5 U.S.C. § 8712 — Annual accounting; special contingency reserve

submitted 60 years ago by Pub. L. 89-554 to r/title-5-GOVERNMENT-ORGANIZATION-AND-EMPLOYEES · 284 words · no verdicts yet

in plain englishAI-generated · not legal advice

Each year, the insurance company must report its premiums and claims to the Office of Personnel Management. Extra money left over goes into a special reserve fund. When that reserve gets big enough, any further extra money goes to the U.S. Treasury.

A policy purchased under this chapter must include a yearly accounting to the Office of Personnel Management, due within 90 days after each policy year ends. The Office decides the form of this accounting. It must show: (1) All the premiums that came in under the policy, from when it started through the end of the policy year. (2) The total of all death-benefit and other claim payments made during that time. (3) The insurer's charges for its own expenses and risk, for that period. If the total premiums (item (1)) are more than the claims and charges combined (items (2) and (3)), the company keeps that extra money in a special contingency reserve. The company can only use this reserve to pay charges under the policy. The reserve earns interest at a rate the company sets before each policy year, which the Office must approve as consistent with rates the company uses for similar group life insurance funds elsewhere. Once the Office decides the reserve is big enough to cover unexpected future costs, any additional extra money goes instead to the U.S. Treasury, credited to the Employees' Life Insurance Fund. If the policy ends, whatever is left in the reserve after paying all charges also goes to the Treasury for that Fund. The company may pay this in equal monthly installments over up to two years.

the actual law source: uscode.house.gov ↗public domain

A policy purchased under this chapter shall provide for an accounting to the Office of Personnel Management not later than 90 days after the end of each policy year. The accounting shall set forth, in a form approved by the Office—

(1)

the amounts of premiums actually accrued under the policy from its date of issue to the end of the policy year;

(2)

the total of all mortality and other claim charges incurred for that period; and

(3)

the amounts of the insurers’ expense and risk charges for that period.

An excess of the total of paragraph (1) of this section over the sum of paragraphs (2) and (3) of this section shall be held by the company issuing the policy as a special contingency reserve to be used by the company only for charges under the policy. The reserve shall bear interest at a rate determined in advance of each policy year by the company and approved by the Office as being consistent with the rates generally used by the company for similar funds held under other group life insurance policies. When the Office determines that the special contingency reserve has attained an amount estimated by it to make satisfactory provision for adverse fluctuations in future charges under the policy, any further excess shall be deposited in the Treasury of the United States to the credit of the Employees’ Life Insurance Fund. When a policy is discontinued, any balance remaining in the special contingency reserve after all charges have been made shall be deposited in the Treasury to the credit of the Fund. The company may make the deposit in equal monthly installments over a period of not more than 2 years.

Source credit: (Pub. L. 89–554, Sept. 6, 1966, 80 Stat. 598; Pub. L. 95–454, title IX, § 906(a)(2), (3), Oct. 13, 1978, 92 Stat. 1224.)

history & why it existsrecord from the source credit

1966Enacted · Pub. L. 89-554 · 80 Stat. 598
1978Amended · Pub. L. 95-454 · 92 Stat. 1224

A history note hasn’t been published yet. The record shows enactment by Pub. L. 89-554 on 1966-09-06.

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