(1) The authority is hereby authorized to establish in the state treasury a special trust fund of the authority to be known as the “Tennessee insurance guaranty association fund.”
(2) The state hereby covenants and agrees that from and after the issuance of any bonds or notes under and pursuant to this part, moneys derived by the state from payments made pursuant to loan agreements with the association as permitted under the terms of the loan agreements that are pledged to the payment of such bonds or notes shall be paid into the particular fund established for the issuance of bonds or notes to which such moneys are pledged.
(3) Such moneys shall be accounted for separately from all other moneys in the treasury and shall be applied by the authority solely for the purpose of paying principal of and interest and premium, if any, on such issue of bonds and notes issued pursuant to this section, refunding moneys due to the association where appropriate, and paying all other costs incidental to the administration of the authority in connection with the loan agreements and the issuance of such issue of bonds and notes.