Alabama Administrative Code › Title 480 - ALABAMA DEPARTMENT OF LABOR › Chapter 480-5-3 - GROUP SELF-INSURANCE › Section 480-5-3-.07 - Formation Of Funds

Current through Register Vol. 42, No. 9, June 28, 2024
(1) A
			 proposed Fund shall file with the Director its application for a certificate of
			 approval accompanied by a non-refundable filing fee in the amount of $2,000,
			 which shall be deposited into the Workers' Compensation Administrative Trust
			 Fund, at least 120 days prior to the proposed Fund's requested inception date.
			 The application shall include the proposed Fund's name, location of its
			 principal office, date of organization, name and address of each Participant,
			 and such other information as the Director may require, together with the
			 following:
(a) A comprehensive written
			 document which clearly describes the Sponsoring Association's common interest
			 and demonstrates that the Fund is being managed for the benefit of the
			 Participants;
(b) Proof that the
			 proposed Fund's Sponsoring Association has been in existence in Alabama for at
			 least five (5) years and is qualified under Section 501(c) (6) or other
			 tax-exempt provision of the Internal Revenue Code;
(c) A copy of the Articles of Incorporation
			 and Bylaws of the proposed Sponsoring Association;
(d) A copy of the Bylaws and other governance
			 documents of the proposed Fund;
(e)
			 A list of the names and addresses of the Fund's initial Board of Trustees and
			 the name and address of the Participant with which each is
			 affiliated;
(f) The name, address,
			 and qualifications of the individual Alabama resident designated and appointed
			 as the Fund Administrator;
(g) Any
			 contract or agreement to be entered into by the Fund with the Administrator
			 describing the services to be performed and the compensation to be
			 paid;
(h) A fidelity bond on the
			 Fund Administrator payable to the Board of Trustees in an amount sufficient to
			 protect the Fund's assets against misappropriation or misuse;
(i) A contract with an approved Service
			 Company which specifies the services to be performed and the amount of
			 compensation to be paid or the method by which compensation is to be determined
			 if not expressed in a certain amount;
(j) The name and address of the Alabama
			 resident designated and appointed as the Fund's registered agent for service of
			 process in this state;
(k) The name
			 and address of the Fund's CPA;
(l)
			 The name and address of the Fund's actuary;
(m) The name and address of the attorney
			 representing the Fund;
(n) The
			 address in the State of Alabama where the books and records of the Fund shall
			 be maintained at all times;
(o) A
			 copy of the fully executed Participant Application for each inception
			 Participant of the Fund. Attached to such application shall be a current year
			 audited financial statement for the Participant;
(p) Copies of fully executed Participation
			 Agreements from each proposed Fund Participant. Subject to the Director's
			 approval, a Fund may add additional provisions to the Participation
			 Agreement;
(q) A confirmation of
			 the required Specific Excess Insurance in a form and amount acceptable to the
			 Director;
(r) The written plan
			 adopted by the Fund to govern underwriting matters and loss control;
(s) Security Deposit in a form and amount
			 prescribed by the Director, but not less than $200,000; and, in addition, proof
			 of deposit with the Fund by each initial Participant of funds in an amount
			 equal to at least twenty-five percent (25%) of that Participant's first year's
			 estimated annual Net Contribution at inception. The deposit shall be considered
			 a part of the first year's contribution payment of each Participant and shall
			 be in an aggregate amount not less than $1,000,000;
(t) A market impact analysis that
			 demonstrates that there is an unserved or underserved segment of the market
			 that the new Fund will target and that the segment is large enough to assure
			 the viability of the new Fund. If the new Fund targets an underserved segment,
			 it shall demonstrate its ability to provide more and/or better quality services
			 to the Participants than are offered by the Fund or Funds currently serving
			 that segment;
(u) A pro forma of
			 each contract and any other form the Fund intends to issue or use;
(v) The workers' compensation contributions
			 paid and incurred loss history for each initial Participant for the latest
			 three (3) complete years preceding the date the Fund is to commence
			 operations;
(w) Substantive five
			 (5) year projection of anticipated losses and annual contributions;
(x) A current audited financial statement in
			 a form approved by the Director showing that the combined net worth of the
			 inception Participants is not less than five million dollars ($5,000,000)
			 ;
(y) A projection of
			 administrative expenses for the first year's operation as an amount and as a
			 percentage of the total estimated annual contribution;
(z) A rating plan or schedule of job
			 classification rates for the prospective Fund Year that is approved by an
			 actuary; and
(aa) A copy of the
			 written description of the dividend, refund, retrospective or contribution
			 return plan.