Arizona Administrative Code › Title 20 - COMMERCE, FINANCIAL INSTITUTIONS, AND INSURANCE › Chapter 05 - INDUSTRIAL COMMISSION OF ARIZONA › Article 15 - WORKERS' COMPENSATION SELF-INSURANCE › Section R20-5-1505 - Initial Application Requirements

Current through Register Vol. 30, No. 28, July 12, 2024
A. An individual employer or pool seeking to
				apply for initial authority to self-insure shall file with the Division a
				completed Initial Application for Authority to Self-Insure Form and the
				documentation and information required in subsection (B).
B. For an initial application to self-insure
				to be deemed complete, the following documentation and information shall be
				provided by the Applicant:
1. A resolution of
				the Applicant's board of directors or governing body, authorizing the filing of
				the application. If the Applicant does not have a board of directors or
				governing body, an authorized representative shall sign the
				resolution.
2. A list of the
				aggregate payroll by Payroll Classification Code for the most current and prior
				two fiscal years.
3. A copy of the
				Applicant's audited financial statements for the most current and prior two
				fiscal years, including any notes to the financial statements. If audited
				financial statements for the most current or prior two fiscal years are not
				reasonably available, internally-reviewed and signed financial statements that
				conform with Generally Accepted Accounting Principles may be substituted. If a
				new Self-Insurance Pool does not have the financial statements required by this
				subsection, the pool shall provide detailed projections for capitalization,
				cash flow, and liabilities of the pool.
4. A detailed description of the Applicant's
				loss control program, including a description of existing or planned
				occupational safety and health requirements and training programs.
5. Except for a new Self-Insurance Pool that
				does not have the information required by this subsection, a loss run of all
				claims incurred in Arizona from the most current complete calendar year and the
				prior three calendar years. The loss run must include the following
				information, if applicable, for each incurred claim: Payroll Classification
				Code, Commission claim number, employee name, date of injury, total paid
				medical, medical reserves, total paid indemnity (including death benefits), and
				indemnity reserves.
6. If
				applicable, copies of excess insurance policies that meet the requirements of
				R20-5-1526, or written confirmation from an authorized insurance company that
				it will provide excess insurance coverage to the Applicant by the prospective
				Authorization Date.
7. Except for a
				new Self-Insurance Pool that does not have the information required by this
				subsection, if the Applicant's Experience Modification Rate specific to Arizona
				for the most recent complete fiscal year is greater than 1.10, a written
				statement describing the causes of the inflated Experience Modification Rate
				and outlining remedial measures the Applicant has taken or will take to lower
				the Experience Modification Rate.
8. Except for an Applicant seeking to
				Self-Administer under R20-5-1510, a copy of a signed agreement between the
				Applicant and a Third-Party Administrator or, if an agreement has not been
				completed, a written confirmation from a Third-Party Administrator that it will
				contract with the Applicant on or before the prospective Authorization Date to
				process workers' compensation claims for the Applicant.
9. If an Applicant is seeking to
				Self-Administer, a completed Application to Self-Administer Form and the
				information and documentation required in R20-5-1510(C).
10. If an eligible Applicant intends to
				direct medical care under A.R.S. § 23-1070, a completed Self-Provider of
				Medical Benefits Form, the detailed statement of the arrangements required in
				A.R.S. § 23-1070(B), and a copy of the current medical or hospital
				agreements, if applicable.
11. If
				the Applicant is a Public Entity or a Public Entity Pool seeking a waiver of
				security under R20-5-1525, a completed Request for Waiver of Security Form and
				a current actuarial report that satisfies the requirements in
				R20-5-1513(B).
12. If the Applicant
				is a Subsidiary:
a. A completed Parent
				Guaranty Form or an Agreement to Process and Pay signed by a designated
				representative of the Parent Company that guarantees the payment of the
				Subsidiary's obligations.
b. A
				resolution of the Parent Company's board of directors or governing body
				authorizing the designated representative to complete, sign, and file the
				Parent Guaranty Form or Agreement to Process and Pay. If the Parent Company
				does not have a board of directors or governing body, an authorized
				representative shall sign the resolution.
c. A copy of the Parent Company's audited
				financial statements for the most current and prior two fiscal years, including
				any notes to the financial statements. If audited financial statements for the
				most current or prior two fiscal years are not reasonably available,
				internally-reviewed and signed financial statements that conform with Generally
				Accepted Accounting Principles may be substituted.
13. If the Applicant is a Self-Insurance
				Pool:
a. The contract or agreement required
				under A.R.S. §§ 11-952.01, 15-382, 23-961.01, or 41-621.01, as
				applicable, to establish the pool.
b. The articles of incorporation and bylaws
				governing the pool, if applicable.
c. The participation, coverage, and indemnity
				agreements between the pool and each member.
d. Written authorization from the board of
				directors or governing body of each member, authorizing membership in the pool.
				If a member does not have a board of directors or governing body, an authorized
				representative shall sign the written authorization.
e. A signed resolution from the
				Self-Insurance Pool Board approving each member for membership in the
				pool.
f. An original or a certified
				copy of fidelity or crime insurance policy that meets the requirements of
				R20-5-1528 or written confirmation from an authorized insurance company that it
				will issue the required fidelity or crime insurance policy on or before the
				prospective Authorization Date.
g.
				A copy of the signed agreement or contract of hire between the Self-Insurance
				Pool Board and the designated Administrator.
h. A detailed description of the underwriting
				program required under R20-5-1529.
i. A current actuarial report that meets the
				requirements of R20-15-1513(B) and documents the rate structure needed to set
				member premium levels to adequately cover potential losses and expenses of the
				pool.
j. For each member, a
				schedule showing, for the most recent complete fiscal year and the prior two
				fiscal years, net workers' compensation premiums paid, total workers'
				compensation losses incurred, and, if available, Experience Modification Rate
				specific to Arizona.
k. A copy of
				each member's audited financial statements for the most current and prior two
				fiscal years, including any notes to the financial statements. If audited
				financial statements for the most current or prior two fiscal years are not
				reasonably available, internally-reviewed and signed financial statements that
				conform with Generally Accepted Accounting Principles may be
				substituted.
l. If any member's
				Experience Modification Rate specific to Arizona for the most recent complete
				fiscal year is greater than 1.10, a written statement describing the causes of
				the inflated Experience Modification Rate and outlining remedial measures the
				member has taken or will take to lower the Experience Modification
				Rate.