Michigan Administrative Code › Department - Labor and Economic Opportunity › Workers Compensation Agency › Workers' Compensation Agency - General Rules › Part 3 - HEARINGS › Section R. 408.43e - Group self-insurers; new and renewal application requirements

Current through Vol. 24-12, July 15, 2024
Rule 13e.
(1) A
				  new application, as submitted by the initial board of trustees of the
				  self-insurer's fund, must be accompanied by all of the following:
(a) A copy of the approved bylaws of the
				  proposed group self-insurers' fund.
(b) A copy of the original individual member
				  application approved by the board of trustees for each member of the group
				  applying for coverage in the fund.
(c) A current financial statement of each
				  member of a private self-insurers' group that, taken collectively, shows both
				  of the following:
(i) The combined net assets
				  of all members applying for coverage on the inception date of the fund, which
				  may not be less than $1,000,000.00.
(ii) Working capital, which must be in an
				  amount that establishes the financial strength and liquidity of the
				  business.
(d) A
				  composite listing of the estimated standard premium to be developed by each
				  member of the group individually and in total as a group.
(e) Proof of payment by each member of not
				  less than 25% of the estimated annual standard premium into a designated
				  depository.
(f) An excess insurance
				  policy that is issued by an authorized carrier in an amount acceptable to the
				  agency and complies with the requirements set forth in
				  R 408.43k.
(g) A copy of a signed service agreement that
				  designates an approved service company.
(h) A copy of the current contract or
				  agreement between the trustees and the administrator if one is used.
(i) Proof of a fidelity policy in a form and
				  amount acceptable to the agency.
(j) If required, a surety bond written by an
				  authorized carrier or other security in a form and amount acceptable to the
				  agency.
(k) In the case of a
				  private employer's group, an indemnity agreement jointly and severally binding
				  the group and each member of the group to comply with the provisions of the
				  act. The indemnity agreement must conform to an indemnity agreement as approved
				  by the agency.
(l) A breakdown of
				  all rates by code classification that will be used by the group fund to develop
				  final audited premium, including an exhibit that shows all administrative
				  expenses as a percentage of estimated final audited premium and loss fund
				  developed under the aggregate excess contract as a percentage of final audited
				  premium.
(m) The trustees shall
				  provide proof, satisfactory to the agency, that the annual gross premiums of
				  the fund will be not less than $500,000.00.
The premium collected from each member must be based upon
					 applying the appropriate manual rates per payroll code classification as
					 approved by the agency and the excess carrier. The premium collected from each
					 participant in a group selfinsurance program must be adjusted by an experience
					 modification formula approved by the agency.
The total premium collected from all participants must be
					 sufficient to fund the loss fund developed under the excess insurance contract
					 and the total administrative expenses of the group fund. A written excess
					 insurance policy must confirm that the rate structure proposed by the aggregate
					 excess insurer will be used by the group fund to develop the loss fund under
					 the aggregate excess contract. The loss fund shall be 75% of final audited
					 premium or as approved by the agency.
(n) Proof, satisfactory to the agency, must
				  be provided to prove that the fund has, within its own organization, ample
				  facilities and competent personnel to service its own program with respect to
				  underwriting matters and loss control services or the fund shall contract with
				  an approved service company to provide the services. An approved service
				  company must be used to handle claims adjusting and reporting of loss data to
				  the agency.