(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. (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. (2) a reserve for unearned premium equivalents;
3. (3) a claim stabilization reserve;
4. (4) a reserve for other obligations of the municipal cooperative health benefit plan; and

5. (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:

   1. (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
   2. (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.

(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. (1) the purpose, source, date and amount of each sum paid into the fund;
2. (2) the interest earned by such funds;
3. (3) capital gains or losses resulting from the sale of investments of the plan's reserve funds;
4. (4) the order, purpose, date and amount of each payment from the reserve fund; and
5. (5) the assets of the fund, indicating cash balance and schedule of investments.