Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Certificates of No-Fault Self-Insurance › Section R. 257.536 - Loss reserve; use; amount; funding; expenditures; commingling; trust or escrow account

Current through Vol. 24-12, July 15, 2024
Rule 6.
(1) A loss
				reserve must be utilized to pay claims that are anticipated during the
				certification year and that are submitted for payment during that year and to
				pay claims that have been incurred and submitted before the certification year,
				but have not yet been paid by the applicant or self-insurer.
(2) Except as provided in subrule (7) of this
				rule, a fully funded loss reserve consists of an amount of money or investment
				grade securities that can be liquidated for face value, as determined by a
				qualified actuary, or as determined by a qualified employee of a casualty
				insurance company, that is sufficient to compensate claimants for all benefits
				that are due for claims that are to be paid or that are anticipated to be paid
				during the certification year and all benefits that are due for claims incurred
				before the certification year, but are to be paid or are anticipated to be paid
				during the certification year, including all benefits that may be due during
				the certification year for claims that can be anticipated or are incurred but
				not reported, exclusive of that portion of any claim that is covered by excess
				insurance.
(3) Before the beginning
				of a certification year, an applicant or self-insurer shall fully fund its loss
				reserve account.
(4) Loss reserve
				funds must only be expended to pay claims that are incurred and submitted under
				the no-fault law, the financial responsibility law contained in chapter V of
				the Michigan vehicle code, and these rules.
(5) Loss reserve funds must be kept in a
				segregated account and must not be commingled with other funds of the applicant
				or self-insurer. The funds must be physically located in this state unless
				otherwise approved by the director and may be maintained in a financial
				institution, in an escrow account, under a trust agreement, or by the applicant
				or self-insurer individually. With prior approval of the director, the loss
				reserve may be commingled for applicants with net worth of more than
				$50,000,000.00 and sufficient liquidity.
(6) For a governmental unit that has the
				authority to tax, a fully funded loss reserve consists of an amount of money
				that is included in the budget or reserve accounts of the governmental unit for
				the fiscal year, which includes its certification year, as determined by a
				qualified actuary, or as determined by a qualified employee of a casualty
				insurance company, and that is sufficient to compensate claimants for all
				benefits that are due for claims that are to be paid or that are anticipated to
				be paid during the certification year and all benefits that are due for claims
				that are incurred before the certification year, but are to be paid or are
				anticipated to be paid during the certification year, including all benefits
				that may be due during the certification year for claims that can be
				anticipated or are incurred but not reported, exclusive of that portion of any
				claim that is covered by excess insurance.