Mich. Admin. Code R. 257.536 - Loss reserve; use; amount; funding; expenditures; commingling; trust or escrow account

Current through Vol. 22-05, April 1, 2022

Rule 6.

(1) A loss reserve must be utilized to pay claims that are anticipated during the certification year and that are submitted for payment during that year and to pay claims that have been incurred and submitted before the certification year, but have not yet been paid by the applicant or self-insurer.
(2) Except as provided in subrule (7) of this rule, a fully funded loss reserve consists of an amount of money or investment grade securities that can be liquidated for face value, as determined by a qualified actuary, or as determined by a qualified employee of a casualty insurance company, that is sufficient to compensate claimants for all benefits that are due for claims that are to be paid or that are anticipated to be paid during the certification year and all benefits that are due for claims incurred before the certification year, but are to be paid or are anticipated to be paid during the certification year, including all benefits that may be due during the certification year for claims that can be anticipated or are incurred but not reported, exclusive of that portion of any claim that is covered by excess insurance.
(3) Before the beginning of a certification year, an applicant or self-insurer shall fully fund its loss reserve account.
(4) Loss reserve funds must only be expended to pay claims that are incurred and submitted under the no-fault law, the financial responsibility law contained in chapter V of the Michigan vehicle code, and these rules.
(5) Loss reserve funds must be kept in a segregated account and must not be commingled with other funds of the applicant or self-insurer. The funds must be physically located in this state unless otherwise approved by the director and may be maintained in a financial institution, in an escrow account, under a trust agreement, or by the applicant or self-insurer individually. With prior approval of the director, the loss reserve may be commingled for applicants with net worth of more than $50,000,000.00 and sufficient liquidity.
(6) For a governmental unit that has the authority to tax, a fully funded loss reserve consists of an amount of money that is included in the budget or reserve accounts of the governmental unit for the fiscal year, which includes its certification year, as determined by a qualified actuary, or as determined by a qualified employee of a casualty insurance company, and that is sufficient to compensate claimants for all benefits that are due for claims that are to be paid or that are anticipated to be paid during the certification year and all benefits that are due for claims that are incurred before the certification year, but are to be paid or are anticipated to be paid during the certification year, including all benefits that may be due during the certification year for claims that can be anticipated or are incurred but not reported, exclusive of that portion of any claim that is covered by excess insurance.

Notes

Mich. Admin. Code R. 257.536
1993 AACS; 2018 MR 5, Eff. 3/15/2018

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