Section 7. Plan of Operation

§ 7 (2019) (N/A)

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Sec. 7. PLAN OF OPERATION. (a) The initial board of directors of the association shall prepare and adopt a plan of operation that is consistent with this article.

(b) The plan must provide for:

(1) economic, fair, and nondiscriminatory administration of the association and its duties;

(2) prompt and efficient provision of primary liability insurance for nonprofit organizations;

(3) preliminary assessment of association members for initial expenses necessary to begin operations;

(4) establishing necessary facilities;

(5) management of the association;

(6) assessment of members and policyholders to defray losses and expenses;

(7) administration of the policyholder stabilization reserve fund;

(8) commission arrangements;

(9) reasonable and objective underwriting standards;

(10) obtaining reinsurance;

(11) appointment of servicing carriers; and

(12) determining amounts of insurance to be provided by the association.

(c) The plan of operation must provide that any balance remaining in the various funds of the association at the close of its fiscal year shall be added to the reserves of the association. A balance remaining at the close of the fiscal year means the excess of revenue over expenditures after reimbursement of members' contributions as provided by Section 12 of this article.

(d) The board of directors may amend the plan of operation with the approval of the board and shall amend the plan of operation at the direction of the board.

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