Virginia Administrative Code › Title 14 - INSURANCE › Agency 5 - STATE CORPORATION COMMISSION, BUREAU OF INSURANCE › Chapter 370 - RULES GOVERNING GROUP SELF-INSURERS OF LIABILITY UNDER THE VIRGINIA WORKERS' COMPENSATION ACT › Section 14VAC5-370-60 - Security deposit and surety bond requirement

Current through Register Vol. 40, No. 24, July 15, 2024
A. Except as provided in subsection B of this
				section, each group self-insurance association licensed by the commission shall
				maintain with the State Treasurer a security deposit of acceptable securities
				or surety bond in an amount of $250,000 for the first plan year, or such other
				amount as the commission prescribes, and for succeeding plan years such amount
				as the commission deems reasonable taking into account the financial condition
				of the association and any excess insurance carried by the association. The
				commission may, from time to time, increase, release or reduce the security
				deposit or surety bond requirement. The security deposit or surety bond shall
				be held by the State Treasurer pursuant to § 65.2-801C of the Code of
				Virginia, and so far as not inconsistent with the provisions of the Act or
				these regulations shall be subject to the provisions of Article 7 (§
				38.2-1045 et seq.) of Chapter 10 of Title 38.2 of the Code of Virginia.
For the purposes of this chapter, acceptable securities shall
				  be (i) investments allowed by § 2.2-4500 of the Code of Virginia (legal
				  investments for public sinking funds) and § 2.2-4501 of the Code of
				  Virginia (legal investments for other public funds), (ii) securities issued by
				  states, other than Virginia, and their municipalities or political subdivisions
				  rated A or better by Moody's Investors Services, Inc., or Standard and Poor's,
				  Inc., (iii) revenue bonds rated Aa (AA) or better by Moody's Investors
				  Services, Inc., or Standard and Poor's, Inc. that are bonds issued by
				  municipalities or political subdivisions of this Commonwealth or any other
				  state, (iv) securities issued by the Federal Home Loan Banks, and (v)
				  securities issued by the Federal Intermediate Credit Banks.
Surety bonds deposited pursuant to this section shall be
				  issued by an insurer duly licensed in this Commonwealth to transact a surety
				  business and shall not either directly or indirectly be under the same
				  ownership or management as the principal on such bonds. The surety bond shall
				  be designated as applying to agreements approved or awards by the Virginia
				  Workers' Compensation Commission made at any time on account of injuries or
				  deaths occurring during the continuance of the principal's license and the
				  continuance of the bond.
In addition to the minimum security deposit or surety bond
				  required by this section, the commission may require additional securities or
				  surety it considers appropriate after giving consideration to such factors as
				  excess insurance and the financial ability of the group to meet its obligations
				  under the Act.
B. As an
				alternative to the security deposit or surety bond required by subsection A of
				this section, a group self-insurance association may have an appropriate
				endorsement attached to its contracts for excess insurance as required in
				14VAC5-370-90. The endorsement
				must provide that in the event the group self-insurance association fails to
				pay to any employee or dependent of any employee any compensation provided by
				the Act, the excess coverage insurer will become liable immediately for 100% of
				the compensation and will make payment as directed by the Virginia Worker's
				Compensation Commission.
C. Any
				deposit made with the State Treasurer prior to May 1, 1988 must be maintained
				with the State Treasurer until specifically released in writing by the
				commission.
Statutory Authority
§§ 12.1-13 and 65.2-802 of the Code of Virginia.