Section 12:1856 - Requirements; excess insurance; administrative and service companies; status; liability; refundsA. The fund established pursuant to this Chapter shall comply with all of the following items: (1) File rates in accordance with R.S. 12:1860 and maintain at least seven hundred fifty thousand dollars in earned premiums in the first fund year. In the second and each subsequent year, the fund shall maintain at least two million dollars in earned premiums. The amounts maintained shall be documented on the fund's audited financial statement prepared in accordance with generally accepted accounting principles.(2)(a) During the first fund year, the fund shall deposit with the department a safekeeping receipt or trust receipt from a bank doing business in this state or from a savings and loan association chartered to do business in the state indicating that the fund has deposited and pledged one hundred thousand dollars in money or bonds of the United States, the state of Louisiana, or any political subdivision of the state, having a par value of one hundred thousand dollars, or post a surety bond issued by a corporate surety authorized to do business in this state, in the amount of one hundred thousand dollars, to secure the obligations of the fund as required by this Chapter.(b) In the second and subsequent fund years, the fund shall deposit with the department a safekeeping receipt or trust receipt from a bank doing business in this state or from a savings and loan association chartered to do business in this state indicating that the fund has deposited and pledged two hundred fifty thousand dollars in money or bonds of the United States, the state of Louisiana, or any political subdivision of the state, having a par value of two hundred fifty thousand dollars, or post a surety bond issued by a corporate surety authorized to do business in this state, in the amount of two hundred fifty thousand dollars, to secure the obligations of the fund as required by this Chapter.(3) Provide property coverage as required by this Chapter.(4)(a) Maintain, on a fund-year basis, a contract or contracts of specific excess insurance or reinsurance of not less than an amount that is actuarially sound and approved by the department. The maximum retention under the excess insurance or reinsurance contracts shall not exceed amounts as may be provided by the department.(b) For purposes of authorizing the purchase of reinsurance as required by this Subsection, the fund shall be deemed an insurer. The excess insurance or reinsurance shall be purchased only from a company having a rating of A- by A.M. Best Rating Services, Inc., A- by Fitch Ratings, A by Weiss Ratings, A- by S&P Global Ratings, or A3 by Moody's Investors Service, or better, and this reinsurance may be purchased from admitted or nonadmitted companies, provided that the provisions of R.S. 22:651 through 661, and Financial Accounting Standard Number 113 as promulgated and updated by the Financial Accounting Standards Board. The department shall approve all excess insurance policies or reinsurance agreements prior to use by the fund.(5) File with the department financial statements and financial reports, including financial statements audited by an independent certified public accountant and actuarial reports, as may be required by the department under rules promulgated pursuant to the Administrative Procedure Act.B. In order for a casualty insurance company to be eligible to write excess coverage for the fund, the company shall have on file with the department its current financial statement showing assets, including any surplus to policyholders, at least equal to the current requirements by the department for admission of a new company to do business in this state. Contracts or policies for excess insurance coverage written by active underwriters of Lloyd's of London are acceptable upon prior approval by the department.C. Any fund administrator contracted by the fund and whose acts are not covered by the fund's bond, errors and omissions insurance, directors' and officers' liability insurance, or other security approved by the department, and any person, including an individual, partnership, corporation, and other entity contracting, either directly or indirectly, with a fund to provide claims adjusting, underwriting, safety engineering, loss control, marketing, investment advisory, or administrative services to the fund or its membership, other than bookkeeping, or auditing, or claims investigation services to the fund, shall comply with all of the following: (1) Post a surety bond with the department issued by a corporate surety authorized to do business in this state of not less than fifty thousand dollars or deposit with the department a safekeeping receipt or trust receipt from a bank doing business in this state or from a savings and loan association chartered to do business in this state indicating that the deposit of fifty thousand dollars in money or bonds of the United States, the state of Louisiana, or any political subdivision of the state, having a par value of fifty thousand dollars, to secure the performance of its obligations under the contract and pursuant to this Chapter.(2) Place all terms, agreements, fee arrangements, and any other conditions in a written agreement, which constitute the entire agreement between the parties, signed by the person and the fund.D. A fund created pursuant to this Chapter shall not be considered a partnership under the laws of this state.E. All members of the fund are solidarily liable for liabilities of the fund incurred by the fund after the inception of the fund year in which the operator becomes a member of the fund, to the extent required by this Chapter.F. The board of trustees may declare, as refundable to fund members, any monies in excess of amounts necessary to fulfill obligations of the fund. The board of trustees may distribute the refund at its discretion, in accordance with the agreement establishing the fund and the following conditions:(1) The amount of the distribution shall not exceed the members' distributions payable and recorded on the balance sheet as indicated by the most recently completed audited financial statements of the fund.(2) The fund shall provide written notification to the department at least ten days before the payment of a distribution.G. Each application for membership in the fund shall contain written notice that the fund is not covered by the Louisiana Guaranty Insurance Association.La. Corporations and Associations § 12:1856
Added by Acts 2023, No. 259, §§1, 3A, eff. June 12, 2023.