§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.