                                 CODE OF VIRGINIA

POLICIES TO PROVIDE FOR ACCOUNTING TO BOARD; ADVANCE PREMIUM DEPOSIT RESERVE (§
51.1-1139)

A. Each insurance product purchased by the Board or contract for administrative
services related to a self-funded product shall provide for an accounting to the
Board not later than 120 days after the end of each product year. For an
insurance product, the accounting shall include (i) the amounts of premiums
actually accrued under the policy during the policy year, (ii) the total amount
of all claim charges incurred during the policy year, and (iii) the amount of
fees accrued under the policy during the year plus the total amount of all claim
charges incurred during the policy year. For a self-insured product, the
accounting shall include the total amount of all claim charges incurred during
the product year, the total amount of third party administrator expenses, and
the total amount of other charges for administrative services.

B. Any portion of the excess of the total of clause A (i) over clause A (iii)
may, with the approval of the Board, be held by the insurance company in an
advance premium deposit reserve to be used by the company for charges under the
policy only. Any expenses incurred by the Board in connection with the
administration of the disability benefits provisions of the program may be
deducted from the advance premium deposit reserve. The advance premium deposit
reserve shall bear interest at a rate to be determined in advance of each policy
year by the insurance company. The rate shall be subject to Board approval as
being consistent with the rates generally used by the company for similar funds
held under other disability insurance policies. Any portion of the excess not
held by the insurance company shall be held by the Board to be used for charges
under the policy only. If the Board determines that the advance premium deposit
reserve, together with any portion of the excess accumulated and held by the
Board, has attained an amount estimated to make satisfactory provision for
adverse fluctuations in future charges under the policy, any further excess
shall inure to the benefit of the Commonwealth as determined by the Board.

C. For purposes of this section, the insurance company may combine and
consolidate the policies issued by it as directed by the Board.

HISTORY: 1998, c. 774; 2006, c. 641.