An Act to Promote Alternatives in Group Self-insurance LR 1734(02)
Maine Legislature, Session 121, LD 0852
Committee Amendment CA_A_H338 (House)
Amends: 39-A MRSA §403

AMENDMENT "~,, 
Alternatives in 
to H.P. 629, L.D. 852, 
Group Self-insurance" 
Bill, "An 
Amend the bill in section 1 in the 3rd blocked paragraph 
from the end in the 9th line (page 1, line 50 in L.D.) by 
striking out the following: 
"M" and inserting in its place the 
following: 
'to the extent' 
Further amend the bill in section 1 in subsection 4 in the 
3rd blocked paragraph from the end in the 8th line from the end 
(page 2, line 7 in L.D.) by striking out the following: 
"injury" 
and inserting in its place the following: 
'iR;Q~y occurrence' 
Further amend the bill by striking out all of section 2 and 
inserting in its place the following: 
'Sec. 2. 39-A MRSA §403, sub-§4-A is enacted to read: 
4-A. 
Groyp 
self-insurance 
reinsurance 
account. 
As 
an 
alternative 
to 
obtaining 
a 
reinsurance 
contract 
providing 
coverage against losses arising out of one occurrence, a group 
self-insurer 
may 
participate 
in 
a 
group 
self-insurance 
reinsurance 
account, 
referred to 
in this 
subsection 
as 
"an 
account," as provided in this subsection. 
More than one account 
may be established pursuant to this subsection. 
Each account 
established pursuant to this subsection is an independent entity 
and 
an 
instrumentality 
of 
the 
State, 
but 
the 
debts 
and 
liabilities of an account are not debts and liabilities of the 
State. 
Page l-LRI734(2) 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT .. .A .. to H.P. 629, L.D. 852 
A. 
Any group self-insurer that is subject to joint and 
several liability pursuant to subsection 4. paragraph F may 
apply to reinsure through an account. 
(1) 
Upon the petition of 4 or more authorized group 
self-insurers. 
the 
Superintendent 
of 
Insurance 
may 
approve an account for the deposit of funds in lieu of 
reinsurance. 
(2) 
The account must indemnify its participating group 
self-insurer members 
for 
claims 
incurred during the 
account's operation. 
The purpose of the account is to 
accumulate 
funds 
to provide coverage against losses 
arising out of one occurrence in excess of $5QQ,QQQ or 
such other amounts as may be permitted or required for 
particular 
members 
consistent 
with 
the 
plan 
of 
operation established pursuant to paragraph B. 
(3) A group self-insurer is deemed to be a member of 
the account for reinsurance coverage for purposes of a 
claim if the group self-insurer is a 
member of the 
account when an injury occurs or a covered occupational 
disease loss is incurred. 
(4) 
A group self-insurer that reinsures 
through an 
account 
shall 
continue 
to 
make 
payments 
into that 
account 
in 
accordance 
with 
the 
plan 
of 
operation 
established pursuant to paragraph B. 
(5) 
A group self-insurer's participation in an account 
is 
considered 
as 
a 
component 
of 
the 
group 
self-insurer's 
renewal 
application. 
A 
group 
self-insurer's membership in an account is considered 
adequate protection against losses arising out of a 
single 
occurrence 
unless 
the 
Superintendent 
of 
Insurance determines, after considering the financial 
condition and catastrophic loss exposure of both the 
group 
self-insurer 
and 
the 
account. 
that 
it 
is 
necessary 
to 
maintain 
additional 
reinsurance 
protection. 
maintain 
a 
lower 
self-insured retention 
level 
or 
provide 
some 
other 
form 
of 
additional 
security. singly or in combination. 
B. 
An account must operate in accordance with a plan of 
operation established by the group self-insurer members and 
approved by the Superintendent of Insurance. 
(1) 
Those 
group 
self-insurers creating 
an 
account 
shall submit to the Superintendent of Insurance a plan 
of 
operation 
and 
any 
amendments 
to 
it that 
are 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT .. A 
.. to H.P. 629, L.D. 852 
necessary to ensure the fair, reasonable and eguitable 
administration of the account. 
The plan of operation 
is effective upon approval by the superintendent. 
Any 
amendments subseguent to the plan' s initial approval 
must be submitted to the superintendent by the plan' s 
board of directors and are effective upon approval by 
the superintendent. 
(2) 
The plan of operation must: 
(a) 
Create 
a 
board of directors 
and initial 
bylaws, 
including the 
terms 
and 
conditions 
of 
board membership and the manner by which board 
members are initially appointed and are replaced 
when vacancies occur; 
(b) 
Establish the procedures by which all the 
powers and duties of the account are performed, 
including. but not limited to. defining the date 
and conditions pursuant to which the account will 
commence 
coverage 
for 
claims 
by 
participating 
group 
self-insurer 
members 
and 
establishing 
provisions for determining limits of exposure for 
the account; 
(c) 
Establish procedures for handling assets of a 
fund created pursuant to paragraph C; 
(d) 
Establish underwriting rules and criteria by 
which rates are to be established; 
(e) 
Establish procedures by which claims may be 
filed with the account; 
(f) 
Establish an investment policy for a 
fund 
created pursuant to paragraph C; 
(g) 
Establish procedures for records to be kept 
of all financial transactions of the account. its 
agents and the board of directors; 
(h) 
Establish procedures for withdrawal from the 
account 
by 
a 
group 
self-insurer 
member. 
which 
must. at a minimum. reguire 90 days' notice from 
the withdrawing group self-insurer member to the 
board 
of 
directors 
and 
the 
Superintendent 
of 
Insurance; 
Establish. 
subject 
to 
approval 
by 
the 
Superintendent of Insurance. 
a 
m~n~mum level of 
funding to be achieved by the account: and 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT ,,~, to H.P. 629, L.D. 852 
(j) 
Contain additional provisions necessary or 
proper for the execution of the powers and duties 
of the board of directors and the ability of the 
account to meet its obligations. 
C. 
The bylaws of an account established pursuant to this 
subsection must establish the powers and duties of the board 
of directors of an account and must include the authority: 
(1) 
To 
administer 
a 
group 
self-insurance specific 
reinsurance 
account 
fund, 
to 
be 
known 
in 
this 
subsection as 
"a fund," which must receive payments 
from participating group self-insurer members of the 
account as 
required by paragraph 
A. 
The 
costs of 
administration by the board of directors and expenses 
of the account must be borne by the fund: 
(2) 
In its discretion, to secure reinsurance for the 
fund's exposure and to otherwise invest the assets of 
the fund to effectuate the purpose of the account, 
subject 
to 
the 
approval 
of 
the 
Superintendent 
of 
Insurance: 
(3) 
To 
accept 
or 
reject 
applications 
of 
group 
self-insurers 
to 
be 
underwritten 
by 
the 
account. 
subject 
to 
the 
approval 
of 
the 
Superintendent 
of 
Insurance; 
(4) 
To 
accept 
or 
reject applications 
of 
a 
group 
self-insurer member to self-insure any exposure for one 
occurrence at a level other than $500,000, subject to: 
(a) 
Compliance with applicable provisions of the 
plan 
of 
operation 
established 
pursuant 
to 
paragraph B: 
(b) 
Notice to and approval by the Superintendent 
of Insurance: and 
(c) 
For higher retention levels, a statement from 
that 
member's 
actuary 
that 
the 
member 
has 
adequately funded its additional exposure; 
(5) 
To create a mechanism for assessing participating 
group self-insurer members if funds are insufficient to 
pay the claims of the account; 
(6) 
To retain actuarial assistance to be used in the 
establishment of loss reserves, 
reinsurance and risk 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT I~" to H.P. 629, L.D. 852 
management for the account. and in the development of 
underwriting 
criteria 
and 
premium 
rates 
for 
group 
self-insurer members. 
Rates are subject to approval by 
the Superintendent of Insurance; 
(7) 
To 
associate 
with 
a 
participating 
group 
self-insurer member in the defense. 
investigation or 
settlement 
of 
any 
claim. 
suit 
or 
proceeding 
that 
~pears to 
involve 
indemnity 
by 
the 
account. 
This 
authority 
does 
not 
create 
a 
duty 
to 
investigate. 
handle. 
settle 
or 
defend 
any 
claims. 
suits 
or 
proceedings against a group self-insurer member; 
(8) 
To borrow funds; 
(9) 
To 
amend 
the 
bylaws 
and 
plan 
of 
operation 
established pursuant to paragraph B. 
subject to the 
approval of the Superintendent of Insurance: and 
(10) 
To exercise such other powers as are established 
in 
the 
plan 
of 
operation 
established 
pursuant 
to 
paragraph B. 
D. 
An account is subject to examination and regulation by 
the Superintendent of Insurance. 
The board of directors of 
an account shall submit. within 120 days after the close of 
each 
fiscal 
year. 
an 
audited 
financial 
report 
and 
an 
actuarial report for the preceding fiscal year in a 
form 
approved by the superintendent. 
When 
the superintendent 
considers it necessary. the superintendent may require an 
account to maintain specific or aggregate reinsurance at 
such retention levels as the superintendent determines to be 
appropriate. 
E. 
The 
Superintendent 
of 
Insurance 
may 
address 
any 
deficiency in reserves. assets or reinsurance of an account 
in accordance with this paragraph. 
(1) 
The superintendent may conduct. 
upon reasonable 
notice, 
an 
examination 
to 
determine 
the 
financial 
condition of an account. 
An examiner dUly qualified by 
the 
superintendent 
may 
examine 
the 
loss 
reserves. 
assets. 
liabilities. 
excess 
insurance 
and 
working 
capital of an account. 
If the superintendent finds 
that the reserves, excess insurance or assets may be 
inadequate. or that an account does not have working 
capital 
in 
an 
amount 
establishing 
the 
financial 
strength and liquidity of an account to pay claims 
promptly and showing evidence of the financial ability 
of 
an 
account 
to 
meet 
its 
obligations 
to 
group 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT .. If., to H.P. 629, L.D. 852 
self-insurer members, 
the superintendent shall notify 
an account of the inadequacy. 
Upon notification, the 
account within 30 
days, 
or such other time as the 
superintendent 
approves, 
shall 
file 
with 
the 
superintendent its written plan specifying 
remedial 
action 
to 
be 
taken 
and 
the 
time 
frame 
for 
implementation of that plan. 
(2) 
If the superintendent determines, after reviewing 
the information filed pursuant to paragraph 0, that a 
hazardous 
financial 
condition 
exists, 
the 
superintendent 
shall 
notify 
an 
account 
of 
the 
condition. 
Upon 
notification, 
an 
account 
shall 
implement within 30 days, or such other time as the 
superintendent 
approves, 
its 
plan 
to 
correct 
any 
deficiencies and within 90 days shall file with the 
superintendent proof of remedial action taken. 
If the 
superintendent is satisfied that the plan submitted to 
improve 
the 
inadequate 
condition of 
an 
account is 
sufficient, 
the 
superintendent 
shall 
notify 
the 
account. 
The account shall report quarterly to the 
superintendent until any deficiencies and their causes 
have been corrected. 
(3 ) 
The Superior Court may appoint the superintendent 
to act as 
receiver, 
in the 
same 
manner 
as 
for 
a 
delinquent insurer pursuant 
to Title 
24-A, 
section 
4360, 
if 
the 
superintendent 
proves 
by 
clear 
and 
convincing 
evidence 
that 
a 
hazardous 
financial 
condition exists 
and that an account is unable or 
unwilling to take meaningful corrective action. 
F. 
A group self-insurer's liability for participating in an 
account is governed by this paragraph. 
(1) 
Each 
participating 
group 
self-insurer 
in 
an 
account 
has 
a 
contingent 
assessment 
liability 
in 
accordance 
with 
the 
plan 
of 
operation 
established 
pursuant to paragraph B for 
payment of claims 
and 
expenses incurred while a member of the account. 
(2) 
Each 
contract 
or 
other 
document 
certifying 
participation in the account. issued by the account. 
must contain a statement of the contingent liability of 
participating group self-insurers. 
G. 
An account is exempt from payment of all fees and all 
taxes levied by this State or any of its subdivisions, 
except taxes levied on real or personal property. 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT .. R 
.. to H.P. 629, L.D. 852 
H. 
This subsection does not create any liability on the 
part of, and a cause of action of any nature does not arise 
against, any group self-insurer member, 
an account or its 
agents or employees, the board of directors of an account or 
its individual members or the Superintendent of Insurance or 
the 
superintendent's 
representatives 
for 
any 
acts 
or 
omissions taken by them in the performance of their powers 
and duties under this subsection. 
The immunity established 
by this subsection does not extend to willful neglect or 
malfeasance that would otherwise be actionable. 
I. 
Assets of an account's fund may be used exclusively for 
payment of expenses of the account and payment of claims 
against the account and for no other purpose. 
J. 
The Superintendent of Insurance shall adopt rules to 
administer and effectuate the intent of this subsection. 
Rules 
adopted 
pursuant 
to 
this 
subsection 
are 
routine 
technical 
rules 
as 
defined 
in Title 
5, 
chapter 
375, 
subchapter 2-A. 
K. 
In the event of dissolution of an account. all assets 
remaining after the satisfaction of all outstanding claims 
must be distributed to the Treasurer of State to be included 
in the Maine Self-Insurance Guarantee Association.' 
SUMMARY 
This 
amendment 
establishes 
an alternative method 
for 
a 
workers' 
compensation group self-insurer to secure payment of 
catastrophic losses arising out of a 
single occurrence. 
The 
amendment allows 4 or more group self-insurers to seek approval 
from 
the Superintendent of 
Insurance of an 
account to hold 
contributions from participating members and make claims payments 
on specific claims that are in excess of $500,000. 
FISCAL NOTE REQUIRED 
(See attached) 
COMMITTEE AMENDMENT 
Fiscal Detail and Notes 
Approved: 05/05/03 ;Jb:?ae 
12lst Maine Legislature 
Office of Fiscal and Program Review 
LD852 
An Act to Promote Alternatives in Group Self-insurance 
LR 1734(02) 
Fiscal Note for Bill as Amended by Committee Amendment" " 
Committee: Insurance and Financial Services 
Fiscal Note Required: Yes 
Fiscal Note 
Minor cost increase - Other Special Revenue Funds 
Any additional costs to the Department of Professional and Financial Regulation resulting from this bill can be 
absorbed by the Department utilizing existing resources. 
LR1734(2) - Fiscal Note - Page 1 of 1