Section 6: Annual review of claim experience; report of fund deficiencies and loan request; certification or denial; independent consultant
Section 6. By July first of each year, the Corporation shall conduct a review of its claim experience for each reporting year. In the event that for any specific reporting year the reinsurance Corporation's charges for providing reinsurance on policies subject to this chapter, determined in accordance with sound rating principles as described in section four, and the reasonable investment income thereon, including amounts available from the special account pursuant to section five are expected to be insufficient to make payments required under its reinsurance contracts with respect to such policies, the Corporation shall submit to the commissioner of insurance a report documenting the extent of such deficiency for the following calendar year. If the total amount of such reporting year deficiencies exceeds one million dollars, the Corporation shall also submit for the commissioner's review an application for a loan by the treasurer of the commonwealth in an amount sufficient to permit the Corporation to make payments required under such reinsurance contracts. Provided that if the balance in the special account has reached a level in excess of five million dollars pursuant to the provisions of section five, such loan application shall be for an amount sufficient to leave a year-end balance of five million dollars in the special account.
Within sixty days of receiving such report and loan request, and after examining such additional documentation as he may deem necessary to verify the extent of the Corporation's need, the commissioner shall certify all or a specified part of the Corporation's loan request or deny such certification. The commissioner shall have a responsibility to ensure that the Corporation's legitimate need for funds to comply with the provisions of this section are adequately recognized in his decision with respect to the loan certification.
Upon certification of its loan request, the Corporation shall present such certified application to the treasurer of the commonwealth. The treasurer is authorized and directed to loan the certified amount to the Corporation within sixty days of receipt of the certified application. Such loan shall be repayable with interest to the commonwealth under a schedule of payments agreed to by the Corporation and the treasurer. In order to repay said loans the Corporation may use funds available from the special account described in section five.
Any such loan to the Corporation shall be repaid within a term not to exceed twelve years. The aggregate amount of outstanding loans shall not exceed twenty-five million dollars. No loan shall be made under the provisions of this section after December thirty-first, two thousand and twelve unless the legislature, upon review of the study conducted pursuant to the provisions of this section, authorizes the continuation of the loan guarantees provided by this section.
No later than June thirtieth, two thousand and ten, the board of directors of the Corporation, with the agreement of the commissioner, shall select a qualified independent consultant with expertise in the fields of finance and public policy to conduct an evaluation of the commonwealth-sponsored loan guarantees authorized under the provisions of this section. Said study shall consider and make recommendations on whether the continuation of such loan guarantees are (i) necessary or important for assuring the financial stability of the Corporation and (ii) in the best interest of the public of the commonwealth. Both the board of directors of the Corporation and the commissioner shall prepare comments on the report of the independent consultant, and shall prepare their own recommendations as to whether said loan guarantees should be extended. The report of the independent consultant, together with the responses and recommendations of the board of directors and the commissioner, shall be submitted to the clerk of the house of representatives, the clerk of the senate, and the governor no later than June thirtieth, two thousand and eleven.