Current through Register Vol. 56, No. 6, March
18, 2024
(a) Consistent
with 11:15-6.6(a)6,
each fund providing primary or underlying coverage on a self-insured or
commercially insured basis shall secure excess insurance or reinsurance in a
form, in an amount and by an insurer, or other entity authorized to provide
such coverage in this State pursuant to law, acceptable to the Commissioner, if
commercially available and not unreasonably priced, as determined by the fund
commissioners for each fund year, and as approved by the Department.
1. Any approval by the Department pursuant to
(a) above shall be for a period not to exceed either the longer of 12 months
from the date of approval or the end of the next succeeding fund year. Any fund
seeking to extend the period of the approval shall notify the Department not
later than 45 days prior to the expiration of the term of the approval. The
notification shall specify the basis upon which the fund commissioners have
determined that excess insurance or reinsurance required pursuant to (a) above
is not commercially available or is not reasonably priced, and shall include
all actions taken by the fund to obtain required excess insurance or
reinsurance.
(b) The
policies of excess insurance and/or reinsurance issued by an insurer to a fund
shall provide single accident (single occurrence) excess insurance and
aggregate excess insurance, in accordance with this subsection.
1. Each fund shall maintain a minimum cap for
aggregate excess insurance in the appropriate amount depending upon the fund's
specific per occurrence retention and the size of the fund's cumulated budgeted
losses as determined in accordance with Exhibit F in the chapter Appendix
incorporated herein by reference. To the extent the fund has different specific
self-insured retentions for different lines, the fund shall utilize the highest
specific per occurrence retention. To the extent the specific per occurrence
retention is not specified in Appendix Exhibit F, the fund shall utilize the
next highest applicable specific per occurrence retention set forth
therein.
2. The fund's aggregate
self-insured retention for the year shall be no greater than 125 percent of its
budgeted losses.
(c)
Certificates of excess insurance and/or reinsurance showing policy limits,
specific and aggregate retentions, and other information shall be available for
the inspection of each member and shall be filed with the
Commissioner.
(d) Losses in excess
of the established self-insurance retention shall be borne by the excess
carrier(s) according to the terms and conditions of the excess
contract(s).
(e) Any proposed
change in the terms or limits of excess insurance and/or reinsurance shall be
submitted to the Department for approval at least 30 days prior to the
effective date of the proposed change.
(f) For purposes of this section:
1. "Budgeted losses" means the amount
established in the fund's budget for losses anticipated for a particular fund
year, as annually certified by the fund's actuary; and
2. "Cumulated budgeted losses" means the
fund's budgeted losses for the current fund year plus the four fund years
immediately preceding. For a fund in existence for less than three years,
cumulated budgeted losses shall be based on an estimate of three years budgeted
losses pro rata for that period. For example, a newly formed fund would
multiply its cumulated budgeted losses by three, a fund with two years
experience would multiply its cumulated budgeted losses by 1.5, and so on. Any
fund with three years or more of experience shall base its cumulated budgeted
losses on its actual years of experience, not to exceed five years.
(g) Nothing in this section shall
be construed as prohibiting a fund from establishing an aggregate excess
insurance cap in amounts greater than that required by this section.
