Section 4706. Reserve and surplus requirements

(a) Notwithstanding any
  provision of law, the governing board of a municipal cooperative  health
  benefit plan shall establish a reserve fund, and the plan's chief fiscal
  officer  shall  cause  to  be  paid  into  the  reserve fund the amounts
  necessary to satisfy all contractual obligations and liabilities of  the
  plan, including:
    (1)  a reserve for payment of claims and expenses thereon reported but
  not yet paid, and claims and  expenses  thereon  incurred  but  not  yet
  reported  which  shall  not  be less than an amount equal to twenty-five
  percent of expected incurred claims and expenses thereon for the current
  plan  year,  unless  a  qualified  actuary  has  demonstrated   to   the
  superintendent's satisfaction that a lesser amount will be adequate;
    (2) a reserve for unearned premium equivalents;
    (3) a claim stabilization reserve;
    (4)  a  reserve  for  other  obligations  of the municipal cooperative
  health benefit plan; and
    (5) a surplus account, established and maintained for the sole purpose
  of satisfying unexpected obligations of the municipal cooperative health
  benefit plan in the event of termination or  abandonment  of  the  plan,
  which shall not be less than:
    (A)  five  percent of the annualized earned premium equivalents during
  the current fiscal year of a municipal cooperative health  benefit  plan
  which  consists of five or more participating municipal corporations and
  covers two thousand or more employees and retirees; or
    (B) seven percent of the annualized earned premium equivalents  during
  the current fiscal year of the municipal cooperative health benefit plan
  which  consists of four or fewer participating municipal corporations or
  covers fewer than two thousand employees and retirees.
    (b) The moneys in the plan's reserve funds and surplus  account  shall
  be  deposited  in one or more banks or trust companies designated by the
  governing board in accordance with the municipal cooperation  agreement,
  in  one  or  more separate segregated accounts, subject to investment in
  obligations specified in the general municipal law or education law  (as
  applicable)  for  investment  of moneys in reserve funds or as otherwise
  expressly permitted by  the  superintendent.  Any  such  bank  or  trust
  company  shall  be  located  in  this  state and shall be duly chartered
  pursuant to federal law or the laws of this state. Any  interest  earned
  or  capital  gain  realized  on the money so deposited or invested shall
  accrue to and become  part  of  the  plan's  reserve  funds  or  surplus
  account, as applicable.
    (c)  The  plan's  chief  fiscal  officer  shall account for the plan's
  reserve funds separate and apart from all other funds of  the  municipal
  cooperative health benefit plan, and such accounting shall show:
    (1)  the  purpose,  source,  date and amount of each sum paid into the
  fund;
    (2) the interest earned by such funds;
    (3) capital gains or losses resulting from the sale of investments  of
  the plan's reserve funds;
    (4)  the  order,  purpose,  date  and  amount of each payment from the
  reserve fund; and
    (5) the assets of the fund, indicating cash balance  and  schedule  of
  investments.
    (d)  The plan's chief fiscal officer, within ninety days of the end of
  each fiscal year, shall furnish a detailed report of the operations  and
  condition of the plan's reserve funds to the governing board.
    (e)  An  expenditure  from the plan's reserve funds shall be made only
  for the payment of benefits  and  other  obligations  of  the  municipal

  cooperative  health  benefit  plan or expenses incurred in administering
  such plan.
    (f) If the municipal cooperative health benefit plan ceases to provide
  plan  benefits  on  a  shared-funding basis, the moneys remaining in the
  plan's reserve funds not needed to  satisfy  plan  liabilities  incurred
  prior  to  such cessation shall be disposed of in the manner provided in
  the municipal cooperation agreement.
    (g) If a municipal corporation withdraws from a municipal  cooperative
  health  benefit  plan  operating  under  a certificate of authority, the
  governing board shall, in  accordance  with  the  municipal  cooperation
  agreement,  determine  the  amount,  if any, of the plan's reserve funds
  attributable to such municipal corporation, after considering  all  plan
  liabilities,  and  dispose  of such amount in the manner provided in the
  municipal cooperation agreement.