An Act Relating to Self-insurance
Maine Legislature, Session 124, LD 1004
Committee: Insurance and Financial Services
Sponsors: RICHARDSON, BOWMAN, BECK, FOSSEL, GOODE, McCORMICK
Amends: 39-A MRSA §403

Legislative Document 
No. 1004 
H.P.692 
House of Representatives, March 12,2009 
An Act Relating to Self-insurance 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
Presented by Representative RICHARDSON of Warren. 
Cosponsored by Senator BOWMAN of York and 
7Y/~ 
117· ml!£:$v-Ir~{ 
MILLICENT M. MacFARLAND 
Clerk 
Representatives: BECK of Waterville, FOSSEL of Alna, GOODE of Bangor, Senator: 
McCORMICK of Kennebec. 
f)rint~J llll recycled pLlpc.:r 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 39-A MRSA §403, sub-§4.:A, as amended by PL 2003, c. 671, Pt. A, 
§ § 11 and 12, is further amended to read: ' 
4-A. Group self-insurance rdnsurance account. As an alternative to obtaining a 
reinsurance contract providing coverage against losses arising out of one occurrence, a 
group self-insurer authorized- under the laws of this State or any other state, or an 
individual self-insurer authorized under this section 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. An account established pursuant to this subsection may be established as 
either an independent private entity or ,an instrumentality of the State, but the debts and 
liabilities of an account established as an instrumentality of the State are not debts and 
liabilities of the State. An account established as an instrumentality of the State within 24 
months of its formation, with the approval of the superintendent Superintendent of 
Insurance, may transfer all of its assets and liabilities into an account established as an 
independent private entity. 
A. ABy A group self-insurer that is subject to joint and several liability pursuant to 
subsection 4, paragraph F or a group self-insurer authorized under the laws of another 
state and that executes an agreement to be jointly and severally liable in accordance 
with the provisions of paragraph F or an individual self-insurer authorized under this 
section that executes an agreement to be jointly and severally liable in accordance 
with the provisions of 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 
" heu of reinsurance. 
(2) The account must indemnify its participating gt=e'Sj3 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 $500,000 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 gt=e'Sj3 self-insurer is deemed to be a member of the account for reinsurance 
coverage for purposes of a claim if the gt=e'Sj3 self-insurer is a member of the 
account when an injUl)' occurs or a covered occupational disease loss is incurred. 
(4) A gt=e'Sj3 self-insurer that reinsures through an account shall continue to make 
payments into that accourit in accordance with theplan of operation established 
pursuant to paragraph B. 
(5) 
A gt=e'Sj3 self-insurer's participation in an account is considered as a 
component of the gt=e'Sj3 self-insurer's renewal application. A gt=e'Sj3 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 
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exposure of both the ~ 
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 Qr ih 
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 necessary to ensure the fair, reasonable and equitable administration of the 
account. The plan of operation is effective upon approval by the superintendent. 
Any amendments subsequent 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 ,:"hen vacancies occur; 
(b) 
Establish the procedures by which all the powers al1d duties of the 
account are performed, including, but not limited to, defining the date and 
conditions pursuant to which the account will commence ~overage for claims 
by participating group self-insurer members and establishing provisions for . 
determining limits of exposure for the account; 
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(c) Establish procedures for handling assets of a fund created pursuant to 
paragraph C; 
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(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 g:Fffi:1p self-
insurer member, which must, at a minimum, require 90 days' notice from the 
withdrawing g:Fffi:1p self-insurer member to the board of directors and the 
Superintendent of Insurance; 
(i) 
Establish, subject to approval by the Superintendent of Insurance, a 
minimum level of funding to be achieved by the account; and 
(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. 
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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 gfffi:lJ3 self-insurance specific reinsurance account fund, to be 
known in this subsection as "a fund," which must receive payments from 
participating gfffi:lJ3 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 bebome by the fund; 
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(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, 
subj ect to the approval of the Superintendent of Insurance; 
(3) To accept or reject applications of gfffi:lJ3 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 gfffi:lJ3 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 ofInsurance; 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 particjpating gfffi:lJ3 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 ofloss reserves, 
reinsurance and risk management for the account, and in the development of 
underwriting criteria and premium rates for gfffi:lJ3 self-insurer members. Rates 
are subjec~ to approval by the Superintendent of Insurance; 
(7) To associate with a participating gfffi:lJ3 self-insurer member in the defense, 
investigation or settlement of any claim, suit or proceeding that appears 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 
gfffi:lJ3 self-insurer member; 
(8) To borrow. funds; 
(9) To amend the bylaws and pian 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 
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maintain specific or aggregate reinsurance at such retention levels as the 
superintendent detennines 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 Superintendent of Insurance may conduct, upon 
reasonable notice, an examination to detennine the financial condition of an 
aCGount. An examiner duly qualified by the superintendent may examine the loss 
reserves, assets, liabilities, exces~ 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 
o~ligations to -grel:lp 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 Superintendent of Insurance detennines, after reviewing 
the information filed pursuant to paragraph D, 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 superiritendent 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 Superintendent of 
Insurance 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 -grel:lp self-insurer's liability for participating in an account is governed by this 
paragraph. 
(1) 
Each participating -grel:lp 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 -grel:lp 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. 
H. This subsection does not create any liability on the part of, and a cause of action 
of any nature does not arise agaim:t, any gt=e'I:l:p self-fnsurer 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 thel 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 accoJjnt and for no other purpose, 
except that an account established as an independent private entity pursuant to this 
subsection may issue such dividends, to its members as are approved by the 
superintendent. 
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 , 
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technical rules as defmed in Title ~, chapter 375" subchapter 2-A. 
K. In the event of dissolution of 'an account established as an instrumentality of the 
State pursuant to this' subsection, 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 bill amends the laws relating to group self-insurance reinsurance accounts to 
clarify that individual self-insurers authorized under Maine law and group self-insurers 
authorized under the laws of other states may participate in the account. 
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