Louisiana Administrative Code › Title 40 - LABOR AND EMPLOYMENT › Part I - Workers' Compensation Administration › Subpart 1 - General Administration › Chapter 17 - Fiscal Responsibility Unit › Section I-1723 - Individual Self-Insurer-Application

Current through Register Vol. 50, No. 6, June 20, 2024
A. Each employer desiring to become a
				  self-insurer individually, as contemplated by Louisiana Statutes, shall make
				  application to the office for such privilege on a form prescribed by the
				  office, and this application shall be filed with the office at least 60 days
				  prior to the desired effective date. The application shall contain answers to
				  all questions propounded and shall be under oath.
B. Before considering the application, the
				  office will require:
1. financial statement
				  of a current date showing a net worth of not less than $750,000 and a current
				  ratio of more than 1.5 to 1 and a working capital of an amount establishing
				  strength and liquidity of the business to pay normal compensation promptly. A
				  surety bond as provided in
				  §1725 shall be
				  considered to be part of the net worth of the employer. However, companies
				  qualified to be self-insured prior to the implementation of these rules who do
				  not meet the requirement of a net worth of $750,000 may nonetheless qualify for
				  continued certification upon a showing that they meet all other requirements of
				  these rules and that they have been continually operating as an approved
				  self-insurer. The requirement for more than 1.5 to 1 current ratio may be
				  waived in the case of a public utility or in those instances where generally
				  recognized accounting principles peculiar to a particular industry make this
				  requirement unreasonable. In no event shall the net worth be less than three
				  times the annual loss fund, or in the event that aggregate excess insurance is
				  not maintained, then the net worth shall be at least three times the
				  self-insurer's annual standard premium. Financial statements dated six months
				  or more prior to the date of application must be accompanied by an affidavit
				  stating that there has been no material lessening of net worth nor significant
				  deterioration of current ratio since the date of the statement;
2. an employer going through or recently
				  acquired through a highly leveraged buyout is not eligible to self-insure until
				  the company has a well established and acceptable financial capacity. Judgment
				  of the company's financial capacity will be based upon financial ratio
				  analysis. This type of company must operate on an insured basis until the
				  financial status is fully known;
3.
				  in considering the financial strength and liquidity of the business to pay
				  normal compensation claims, the office will take into consideration contracts
				  or policies of excess insurance in accordance with §1711;
4. the determination of a company's financial
				  strength will also be based upon a financial ratio analysis and the trends in
				  operating and net income. A number of successive years operating net losses
				  experienced by a company may cause the Office of Workers' Compensation to deem
				  that company unable to assume the responsibility of self-insuring;
5. in addition, a company must have been in
				  business for at least three years unless it is part of an established operation
				  that is able to guarantee the financial stability of the concern;
6. each employer shall execute and file with
				  the office an agreement, which shall be part of his application, whereby he
				  agrees:
a. to fully discharge by cash payment
				  all amounts required to be paid by the provisions of the Act; and
b. to deposit with the office acceptable
				  securities or corporate surety bond to secure guarantee of payment of
				  compensation liabilities;
7. each Individual self-insurer shall satisfy
				  the office that it has complied with the provisions of
				  §1713.
				  A before approval for self-insurer status may
				  be granted by the office. In addition, the office may require periodic proof
				  that the self-insurer is complying with these standards on a continuing
				  basis;
8. the application for the
				  privilege or the renewal of the privilege of being a self-insurer shall be
				  accompanied by a remittance in the amount of $100, payable to the Office of
				  Workers' Compensation. This fee will not be refunded, regardless of the
				  disposition of the application;
9.
				  an investigation and study of the financial and other capabilities of the
				  individual applicant to meet its obligation under the Act will be conducted by
				  the self-insurer department of the office. The administrator of the
				  self-insurer department of the office will submit an evaluation report to the
				  office, after which formal approval for self-insurer status may be granted by
				  the office.