interest.

D. This loan shall be repaid by levying assessments against the members for the account on whose behalf the loan was negotiated. Unless otherwise approved by the Commission, the loan shall be repaid within six months of its issuance. This assessment in conjunction with any other assessments levied, shall not exceed the limit specified in subsection E of § 38.2-1705.

E. Subject to the approval of the Commission assets of the safety fund may be loaned to any account in subsection A of § 38.2-1702 even though the maximum assessment in subsection E of § 38.2-1705 has not been levied if the directors of the Association determine that this action will minimize the cost to the Association in paying covered claims.

F. Excess safety fund assets set forth in subsection D of § 38.2-1718 may be used to pay the Association's covered claims without the members incurring a liability to repay the safety fund.

1986, c. 562.

In handling the assets of the safety fund, the Association shall be deemed a fiduciary for the Commonwealth.

1986, c. 562.