exv10w10



 








Exhibit 10.10




WORKERS’
COMPENSATION REINSURANCE 
ASSOCIATION









REINSURANCE AGREEMENT




Effective January 1, 2006




 









 








Workers’ Compensation Reinsurance Association Reinsurance Agreement




	 	 	 	 	 	 	 	 	 
	NATURE AND SCOPE OF AGREEMENT	 	 	 	 
	A.	 	 	The Purpose
	 	 	1	 
	B.	 	 	Parties
	 	 	1	 
	C.	 	 	Definitions
	 	 	1	 
	D.	 	 	Agreement Incorporates by Reference the Plan and the Operating Rules
	 	 	1	 
	 	 	 	 	 
	 	 	 	 
	PART ONE: Reinsurance Agreements	 	 	1	 
	A.	 	 	Liability of Association
	 	 	1	 
	B.	 	 	Member’s Duties
	 	 	1	 
	 	 	 	 	 
	 	 	 	 
	PART TWO: Retention Limits	 	 	2	 
	 	 	 	 	 
	 	 	 	 
	PART THREE: Reinsurance Provided by Association Exclusive	 	 	2	 
	 	 	 	 	 
	 	 	 	 
	PART FOUR: Coverage	 	 	2	 
	A.	 	 	General Scope
	 	 	2	 
	B.	 	 	Per Occurrence Basis
	 	 	2	 
	C.	 	 	Claims Expenses
	 	 	3	 
	D.	 	 	Assessments
	 	 	3	 
	E.	 	 	Effective Date
	 	 	3	 
	 	 	 	 	 
	 	 	 	 
	PART FIVE: Premiums	 	 	3	 
	A.	 	 	Annual Premium
	 	 	3	 
	B.	 	 	Billing of Premium
	 	 	3	 
	C.	 	 	Offset
	 	 	3	 
	D.	 	 	Annual Adjustment of Premium
	 	 	4	 
	E.	 	 	Interim Adjustment of Premium
	 	 	4	 
	F.	 	 	Surplus Distributions and Deficiency Assessments
	 	 	4	 
	G.	 	 	Premiums for Unfunded Coverage
	 	 	4	 
	H.	 	 	Premium Audits
	 	 	4	 
	 	 	 	 	 
	 	 	 	 
	PART SIX: Reimbursement Procedure for Indemnification of Ultimate Losses in Excess of a Member’s Retention Limit	 	 	5	 
	 	 	 	 	 
	 	 	 	 
	PART SEVEN: Management of Claims and Losses	 	 	5	 
	A.	 	 	Claims
	 	 	5	 
	B.	 	 	Claims Audits
	 	 	6	 
	C.	 	 	Reporting Requirements
	 	 	6	 
	D.	 	 	Legal Proceedings
	 	 	7	 
	 	 	 	 	 
	 	 	 	 
	PART EIGHT: Subrogation, Salvage, and Third Party Recoveries	 	 	7	 
	 	 	 	 	 
	 	 	 	 
	PART NINE: Recoveries Under The Terrorism Risk Insurance Extension Act of 2005	 	 	7	 
	 	 	 	 	 
	 	 	 	 
	PART TEN: Resolution of Disputes	 	 	8	 
	 	 	 	 	 
	 	 	 	 
	PART ELEVEN: Insolvency	 	 	8	 
	 	 	 	 	 
	 	 	 	 
	PART TWELVE: Termination	 	 	9	 




Effective  January 1, 2006



 









 






NATURE AND SCOPE OF AGREEMENT





	A.	 	The Purpose
	 
	 	 	The purpose of this Reinsurance Agreement (the “Agreement”) is to set forth the basic
conditions of the reinsuring agreement between the Workers’ Compensation Reinsurance
Association (“Association”) and the Member. This Agreement is authorized by the Association’s
Enabling Act (Minnesota Statutes §§ 79:34—79.40), (the “Enabling Act”); its Plan of Operation
(the “Plan”); and its Operating Rules.





	 	 	 
	     Ref:
	 	Plan, Article VI.K.








	B.	 	Parties
	 
	 	 	This Agreement is solely between the Member and the Association. All affiliated insurers
or self-insurers within a holding company system shall be considered a single entity for
purposes of the exercise of all rights and duties of membership in the Association. Nothing in
this Agreement shall establish any rights in favor of any third party. Nothing in this
Agreement shall create any liability or responsibility on the part of the Association for
actions of the Member or other members. Nothing in this Agreement shall limit the Member’s
liability to employers, employees and others under Minn. Stat. Chs. 79 and 176 and other
Minnesota law.





	 	 	 
	     Ref:
	 	Minn. Stat. § 79.34. subd. 1.

	 	 	Plan, Article VI.E.L., and VI.M.








	C.	 	Definitions
	 
	 	 	To the extent defined in the Plan or in Operating Rules, the words used in this Agreement
shall have the meanings given them by the Plan and the Operating Rules.





	 	 	 
	     Ref:
	 	Plan, Article I.








	D.	 	Agreement Incorporates by Reference the Plan and the Operating Rules
	 
	 	 	This Agreement incorporates by reference the Plan and the Operating Rules as they may from
time to time be amended. The provisions of the Enabling Act, Plan, and Operating Rules shall be
controlling over any conflicting provisions of this Agreement.





	 	 	 
	     Ref:
	 	Plan, Article IX.E.







PART ONE:

Reinsurance Agreements





	A.	 	Liability of Association
	 
	 	 	The Association shall reinsure the Member’s Minnesota workers’ compensation liability and
shall indemnify the Member for 100 percent of the amount of ultimate loss arising out of each
occurrence compensable under Minn. Stat. Ch. 176 to the extent that the ultimate loss exceeds
the Member’s retention limit in effect at the time of the loss occurrence and subject to the
terms and conditions of the Enabling Act, the Plan, and the Operating Rules.





	 	 	 
	     Ref:
	 	Minn. Stat. § 79.34, subd. 2.

	 	 	Plan, Article VI.A.








	B.	 	Member’s Duties
	 
	 	 	The Member shall comply with all requirements of the Enabling Act, Plan, and Operating
Rules. These requirements include, but are not limited to, the following: The Member shall
reinsure its Minnesota workers’ compensation liability with the Association, pay all benefits
for losses reinsured by the Association that are covered by the terms and conditions of the
original policies issued to the Member’s insureds, belong to the Association, accept
indemnification from the Association, and report to the Association claims for




Effective  January 1, 2006



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benefits which may involve liability to the Association.





			
	         Ref:	 	Minn. Stat. § 79.34, subds. 1 and 2.
 Plan, Article III. and Article VI.A.





PART TWO:

Retention Limits



The Member shall select the low, high or super retention limit for each calendar year. The
retention limits may be changed annually on January 1. The Member shall notify the Association by
certified mail or fax of any change of its retention limit selection by December 1 of the year
preceding the coverage year. All affiliated insurers or self-insurers within a holding company
system shall select the same retention limit. If the Association is not notified of the Member’s
change of retention limit for the next coverage year by December 1, the Member shall be deemed to
have chosen for the next coverage year the same retention limit (low, high, or super retention
limit) which was in effect on December 1.





			
	Ref:	 	Minn. Stat. § 79.34, subds, 1 and 2.
 Plan, Article VI.A.





PART THREE:

Reinsurance Provided by Association Exclusive



A Member selecting the high or super retention limit shall not purchase reinsurance for
losses below its retention limit except in certain circumstances specified by statute. A Member
selecting the low retention limit may purchase reinsurance from other organizations to provide
indemnification for losses below its retention limit. A Member shall not issue large deductible
policies in Minnesota for deductible amounts in excess of its selected retention limit.





			
	Ref:	 	Minn. Stat. § 79.34, subd. 2.

Minn. Dept. of Commerce, Bulletin 91-5





PART FOUR:

Coverage





	A.	 	General Scope
	 
	 	 	The reinsurance provided by the Association shall cover only benefits under Minn. Stat. Ch.
176 which are paid by the Member, provided that for losses incurred on or after January 1, 1984,
the reinsurance provided shall cover benefits paid by the Member under the workers’ compensation
law of another state when the injured worker is eligible for benefits under Minn. Stat. § 176.041,
subds. 2 or 3, but elects to receive benefits under the workers’ compensation statute of such other
state, as provided in Minn. Stat. § 79.34 subd. 7. Any amounts paid by a Member pursuant to Minn.
Stat. §§ 176.183; 176.221, subd. 1; 176.225; and 176,82 shall not be included in ultimate loss and
shall not be indemnified by the Association. Employers’ liability coverage is not provided by the
Association. The Association does not cover claims under the Federal Employers’ Liability Act, the
Jones Act, the Longshoremen’s and Harbor Workers’ Compensation Act, or any other federal law.






			
	         Ref:	 	Minn. Stat. § 79.34, subds. 2 and 7. 
Minn. Stat. § 176.041, subds. 2 and
3. 
Plan, Article VI.






	B.	 	Per Occurrence Basis
	 
	 	 	Coverage shall be provided on a per occurrence basis, as determined by the Association,
except as otherwise provided by statute, including, in the case of occupational disease, where
coverage is provided on a per person per occurrence basis.






			
	         Ref:	 	Minn. Stat. § 79.34, subd. 2.

Plan, Article I.N. and Article VI.





Effective January 1, 2006





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	C.	 	Claims Expenses
	 
	 	 	Claims expenses, assessments, damages and penalties shall not be indemnified by the
Association. Claims expenses include investigation and legal expenses, court costs, interest
and penalties. Expenses subject to indemnification include expenditures incurred in the
preparation and development of a rehabilitation plan submitted to the Department of Labor and
Industry and in the provision of rehabilitation services rendered in accordance with such a
rehabilitation plan.





	 	 	 
	     Ref:
	 	Minn. Stat. § 79.34, subd. 2.

	 	 	Plan, Article I.G.

	 	 	Operating Rule for Clarification of the Definition of Claims Expenses








	D.	 	Assessments
	 
	 	 	Assessments, including Special Compensation Fund assessments
under Minn. Stat. §§ 176.129 and
176.131 shall not be reimbursed by the Association.





	 	 	 
	     Ref:
	 	Minn. Stat. §§ 176.129 and 79.34, subd. 2.

	 	 	Plan, Article VI.








	E.	 	Effective Date
	 
	 	 	Coverage shall be effective as of 12:01 A.M. on the date that the Member’s authority to either
insure or self-insure workers’ compensation liabilities is approved by the Minnesota Department
of Commerce. In no case shall the Association be liable for benefits for occurrences taking
place prior to October 1, 1979. The Association shall have no liability for death benefits
where an injury prior to October 1, 1979, causes or contributes to death on or after October 1,
1979. Effective January 1, 1984, certain benefits paid pursuant to the workers’ compensation
laws of other states will be covered, as provided in Part Four A. of this Agreement.





	 	 	 
	     Ref:
	 	Minn. Stat. § 79.34, subds. 1, 2 and 7.






PART FIVE:

Premiums





	A.	 	Annual Premium
	 
	 	 	The Member shall pay an annual premium, together with any premium surcharges, for the
reinsurance coverage provided by the Association at the rate determined by the Board of
Directors of the Association (“Board of Directors”) and approved by the Minnesota Commissioner
of Labor and Industry (“Commissioner”). Estimated premium shall be calculated in accordance
with procedures established in the Operating Rule for Determination of Exposure Base. The
estimated exposure base for a Member may be revised after six months of the coverage year if
the member verifies that its current annualized six month exposure base is at least fifteen
percent higher or lower than its estimated exposure base. When the actual exposure base figures
for the billing year become available, the actual premium shall be calculated. A premium
adjustment shall be made as provided in Part Five D. of this Agreement.





	 	 	 
	     Ref:
	 	Minn. Stat. § 79.35(d).

	 	 	Plan, Article VI.D.

	 	 	Operating Rule for Determination of Exposure Base








	B.	 	Billing of Premium
	 
	 	 	The estimated premium shall be billed on an annual or quarterly basis, and shall be payable
within 30 days of the date of mailing of the premium notice, with late payments subject to
interest charges established by the Board of Directors.





	 	 	 
	     Ref:
	 	Plan, Article VI.D.3.








	C.	 	Offset
	 
	 	 	The Association may offset indemnification payable to the Member against premium payable by the
Member. Premiums payable shall not be offset by





Effective  January 1, 2006



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	 	 	the Member against indemnification claimed by the Member.






			
	         Ref:	 	Plan, Article VI.D.3.C.






	D.	 	Annual Adjustment of Premium
	 
	 	 	The Association shall annually provide to the Member a statement indicating adjustments for
previous years’ premium. Amounts due the Association as a result of the adjustment shall be paid by
the Member within 30 days of the date of mailing of the adjusted premium notice, with late payments
subject to interest charges established by the Board of Directors. Amounts due the Member shall be
credited to the Member’s premium account with the Association, and any credit premium balance shall
be refunded to the Member within 30 days, provided, however, that the Member has no additional
premiums due and unpaid in the year the refund is to be made. If the Member has additional premiums
due and unpaid in the year the refund is to be made, the Association may apply any credit premium
balance against the due and unpaid premium.






			
	         Ref:	 	Plan, Article VI.D.2.b.

Operating Rule for Determination of Exposure Base 

Operating Rule for Annual and Audit

  Premium Adjustment Refunds






	E.	 	Interim Adjustment of Premium
	 
	 	 	A Member who ceases doing business in Minnesota or a self-insurer Member who ceases to be an
approved self-insurer may request an interim adjustment of estimated annual premium.






			
	         Ref:	 	Operating Rule for Interim Adjustment
    of Estimated Annual Premium






	F.	 	Surplus Distributions and Deficiency Assessments
	 
	 	 	The Board of Directors may declare a distribution of surplus or assessment of deficiencies in the
form of member excess or deficient premiums or policyholder excess
surplus or deficiencies as required by the Operating Rule for the Determination of Surplus. Such
distributions or assessments may result from statutory changes, changes in the exposure base, or
excess or deficient funds. Distributions of surplus and deficiency assessments shall be made as
required by the Board of Directors in accordance with the Enabling Act, Plan and Operating Rule for
the Determination of Surplus as they have been interpreted by the courts.






			
	         Ref:	 	Minn. Stat. § 79.34, et seq.

Plan, Article VI.D.l.d. and VI.N.
 Operating Rule for the 
Determination of Surplus






	G.	 	Premiums for Unfunded Coverage
	 
	 	 	In the event that benefits paid or expected to be paid on any claims in a calendar year exceed the
prefunded limit in effect at the time the loss was incurred, the Association shall calculate and
charge to all Members an additional premium for that year sufficient to cover the payments in
excess of the prefunded limit. The premium shall be charged and collected in the same manner as the
annual premium.






			
	         Ref:	 	Minn, Stat. § 79.35(d).






	H.	 	Premium Audits
	 
	 	 	The Association may inspect and audit any Member’s records to determine the accuracy of the premium
calculation. The Member shall timely provide all information requested and shall in all respects
cooperate fully in providing information during the course of an audit.






			
	         Ref:	 	Plan, Article VI.D.2.f.






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PART SIX:

Reimbursement Procedure for Indemnification of Ultimate Losses in Excess of a Member’s Retention
Limit



Requests for reimbursement shall be submitted in a form approved by the Association. The
first request shall be submitted within six months after the Member’s payments on a loss exceed the
Member’s Retention Limit. Thereafter the Member, if entitled to indemnification by the Association,
shall file a reimbursement request form semiannually until the claim is closed. The request shall
be submitted to the Association in accordance with the provisions of the Operating Rule for
Reimbursement Procedures. The Member and the Association may, in the alternative, agree upon a
semiannual reimbursement cycle, whereby all of the Member’s reimbursement requests, regardless of
loss occurrence date, are filed on the same cycle. If a claim settles on a full, final and complete
basis, or the claim file is closed, a reimbursement request may be filed at any time. If payments
for which reimbursement is due exceed $30,000 in the three months following a regularly scheduled
reimbursement date, a reimbursement request may be filed in the following month. The reimbursement
request shall itemize all payments of benefits since submission of the last reimbursement request.



Proper and complete reimbursement requests for indemnification of Ultimate Losses in excess of a
Member’s Retention Limit shall be promptly paid by the Association.




	 	 	 
	Ref:
	 	Plan, Article VI.

	 	 	Operating Rule for Reimbursement Procedures







PART SEVEN:

Management of Claims and Losses





	A.	 	Claims
	 
	 	 	The Member shall have the primary responsibility for the investigation, management, and
defense of all claims. The Member may settle and compromise disputed claims
that are within the terms and conditions of the original policies issued by the Member and are
consistent with the claims procedures established by the Association. If the Association, in its
sole discretion, determines that the claims procedures or practices of a Member are inadequate to
properly limit the liabilities of the Association, or may, in any way, jeopardize the interests of
the Association, the Association may withhold reimbursements from the Member until it determines
that the deficiencies in the claims procedures and practices have been resolved, or the Association
may, with the approval of the Board of Directors and at the Member’s expense, undertake directly or
contract with another person, including another Member, to adjust or assist in the adjustment of a
Claim or Claims which create a potential liability to the Association. Except as provided by Minn.
Stat. § 79.35(g), the Association may charge the costs and expenses of these activities, including
legal expenses, to the Member. The Member shall cooperate fully with the Association in such claims
management. If the Board of Directors determines that the claims procedures or practices of a
Member are inadequate to properly service the liabilities of the Association, or may, in any way,
jeopardize the interests of the Association, the Association may also recommend to the Commissioner
and the Commissioner of Commerce that an Insurer Member’s license to transact workers’ compensation
insurance, or a Self-insurer Member’s authorization to self-insure workers’ compensation liability,
pursuant to Minn. Stat. § 176.181, be revoked.





	 	 	 
	     Ref:
	 	Minn. Stat. § 79.35(g).

	 	 	Plan, Article VI.F.4.

	 	 	Operating Rule for the Adjustment of Claims






Effective  January 1, 2006



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	B.	 	Claims Audits
	 
	 	 	The Association may inspect and audit the Member’s records relating to all claims or related
matters. The Member shall timely provide all information requested
and shall in all respects
cooperate fully in providing information during the course of an audit.






			
	         Ref:	 	Minn. Stat. § 79.35(g).
 Plan, Article VI.F.3.






	C.	 	Reporting Requirements
	 
	 	 	Members shall promptly notify the Association of any claim meeting any of the following reporting
criteria.






	 	1.	 	Catastrophic Injury Criteria
	 
	 	 	 	When a claimant has suffered a catastrophic injury as described
in the following list, the Member shall notify the Association of the injury within 15 business
days of notification of the injury to the Member.






	 	a)	 	Central Nervous System Injury






	 	1)	 	Spinal cord injury resulting in paraplegia or quadriplegia.
	 
	 	2)	 	Brain damage affecting cognition and/or such conditions as permanent disorientation,
behavior disorder, personality change, seizure disorder, sensorimotor deficits, aphasia, or coma.






	 	b)	 	Fatality, except for a no dependent exposure.
	 
	 	c)	 	Third-degree burns covering 10 percent of the body, or second-degree burns covering 30
percent of the body, or if significant medical costs can be anticipated.
	 
	 	d)	 	Amputations of a significant portion of one extremity or multiple amputations.






	 	2.	 	Serious Injury Criteria
	 
	 	 	 	When a claimant has suffered a serious injury as described in the following list, the Member
shall promptly notify the Association.






	 	a)	 	Impairment of total vision by 50 percent or more.
	 
	 	b)	 	Peripheral nerve damage causing major muscle dysfunction or paralysis in an upper or lower
extremity.
	 
	 	c)	 	Serious internal injuries resulting from blunt, penetrating, or crushing injuries to the
chest or abdomen.
	 
	 	d)	 	Multiple fractures, or significant degloving injuries, involving more than one arm, hand,
or leg, malunion, or significant shortening of the limbs.
	 
	 	e)	 	Fracture of both heel bones (bilateral os calcis).
	 
	 	f)	 	Occupational disease allegedly caused by working conditions or other job-related factors,
including asbestosis, or chronic pulmonary disease, or other occupational disease which results in
disability expected to last two years or more.






	 	3.	 	Claim Cost Criteria
	 
	 	 	 	When a Member estimates that the total incurred cost (payments and reserves for future payments) of
a claim exceeds 50 percent of the retention limit which was in effect during the year when the loss
was incurred, the Member shall promptly notify the Association.






			
	         Ref:	 	Plan, Article VI.B.1.

Operating Rule for Claim Reporting Procedure





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	D.	 	Legal Proceedings
	 
	 	 	The Association may intervene in legal proceedings under Minnesota Statutes Chapters 79 and
176 and in any other legal proceedings where the result of the proceeding is considered likely
to affect the interests of the Association. The Association shall notify the affected Member
prior to intervening.





	 	 	 
	     Ref:
	 	Minn. Stat. § 79.36(f).

	 	 	Plan, Article VI.H.

	 	 	Operating Rule for Intervention in Legal Proceedings







PART EIGHT:

Subrogation, Salvage, and Third Party Recoveries



The Member shall, to the extent permitted by law, prosecute or intervene in any and all claims
against third parties arising out of any covered loss occurrence and all recoveries therefrom shall
be applied to reduce the loss which the Association is required to reimburse to the Member;
provided, however, that a Member may waive its subrogation rights in writing in advance of any loss
occurrence.



If the Member fails or neglects to enforce any such claims, the Association may reduce the Member’s
reimbursement for such claim by the amount the Member would have recovered from such third parties.
In the alternative, the Association may, in its sole discretion, enforce the Member’s rights of
subrogation against such third parties. The net proceeds recovered, if any, shall be distributed
first to the Association to the extent of amounts paid or payable in the future by the Association
for the claim. Any excess recovered by the Association shall be paid to the Member or other person
entitled to the proceeds, as determined by the Board of Directors,



If the Member waives its subrogation rights after a claim has occurred without first obtaining the
agreement of the Association, and the Association determines that it was not in its best interests
to waive subrogation, the Association may refuse to indemnify the Member for that claim to the extent
of amounts which the Association determines would have been recoverable through subrogation. The
Association may withhold reimbursements to the Member for other claims to recover reimbursements
already made on the claim where subrogation was waived.




	 	 	 
	Ref:
	 	Minn. Stat. § 79.36(g)

	 	 	Plan,
Article VI.E.3. and VI.G. 

Operating Rule for the Adjustment of Claims

	 	 	Operating Rule for Approval of Waivers of Subrogation







PART NINE:

Recoveries Under The Terrorism Risk
Insurance Extension Act of 2005



The Association has been determined by the Department of the Treasury to be a separate insurer
under the Terrorism Risk Insurance Act of 2002 as amended and
extended by the Terrorism Risk
Insurance Extension Act of 2005 (TRIEA). As such, the Association is eligible to directly submit
claims in accordance with the provisions of the TRIEA for liabilities it incurs from its members as
the result of “acts of terrorism” certified by the Secretary of the Treasury as provided in the
TRIEA.



Any loss reimbursement that a Member receives from the United States Government under TRIEA as a
result of a loss occurrence during the term of this Agreement shall inure to the benefit of the
Association in the proportion that the Member’s insured losses, as defined in the TRIEA, in that
loss occurrence for coverage provided under this Agreement bear to the Member’s total insured
losses, as defined in the TRIEA, in that loss occurrence.



If a loss reimbursement received by the Member under the TRIEA is based on the Member’s losses
in more than one loss



Effective  January 1, 2006




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occurrence, and the United States Government does not designate the amount allocable to each loss
occurrence, the reimbursement shall be prorated between occurrences in the proportion that the
Member’s insured losses for coverage provided under this
Agreement in each loss occurrence bears to
the Member’s total insured losses arising out of all loss occurrences to which the recovery
applies.




PART TEN:

Resolution of Disputes



Any Member or other interested party aggrieved by any action or decision of the Board of
Directors or the Association, or any agent of the Association, may file a written complaint with
the Association concerning such action or decision within 30 days after the action was taken or the
decision rendered. The complaint will be resolved by the Member Appeals Committee in accordance
with the procedures it follows for the resolution of such disputes. Any Member aggrieved by a
determination by the Member Appeals Committee may appeal such determination to the Commissioner
within 30 days.



Any dispute between a Member (or Former Member or successor in interest of a Member) and the
Association with respect to Article VI. of the Plan or any provisions in the Reinsurance
Agreement or Operating Rules adopted by the Board of Directors relating to coverage, claim, or
premium issues, as determined by the Association, shall be resolved by arbitration in accordance
with the Commercial Arbitration Operating Rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction over the parties and the dispute. A single neutral arbitrator shall be agreed upon by
the Member and the Association. If the parties are unable to agree upon a single neutral
arbitrator, three arbitrators shall be chosen, one by each party and the third by the two
arbitrators so chosen. If either or both parties refuse or neglect to appoint an arbitrator or
arbitrators within 30 days after receipt of written notice from the other party requesting the
party to do so, the Commissioner may choose the arbitrator
or arbitrators which the party or parties refuse or neglect to choose, and the two arbitrators so
chosen shall choose the third. If the two arbitrators fail to select the third arbitrator within 30
days after the second of the first two arbitrators is chosen, the Commissioner shall choose the
third arbitrator. Each party shall submit its case to the arbitrator or arbitrators within 30 days
of the appointment of the arbitrator. The decision of the arbitrator or a majority of the
arbitrators shall be a final determination, binding upon both the Member and the Association. The
expense of the arbitrator or arbitrators and the arbitration shall be divided as follows: the
prevailing party shall pay 25 percent and the remainder shall be paid by the other party. In the
event that no one party clearly prevails, the arbitrator or arbitrators shall specify the
percentage of expenses to be contributed by the parties. Any such arbitration shall take place in
Minneapolis or Saint Paul, Minnesota, unless some other location is mutually agreed upon by the
Member and the Association.





			
	Ref:	 	Minn. Stat. § 79.36(h).
 Plan, Article VIII.





PART ELEVEN:

Insolvency



If the Member becomes insolvent, indemnification for losses payable by the Association shall be
payable by the Association directly to the Member or its liquidator, receiver, or statutory
successor or, if applicable, in accordance with Minn. Stat. § 176.185, subd. 8a..



If the Member or any other member becomes insolvent, any liability of the insolvent member to the
Association shall be apportioned among the remaining members on the same basis as reinsurance
premiums are charged. The Association shall have, on behalf of all of the remaining members, all
rights allowed by law against the estate or funds of the insolvent member for sums due the
Association, and any




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amounts received by the Association as a result thereof shall be credited to the members on
the same basis as reinsurance premiums are charged.




	 	 	 
	Ref:
	 	Minn. Stat. § 79.34, subd. 4.

	 	 	Minn. Stat. § 176.185, subd. 8a.

	 	 	Plan, Article III. A.2.







PART TWELVE:

Termination



The Commissioner or Commissioner of Commerce may, upon notice to a Member, take any appropriate
action against a Member pursuant to procedures available to the Commissioner or Commissioner of
Commerce, including revocation of the license of an Insurer to transact workers’ compensation
insurance or revocation of authorization of a Self-insurer to self-insure workers’ compensation
liability as authorized by law, for failure to pay Premiums to the Association when due, failure to
comply with the Plan, Reinsurance Agreement, or Operating Rules, or failure to comply with
Minnesota law. In the event that a political subdivision or group of political subdivisions that
self-insure workers’ compensation liability fails to pay Premiums to the Association when due,
fails to comply with the Plan, Reinsurance Agreement, or Operating Rules, or otherwise fails to
comply with the Enabling Act, the Association shall notify the Commissioner and the State Auditor.
Revocation of authority to write workers’ compensation insurance by an Insurer or to self-insure
automatically terminates membership in the Association. An Insurer may voluntarily withdraw from
membership in the Association only upon ceasing to be authorized by the Commissioner of Commerce to
transact workers’ compensation insurance in Minnesota. A Self-insurer may voluntarily withdraw from
membership in the Association only when it stops self-insuring its workers’ compensation liability,
which voluntary withdrawal is effective on the date determined by the Commissioner of Commerce. Any
unpaid Premiums which have been charged to a withdrawing or terminated Member shall be due and
payable as of the
effective date of withdrawal or termination, as determined by the
Commissioner of Commerce. A
Former Member shall continue to be bound by the Act, Plan, and any Reinsurance Agreement or
Operating Rules with respect to the performance and completion of any unsatisfied liabilities and
obligations to the Association.




	 	 	 
	     Ref:
	 	Minn. Stat. § 79.34, subd. 3.

	 	 	Plan, Article III.A.l.






Adopted by action of the Board of Directors of the Workers’ Compensation Reinsurance Association on
the 21st day of December 2005, and approved by the Minnesota Commissioner of Labor and
Industry on the 22nd day of December 2005.




	 	 	 
	WORKERS’
COMPENSATION 

REINSURANCE ASSOCIATION
	 
	 	 

	By
	 	

	 	 	Carl W. Cummins III

	 	 	Its President

	 
	 	 

	ATTEST
	 
	 	 

	By
	 	

	 	 	Cynthia M. Smith

	 	 	Its Secretary






Effective  January 1, 2006




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