38.2-1720 - Use of safety fund, repayment, etc. - Virginia Statutes

§ 38.2-1720. Use of safety fund, repayment, etc.

A. The purpose of the safety fund is to provide for the payment of coveredclaims in the event the assessment limit specified in subsection E of §38.2-1705 is reached.

B. In the event the assets of the safety fund are needed to pay coveredclaims, these assets shall be loaned to the respective account listed insubsection A of § 38.2-1702. This loan shall be the general obligation of theAssociation members and shall be evidenced by an agreement approved by theCommission.

C. Interest on this loan shall be compounded quarterly and be based upon theaverage ninety-day treasury bill rate for the most recently completedcalendar quarter as published in the Federal Reserve Bulletin. This rate willbe updated quarterly in order to conform with market rates of interest.

D. This loan shall be repaid by levying assessments against the members forthe account on whose behalf the loan was negotiated. Unless otherwiseapproved by the Commission, the loan shall be repaid within six months of itsissuance. This assessment in conjunction with any other assessments levied,shall not exceed the limit specified in subsection E of § 38.2-1705.

E. Subject to the approval of the Commission assets of the safety fund may beloaned to any account in subsection A of § 38.2-1702 even though the maximumassessment in subsection E of § 38.2-1705 has not been levied if thedirectors of the Association determine that this action will minimize thecost to the Association in paying covered claims.

F. Excess safety fund assets set forth in subsection D of § 38.2-1718 may beused to pay the Association's covered claims without the members incurring aliability to repay the safety fund.

(1986, c. 562.)