California Code of Regulations › Title 8 - Industrial Relations › Division 1 - Department of Industrial Relations › Chapter 8 - Office of the Director › Subchapter 2 - Administration of Self-Insurance Plans › Article 13 - Group Self-Insurance › Section 15475 - Board of Trustees

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a)
					 Each group self insurer shall have a Board of Trustees that is responsible for
					 all operations of the group self insurer.
(b) Each trustee on the Board of Trustees
					 shall be elected by the group members or, if each group member has a seat on
					 the Board of Trustees, the trustee may be appointed by the group members. At
					 least two-thirds of the trustees shall be employees or officers of the group
					 members. No service provider, director, officer, or employee of a service
					 provider, or person with a direct or indirect management or financial interest
					 in a service provider of the group self insurer shall serve as a voting member
					 of the Board of Trustees of the group self insurer. The Group Administrator may
					 be a non-voting member of the Board of Trustees but shall not vote on any
					 matters before the Board. Service providers of the group self insurer include,
					 but are not limited to, all service providers described in Section
					 15475.1 of these
					 regulations.
(c) The duties of the
					 Board of Trustees shall include the responsibility to approve or deny the
					 request of any proposed member to join the group self insurer, subject to
					 subsequent application and approval of the proposed group self insurer member
					 by the Director of Industrial Relations.
(d) The Board of Trustees shall take all
					 necessary precautions to protect the assets of the group self insurer,
					 including all of the following:
(1) Designate
					 a "Group Administrator" to administer the financial affairs and normal
					 day-to-day operations of the group self insurer and ensure that there are no
					 conflicts of interest or potential conflicts of interest involving the Board of
					 Trustees, the Group Administrator, or any service providers utilized by the
					 group self insurer, as provided by Section
					 15475.1;
The group administrator shall not be an owner, operator
						or employee of any member of the group self insurer or of the third party
						administrator handling the claims of the group self insurer.
(2) Obtain fidelity coverage in an amount
					 determined by the Board of Trustees to be sufficient to ensure the integrity of
					 affiliate group member or group funds handled by the Trustees and employees of
					 the group self insurer, and obtain errors and omissions insurance coverage
					 sufficient to protect its interests. Evidence of such bond shall be provided to
					 the Chief upon request. The Group Administrator shall obtain and maintain
					 fidelity insurance sufficient to cover funds handled for the group self insurer
					 and errors and omissions insurance coverage sufficient to protect the group
					 self insurer's and its members' interests.
(3) Contract with a third party claims
					 administrator to work directly for the Board of Trustees to administer in
					 California the workers' compensation claims of the group self insurer and
					 require the third party claims administrator to carry fidelity insurance naming
					 the group self insurer as beneficiary that is sufficient to protect the funds
					 handled, and to carry errors and omissions insurance naming the group self
					 insurer as beneficiary that is sufficient to protect against errors and
					 omissions made in the claims handled.
(4) Manage disbursements for the payment of
					 expenses of handling claims, administrative expenses, posting of security
					 deposit, and other expenses necessary for operating the group self
					 insurer;
(5) Appoint a financial
					 institution and establish necessary accounts in California to handle the fiscal
					 needs of the group self insurer and adopt a board resolution authorizing
					 signature authority for each account;
(6) Immediately after the December 31 close
					 of each reporting year, obtain an annual audit of the financial accounts and
					 records of the each group self insurer by an independent, certified public
					 accountant. The Group Administrator may not serve as the independent certified
					 public accountant for the private group self insurer.
(7) Contract with an actuary that meets the
					 requirements of Section
					 15481, subdivisions (a)(3) and (4)
					 to conduct an annual actuarial review of the group self insurer's claims and
					 produce a written actuarial study that projects ultimate liabilities of the
					 group self insurer by program year at the undiscounted expected actuarial
					 confidence level also commonly known as the undiscounted 'actuarial central
					 estimate', inclusive of incurred but not reported (IBNR) liabilities, Allocated
					 loss adjustment expense (ALAE), and unallocated loss adjustment expense (ULAE)
					 to ensure that all claims and associated costs are recognized;
(8) Ensure that contributions are collected
					 for each program year as required by Section
					 15484, subdivision (e).
(9) Ensure that funds collected from group
					 members shall not be used for any purpose not directly related to the payment
					 of compensation liabilities of the group self insurer, posting of security
					 deposit, payment of assessments and penalties as a group self insurer or the
					 reasonable expenses of operation of the group self insurer. Excess moneys not
					 needed for current operation of the group self insurer may be invested by the
					 Board of Trustees, at its discretion, only as provided by Section
					 15475.3 of these
					 regulations.
(10) Hold meetings no
					 less frequently than annually to adopt a budget for the upcoming year, approve
					 contribution rates, and review the investment portfolio for compliance with
					 these regulations;
(11) Ensure that
					 the Group Administrator immediately reports to the Chief, in writing, any
					 information that indicates the private group self insurer is no longer in
					 compliance with statutory or regulatory requirements of the workers'
					 compensation self insurance program or of any instance wherein the group self
					 insurer terminates an affiliate group self insurer's group membership for
					 cause.