                                 CODE OF VIRGINIA

NONASSESSABLE POLICIES (§ 38.2-1213)

A. The Commission may issue a certificate authorizing the reciprocal to reduce
or extinguish the contingent assessment liability of subscribers under its
policies then in force in this Commonwealth, and to omit provisions imposing
contingent assessment liability in all policies delivered or issued for delivery
in this Commonwealth for as long as all such surplus to policyholders remains
unimpaired. The certificate may be issued if, in the case of a domestic or
foreign reciprocal, the reciprocal has surplus to policyholders of at least four
million dollars, or, if in the case of an alien reciprocal, the reciprocal has a
trusteed surplus, as defined in &#xA7; 38.2-1031, of at least four million
dollars. No certificate may be issued until an application of the attorney has
been approved by the subscribers&#8217; advisory committee.
			However, any reciprocal that on June 30, 1991, was authorized to issue and
was engaged in issuing policies without contingent liability may continue to do
so until July 1, 1994, by maintaining at all times the minimum surplus to
policyholders if a domestic or foreign reciprocal, and the minimum trusteed
surplus if an alien reciprocal, required at the time of authorization.

B. The Commission shall issue this certificate if it determines that the
reciprocal&#8217;s surplus to policyholders is reasonable in relation to the
reciprocal&#8217;s outstanding liabilities and adequate to meet its financial
needs. In making that determination the following factors, among others, shall
be considered:

   1. The size of the reciprocal as measured by its assets, capital and surplus,
   reserves, premium writings, insurance in force and other appropriate criteria;

   2. The extent to which the reciprocal&#8217;s business is diversified among
   different classes of insurance;

   3. The number and size of risks insured in each class of insurance;

   4. The extent of the geographical dispersion of the reciprocal&#8217;s insured
   risks;

   5. The nature and extent of the reciprocal&#8217;s reinsurance program;

   6. The quality, diversification, and liquidity of the reciprocal&#8217;s
   investment portfolio;

   7. The recent past and trend in the size of the reciprocal&#8217;s surplus to
   policyholders;

   8. The surplus to policyholders maintained by other comparable insurers; and

   9. The adequacy of the reciprocal&#8217;s reserves.

C. Upon impairment of the surplus to policyholders, the Commission shall revoke
the certificate. After revocation, the reciprocal shall not issue or renew any
policy without providing for the contingent assessment liability of subscribers.

D. The Commission shall not authorize a domestic reciprocal to extinguish the
contingent assessment liability of any of its subscribers or in any of its
policies to be issued, unless it has the required surplus to policyholders and
extinguishes the contingent assessment liability of all of its subscribers and
in all policies to be issued for all classes of insurance written by it.
However, if required by the laws of another state in which the domestic
reciprocal is transacting the business of insurance as a licensed insurer, it
may issue policies providing for the contingent assessment liability of its
subscribers acquiring policies in that state and need not extinguish the
contingent assessment liability applicable to policies already in force in that
state.

HISTORY: 1952, c. 317, § 38.1-703; 1977, cc. 58, 322; 1986, c. 562; 1991, c.
261.