Document:

exv10w10

 

Exhibit 10.10

WORKERS’ COMPENSATION REINSURANCE

ASSOCIATION

REINSURANCE AGREEMENT

Effective January 1, 2007

 

 

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
	 	 	2	 
	D. Assessments
	 	 	3	 
	E. Effective Date
	 	 	3	 
	 
	 	 	 	 
	PART FIVE: Premiums
	 	 	3	 
	A. Annual Premium
	 	 	3	 
	B. Billing of Premium
	 	 	3	 
	C. Offset
	 	 	4	 
	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, 2007

 

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.L.

	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.N.

	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 statutory 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 VIA.

	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, report to the Association claims for benefits that may
involve liability to the Association, and take all actions necessary to limit the liabilities
of the Association. Any member choosing to hire a third -party administrator (TPA) to
administer any portion of its WCRA member duties is required to notify

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	 	 	the WCRA and complete a WCRA TPA Member Authorization Agreement.
	 
	 	 	Ref: Minn. Stat. § 79.34, subds. 1 and 2.

        Plan, Article III. and Article VI.A.and B.

PART TWO:

Retention Levels

The Member shall select the low, high or super retention level for each calendar year. Each
retention level has a corresponding retention dollar limit, which increases over time as the
Statewide Average Weekly Wage increases. The retention levels may be changed annually on January 1.
The Member shall notify the Association by certified mail or fax of any change of its retention
level selection by December 1 of the year preceding the coverage year. All affiliated insurers
within a holding company system shall select the same retention level. If the Association is not
notified of the Member’s change of retention level for the next coverage year by December 1, the
Member shall be deemed to have chosen for the next coverage year the same retention level (low,
high, or super retention level) 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 level shall not purchase reinsurance for losses
below its retention limit except in certain circumstances specified by statute. A Member selecting
the low retention level 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 95-7

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.R. and Article VI.

	C.	 	Claims Expenses

Claims expenses, assessments, damages and penalties shall not be indemnified by the
Association. Claims expenses include

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	 	 	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.K.

	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.

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	C.	 	Offset

The Association may offset indemnification payable to the Member against premium payable by the
Member. Premiums payable shall not be offset by 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. 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 applicable Operating Rules as they have been interpreted by the courts.
	 
	 	 	Ref:  Minn. Stat. § 79.34, subd. 2a and §79.361.
        
Plan, Article VI.D.l.d. and VI.O.
	 
	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).
        
Operating Rule for Calculation and Charging of Premium for Unfunded Layers
	 
	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.4.

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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,
may 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.A.
        
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.

Members are required to notify the WCRA prior to entering into claim settlements that may involve
present or future WCRA reimbursements. If a settlement involving WCRA funds is executed without
advance notification to the WCRA, and the WCRA has no material or substantial disagreement with the
terms of the settlement, the WCRA shall reimburse the Member for the settlement amount. If the WCRA
disagrees with the terms of a settlement entered into by a Member, either because of errors in
applying the provisions of Minn. Stat. Ch. 176 in calculating the settlement amount or because it
believes the settlement is clearly excessive and materially affects the WCRA’s interests, the WCRA
shall reimburse any undisputed settlement amounts and the Member may request a review of the denial
of reimbursement as provided in Article VI.G.4. of the Plan.

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

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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.
        
Operating Rule for the Adjustment of Claims

	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

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	 	 	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 VIB.1.
        
Operating Rule for Claim Reporting Procedure

	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.I.
        
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(f) and (g). 
        
Plan, Article VI.E.3. and VI.H. 
        
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

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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 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

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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 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.

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 14th day of December 2006, and approved by the Minnesota Commissioner of Labor and
Industry on the 18th day of December 2006.

	 	 	 	 	 
	 	WORKERS’ COMPENSATION

REINSURANCE ASSOCIATION

 	 
	 	By  	/s/ Carl W. Cummins III
 	 
	 	 	Carl W. Cummins III  	 
	 	 	Its President 	 
	 
	 	ATTEST

 	 
	 	By  	/s/
Cynthia M. Smith
 	 
	 	 	Cynthia M. Smith 	 
	 	 	Its Secretary 	 
	 

Effective
January 1, 2007

-9-exv10w11

 

Exhibit 10.11

2007

CERTIFICATE OF REINSURANCE

for the

Agreement of Reinsurance

between the

WORKERS’ COMPENSATION REINSURANCE ASSOCIATION

and

RTW Inc

American Compensation Insurance
Company 0030392 
Bloomington
Compensation Insurance Company 0012311

	 	 	 	 	 
	Coverage Period:

	 	January 1, 2007 — December 31, 2007
	 	Retention Limit: $400,000
	 

	 	(12:01 a.m. Standard Time)	 	 

This certifies that the entities named above are Members of the Workers’ Compensation Reinsurance
Association (WCRA), and that the WCRA reinsures the Members’ liability during the indicated
coverage period for benefits pursuant to Minn. Stat. Ch. 176 in excess of the Members’ retention
limit for the period indicated above. This certificate provides for coverage in accordance with the
terms and conditions of the Reinsurance Agreement approved by the Commissioner of the Minnesota
Department of Labor and Industry on December 18, 2006. This certificate shall not be valid for any
portion of the indicated period during which an entity is not a Member of the Association.

	 	 	 
	 

	 	
Workers’ Compensation Reinsurance
Association
	 
	 	 
	 

	 	
	 
	 	 
	 

	 	Carl W. Cummins III
	 

	 	President and Chief Executive Officer
	 

	 	Dated: December 26, 2006

Workers’
Compensation Reinsurance Association®

Suite 1700, 400 Robert Street North, Saint Paul, MN 55101
  Phone: 651.293.0999   Fax:
651.229.1848   www.wcra.biz

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