Kentucky Administrative Regulations › Title 806 - PUBLIC PROTECTION CABINET - DEPARTMENT OF INSURANCE › Chapter 39 - Motor Vehicle Reparations (No-fault) › Section 806 KAR 39:050 - Self-insurance

Current through Register Vol. 51, No. 1, July 1, 2024
RELATES TO:
				KRS
				304.8-030,
				304.8-095,
				304.39-020(12),
				304.39-080,
				304.39-140,
				304.39-170,
				304.39-290,
NECESSITY, FUNCTION, AND CONFORMITY:
				KRS
				304.39-080 authorizes the Commissioner of
				Insurance to approve applications for self-insurance and set standards that
				shall be met by applicants. This administrative regulation establishes the
				criteria to apply for self-insurance, and the authority of the commissioner to
				revoke self-insurance status.
Section
			 1. Any person who desires to be self-insured, as established in
			 KRS Chapter 304, Subtitle 39, shall submit an application to the Commissioner
			 of Insurance on the form, "Application for Motor Vehicle Self-Insurance,"
			 12/2020 edition.
Section 2. The
			 applicant shall agree in writing to pay all tort liability and basic reparation
			 benefits incurred and established by KRS Chapter 304, Subtitle 39, and shall
			 agree to become a member of the Kentucky Arbitration Association, and to meet
			 all obligations incurred, and shall agree to become a member of the Assigned
			 Claims Bureau, and to meet all obligations incurred.
Section 3. The applicant shall file with the
			 application, and every year after, a balance sheet and income statement that
			 shall reflect the actual financial condition of the applicant as of the last
			 complete calendar or fiscal year preceding the date of the application; and, in
			 the case of an individual, the balance sheet and income statement shall be
			 certified, under oath, by the individual that it truly reflects his financial
			 condition and income as of that time. In the case of a corporation or
			 partnership, it shall be certified by a Certified Public Accountant or
			 responsible accounting officer of the applicant. This information shall be
			 confidential, and the Commissioner of Insurance shall not release this
			 information unless he has the prior written consent of the applicant.
Section 4. The application shall list the
			 vehicles as of the date of application and annually thereafter for which the
			 self-insured shall provide security and advise the commissioner of any changes
			 in the number of insured vehicles thereof unless the self-insurer has furnished
			 maximum security.
Section 5. The
			 applicant shall furnish security to the commissioner to meet his continuing
			 obligation as agreed to in Section 2 of this administrative regulation. The
			 security furnished may be in the form of a bond, with surety, by an insurer
			 authorized by the Department of Insurance to engage in surety insurance
			 contracts or an irrevocable letter of credit issued by a bank chartered by the
			 Commonwealth of Kentucky or a member bank of the Federal Reserve System whose
			 capital and surplus shall equal or exceed $25 million.
Section 6. Security may also be furnished by
			 depositing, with the Custodian of Insurance Securities, cash or assets of the
			 kind that may be deposited by a domestic insurer pursuant to
			 KRS
			 304.8-030. The commissioner may require
			 assets to be deposited pursuant to
			 KRS
			 304.8-095. Where the security tendered to the
			 commissioner is of a kind that may vary in market value, including U.S.
			 obligations, bonds, stocks, or real estate, the commissioner may, in his
			 discretion, require the amount tendered to have a current market value greater
			 than the minimum required security, but not in excess of 150 percent of the
			 minimum required security.
Section
			 7. The minimum security that shall be furnished to the
			 commissioner is for one (1) secured vehicle, $50,000; and for each additional
			 vehicle: $10,000, up to a maximum of $200,000.
Section 8. The commissioner shall hold the
			 securities furnished under Sections 5, 6, and 7 of this administrative
			 regulation for the benefit of those persons to whom the self-insured is
			 obligated under the provisions of KRS Chapter 304, subtitle 39.
Section 9. Each self-insured shall furnish to
			 the commissioner, no later than January 10, April 10, July 10, and October 10
			 of each year, a report on forms, authorized by the commissioner, of all claims
			 incurred during the preceding calendar year.
Section 10. If, based upon the number of
			 claims incurred by the self-insured, the commissioner shall determine that the
			 security furnished is inadequate, he may require additional security and more
			 frequent report of claims incurred.
Section
			 11. If a self-insured fails to meet its obligations under KRS
			 Chapter 304, Subtitle 39, or fails to make the required report of claims, or to
			 post additional security required by the commissioner, the commissioner shall
			 disapprove the self-insured for self-insurance.
Section 12. A self-insured may, at any time,
			 by written request to the commissioner, withdraw as a self-insured.
Section 13. When a self-insured voluntarily
			 withdraws as a self-insured, or when the commissioner disapproves the
			 self-insured, the commissioner shall retain the security furnished until the
			 self-insured has met all obligations incurred as a self-insured under KRS
			 Chapter 304, Subtitle 39. If any obligation remains unsatisfied for ninety (90)
			 days, the commissioner may institute proceedings to assure that all persons to
			 whom the self-insured is obligated under KRS Chapter 304, Subtitle 39 shall
			 receive their equitable share of the securities available.
Section 14. Incorporation by Reference.
(1) The following material is incorporated by
			 reference:
(1) "Application for Motor Vehicle
			 Self-Insurance", 4/2021 edition.
(2) This material may be inspected, copied,
			 or obtained, subject to applicable copyright law, from the Department of
			 Insurance, Mayo-Underwood Building, 500 Mero Street, Frankfort, Kentucky 40601,
			 Monday through Friday, 8 a.m. to 4:30 p.m. This material is also available on
			 the office's Web site at
www.insurance.ky.gov
.