2023 Louisiana Laws › Revised Statutes › Title 3 - Agriculture and Forestry › §3:4351.3. Requirements; excess insurance; administrative and service companies; status; liability; refunds

RS 3:4351.3 - Requirements; excess insurance; administrative and service companies; status; liability; refunds
A. The fund established pursuant to R.S. 3:4351.2 shall:
(1) File rates in accordance with R.S. 3:4351.7 and maintain at least seven hundred fifty thousand dollars in earned premiums in the first fund year. For 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, 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 has pledged one hundred thousand dollars in money or bonds of the United States, the state of Louisiana, or any political subdivision thereof, of the par value of one hundred thousand dollars, or post a surety bond issued by a corporate surety authorized to do business within the state, in the amount of one hundred thousand dollars, to secure the obligations of the fund under this Part.
(b) During the second and subsequent fund years, 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 has pledged two hundred fifty thousand dollars in money or bonds of the United States, the state of Louisiana, or any political subdivision thereof, of the par value of two hundred fifty thousand dollars, or post a surety bond issued by a corporate surety authorized to do business within the state, in the amount of two hundred fifty thousand dollars, to secure the obligations of the fund under this Part.
(3) Provide timber and agriculture transportation vehicle coverage as required by this Part.
(4) Maintain at all times, on a fund-year basis, a contract or contracts of specific excess insurance or reinsurance of not less than two million dollars per occurrence and aggregate excess insurance or reinsurance of not less than two million dollars. The maximum retention under the excess insurance or reinsurance contracts shall not exceed amounts as may be provided by the department by regulation. Solely for the purposes of authorizing the purchase of reinsurance permitted under 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 Company, A- by Fitch Ratings, A by Weiss Ratings, A- by Standard & Poor's, or A3 by Moody's Investors Services, 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, shall apply to all such reinsurance. All excess insurance policies or reinsurance agreements shall be approved by the department prior to use by the fund.
(5) File with the department financial statements and reports, including financial statements audited by an independent certified public accountant and actuarial reports, as may be required by the department through rules promulgated pursuant to the Administrative Procedure Act.
B. For any casualty insurance company to be eligible to write excess coverage for the fund, the company shall at all times have on file with the department its current financial statement showing assets, including surplus to policyholders, at least equal to the current requirements by the department for admission of a new company to do business in the state. Contracts or policies for excess insurance coverage written by active underwriters of Lloyd's of London shall be 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' insurance, or other security approved by the department, and any person, which shall include an individual, partnership, corporation, and other entity contracting, either directly or indirectly, with the 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:
(1) Post with the department a surety bond issued by a corporate surety authorized to do business in the 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 the state indicating that the person has deposited fifty thousand dollars in money or bonds of the United States, the state of Louisiana, or any political subdivision thereof, of the par value of fifty thousand dollars, to secure the performance of its obligations under the contract and under this Part.
(2) Place all terms, agreements, fee arrangements, and any other conditions in a written agreement, which shall constitute the entire agreement between the parties, signed by the person and the fund.
D. The fund in this Part shall not be considered a partnership under the laws of the state.
E. Fund members shall be 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 Part.
F. Any monies in excess of the amount necessary to fund all obligations of the fund may be declared as refundable to the members of the fund by the board of trustees. The board of trustees shall be authorized to 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 recorded on the balance sheet as indicated by the most recently completed audited financial statements of the fund.
(2) No later than ten days before the payment of a distribution, the fund shall provide written notification to the department.
G. Any funds which are not guaranteed by a guaranty fund shall give written notice of the lack of a guaranty to the department and the members of the fund.
Acts 2022, No. 586, §1, eff. June 17, 2022; Acts 2022, No. 598, §1, eff. June 18, 2022; Acts 2023, No. 191, §2, eff. June 8, 2023.