20 Miss. Code. R. 1-1.7 - Self-Insurers
(I)
Individual
Self-Insurance
A.
Application for Individual Exemption from Insuring
(1) Any employer desiring to qualify as an
individual exempt from insuring its liability for compensation (individual
self-insurance) under the provisions of Miss. Code Ann. §
71-3-75
shall make application on a form provided by the Commission, and shall be
required to reply fully to all inquiries made by the Commission and provide all
necessary documents for the application to be properly considered.
(2) No record or any information concerning
the solvency and financial ability of any applicant for individual
self-insurance and no other information acquired by the Commission, which is
deemed confidential by other provisions of law, shall be subject to public
inspection.
(3) In no event shall
an application for self-insurance be approved unless the applicant is willing
and able to furnish adequate security for the payment of its obligations under
the Act, and the type and amount of such security shall be determined by the
Commission and in no event shall be less than $100,000.00. Upon approval of
application by the Commission, security information shall be made available to
the Mississippi Workers' Compensation Individual Self-insurer Guaranty
Association (IGA).
(4) Each
applicant for individual self-insurance shall provide the Commission with one
(1) point of contact information consisting of its mailing address, e-mail
address, and telephone number.
(5)
Upon approval of an application to be self-insured, the applicant must furnish
the complete excess insurance policy in a form and in an amount acceptable to
the Commission and that specifically names the Mississippi Workers'
Compensation Individual Self-insurer Guaranty Association (IGA) as an
additional insured in the event of the self-insurer's insolvency or
default.
B.
Regulation of Approved Individual Self-Insurers
(1) The Commission shall continually monitor
the financial status and claim liabilities of the individual self-insurer, and
shall require, at the expense of the self-insurer, periodic financial,
actuarial, or other such audits, statements, or reports as the Commission deems
necessary to ensure that the financial status of the self-insurer remains
satisfactory, that its liabilities remain adequately funded, and that its
obligations under the compensation law are being promptly met.
(2) All individual self-insurers shall file
with the Commission a statement of financial condition audited by an
independent certified public accountant six months after the end of the
individual self-insurer's fiscal year. All financial reports requested are
required to be submitted electronically to the Commission. No record or any
information concerning the solvency and financial ability of an individual
self-insurer acquired by the Commission shall be subject to public
inspection.
(3) At the same time
the individual self-insurer files its required financial reports, each
individual self-insurer shall provide the Commission with a current point of
contact information consisting of its mailing address, e-mail address,
telephone number. Failure to provide a current point of contact for Commission
regulation and the Commission's annual assessment may result in cancellation of
an individual self-insured's certificate of authority.
(4) All individual self-insurers shall
maintain specific and/or aggregate excess insurance coverage in an approved
form providing statutory coverage with retention in an amount set by the
Commission and naming the IGA as an additional insured in the event of the
self-insurer's insolvency or default. A copy of the renewal policy shall be
filed electronically with the Commission within thirty (30) days of the policy
inception date.
(5) The security
posted or the indemnity bond held by the Commission shall be for the benefit of
the Commission and IGA as security for the payment of the individual
self-insurer's covered claims and other obligations under the Law; for the
expenses incurred by IGA in evaluating, adjusting, defending, or settling the
self-insurer's covered claims; and for any assessment made against the
self-insurer pursuant to the Mississippi Workers' Compensation Self-insurer
Guaranty Association Law, Miss. Code Ann. §§
71-3-151 through
181. The security posted or the indemnity bond held by the Commission shall
also be for the benefit of the Commission to the extent of any assessment made
against the self-insurer pursuant to the applicable provisions of the Act. Any
bond or other security held by the Commission shall not be returned to a
self-insurer or released any earlier than at least one (1) year after the last
known claim, including medical only claims, against such selfinsurer has been
closed in accordance with the provisions of the Act.
(6) The Commission has the authority to
require further or additional security from the individual self-insured to
ensure that all outstanding liabilities are adequately secured. Additionally,
the Commission has the authority to reduce the amount of security to a minimum
held on behalf of the individual self-insured. The Commission shall not reduce
the amount of security held on behalf of an individual self-insurer to below
$100,000.00, until at least one (1) year after the last known claim, including
medical only claims, against such individual self-insurer has been closed in
accordance with the provisions of the Act. The Commission shall notify the IGA
of the Commission's intent to release, reduce, or increase the security or
bond.
(7) All individual
self-insurers are required to furnish the Commission safety reports at least
annually, according to the schedule or time fixed by the Commission. Such
reports are to be made by a safety engineer or some other party competent to
make safety surveys and reports, shall be submitted electronically, and shall
be in the format prescribed by the Commission.
(8) At least every three years, unless
relieved by the Commission, or more often if prescribed by the Commission,
every individual self-insurer shall file an actuarial report with the
Commission from a Member of the American Academy of Actuaries or other
Commission approved qualified loss reserve specialist. The report shall
include, but not be limited to, the amount of actuarially appropriate reserves
for (i) known Mississippi claims and expenses associated therewith, and (ii)
Mississippi claims incurred but not reported and expenses associated therewith,
which reserves shall be shown as liabilities.
(9) All renewals of certificates of authority
for the privilege of individual self-insurance shall automatically be granted
upon the express condition that the individual self-insurer files promptly and
completely by the prescribed due date all reports required of it by the
Commission and that the individual self-insurer complies with the plan of
operation of the IGA, in accordance with Mississippi Code §
71-3-165(3).
(10) The Commission may institute proceedings
requiring the individual self-insurer to show cause why its certificate of
authority to act as an individual self-insurer pursuant to Miss. Code Ann.
§
71-3-75
should not be terminated. The Commission shall notify the IGA of any such
proceedings instituted against an individual self-insurer and of the basis for
the Commission's decision to institute the proceedings.
(II)
GROUP
SELF-INSURERS.
A.
Authority to Act as a Workers' Compensation Self-Insurance Group
The Commission may permit two or more employers engaged in a common type of business activity or pursuit, or having other reasons to associate, to enter into agreements to pool their liabilities under Miss. Code Ann. § 71-3-75 for the purpose of qualifying as group self-insurers, and, in conjunction therewith, to enter into agreements to pool any other liabilities to their employees, and each employer member of such approved group shall be classified as a self-insurer. No person, association, or other entity shall act as a workers' compensation self-insurance group unless it has been issued an annual certificate of authority by the Commission. Such certificate of authority must be renewed annually on or before the anniversary date of the original certificate of authority of group self-insurance.
B.
Qualifications for Initial Approval
and Authority to Act as a Workers' Compensation Group
(1) A group of employers shall file an
application with the Commission to act as a group self-insurer demonstrating
the need to form such a group. The proposed group self-insurer must show cause
as to why a new group self-insurer should be approved. This may be through
written presentation, oral, or both, at the direction of the Commission. The
proposed self-insurance group shall file with the Commission its application
for a certificate of approval accompanied by a non-refundable filing fee in the
amount of Five Thousand Dollars ($5,000.00).
(2) In no event shall an application for
group self-insurance be approved unless the applicant is willing and able to
furnish adequate security for the payment of its obligations under the Act, and
the type and amount of such security shall be determined by the Commission and
in no event shall be less than $100,000.00. Upon approval of application to
form a group self-insured by the Commission, security information shall be made
available to the Mississippi Workers' Compensation Group Self-insurer Guaranty
Association (GGA).
(3) After
approval of the proposed group self-insurer, the self-insurance group shall
file with the Commission the following:
(i)
The applicant group self-insurer's name, location of its principal office, date
of organization, and name and address of each member;
(ii) A copy of the articles of association,
if any;
(iii) A copy of the bylaws
of the proposed group self-insurer;
(iv) A copy of agreements with the
administrator and with any and all service companies;
(v) A copy of the agreement between the group
self-insurer and each member securing the payment of workers' compensation
benefits, which shall include provisions for payment of assessments as provided
by law;
(vi) Designation of the
initial board of trustees and administrator;
(vii) The address in this State where the
books and records of the group self-insurer will be maintained;
(viii) A pro-forma financial statement and
any other documents required by the Commission on forms acceptable to the
Commission showing the financial ability of the group self-insurer to pay
workers' compensation obligations of its members;
(ix) Proof of payment to the group
self-insurer by each member of not less than 25% of that member's first year of
estimated annual premium as defined by the Commission on a date
prescribed;
(x) Public group
self-insurers must submit authorization from the governing authorities of each
proposed member allowing participation in such a group self-insurance program
with other political subdivisions or state agencies, boards, commissions or
other public entities;
(xi) Rates,
Rating Plans, (including all rating elements and formulas, e.g., experience
rating factors, discounts, Schedule Rating Plans, etc.). Premium payment plans
and classes of business to be written must be submitted for, and approved by
the Commission, prior to a certificate of authority being issued.
C.
Maintaining
Authority to Act as a Group Self-Insurer
(1) In order to maintain the authority to act
as a self-insurance group, the certificate of authority must be renewed
annually on or before the anniversary date of the original certificate of
authority of group self-insurance.
(2) To renew a group self-insurer certificate
of authority, the group self-insurer must comply annually with the following
provisions and supply the following items to the Commission:
(i) Demonstrate a combined net worth of all
members of at minimum $1,000,000.00;
(ii) Each group self-insurer shall submit to
the Commission a statement of financial condition audited by an independent
certified public accountant, approved by the Commission, six months after the
end of the group self-insurer's fiscal year. The financial statement shall
include actuarially appropriate reserves for (a) known claims and expenses
associated therewith, (b) claims incurred but not reported and expenses
associated therewith, (c) unearned premiums, and (d) bad debt, which reserves
shall be shown as liabilities;
(iii) An actuarial opinion regarding reserves
for (a) claims and expenses associated therewith and (b) claims incurred but
not reported and expense associated therewith shall be submitted to the
Commission included in the audited financial statement;
(iv) Rates, Rating Plans, (including all
rating elements and formulas, e.g., experience rating factors, discounts,
Schedule Rating Plans, etc.) Premium payment plans and classes of business to
be written must be submitted for, and approved by the Commission at least
ninety (90) days prior to the renewal date in order for the group
self-insurer's certificate of authority to be renewed.
(v) Unless relieved by the Commission, an
actuarial rate analysis shall be performed annually and presented to the
Commission in conjunction with the submission of the items mentioned in part
(C)(2)(iv) above. This analysis shall include all classes to be written by the
group self-insurer. The actuarial opinions and rate analysis shall be given by
a Member of the American Academy of Actuaries or other Commission-approved
qualified loss reserve specialist as defined in the annual statement adopted by
the National Association of Insurance Commissioners, or any other qualified
entity approved by the Commission.
(vi) Security against all unpaid claims and
other liabilities in case of insolvency as prescribed by the Commission shall
be provided by either a surety bond, financial security endorsement, guaranty
agreement, or such other security as may be required by the Commission, payment
into the self-insurance guaranty fund in an amount specified by the Commission,
or any combination thereof. The Commission may adjust from time to time the
requirements for the amount of security based on differences among group
self-insurers in their size, types of employment, years in existence, financial
status, or other relevant factors. The Commission shall notify the GGA of the
Commission's intent to release, reduce, or increase the security;
(vii) Specific and/or aggregate excess
insurance in a form and in an amount by an insurance company acceptable to the
Commission;
(viii) An indemnity
agreement jointly and severally binding the group self-insurer and each member
thereof to meet the workers' compensation obligations of each member. The
indemnity agreement shall be in a form prescribed by the Commission;
(ix) A fidelity bond for the administrator in
a form and amount acceptable to the Commission;
(x) Any changes in bylaws of the approved
group self-insurer;
(xi) Any
changes in agreement with the administrator and with any and all service
companies;
(xii) Any changes in the
board of trustees or administrator.
D.
Examinations.
The Commission may examine the affairs, transactions, accounts, records, assets, and liabilities of each group self-insurer as often as the Commission deems advisable. The expenses of such examinations shall be assessed against the group self-insurer.
E.
Board of Trustees: Membership,
Powers, Duties, Prohibition.
(1) Each
group self-insurer shall be operated by a board of trustees which shall consist
of not less than five persons whom the members of a group self-insurer elect
for stated terms of office. At least two-thirds of the trustees shall be
employees, officers, or directors of members of the group self-insurer. The
group self-insurer's administrator, service company, or any owner, officer,
employee of, or any person affiliated with such administrator or service
company shall not serve on the board of trustees of the group self-insurer. All
trustees shall be residents of the state of Mississippi or officers of
corporations authorized to do business in the state of Mississippi. The board
of trustees of each group self-insurer shall ensure that all claims are paid
promptly and shall take all necessary precautions to safeguard the assets of
the group self-insurer.
(2) The
board of trustees shall:
(i) Maintain
responsibility for all monies collected or disbursed from the group
self-insurer. Unless otherwise required by the Commission, at least 70% of the
premium as determined by the Commission shall be for the sole purpose of paying
claims, allocated claims expenses, reinsurance or excess insurance, and special
fund contributions, including second injury and other loss related funds. The
remaining premium shall be for the payment of taxes, general regulatory fees
and assessments, and administrative costs. The Commission may approve an
administrative fund account of more than 30% and a claims fund account of less
than 70% only if the group self-insurer shows to the Commission's satisfaction
that (a) more than 30% is needed for an effective safety and loss control
program or (b) the group self-insurer's aggregate excess insurance attaches at
less than 70%;
(ii) Maintain
minutes of all board meetings and make such minutes available to the
Commission;
(iii) Designate an
administrator to carry out the policies established by the board of trustees,
provide day to day management of the group self-insurer, and delineate in the
written minutes of its meetings the areas of authority it delegates to the
administrator;
(iv) Retain an
independent certified public accountant to prepare the statement of financial
condition as required by the Commission;
(v) Adopt and be responsible for maintaining
an investment policy which will permit no more than 30% of investments in
equities, unless otherwise approved by the Commission.
(3) The board of trustees shall not:
(i) Extend credit to individual members for
payment of a premium except pursuant to payment plans approved by the
Commission;
(ii) Borrow any monies
from the group self-insurer or in the name of the group self-insurer except in
the ordinary course of business, without first advising the Commission of the
nature and purpose of the loan and obtaining prior approval from the
Commission.
F.
Individual Employer: Group
Membership, Termination, and Liability
(1) An employer joining a workers'
compensation self-insurance group after the group self-insurer has been issued
a certificate of approval shall (i) submit an application for membership to the
board of trustees or its administrator and (ii) enter into the indemnity
agreement required by this Rule. Membership takes effect no earlier than each
member's date of approval. The application for membership and its approval
shall be maintained as permanent records of the board of trustees.
(2) Individual members of a group
self-insurer shall be subject to cancellation by the group self-insurer
pursuant to the by-laws of the group. In addition, individual members may elect
to terminate their participation in the group. The group self-insurer shall
notify the Commission of the termination or cancellation of a member within ten
(10) days and shall maintain coverage of each canceled or terminated member for
thirty (30) days after such notice, at the terminating member's expense, unless
the group self-insurer is notified sooner that the canceled or terminated
member has procured workers' compensation insurance, has become an approved
individual self-insurer, or has become a member of another group self-insurer.
The Commission may terminate any member of a group self-insurer. Any member
that owes undisputed premium or assessment to a group self-insurer shall be
prohibited from joining any other self-insurance groups or becoming an
individual self-insurer until such debt is paid.
(3) The group self-insurer shall pay all
workers' compensation benefits for which each member incurs liability during
its period of membership. A member that wishes to terminate its membership or
is canceled by a group self-insurer remains jointly and severally liable for
workers' compensation obligations of the group self-insurer and its members
which were incurred during the canceled or terminated member's period of
membership.
(4) A group
self-insurer member is not relieved of its workers' compensation liabilities
incurred during its period of membership except through payment by the group
self-insurer or the member of required workers' compensation benefits and other
assessments or liabilities.
(5) The
insolvency or bankruptcy of a member does not relieve the group self-insurer or
any other member of liability for the payment of any workers' compensation
benefits or assessments and liabilities incurred during the insolvent or
bankrupt member's period of membership.
G.
Service Companies.
(1) No service company or its employees,
officers, or directors shall be an employee, officer, or director of, or have
either a direct or indirect financial interest in, an administrator. No
administrator or its employees, officers, or directors shall be an employee,
officer, or director of, or have either a direct or indirect financial interest
in, a service company. All contracts shall be made available to the Commission
upon request.
(2) The service
contract shall state that, unless the Commission approves otherwise, the
service company shall handle, to their conclusion, all claims and their
obligations incurred during the contract period.
H.
Other Reports.
(1) The Commission may prescribe the format
and frequency of other reports which may include, but shall not be limited to,
payroll audit reports, summary loss reports (loss runs), and quarterly
financial statements.
(2) The
Commission may also prescribe that information be submitted in a data form to
the Commission so that the Commission may prepare its own reports and to
satisfy oversight responsibility. In any case, non-cooperation, or incomplete
or improper submissions may result in a show-cause hearing or a hearing for
revocation.
I.
Rates and Reporting of Rates.
(1)
Each group member shall be audited by an auditor acceptable to the Commission
at least annually, unless relieved by the Commission, to verify proper
classification, experience rating, payroll, and rates.
(2) A group self-insurer or any member
thereof may request a hearing and review by the Commission on any objections to
the classifications, experience rating, payroll, or rates. The Commission may,
in its discretion, convene a hearing for such purpose or consider the request
without a formal hearing. If the Commission determines that as a result of an
improper classification, a member's premium is insufficient, the Commission may
order the group self-insurer to assess that member an amount equal to the
deficiency. If the Commission determines that as a result of an improper
classification a member's premium is excessive, the Commission may order the
group self-insurer to refund to the member the excess collected. The Commission
may grant such other relief as may be appropriate under the circumstances. The
audit shall be at the expense of the group self-insurer.
J.
Refunds.
(1)Any monies for a fund year in excess of
the amount necessary to fund all obligations for that fund year may be declared
to be refundable by the board of trustees with the approval of the
Commission.
(2) Each member shall
be given a written description of the refund plan at the time of application
for membership. A refund for any year shall be paid only to those employers
that remain participants in the group for the entire fund year for which such
refund has been approved. However, payment of a refund based on a premium fund
year shall not be contingent on continued membership in the group after that
fund year for which such refund has been approved.
K.
Payment of Premium.
(1) Each group self-insurer shall establish a
premium payment plan which is filed with and approved by the
Commission.
(2) Each group
self-insurer shall establish and maintain bad debt reserves based on the
historical experience of the group self-insurer or other group
self-insurers.
L.
Deficits and Insolvencies.
(1) If
the assets of a group self-insurer are at any time found by the Commission to
be insufficient to enable the group to discharge its legal liabilities and
other obligations and to maintain the reserves required of it under the
Mississippi Workers' Compensation Act and the provisions herein, the group
self-insurer shall immediately levy an assessment upon its members for the
amount needed to make up the deficiency.
(2) In the event of a deficiency in any fund
year, such deficiency shall be made up immediately, either from:
(i) surplus from a fund year other than the
current fund year,
(ii)
administrative funds,
(iii)
assessments of the membership, if ordered by the group self-insurer or the
Commission, or
(iv) such alternate
method as the Commission may approve or direct. The Commission shall be
notified prior to any transfer of surplus funds from one year to
another.
(3) The
Commission may deem a group self-insurer insolvent if:
(i) it fails to make and collect the
assessments to overcome Commission recognized deficiencies; or
(ii) it is unable to pay its outstanding
lawful obligations as they mature in the regular course of business, as may be
shown either by an excess of its required reserves and other liabilities over
its assets or by its not having sufficient assets to reinsure all of its
outstanding liabilities after paying all accrued claims and assessments owed by
it. The Commission shall levy an assessment upon the members of an insolvent
group self-insurer sufficient to discharge all liabilities of the group,
including the reasonable cost of liquidation.
(4) The Commission may replace the current
board of directors and/or administrator of an insolvent group self-insurer if
necessary to collect outstanding liabilities and assessments through
rehabilitation or liquidation of the fund.
(5) The Commission shall notify the GGA of
any proceedings instituted by the Commission against a group self-insurer and
of the basis for the Commission's decision to institute the
proceedings.
M.
Revocation and Non-Renewal of Certificate of Authority.
(1) After notice and opportunity for a
hearing, the Commission may revoke a group self-insurer's certificate of
authority prior to annual renewal for the following reasons:
(i) the group self-insurer is found to be
insolvent by the Commission,
(ii)
the group self-insurer fails to pay assessments, fines, or other payments
imposed upon it,
(iii) the group
self-insurer fails to comply with any of the provisions of the Mississippi
Workers' Compensation Act or Rules promulgated thereunder,
(iv) any certificate of approval that was
issued to the group self-insurer was obtained by fraud,
(v) there was a material misrepresentation in
the application for the certificate of approval,
(vi) the group self-insurer or its
administrator has misappropriated, converted, illegally withheld, or refused to
pay over upon proper demand any monies that belong to a member, or employee of
a member, or a person otherwise entitled thereto and that may have been
entrusted to the group self-insurer or its administrator in its fiduciary
capacities, or
(vii) for other good
cause.
(2) Non-renewal
of the annual certificate of authority shall be at the discretion of the
Commission and shall not require a hearing.
(3) Any group self-insurer that ceases to act
as a self-insurer through non-renewal or revocation shall remain subject to
regulation by the Commission until such time as all claims are paid and an
appropriate amount of time, as determined by the Commission, has passed to
insure that no additional liability under the Act will be incurred. During this
time of continuing regulatory oversight by the Commission, all reports required
by the Commission shall continue to be submitted by the former group
self-insurer as shall any additional reports required by the Commission. The
Commission maintains the ultimate responsibility for regulation throughout said
process up to and including the installation of a new group self-insurer if the
Commission so warrants, or final dissolution.
O.
Definitions.
(1) "Administrator" means an individual,
partnership, or corporation engaged by a workers' compensation group
self-insurer's board of trustees to carry out the policies established by the
group self-insurer's board of trustees and to provide day to day management of
the group self-insurer.
(2)
"Commission" means the Mississippi Workers' Compensation Commission.
(3) "Service Company" means a person or
entity which provides services not provided by the administrator, including but
not limited to, (1) claims adjustment, (2) safety engineering, (3) compilation
of statistics and the preparation of premium, loss, and tax reports, (4)
preparation of other required self-insurance reports, (5) development of
members' assessments and fees, and (6) administration of a claim
fund.
Notes
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