An Act To Promote Alternatives in Group Self-insurance
Maine Legislature, Session 121, LD 0852
Committee: Insurance and Financial Services
Sponsors: O'NEIL
Amends: 39-A MRSA §403

Legislative Document 
No. 852 
H.P.629 
House of Representatives, February 20, 2003 
An Act To Promote Alternatives in Group Self-insurance 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
Presented by Representative O'NEIL of Saco. 
Printed on recycled paper 
!7J~/J?~ 
MILLICENT M. MacFARLAND 
Clerk 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 39·A MRSA §403. sub·§4. as amended by PL 1997, c. 126, 
§8, is further amended to read: 
4. 
Group 
self-insurers; 
application. 
Except 
for 
the 
provision relating to individual public employer self-insurers, 
subsection 
is equally applicable in all respects to group 
self-insurers. 
Any employer or group of employers desiring to 
become 
a 
self-insurer shall 
submit to 
the Superintendent of 
Insurance with an application for 
self-insurance, 
in 
a 
form 
prescribed by the superintendent, the following: 
A. 
A payroll report for each participating employer of the 
group for the 3 preceding annual fiscal periods; 
B. 
A report of compensation losses incurred, 
reserves, by each participating employer of 
the periods described in paragraph A; 
payments plus 
the group for 
C. 
A sworn itemized statement 
liabilities; satisfactory proof 
compensation for the employers 
plan; and the group's reserves, 
of continuance: 
of the group's assets and 
of financial ability to pay 
participating in the group 
their source and assurance 
D. 
A description of the safety organization maintained by 
the employer or group for the prevention of injuries; 
E. 
A statement showing the kind of operations performed or 
to be performed; 
F. 
An 
indemnity agreement in a 
form prescribed by the 
superintendent that jointly and severally binds the group 
and each member to comply with the provisions of this Act; 
and 
G. 
Any 
documents 
the group. 
other 
agreements, 
contracts 
or 
other 
pertinent 
relating to the organization of the employers in 
If, upon .examination of the sworn financial statement and other 
data submitted, the superintendent is satisfied as to the ability 
of the employer or group to make current compensation payments 
and 
that 
the 
employer's 
or 
group's 
tangible 
assets 
make 
reasonably certain the payment of all obligations that may arise 
under this Act, the application 
must be granted subject to the 
terms and conditions setting out the exposure of cash deposits or 
securities or an acceptable surety bond, 
as 
required by the 
superintendent. 
See\'\ri~y Except as provided in subsection 4-A, 
Page l-LR1734(1) 
.. 
security against 
shock 
or catastrophe loss must 
be 
provided 
either by depositing securities with the board in such amount as 
the 
superintendent 
may 
determine 
or 
by 
filing 
with 
the 
superintendent and the board an insurance carrier's certificate 
of a standard self-insurer's 
reinsuiance contract issued to the 
self-insurer or group in a form approved by the superintendent. 
providing coverage against losses arising out of one injury in 
such 
amounts 
as 
the 
superintendent 
may 
determine, 
or 
a 
combination 
of 
the 
foregoing, 
satisfactory 
to 
the 
superintendent. 
Notwithstanding any provision of this chapter. 
no specific or aggregate 
reinsurance may be required of any 
individual public employer that is self-insured and qualifies for 
the alternative security requirements of subsection 3, paragraph 
O. 
Yearly reports in a form prescribed by the superintendent must be 
filed by each self-insurer or group. The superintendent may, in 
addition, 
require 
the 
filing 
of 
quarterly 
financial 
status 
reports whenever the superintendent has reason to believe that 
there has been a deterioration in the financial condition of 
either an individual or group self-insurer that adversely affects 
the individual's or group's ability to pay expected losses. The 
reports must be filed within 30 days after the superintendent's 
request or at such time as the superintendent shall otherwise set. 
After 
approving 
any 
application 
for 
self-insurance, 
the 
superintendent shall promptly notify the board and forward to it 
copies of the application and all supporting materials. 
Sec. 2. 39-A MRSA §403~ sub-§4-A is enacted to read: 
4-A. 
Group self-in&urers reinsurance alternative account, 
As an alternative to obtaining a reinsurance contract providing 
coverage 
against 
losses 
arising 
out 
of 
one 
injury, 
group 
self-insurers may participate in an account established by the 
Superintendent of Insurance as provided in this subsection. 
A. 
Upon 
the 
petition 
of 
or 
more 
authorized 
group 
self-insurers, the Superintendent of Insurance shall create 
an account for the deposit of funds in lieu of reinsurance. 
The 
account, 
called 
the 
"Workers' 
Compensation 
Group 
Self-insurance Specific 
Reinsurance 
Alternative 
Account," 
and referred to in this section as "the account," may be 
used as an al ternati ve to obtaining a reinsurance contract 
providing coverage against losses arising out of one injury. 
B. 
The purpose of the account is to accumulate funds to 
~rovide coverage against losses arising out of one injury in 
excess of $500,000. 
Any group self-insurer that is subject 
to joint and several liability pursuant to subsection 4, 
paragraph 
F 
may 
pay 
funds 
into 
the 
account 
as 
an 
alternative 
to 
obtaining specific 
reinsurance. 
A group 
self-insurer who pays into the account shall continue to 
make annualized payments into the account for at least 
~ 
years. 
c. 
Only those inj ur ies that occur on or after the date o_f 
first payment to the account by the injured person's group 
self-insurer are eligible for 
coverage pursuant to this 
subsection. 
D. 
Payments into the fund must be made as follows: 
(1) 
The first year, 
payment 
by each participating 
group must be in an amount equal to the average premium 
payment 
for 
specific excess 
insurance made 
by that 
group self-insurer for each of the 3 years immediately 
preceding the first payment into the account: 
(2) 
The Superintendent of Insurance may require that 
payments for the 2nd and 3rd years be increased by a 
maximum of 
10~b per year over the payment made the first 
year: and 
( 3) 
The superintendent may require that payments for 
the 4th and 5th years be made by all groups in an 
amount not to exceed each group's 3rd payment. 
E. 
Claims may be made against the account as follows: 
(1) 
A group self-insurer may make claims against the 
account 
for 
reimbursement 
of 
losses 
in 
excess 
of 
$500,000 arising out of one injury: and 
(2) 
A group self-insurer who makes a claim against the 
account, commencing with the next anniversary date of 
that group self-insurer's participation in the account, 
shall pay into the account the lesser of: 
(a) 
The amount claimed from the account; and 
(b) 
One year's contribution of an amount not to 
exceed rates for reinsurance from that same time 
period quoted by 
a 
reinsurer acceptable to the 
Superintendent of Insurance; 
If one year's contribution is insufficient to fully 
reimburse the account for the claim amount, the group 
self-insurer shall continue to make annual payments to 
the account until the claim amount is repaid to the 
account. 
.. 
F. 
The account may not be used for any purpose other than 
as provided in this subsection. 
G. 
After the account is established, if at any time there 
are no group self-insurers participating, the Superintendent 
of 
Insurance 
shall 
terminate 
the 
account. 
Any 
funds 
remaining in the account must be returned, on a pro rata 
basis, to those group self-insurers who participated in the 
account during the 24 months prior to the termination of the 
account. 
The 
superintendent 
shall 
adopt 
rules 
to 
implement 
this 
subsection. 
Rules 
adopted 
pursuant 
to 
this 
subsection 
are 
routine technical rules as defined in Title 5, 
chapter 
375, 
subchapter 2-A. 
SUMMARY 
This bill allows the Superintendent of Insurance within the 
D'epartment of Professional and Financial Regulations to establish 
the 
Workers' 
Compensation 
Group 
Self-insurance 
Specific 
Reinsurance Alternative Account, an alternative method for group 
self-insurers to secure payment on specific claims that exceed 
$500,000. 
The 
superintendent 
is 
required 
to 
establish 
the 
account if 3 or more group self-insurers request the creation of 
the account. 
Participation in the account is required for 
a 
minimum of 3 years. 
Payments by the group self-insurers into the 
account are based on the rates of reinsurance and adjusted by the 
superintendent. 
Claims may be made for an injury occurring on or 
after the date of first deposit into the account but must be 
repaid 
in 
full 
through 
annualized 
payments 
by 
the 
group 
self-insurer.