Michigan Administrative Code › Department - Labor and Economic Opportunity › Workers Compensation Agency › Workers' Compensation Agency - General Rules › Part 3 - HEARINGS › Section R. 408.43k - Aggregate excess liability insurance; specific excess liability insurance; individual self-insurer; group self-insurer

Current through Vol. 24-12, July 15, 2024
Rule 13k. The agency shall not recognize a policy of
					 aggregate or specific excess liability insurance in considering the ability of
					 a self-insurer to fulfill its financial obligations under the act, unless the
					 policy is issued by a casualty insurance company authorized, as defined in
					 section 108 of the insurance code of 1956, 1956 PA 218, MCL 500.108, to
					 transact such business in this state. The policy must comply with all of the
					 following provisions unless specifically waived by the agency. Policies issued
					 that do not comply with all provisions of this rule may be considered grounds
					 for termination of the employer's self-insured authority.
(a) The policy may not be cancelable or
				  nonrenewable unless written notice, sent by courier, registered mail or
				  certified mail, is given to the other party to the policy and to the agency not
				  less than 60 days before termination by the party desiring to cancel or not
				  renew the policy.
(b) The policy
				  may not contain endorsements, provisions, or terms that increase the named
				  insured or insureds retentions or increase the amount that must be paid by the
				  named insured or insureds beyond the retentions reported on the declarations
				  page of the policy and the Michigan certificate of specific/aggregate excess
				  liability insurance. This provision does not apply to customary policy language
				  that may call for increased payments by the insured or insureds for failure to
				  act or abide by a policy provision.
(c) A policy that has any type of commutation
				  clause must provide that any commutation effected under the policy may not
				  relieve the casualty insurance company of further liability with respect to
				  claims and expenses unknown at the time of the commutation or in regard to any
				  claim apparently closed at the time of initial commutation that is subsequently
				  reopened by or through a competent authority. If the casualty insurance company
				  proposes to settle its liability for future payments payable as compensation
				  for accidents occurring during the term of the policy by the payment of a lump
				  sum to the employer, to be fixed as provided in the commutation clause of the
				  policy, then the casualty insurance company or the company's agent shall give
				  the agency not less than 30 days' prior notice of the commutation. Notice must
				  be by courier, registered mail, or certified mail. If any commutation is
				  affected, then the agency has the right to direct that the sum be placed in
				  trust for the benefit of the injured employee or employees entitled to future
				  payments of compensation.
(d) The
				  policy must state that if a private self-insured employer becomes insolvent and
				  is unable to make compensation payments and the self-insurers' security fund
				  may have responsibility for making payment under section 537 of the act, MCL
				  418.537, then the excess insurance carrier shall make, directly to the
				  claimants or their authorized representatives, payments as would have been made
				  by the excess insurance carrier to the employer after it has been determined
				  that the retention level has been reached on the excess liability insurance
				  policy.
(e) The policy must state
				  that 100% of the following payments must be applied toward reaching the
				  retention level in the specific and aggregate excess liability policy:
(i) Benefit payments made by the employer as
				  required in the act.
(ii) Benefit
				  payments, as required in the act, that are due and owing to claimants of the
				  employer.
(iii) Benefit payments
				  made on behalf of the employer, as required in the act, by a surety under a
				  bond or through the use of other security required by the director.
(iv) Payments made by the self-insurers'
				  security fund.
(v) Usual and
				  customary claims allocated loss adjustment expenses.
(vi) Payments made, as specified in
				  paragraphs (i), (iii), (iv) and (v) of this subdivision, that are reimbursable
				  by the specific excess liability policy may not be considered in reaching the
				  aggregate excess liability retention.