The following words and terms, when used in this
subchapter, have the following meanings, unless the context clearly indicates
otherwise:
Act-The Workers' Compensation Act
(77 P. S. §§
1-1041.4,
2501-2506 and
2701-2708).
Active self-insurer-A self-insurer that is
not a runoff self-insurer.
Actuary-A member in good standing of the
Casualty Actuarial Society or a member in good standing of the American Academy
of Actuaries.
Adequate accident and illness prevention
program-A determination by the Bureau under Chapter 129 (relating to
workers' compensation health and safety) that a self-insured employer's
accident and illness prevention services fulfill the program and service
requirements as stated in that chapter.
Affiliates-Employers which are closely
related through common ownership or control.
Aggregate excess insurance-Insurance under
which the insurer pays on behalf of or reimburses a self-insurer for its
payment of benefits on claims incurred during a policy period in excess of the
retention amount to the insurer's liability limit.
Applicant-An employer requesting
permission to initiate or to renew self-insurance, an employer requesting
permission for it and its affiliates or subsidiaries to initiate or to renew
self-insurance, or a parent company requesting permission for its subsidiaries
to initiate or to renew self-insurance.
Authorized retention amount-A retention
amount that is equal to or is less than a self-insurer's maximum quick assets
exposure amount or the current standard retention amount, whichever is less, or
the special retention amount approved by the Bureau.
Bureau-The Bureau of Workers' Compensation
of the Department.
Cash flow protection amount-The maximum
amount of benefits a self-insurer pays over a 2-year period on an occurrence
without reimbursement from an insurer under a specific excess insurance policy
with a per year per occurrence cash protection plan.
Catastrophic loss estimation-The greater
of the following:
(i) The largest
number of employees anticipated to work at one time during a work day at the
largest location in this
Commonwealth in terms of the
applicant's employment,
or the employment of any of its
affiliates or subsidiaries under a consolidated
permit under §
125.4 (relating to application for
affiliates and subsidiaries), multiplied by the current
Statewide average
weekly wage multiplied by 500.
(ii)
The current Statewide average weekly wage multiplied by 5,000.
Claims service company-An individual,
corporation, partnership or association engaged in the business of servicing a
self-insurer's claims, including the adjusting and handling of claims, the
payment of benefits and the provision of required reports.
Commonwealth-The term includes the
following:
(i) The government of the
Commonwealth, including the following:
(A) The
courts and other officers or agencies of the unified judicial system.
(B) The General Assembly, and its officers
and agencies.
(C) The Governor, and
the departments, boards, commissions, authorities and officers and agencies of
the Commonwealth.
(ii) An
employer, politic and corporate, exercising an essential government function
under the laws of the Commonwealth that is not a political
subdivision.
Dedicated asset account-An account or
fund, such as a bank, checking or trust account or an internal services fund,
holding cash or investments solely to finance or hold reserves for the payment
of a public employer's workers' compensation liability and related
expenses.
Department-The Department of Labor and
Industry of the Commonwealth.
Employer-An employer as defined in section
103 of the act (77 P. S. §
21) or under
section 103 of the Occupational Disease Act (77 P. S. §
1203), or both.
Excess indemnity insurance-Aggregate
excess insurance or specific excess insurance that meets the requirements in
§
125.11(b)(1)
(relating to excess insurance).
Excess insurance-Excess indemnity
insurance or workers' compensation excess insurance.
Financial ability to
self-insure-Possession of adequate financial capacity and adequate
financial health, as specified in §
125.6(a)
(relating to decision on application).
Guarantor-The affiliate or parent company
that has guaranteed a self-insurer's liability by executing an agreement under
§
125.4(b) that is
on file with the Bureau.
Investment grade long-term credit or
debt rating-A long-term credit or debt rating identified as
investment grade by the NRSRO that issued it.
Liability limit-The maximum amount of
benefits for which an insurer indemnifies a self-insurer under an excess
insurance policy.
Long-term credit or
debt
rating-A measurement by an NRSRO of an applicant's willingness and
intrinsic capacity to meet its long-term financial commitments as the
commitments become due, exclusive of the effects of any guaranties, insurance
or other forms of credit enhancements or legal priorities on any of the
applicant's financial obligations.
Loss development-The tendency of the cost
of a group of claims to increase as they mature.
Maximum quick assets exposure amount-Five
percent of an applicant's average year-end quick assets amount for its last 2
completed fiscal years.
Minimum funding amount-The lower of the
following:
(i) The current Statewide
average weekly wage multiplied by 500.
(ii) The retention amount of the applicant's
current or any proposed excess insurance, if applicable.
Minimum security amount-The lower of the
following:
(i) The current Statewide
average weekly wage multiplied by 1,000.
(ii) The retention amount of the applicant's
current or any proposed excess insurance, if applicable.
NRSRO-A designated Nationally-recognized
statistical rating organization of the United States Securities and Exchange
Commission or its successor.
Occupational Disease Act-The Pennsylvania
Occupational Disease Act (77 P. S. §§
1201-1603).
Parent company-An entity which directly or
indirectly owns a majority of the voting stock of an employer or directly or
indirectly controls a majority of the employer's board of directors
appointments if the employer has no voting stock.
Permit-The document issued by the Bureau
to an employer which authorizes the employer to operate as a
self-insurer.
Political subdivision-A county, city,
borough, incorporated town, township, school district, vocational school
district and county institution district, municipal authority, or other entity
created by a political subdivision under law.
Private employer-An employer who is not a
public employer as defined in this section.
Public employer-The Commonwealth or a
political subdivision.
Quick assets-The sum of an applicant's
cash, cash equivalents, current receivables and marketable securities or, if
the applicant is a public employer who uses fund accounting, the total of the
applicant's general fund assets.
Retention amount-
(i) The maximum amount of benefits a
self-insurer pays without reimbursement from the insurer under an aggregate
excess insurance policy or under a specific excess insurance policy which does
not include an annual cash flow protection plan.
(ii) The term also includes the lower of the
maximum amount of benefits a self-insurer pays on each occurrence without
reimbursement from the insurer or the cash flow protection amount under a
specific excess insurance policy which includes an annual cash flow protection
plan.
Runoff self-insurer-An employer that had
been a self-insurer but no longer maintains a current permit.
Security-Surety bonds, letters of credit
or cash or negotiable government securities held in trust to be used for the
payment of a self-insurer's workers' compensation liability upon order of the
Bureau if the self-insurer fails to pay its liability due to its financial
inability or due to the self-insurer filing for bankruptcy or being declared
bankrupt or insolvent.
Self-insurance-The privilege granted to an
employer which has been exempted by the Bureau from insuring its liability
under section 305(a) of the act (77 P. S. §
501(a)) and section 305 of
the Occupational Disease Act (77 P. S. §
1405).
Self-insurance loss portfolio transfer
policy-A policy of insurance accepted by the Bureau as meeting the
requirements of §
125.21 (relating to self-insurance
loss portfolio transfer policy) under which a self-insurer transfers liability
incurred as a self-insurer to a workers' compensation insurer.
Self-insurer-
(i) An employer which has been granted the
privilege to self-insure its liability and to maintain direct responsibility
for the payment of this liability under the act and the Occupational Disease
Act.
(ii) The term includes a
parent company or affiliate which has assumed a subsidiary's or an affiliate's
liability upon the termination of the parent-subsidiary or affiliate
relationship.
Special retention amount-
(i) A retention amount that exceeds the
applicant's maximum quick assets exposure amount or the standard retention
amount requested by the applicant and approved by the Bureau based on a
determination that the applicant has sufficient quick assets to easily
liquidate all losses at the requested greater retention amount.
(ii) Additionally, an applicant whose
self-insurance status began before September 11, 2010, may use a special
retention amount that is equal to the retention amount of the applicant's
excess insurance in effect on September 11, 2010.
Specific excess insurance-Insurance under
which the insurer pays on behalf of or reimburses a self-insurer for its
payment of benefits on each occurrence in excess of the retention amount to the
insurer's liability limit.
Standard retention amount-
(i) The current Statewide average weekly wage
multiplied by 500.
(ii) Rounded
upward to the nearest hundred thousand.
Statewide average weekly wage-The amount
calculated and reported by the Bureau under section 105.1 of the act
(77 P. S. §
25.1).
Subsidiary-An employer whose voting stock
or board of directors appointments are directly or indirectly controlled by a
parent company.
Workers' compensation excess
insurance-Aggregate excess insurance or specific excess insurance that
meets the requirements in §
125.11(b)(2).
Workers' compensation excess insurance
recoveries-Payments made to a self-insurer under a policy of workers'
compensation excess insurance or payments receivable under a policy of workers'
compensation excess insurance that the insurer has agreed in writing that it is
liable to pay.
Workers' compensation insurer-An insurance
company authorized to transact the class of insurance listed in section
202(c)(14) of The Insurance Company Law of 1921 (40 P. S. §
382(c)(14)).
