Arizona Administrative Code › Title 20 - COMMERCE, FINANCIAL INSTITUTIONS, AND INSURANCE › Chapter 05 - INDUSTRIAL COMMISSION OF ARIZONA › Article 15 - WORKERS' COMPENSATION SELF-INSURANCE › Section R20-5-1501 - Definitions

Current through Register Vol. 30, No. 28, July 12, 2024
In addition to the definitions provided in A.R.S. §
				  23-901, the following definitions apply to this Article:
1. "Act" means the Arizona Workers'
				Compensation Act, A.R.S. § 23-901 et seq.
2. "Administrator" means an individual or
				organization designated by a Self-Insurance Pool Board to manage the daily
				operations of a Self-Insurance Pool.
3. "Agreement to Process and Pay" means a
				written agreement that requires an entity to process and pay or guaranty the
				payment of another entity's liabilities.
4. "Applicant" means an entity or pool
				seeking initial or renewal authority to self-insure for workers' compensation,
				a Self-Insurance Pool seeking to add a new member, or a Self-Insurer seeking to
				Self-Administer.
5. "Authorization
				Date" means the date designated by the Commission on which self-insurance
				authority begins.
6. "Basic Premium
				Factor" means a factor used in the Retrospective Rating Plan formula to
				represent expenses of the Self-Insurer, such as acquisition, audit,
				administration, and profit or contingencies, but not taxes.
7. "Cash Flow Ratio" means a numerical
				relationship that reflects an entity's ability to meet current financial
				obligations out of cash flow and is calculated as follows: (cash flow from
				operations) divided by (current liabilities).
8. "Claim" or "claim" means a workers'
				compensation claim.
9. "Deviation
				Rate" means the rate applied to the Manual Premium to calculate a discount from
				the Manual Premium.
10. "D-Ratio"
				means a factor used in the Ex-Medical Plan that reflects the ratio of primary
				expected losses and total expected losses.
11. "Division" means the self-insurance
				office of the Commission.
12.
				"Ex-Medical Plan" means a method of determining the premium upon which taxes
				are calculated that provides for rate revisions based upon the Self-Insurer
				operating a medical facility with a program for providing medical, surgical, or
				hospital services to a majority of the Self-Insurer's employees that complies
				with the requirements of A.R.S. § 23-1070.
13. "Experience Modification Rate" means a
				ratio comparing actual losses to expected losses based on a formula determined
				by an approved Rating Organization or the Commission.
14. "Fiscal Year" or "fiscal year" means a
				12-month financial or accounting period.
15. "Fixed Premium Plan" means a method of
				determining the premium upon which taxes are calculated in which neither losses
				nor incurred loss reserves are used for the net taxable premium
				calculation.
16. "Guaranteed Cost
				Plan" means a method of determining the premium upon which taxes are calculated
				that provides for a direct relationship, on an annual basis, of the premium for
				tax purposes and the Experience Modification Rate developed to reflect the loss
				payment and incurred loss experience of the Self-Insurer.
17. "Local Government Investment Pool" means
				a pooled investment fund operated by the Arizona State Treasurer according to
				A.R.S. § 35-326.
18. "Loss
				Conversion Factor" means a factor used in the Retrospective Rating Plan formula
				that is used to cover unallocated claims and the costs of the Self-Insurer's
				claims services.
19. "Manual
				Premium" means the aggregate payroll by individual Payroll Classification Code
				multiplied by the Payroll Classification Rate.
20. "Member" or "member" means an employer
				described in A.R.S. §§ 11-952.01, 15-382 23-961.01, or 41-621.01 that
				has joined with other employers to operate a Self-Insurance Pool.
21. "Parent Company" means a company that has
				sufficient ownership in another entity (the Subsidiary) to have control,
				directly or indirectly, of the Subsidiary.
22. "Payroll" or "payroll" means the total
				wages and salaries paid by an employer.
23. "Payroll Classification Code" means a
				four-digit numerical code assigned by a Rating Organization or the Commission
				to differentiate between the various job duties or scope of work performed by
				employees.
24. "Payroll
				Classification Rate" means a rate assigned to an individual Payroll
				Classification Code by a Rating Organization or the Commission.
25. "Public Entity" means an individual
				employer that is a state, county, municipality, school district, or any other
				entity with taxing authority.
26.
				"Public Entity Pool" means a workers' compensation pool organized under A.R.S.
				§§ 11-952.01, 15-382, or 41-621.01.
27. "Public Entity Trust Fund" means an
				internal service fund or sub-fund dedicated to workers' compensation or risk
				management established by a Public Entity from which money is used to pay
				workers' compensation claim liabilities and expenses.
28. "Rating Organization" means an entity
				that meets the requirements of A.R.S. § 20-363 and is approved by the
				Department of Insurance and Financial Institutions to establish rates, codes,
				and formulas used to calculate workers' compensation premiums.
29. "Renewal Date" means the date designated
				by the Commission by which a renewal application shall be filed with the
				Division.
30. "Reserves" or
				"reserves" means an amount of money that is set aside to satisfy the financial
				and legal obligations associated with a workers' compensation claim or group of
				claims.
31. "Resolution of
				Authorization" means a document issued by the Commission that grants authority
				to self-insure for purposes of workers' compensation.
32. "Retrospective Rating Plan" means a
				method of determining the premium upon which taxes are calculated that provides
				for a relationship between the premiums for tax purposes, the Experience
				Modification Rate developed to reflect the loss payment and incurred loss
				experience of the Self-Insurer, and the actual incurred losses for the tax
				year.
33. "Security" or "security"
				means any financial instrument authorized by R20-5-1521 through R20-5-1524, or
				appropriate documents renewing, amending, or continuing any of these.
34. "Self-Administer" means the process under
				which a Self-Insurer administers its own claims, once approved by the
				Division.
35. "Self-Insurance Pool"
				means a Public Entity Pool or Similar Industry Pool.
36. "Self-Insurance Pool Board" means a body
				of individuals that directs a Self-Insurance Pool according to
				R20-5-1527.
37. "Self-Insurer"
				means an entity authorized by the Commission to self-insure for workers'
				compensation and may include a Public Entity, an individual private employer
				under A.R.S. § 23-961(A)(2), a Public Entity Pool, or a Similar Industry
				Pool.
38. "Similar Industry Pool"
				means a pool with members in similar industries as authorized by A.R.S. §
				23-961.01.
39. "Subsidiary" means
				an entity of which a Parent Company has sufficient ownership to have control,
				directly or indirectly.
40.
				"Third-Party Administrator" means an organization that processes workers'
				compensation claims for a Self-Insurer.
41. "Workers' Compensation Pool Loss Account"
				means an account or sub-account in the Workers' Compensation Pool Operations
				Account established by a Self-Insurance Pool from which money is used to pay
				workers' compensation claims, liabilities, and expenses.
42. "Workers' Compensation Pool Operations
				Account" means an account or sub-account into which premiums, investment
				proceeds, and other revenues are deposited for purposes of a Self-Insurance
				Pool.