N.J. Admin. Code § 11:15-6.20

Current through Register Vol. 56, No. 21, November 4, 2024

Section 11:15-6.20 - Refunds

(a) Any monies for a fund year in excess of the amount necessary to fund all obligations for that fiscal year as certified by an actuary may be utilized to satisfy the surplus requirements set forth in 11:15-6.1 5(b) for the subsequent fiscal year immediately after the end of the current fiscal year, and otherwise may be declared to be refundable by the fund not less than 24 months after the end of the fiscal year.

(b) The fund may seek approval from the Commissioner to make initial refund payments from a claims or loss retention fund account remaining from any year which has been completed at least 24 months, or immediately after the end of a fund year if utilized solely to satisfy surplus requirements for a subsequent fund year, by submitting a written request to the Department with appropriate documentation including, but not limited to, assessment, claims and expense detail; actuarial certification that the loss and loss expense reserves are adequate for the fund to have an overall surplus for that fiscal year; and such other information that the Commissioner may require. The initial and any subsequent refund for any year from a claim or loss retention trust account may be in any amount subject to the limitation that after the refund, the remaining net current surplus in the account from which the refund is made must equal or exceed the surplus retention requirement to be calculated as follows:

1. Fund year paid losses shall be multiplied by the appropriate paid loss factor for the line of coverage and duration of maturity set forth in Exhibit H in the chapter Appendix incorporated herein by reference;

2. Fund year unpaid claim reserves, excluding reserves for incurred but not reported claims, shall be multiplied by the appropriate unpaid claim factor for the line of coverage and duration of maturity set forth in Appendix Exhibit H. Unpaid claim reserves, excluding reserves for incurred but not reported claims, shall be established at full value and not discounted, and shall be so certified by an actuary.

3. The greater of the results from the calculation set forth in (b)1 and 2 above shall then be reduced by the account of outstanding losses reported, including incurred but not reported claims. The result of this calculation shall be the surplus retention requirement for that fund year.

(c) A full and final refund of net current surplus shall not be allowed until all case reserves and all unpaid claim reserves are closed.

(d) A refund for any fiscal year shall be paid only in proportion to the member's participation in the fund for such year. Payment of a refund on a previous year shall not be contingent on the member's continued membership in the fund after that year.

(e) At the option of the member the refund may be retained by the fund and applied towards the member's next annual assessment.

(f) A fund may seek approval from the Commissioner to make interyear fund transfers from a claims or loss retention trust account from any year not sooner than 24 months after the end of that year, or immediately after the end of the fund year if utilized solely to satisfy surplus requirements, by submitting written request to the Department with appropriate documentation as set forth in (b) above. The interyear fund transfer may be in any amount subject to the limitation that after the transfer, the remaining net current surplus in the account from which the transfer is made must equal or exceed the surplus retention requirement determined pursuant to (b) above for that account for the fiscal year. The membership for each fiscal year involving interyear fund transfers must be identical between fiscal years. The Commissioner shall waive the identical membership requirement provided the fund demonstrates to the Department that it maintains records of each member's pro rata share of each claim or loss retention fund account, and that the transfer shall be made so that any potential dividend shall not be reduced for a member that did not participate in the year receiving the transfer.

N.J. Admin. Code § 11:15-6.20