Ariz. Admin. Code § R20-5-1505 - Initial Application Requirements

A. An individual employer or pool seeking to apply for initial authority to self-insure shall file with the Division a completed Initial Application for Authority to Self-Insure Form and the documentation and information required in subsection (B).

B. For an initial application to self-insure to be deemed complete, the following documentation and information shall be provided by the Applicant:

1. A resolution of the Applicant's board of directors or governing body, authorizing the filing of the application. If the Applicant does not have a board of directors or governing body, an authorized representative shall sign the resolution.

2. A list of the aggregate payroll by Payroll Classification Code for the most current and prior two fiscal years.

3. A copy of the Applicant's audited financial statements for the most current and prior two fiscal years, including any notes to the financial statements. If audited financial statements for the most current or prior two fiscal years are not reasonably available, internally-reviewed and signed financial statements that conform with Generally Accepted Accounting Principles may be substituted. If a new Self-Insurance Pool does not have the financial statements required by this subsection, the pool shall provide detailed projections for capitalization, cash flow, and liabilities of the pool.

4. A detailed description of the Applicant's loss control program, including a description of existing or planned occupational safety and health requirements and training programs.

5. Except for a new Self-Insurance Pool that does not have the information required by this subsection, a loss run of all claims incurred in Arizona from the most current complete calendar year and the prior three calendar years. The loss run must include the following information, if applicable, for each incurred claim: Payroll Classification Code, Commission claim number, employee name, date of injury, total paid medical, medical reserves, total paid indemnity (including death benefits), and indemnity reserves.

6. If applicable, copies of excess insurance policies that meet the requirements of R20-5-1526, or written confirmation from an authorized insurance company that it will provide excess insurance coverage to the Applicant by the prospective Authorization Date.

7. Except for a new Self-Insurance Pool that does not have the information required by this subsection, if the Applicant's Experience Modification Rate specific to Arizona for the most recent complete fiscal year is greater than 1.10, a written statement describing the causes of the inflated Experience Modification Rate and outlining remedial measures the Applicant has taken or will take to lower the Experience Modification Rate.

8. Except for an Applicant seeking to Self-Administer under R20-5-1510, a copy of a signed agreement between the Applicant and a Third-Party Administrator or, if an agreement has not been completed, a written confirmation from a Third-Party Administrator that it will contract with the Applicant on or before the prospective Authorization Date to process workers' compensation claims for the Applicant.

9. If an Applicant is seeking to Self-Administer, a completed Application to Self-Administer Form and the information and documentation required in R20-5-1510(C).

10. If an eligible Applicant intends to direct medical care under A.R.S. § 23-1070, a completed Self-Provider of Medical Benefits Form, the detailed statement of the arrangements required in A.R.S. § 23-1070(B), and a copy of the current medical or hospital agreements, if applicable.

11. If the Applicant is a Public Entity or a Public Entity Pool seeking a waiver of security under R20-5-1525, a completed Request for Waiver of Security Form and a current actuarial report that satisfies the requirements in R20-5-1513(B).

12. If the Applicant is a Subsidiary:

a. A completed Parent Guaranty Form or an Agreement to Process and Pay signed by a designated representative of the Parent Company that guarantees the payment of the Subsidiary's obligations.

b. A resolution of the Parent Company's board of directors or governing body authorizing the designated representative to complete, sign, and file the Parent Guaranty Form or Agreement to Process and Pay. If the Parent Company does not have a board of directors or governing body, an authorized representative shall sign the resolution.

c. A copy of the Parent Company's audited financial statements for the most current and prior two fiscal years, including any notes to the financial statements. If audited financial statements for the most current or prior two fiscal years are not reasonably available, internally-reviewed and signed financial statements that conform with Generally Accepted Accounting Principles may be substituted.

13. If the Applicant is a Self-Insurance Pool:

a. The contract or agreement required under A.R.S. §§ 11-952.01, 15-382, 23-961.01, or 41-621.01, as applicable, to establish the pool.

b. The articles of incorporation and bylaws governing the pool, if applicable.

c. The participation, coverage, and indemnity agreements between the pool and each member.

d. Written authorization from the board of directors or governing body of each member, authorizing membership in the pool. If a member does not have a board of directors or governing body, an authorized representative shall sign the written authorization.

e. A signed resolution from the Self-Insurance Pool Board approving each member for membership in the pool.

f. An original or a certified copy of fidelity or crime insurance policy that meets the requirements of R20-5-1528 or written confirmation from an authorized insurance company that it will issue the required fidelity or crime insurance policy on or before the prospective Authorization Date.

g. A copy of the signed agreement or contract of hire between the Self-Insurance Pool Board and the designated Administrator.

h. A detailed description of the underwriting program required under R20-5-1529.

i. A current actuarial report that meets the requirements of R20-15-1513(B) and documents the rate structure needed to set member premium levels to adequately cover potential losses and expenses of the pool.

j. For each member, a schedule showing, for the most recent complete fiscal year and the prior two fiscal years, net workers' compensation premiums paid, total workers' compensation losses incurred, and, if available, Experience Modification Rate specific to Arizona.

k. A copy of each member's audited financial statements for the most current and prior two fiscal years, including any notes to the financial statements. If audited financial statements for the most current or prior two fiscal years are not reasonably available, internally-reviewed and signed financial statements that conform with Generally Accepted Accounting Principles may be substituted.

l. If any member's Experience Modification Rate specific to Arizona for the most recent complete fiscal year is greater than 1.10, a written statement describing the causes of the inflated Experience Modification Rate and outlining remedial measures the member has taken or will take to lower the Experience Modification Rate.

Notes

Ariz. Admin. Code § R20-5-1505

New section made by final rulemaking at 28 A.A.R. 3435, effective 10/5/2022.