Which option correctly describes the basis for the administrative fund assessment (percentage and minimum)?

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Multiple Choice

Which option correctly describes the basis for the administrative fund assessment (percentage and minimum)?

The administrative fund assessment is based on a percentage of gross premiums, with a minimum amount, and the exact percentage can be set or adjusted by the director. This means the charge is calculated by applying the certified rate to the insurer’s gross premiums, but it can never be less than the $50 floor. The correct choice reflects both elements: a percentage of gross premiums and a $50 minimum, with the added note that the director may certify a different percentage as needed. For example, with a $1,000 premium, the assessment would be $42.50 at 4.25%, but the minimum would push it to $50. If the premium is $10,000, the assessment would be $425, which is above the minimum.

The administrative fund assessment is based on a percentage of gross premiums, with a minimum amount, and the exact percentage can be set or adjusted by the director. This means the charge is calculated by applying the certified rate to the insurer’s gross premiums, but it can never be less than the $50 floor. The correct choice reflects both elements: a percentage of gross premiums and a $50 minimum, with the added note that the director may certify a different percentage as needed. For example, with a $1,000 premium, the assessment would be $42.50 at 4.25%, but the minimum would push it to $50. If the premium is $10,000, the assessment would be $425, which is above the minimum.

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