                                 CODE OF VIRGINIA

ASSOCIATION ACTIVATION; MEMBERS; PURPOSE; DETERMINATIONS BY COMMISSION; POWERS
OF ASSOCIATION (§ 38.2-2901)

A. After investigation, notice, and hearing, the Commission shall be empowered
to activate a Joint Underwriting Association with respect to any line,
subclassification or type of commercial liability insurance coverage if it finds
that such line, subclassification, or type of commercial liability insurance
coverage is not reasonably available for a significant number of any class,
type, or group of such risks in the voluntary market or through a market
assistance plan. The Association shall consist of all insurers licensed to write
and engaged in writing the classes of insurance defined in &#xA7;&#xA7; 38.2-117
through 38.2-119, and the liability portions of the insurance defined in
&#xA7;&#xA7; 38.2-124, 38.2-125 and 38.2-130 through 38.2-132 within this
Commonwealth on a direct basis except those exempted from rate regulation by
subsection C of &#xA7; 38.2-1902. Each such insurer shall be a member of the
Association as a condition of its license to write such insurance in this
Commonwealth.

B. The purpose of the Association shall be to provide markets for commercial
liability insurance for persons with eligible risks who are unable to obtain
commercial liability insurance coverage, including incidental coverage, through
the voluntary market. It shall also be the purpose of the Association to do so
on a self-supporting basis without subsidy from its members.

C. 1. The Association shall not commence underwriting operations for any line,
subclassification or type of commercial liability insurance coverage until so
ordered by the Commission. At the direction of the Commission, the Association
shall commence operations in accordance with the provisions of this chapter.

   2. If the Commission determines at any time that a line, subclassification or
   type of commercial liability insurance coverage is reasonably available at
   adequate levels in the voluntary market, the Association shall, at the
   direction of the Commission, cease its underwriting operations for that line,
   subclassification, or type of commercial liability insurance coverage.

D. The Commission shall also determine after investigation and a hearing whether
the Association shall be the exclusive source of any line, subclassification or
type of commercial liability insurance which it finds not to be reasonably
available pursuant to subsection A of this section and the type of policy or
policies that shall be issued for any line, subclassification or type of
commercial liability insurance. If the Commission determines that a claims-made
policy will be issued for any line, subclassification or type of coverage, the
Commission shall also provide for the guaranteed availability of insurance that
covers claims which (i) result from incidents occurring during periods when the
basic claims-made policies are in force; and (ii) are reported after the
expiration of the basic claims-made policies. The Commission may from time to
time after an investigation and hearing reexamine and reconsider any
determination made pursuant to this subsection.

E. Pursuant to this chapter and the plan of operation required by § 38.2-2904,
the Association shall have the power on behalf of its members to:

   1. Issue, or cause to be issued, policies of commercial liability insurance to
   eligible applicants, including incidental coverages, subject to limits
   specified in the plan of operation but not to exceed one million dollars for
   each claimant under any one policy and three million dollars for all claimants
   under one policy in any one year;

   2. Provide a means for establishing eligibility of a risk for obtaining
   insurance through the plan;

   3. Underwrite the insurance and adjust and pay losses on the insurance;

   4. Appoint a service company or companies to perform functions enumerated in
   this subsection;

   5. Provide a means for the equitable apportionment of profits or losses and
   expenses among participating insurers;

   6. Develop rules for the classification of risks and rates which reflect the
   past and prospective loss experience and a rating plan which reasonably
   reflects the prior claims experience of the insureds;

   7. Assume reinsurance from its members;

   8. Reinsure its risks in whole or in part; and

   9. Take such other action as is necessary for the efficient and equitable
   operation and termination of the Association.

HISTORY: 1988, cc. 769, 783.