District Of Columbia § 31-3506 - Surplus requirements.

At the time of issuance of a certificate of authority under this chapter and at all times thereafter until risk-based capital regulations for hospital and medical services corporations are promulgated, a corporation must possess surplus in an amount which is the greater of $5,000,000 or 8.0% of the total amount of premiums for insured risk received by the corporation in the preceding calendar year. The total amount of premiums for insured risk shall not include premiums collected for federal health benefit programs that have a separate reserve fund held by the federal government.

The surplus requirement of 8.0% shall be phased-in following April 9, 1997 as follows:

The Mayor shall have the authority to require the differentiation of the corporation’s activities into risk and nonrisk business for the purpose of determining the corporation’s income that is derived from premiums for insured risk and from other sources.

Notwithstanding the provisions of subsection (a) of this section, at the time of issuance of a certificate of authority under this chapter and at all times thereafter, a corporation shall be subject to the provisions of any risk-based capital regulations for hospital and medical services corporations promulgated by the Mayor, and must maintain at all times such surplus as is determined to be necessary under those regulations.

The Commissioner may, on an annual basis, and shall, on a basis no less frequently than every 3 years, review the portion of the surplus of the corporation that is attributable to the District and may issue a determination as to whether the surplus is excessive. Any such review shall be undertaken in coordination with the other jurisdictions in which the corporation conducts business. The surplus may be considered excessive only if:

In determining whether the surplus of the corporation that is attributable to the District is excessive, the Commissioner shall take into account all of the corporation’s financial obligations arising in connection with the conduct of the corporation’s insurance business, including premium tax paid and the corporation’s contribution to the open enrollment program required by and payments and expenditures pursuant to a public-private partnership.

When determining what surplus is attributable to the District and whether the surplus is excessive, the Commissioner may retain attorneys, appraisers, independent actuaries, independent certified public accountants, or other professionals, the cost of which shall be borne by the corporation.

If the Commissioner determines that the corporation failed to submit a plan as ordered under subsection (g) of this section within a reasonable period or failed to execute within a reasonable period a plan already submitted under subsection (g) of this section, the Commissioner shall deny for 12 months all premium rate increases for subscriber policies written in the District sought by the corporation pursuant to and may issue such orders as are necessary to enforce the purposes of this chapter.

The existence of a public-private partnership shall not preclude the Commissioner’s surplus evaluation of the corporation or diminish the Commissioner’s authority to issue directives to the corporation pursuant to the evaluation.