§ 4986 - Deficits - Vermont Statutes

§ 4986. Deficits

(a) In the event an association suffers an underwriting deficit for any year, the board of directors shall so certify to the commissioner. Such certification shall be subject to the review and approval of the commissioner. As provided in the plan of operation, but in a term not to exceed one year, each policyholder shall pay to the association a premium contingency assessment which bears the same ratio to the amount of such deficit as his or her premium for such year for insurance written or reinsured by the association bore to the total premiums paid to the association for such year. The association may cancel any policy of any policyholder who fails to pay the premium contingency assessment and need not pay any future claims against that policyholder. Any deficit premium contingency assessment uncollectible against any policyholder shall not be assessed against any other policyholder or policyholders.

(b) In no event shall a deficit incurred by an association be charged directly or indirectly to any insured other than a policyholder insured through an association.

(c) An association shall amend the amount of its certification of deficit to the commissioner as the values of its incurred losses become finalized and the members of the association shall upon approval by the commissioner amend their recoupment procedure accordingly. The board of directors of an association may require all members to contribute on a temporary basis to the financial requirements of the association prior to recoupment of any deficit in such proportion as shall be specified in the plan. (Added 1985, No. 265 (Adj. Sess.), § 4, eff. June 4, 1986.)