California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 9.8 - Workers' Compensation Deductible Policies › Section 2509.80 - Definitions

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
As used in this article:
(a) "Workers' Compensation Deductible Policy"
				  means a policy, or any combination of one or more policies, endorsements or
				  ancillary agreements, in which an insured has agreed with the insurer to be
				  responsible to the insurer for any portion of any workers' compensation claim
				  and, in some cases, the associated loss adjustment expense.
(b) "Workers' Compensation High Deductible
				  Policy" means a Workers' Compensation Deductible Policy in which the portion of
				  any workers' compensation claim and, if applicable, the associated loss
				  adjustment expense, for which the insured agrees to be responsible to the
				  insurer equals or exceeds one hundred thousand dollars ($100,000.00).
(c) "Insurer" means an insurer admitted in
				  California for the class of workmen's compensation insurance as defined in
				  Insurance Code section
				  109, and
				  includes the State Compensation Insurance Fund.
(d) "Financial Statements" means the annual
				  statements and quarterly filings required by Insurance Code section
				  900.
(e) "California Workers' Compensation Claim"
				  means a claim for benefits subject to Chapter 3 of Part 1 of Division 4 of the
				  Labor Code, commencing with Section
				  3600.
(f) "Open Workers' Compensation Claim" means
				  a California Workers' Compensation Claim under a Workers' Compensation
				  Deductible Policy for which there is any potential future liability.
(g) "Deductible Paid Loss" means the amount
				  of loss paid by the insurer on each workers' compensation claim under a
				  Workers' Compensation Deductible Policy, limited to a maximum value of the
				  policy deductible.
(h) "California
				  Deductible Paid Loss" means the amount of loss paid by the insurer on each
				  California Workers' Compensation Claim under a Workers' Compensation Deductible
				  Policy, limited to a maximum value of the policy deductible.
(i) "Allocated Loss Adjustment Expense" or
				  "ALAE" means the cost of adjusting workers' compensation insurance claims that
				  can be assigned specifically to an individual claim.
(j) "Deductible Incurred Loss" means the
				  estimated final cost of each Open Workers' Compensation Claim, limited to a
				  maximum value of the policy deductible, which pursuant to the terms of the
				  policy may or may not include ALAE, under the Workers' Compensation Deductible
				  Policy in question.
(k) "Aggregate
				  Deductible Incurred Loss" means the estimated final cost, which pursuant to the
				  terms of each policy may or may not include ALAE, of all Open Workers'
				  Compensation Claims, and includes actuarially determined provisions for (1)
				  incurred but not reported claims and (2) a bulk reserve for any shortfall in
				  individual claim cost estimates. In the case of a policy whose terms specify
				  that ALAE is included within the deductible, "Aggregate Deductible Incurred
				  Loss" also includes a reserve for ALAE. "Aggregate Deductible Incurred Loss"
				  includes the deductible portion of all claims that exceed the policy
				  deductible, as well as the full value of all claims within the
				  deductible.
(l) "Deductible Loss
				  Reserves" means the Aggregate Deductible Incurred Loss less any Deductible Paid
				  Loss.
(m) "California Deductible
				  Reserves" means Deductible Loss Reserves for California Workers' Compensation
				  Claims.
(n) "Deductible Ultimate
				  Receivables" means any amounts of Deductible Paid Loss for which the employer
				  has not fully reimbursed the insurer, plus any Deductible Loss Reserves, for
				  the Workers' Compensation Deductible Policy in question.
(o) "California Deductible Ultimate
				  Receivables" means any amounts of California Deductible Paid Loss for which the
				  employer has not fully reimbursed the insurer, plus any California Deductible
				  Reserves, for the Workers' Compensation Deductible Policy in
				  question.
(p) "California
				  Deductible Recoverable" means the California Deductible Ultimate Receivables
				  minus the California Deductible Reserves.
(q) "Qualified United States Financial
				  Institution" means a member of the Federal Reserve System that maintains a
				  public debt rating of at least an A.M. Best Company rating of A-; a Standard
				  & Poor's rating of A-; a Moody's Investors Service rating of A3; or a Fitch
				  Ratings rating of A-.
(r)
				  "Other-Line Coverage" means any and all insurance other than workers'
				  compensation insurance, which the insured under a Worker's Compensation
				  Deductible Policy procures from the Insurer that issues that Workers'
				  Compensation Deductible Policy.
(s)
				  "Other-Line Deductible Plan" means any and all policies of insurance providing
				  Other-Line Coverage under which policy any amount of a claim other than a
				  workers' compensation claim is to be paid first by the Insurer, who is then to
				  be reimbursed by the insured.
(t)
				  "Open Other-Line Claim" means a claim under an Other-Line Deductible Plan for
				  which there is any potential future liability.
(u) "Other-Line Deductible Paid Loss" means
				  the amount of loss paid by the insurer on each claim under an Other-Line
				  Deductible Plan, limited to a maximum value of the policy deductible.
(v) "Other-Line Aggregate Deductible Incurred
				  Loss" means the estimated final cost, which pursuant to the terms of each
				  policy may or may not include ALAE, of all Open Other-Line Claims, and includes
				  actuarially determined provisions for (1) incurred but not reported claims and
				  (2) a bulk reserve for any shortfall in individual claim cost estimates. In the
				  case of a policy whose terms specify that ALAE is included within the
				  deductible, "Other-Line Aggregate Deductible Incurred Loss" also includes a
				  reserve for ALAE. "Other-Line Aggregate Deductible Incurred Loss" includes the
				  deductible portion of all claims that exceed the policy deductible, as well as
				  the full value of all claims within the deductible.
(w) "Other-Line Deductible Loss Reserves"
				  means the Other-Line Aggregate Deductible Incurred Loss less any Other-Line
				  Deductible Paid Loss.
(x)
				  "Other-Line Deductible Plan Ultimate Receivables" means any amounts of
				  Other-Line Deductible Paid Loss for which the employer has not fully reimbursed
				  the insurer, plus any Other-Line Deductible Loss Reserves, for the Other-Line
				  Deductible Plan in question.
(y)
				  "Multiline Deductible Loss Reserves" means the sum of the Deductible Loss
				  Reserves and the Other-Line Deductible Loss Reserves.
(z) "Multiline Deductible Ultimate
				  Receivables" means the sum of the Deductible Ultimate Receivables and the
				  Other-Line Deductible Plan Ultimate Receivables.
(aa) "Multiline Deductible Recoverable" means
				  the Multiline Deductible Ultimate Receivables minus the Multiline Deductible
				  Loss Reserves.
(bb) "Surety" means
				  the insurer issuing a surety bond.
1. New
					 article 9.8 (sections
					 2509.80-2509.82) and section filed
					 11-29-2018; operative 1-1-2019 (Register 2018, No.
					 48).
Note: Authority cited: Section
						11736.5,
						Insurance Code. Reference: Section
						11736.5,
						Insurance Code.