Current through Register Vol. 49, No. 9, September, 2024
SECTION 1. AUTHORITY
This Rule and Regulation is adopted, and promulgated by the
Insurance Commissioner for- the State of Arkansas ("Commissioner") pursuant to
the authority vested in the' Commissioner by Act 561 of 1991 [codified at
Arkansas Code §§
23-67-201 et
seq.]; Act 1155 of 1993 [An Act amending Arkansas Code §§.
23-67-201 et
seq.]; Act 796 of 1993 [An Act amending Chapter 9 of Title 11, Arkansas Code];
Act 1269 of 1993 [An Act supplementing Chapter 67 of Title 23, Arkansas Code];
and by Arkansas Code §§
23-61-108,
23-67-219,
23-67-310,
23-79-109,
and
25-15-201 et
seq.
SECTION 2. EFFECTIVE
DATE
The provisions of this Rule and Regulation shall become effective
January 1, 1997, upon statutory filing per Arkansas law.
SECTION 3. PURPOSE
The purpose of this Rule and Regulation, as amended, is to reform
the mandatory Workers' Compensation Insurance Plan ("WCIP" or "Plan") to assure
coverage for employers who are in good faith entitled, but unable to procure,
workers' compensation and employers' liability insurance in the voluntary
market, and to provide for the fair, efficient, and equitable operation and
regulation of the Plan.
SECTION
4. WCIP DEFINITIONS
A.
"Affiliated Insurer" An insurer that directly, or indirectly through one (1) or
more intermediaries, controls, or is controlled by, or is under common control
with another insurer specified. The term "control" means the possession, direct
or indirect, of the power to direct or cause the direction of the management
and policies of an insurer, whether through the ownership of voting securities,
by contract, or otherwise. Control shall be deemed to exist if any person or
business enterprise, directly or indirectly, owns, controls, holds with the
power to vote, or holds proxies, representing ten (10) percent or more of the
voting securities of any other insurer.
B. "Articles of Agreement" or "Articles" The
reinsurance mechanism authorized under this Plan to provide reinsurance to the
servicing carriers on employers assigned to them under this Plan, which said
agreement and any amendments thereto shall be provided to and approved by the
Commissioner but which, in cases of conflict between them and this Rule and
Regulation, shall be subordinate to this Rule and Regulation.
C. "Assigned Carrier" or "Servicing Carrier"
The insurer authorized to receive Plan assignments and provide coverage to
eligible employers on behalf of those participating companies subscribing to
the Articles of Agreement incorporated as a part of the Plan in this
state.
D. "Collected Premium" The
gross direct premium charged and physically collected and receipted for all
employers subject to this Plan.
E.
"Commissioner" The Insurance Commissioner for the State of Arkansas.
F. "Employer" Any business organization or
enterprise that is required by statute to maintain workers' compensation
insurance in this State. The term shall include any business organizations or
enterprises that are affiliated as a result of common management or common
ownership.
G. "National Council on
Compensation Insurance, Inc." or "NCCI" The rating organization or advisory
organization licensed in this State to make and file rates, rating values,
classifications, and rating plans for workers' compensation insurance.
H. "Net Premiums Written" The
gross direct premiums charged less all premiums (except dividends and savings
refunded under participating policies) returned to insureds for all Workers'
Compensation and Occupational Disease Insurance, exclusive of premiums for
employers subject to this Plan, and for employers written under the National
Defense Projects Rating Plan and under excess policies.
I. "Plan" or, "WCIP" The Arkansas Workers'
Compensation Insurance Plan.
J.
"Plan Administrator" Such organization or organizations to which the
responsibility for administering the affairs of the Plan may, from time to
time, be delegated, including but not limited to such functions and duties as
rates, forms, and statistics.
K.
"Premium in Dispute" A workers' compensation insurance premium obligation in
which a bona fide dispute exists only if the employer or its representative has
provided:
(a) written notice to the insurer or
the servicing carrier detailing the specific areas of dispute;
(b) an estimate of the premium the employer
believes to be correct, with an explanation of the premium
calculation;
(c) payment of the
undisputed portion of the premium; and
(d) a written request that includes all
information relevant to the dispute to the Plan Administrator for a hearing
before the appropriate administrative or regulatory body having jurisdiction
over appeals on Plan matters.
L. "Producer" A licensed casualty insurance
agent or broker as defined in the State Insurance Code, whose privileges under
the Plan have not been suspended or revoked. Provided however, that such
producer shall, for purposes of the Plan, be considered to be acting on behalf
of the insured or employer applying under the Plan and not as an agent of the
Plan Administrator or of any assigned carrier for Plan business.
M. "Undisputed Premium" A workers'
compensation insurance premium obligation that is not the subject of a bona
fide dispute.
N. "Voluntary Offer
of Coverage" A legitimate, good faith offer of workers' compensation insurance
made by a workers' compensation insurer to an employer on a "voluntary" basis
outside this Plan, which said offer is either:
(i) of such workers' compensation insurance
on a monoline basis and on a reasonable rating plan approved for use in
Arkansas by the Commissioner for that insurer; or
(ii) of such workers' compensation insurance
in combination or coordination with other property and/or casualty coverages
and limits desired by the employer and as such insurer may also offer; provided
however, that such insurer shall apply its filed rating plan (including all
applicable discounts or credits) to such employer in a good faith,
non-discriminatory manner. "Voluntary Offer of Coverage" shall in no event be
interpreted as including or referring to an offer, entreaty or opportunity
presented for coverage under any type of self-insured workers' compensation
plan.
Neither the Plan Administrator(s) nor the servicing carrier(s)
shall have a responsibility to determine whether the putative voluntary offer
of coverage is truly "voluntary", but any agent or broker and any insurer
knowingly submitting an offer of workers' compensation coverage to an employer
which does not meet the above definition of a bona fide . "voluntary offer"
may. be in violation of Ark. Code Ann. §§
23-66-205
et. seq. and Section 16.D. of this Rule and Regulation.
O. "Workers'
Compensation Insurance"
(a) Statutory
workers' compensation and occupational disease liability insurance including
insurance for liability under the Longshore and Harbor Workers' Compensation
Act, as amended, and the Federal Coal Mine Health and Safety Act of 1969, as
amended;
(b) Employers' liability
insurance written in connection with a workers' compensation policy;
and
(c) Such other coverages as
approved by the Commissioner.
SECTION 5. RULES FOR ELIGIBILITY AND
ASSIGNMENT
A. Good Faith.
The following rules will govern the insuring of employers who are
in "good faith entitled to workers' compensation insurance" as defined herein,
but who are unable to procure such insurance in a regular manner. For purposes
of this Plan, the offer of any reasonable rating plan approved for use in this
jurisdiction shall be deemed an offer of insurance in a regular manner. Any
dispute arising hereunder shall be subject to the dispute resolution procedure
provided in this Plan.
(1) Good faith
rules of eligibility.
Good faith will be presumed in the absence of clear and
convincing evidence to the contrary. An employer is not in good faith entitled
to insurance if any of the following circumstances exist at the time of
application or thereafter, or other evidence exists that such employer is not
in good faith entitled to insurance.
(a) At the time of application, a
self-insured employer is aware of pending bankruptcy proceedings, insolvency,
cessation of operations, or conditions that would probably result in
occupational disease or cumulative injury claims from exposure incurred while
the employer was self-insured.
(b)
The employer, has failed or refused to comply with all effective laws, rules,
or regulations relative to the welfare, health and safety of employees or loss
control requirements; does not allow reasonable access to the insurer for audit
or inspection under the policy; or does not comply with any other policy
obligations.
(c) The employer has
an outstanding workers' compensation insurance premium obligation or other
monetary policy obligation on previous workers' compensation insurance that is
not subject to a bona fide dispute.
(d) The employer, its representative, or the
producer knowingly' fails to comply with Plan procedures; or knowingly makes a
material misrepresentation on the application by omission or otherwise,
including, but not limited to, the following: estimated payroll, offers of
workers' compensation insurance, nature of business, name or ownership of
business, previous insurance history, or an outstanding workers' compensation
insurance premium obligation or other monetary policy obligation of the
employer.
B.
Declinations
Within sixty (60) days preceding the date of application, the
employer must have applied for workers' compensation coverage and have been
rejected by at least two (2) insurers, specifically including, where
applicable, the insurer providing coverage to the employer at the time of
application.
Within sixty (60) days preceding the date of application, the
employer must not have rejected a "voluntary offer of coverage" from an
insurer.
The employer or its representative shall maintain on record for
this policy period the insurer name, contact person, address, phone number and
date of contact for each insurance company with which it applied for workers'
compensation coverage and make such information available to the Plan
Administrator or servicing carrier upon request.
C. Forms and Kates
All policies issued to employers to which this Plan applies shall
be written utilizing the classifications, forms, rates, and rating plans
approved by the Commissioner and authorized for use in the residual market by
the Plan Administrator.
D.
Securing a Requested Effective Date
The employer or its representative shall forward an application
to the Plan Administrator using one of the submission methods established by
the Plan Administrator.
The employer or its representative may request an effective date
not later that sixty (60) days from the date of application; however, such
requested effective date shall be the later of the following options:
(1) 12:01 a.m. on the date following receipt
by the Plan Administrator of a complete and eligible application,
(2) the date of expiration of existing
coverage, or
(3) a date the
employer requested.
Subject to the review by the servicing carrier, employers which
were formerly self-insured shall secure a requested effective date no later
than 12:01 a.m. sixty (60) days following receipt by the Plan Administrator of
a complete and eligible application.
In order to promote competition among servicing carriers and to
improve. the service thereof, the employer applying for initial coverage or
renewal coverage within the Plan may strike up to a maximum of six (6)
servicing carriers from the list of active-eligible servicing carriers then
maintained by the Commissioner and the Plan Administrator as provided on the
Appendix A to the application.
E. Application Review
Upon receipt of the application, the Plan Administrator shall
review it for eligibility and completeness. The Plan Administrator may request
additional information at its discretion to establish eligibility, to assign
appropriate classification codes, to calculate applicable premium, and to
otherwise appropriately process the application, Such information may include
tax documentation, ownership information, contracts, or any other information
deemed necessary to process the application. The employer and/or its
representative shall provide this information/documentation, or provide an
acceptable explanation for failure to provide the requested items within the
timeframe established by the Plan Administrator.
Incomplete applications received by the Plan Administrator may,
at the discretion of the Plan Administrator, be returned to the employer or its
representative for completion or, with notice to the employer or its
representative, may be retained by the Plan Administrator pending receipt of
further information. Failure to comply in a timely manner with a request from
the Plan Administrator may result in the rejection of the application.
F. Additional States Coverage
Except as indicated on the binder/verification page, all
assignments under this Plan are to be made on an intrastate basis. However, any
employer desiring insurance for operations in states other than those covered
by its servicing carrier may request its servicing carrier to furnish insurance
in the additional state in accordance with the Interstate Assignments section
of this Plan. Plan policies affording coverage on operations in more than one
(1) state must clearly indicate the premium developed for each state
separately.
G. Premium
Obligations
Assignments shall not knowingly be made under this Plan unless
all undisputed workers' compensation premium obligations on any previous
insurance have been met by the employer whether the obligation is to a
servicing carrier or voluntary insurer.
H. Initial or Deposit Premium
After the application has been reviewed and eligibility has been
determined, the Plan Administrator shall calculate the initial or deposit
premium (depending on state payment options) and inform the employer, its
representative, or the producer of the applicable premium, using the submission
options identified by the Plan Administrator.
Note: See individual state Special Rules pages of the Basic
Manual for Workers' Compensation and Employers' Liability Insurance for
applicable initial or deposit premium rules.
I. Binding of Coverage ;
The producer or employer must submit the total required initial
or deposit premium to the Plan Administrator, using one of the submission
methods approved by the Plan Administrator. The required initial or deposit
premium must be received within the timeframe established by the Plan
Administrator in order for coverage to be bound on the requested effective
date.
The effective date on the binder will be the secured effective
date determined in the section entitled "Securing a Requested Effective Date"
only if all of the following occur:
(1) the Plan Administrator is in receipt of a
complete signed application within the established timeframe,
(2) the applicant is deemed eligible,
and
(3) the total initial or
deposit premium has been received by the Plan Administrator within an
established timeframe.
Coverage will not be bound by the Plan Administrator without a
complete signed application and receipt of the appropriate deposit or initial
premium.
J. Binder
Information
The binder/verification page shall be sent to the insured,
producer and servicing carrier and shall remain in effect until canceled or a
policy has been issued. In accordance with Plan procedures, coverage shall not
exist if a binder was not issued.
K. Reassignment
If the employer is dissatisfied with the servicing carrier, the
employer may request reassignment to another insurer not less than thirty (30)
days nor more than sixty (60) days prior to the expiration of the current
policy unless otherwise approved by the Plan Administrator. The employer must
submit a new application in accordance with the section entitled "Securing a
Requested Effective Date."
The employer must also provide the Plan Administrator with an
acceptable reason or reasons for the request with appropriate documentation.
The request for reassignment is subject to approval by the Plan Administrator
and the reassignment shall be made on random basis.
L. Producer Information
(1) Producer Fee
The servicing carrier shall pay a fee to the licensed producer
designated by the employer on new and renewal policies upon payment and receipt
of premium due under the policy. The producer fee shall be based on the state
standard premium charged and collected, and will be paid at the rate filed by
the Plan Administrator with the Commissioner.
(2) Producer Changes
The employer may designate a licensed producer, and with respect
to any renewal of the assigned insurance, may change the designated producer by
notice to the servicing carrier prior to the date of renewal or, with the
consent of the servicing carrier, at any other time.
M. Additional Coverages
Additional coverages may be available to the employer through the
servicing carrier. See the WCIP Supplement printed at the end of the Plan for
those coverages available in each state.
N. Policy Term
The policy shall be issued for a term of at least one (1) year,
unless insurance for-a shorter term has been requested. A short-terra policy
may be obtained only once within a twelve (12)-month period unless agreed to by
the servicing carrier.
SECTION
6. CANCELLATION AND RENEWAL
A. A
servicing carrier shall have the right to cancel prospectively and upon thirty
(30) days written notice any binder issued by the Plan Administrator, or any
policy it has issued under the Plan:
1) Where
the employer is not eligible for the Plan as provided in Section 5 of this Rule
and Regulation;
2) Where the
employer refuses to implement reasonable health, safety or loss control
recommendations of the servicing carrier or of a duly-authorized government
agency;
3) Where the employer
refuses to allow the servicing- carrier reasonable access to its facilities or
to its files and records for audit or inspection; or
4) Where the employer refuses to disclose to
the servicing carrier the full nature and scope of the servicing carrier's
exposure.
A servicing carrier shall, however, have the right to cancel
prospectively upon ten (10) days' written notice if the cancellation is for
nonpayment of premium when due. A servicing carrier shall have the right to
extend the notice of cancellation if provided reasonable assurance of payment
by the employer, but it may not extend the original
due date by more than a total of thirty (30) days.
The servicing carrier shall proceed according to Arkansas Code
§
11-9-408(b)
in canceling any binder or policy issued under the Plan, including the
requisite notices to the employer and to the Workers. Compensation Commission.
All notices of cancellation shall state the hour and date at which the
cancellation is to be effective. If, however, the employer procures other
insurance or becomes self-insured as provided by law within the notice period,
the cancellation date of the policy being cancelled shall be the effective date
of the replacement coverage.
B. At least forty-five (45) days prior to the
scheduled expiration date of a policy issued under the. Plan, the servicing
carrier shall notify the employer and the producer, in writing, and forwarding
the Plan Administrator a copy, of the impending expiration and instruct the
employer to request the servicing carrier to renew, provided the employer
continues to be eligible for coverage under the Plan. The servicing carrier
must forward the renewal proposal to the employer, with a copy to the producer
and to the Plan Administrator. Within thirty (30) days after receipt of the
estimated annual or minimum deposit premium, the servicing carrier shall issue
a policy, properly stamped "AR CIP," to the employer and furnish a copy of the
renewal Information Page to the Plan Administrator or its designee, to the
producer, and to the Workers Compensation Commission. The renewal policy shall
be effective upon expiration of the current policy, or as provided in Section 7
(B)(1), whichever is later.
C. A
servicing carrier unwilling to renew an employer assigned to it shall notify in
writing the employer, the producer, and the Plan Administrator at least
forty-five (45) days prior to the scheduled expiration date of the policy
giving the reasons therefor.
D. If
any employer to which this Plan applies is dissatisfied with its servicing
carrier, the employer may request reassignment by submitting in writing
reasonably acceptable reasons for the request to the Plan Administrator at
least thirty (30) days prior to the scheduled expiration date of the
policy.
E. The employer may request
cancellation at any time. Once coverage is no longer needed, the servicing
carrier shall cancel the coverage pro rate as of the requested data for certain
reasons. Typical or normal reasons for a request for pro rata cancellation
include:
(i) going out of business;
(ii) no longer any workers'
compensation exposure;
(iii) the
business is sold, or
(iv) the
business is being insured in the voluntary market.
SECTION 7. PARTICIPATION
All insurers licensed to write and actually writing workers
compensation insurance in this State are required to participate in this Plan
and subscribe to the Articles of Agreement for this State. Any assessment that
may be required of such carriers by reason of Ark. Code Ann. §
23-67-204(a)(6)
may be offset to the extent provided under the terms of the "Take Out Credit
Program" Rating Plan of the National Council on Compensation Insurance as
approved by the Commissioner.
Insurers which, prior to -this Regulation, provided coverage on a
direct assignment basis shall continue to be responsible for all obligations
arising from such operations with no reinsurance available through the Articles
of Agreement.
Commencing with the effective date of this Regulation, all direct
assignment carriers shall be required to participate in the Articles of
Agreement. All former direct assignment carriers shall, during policy year
1994, participate in the Pool, with respect to assessments and refunds, on a
prorated basis which recognizes the number of months as a Pool member in
relationship to the twelve month period.
Whenever the Plan Administrator, with the consent of the
Commissioner, determines the capacity of servicing carriers to handle
assignments made pursuant to this Plan and this Rule and Regulation falls below
a level which is adequate to handle all the assignments being made, the
Commissioner may, if an adequate number of servicing carriers have not
voluntarily made themselves available, appoint such number of qualified .
insurers as are reasonably necessary to service the needs of Arkansas employers
under the Plan.
SECTION 8.
PLAN ADMINISTRATOR
A. The Commissioner shall
from time to time designate a Plan Administrator to administer and operate the
Plan.
B. The Plan Administrator (or
any successor Plan Administrator or Administrators) shall open and continually
operate a centrally - located office within the State of Arkansas reasonably
and readily accessible to the offices of the Commissioner and at a location and
with such staffing, equipment and facilities as shall be reasonably acceptable
to the Commissioner as being adequate to provide a high quality level of
service to the people of the State of Arkansas.
C. The Plan Administrator shall file with the
Commissioner for approval operating rules, procedures, and guidelines
consistent with the provisions of this Rule and Regulation for the
administration and operation of the Plan. The Plan Administrator shall publish
and make available to all insurers and producers the operating rules,
procedures, performance standards, and guidelines for the administration and
operation of the Plan. Further, the Plan Administrator shall file for approval
its schedule of fees which it proposes to remit to Producers for policies
written and services provided under the Plan.
D. The Plan Administrator shall have the
following duties and responsibilities in addition to any others set forth in
this Plan, all of which are subject to the ultimate control and oversight of
the Commissioner:
(1) administering,
managing, and enforcing the Plan subject to the provisions contained
herein;
(2) determining the
methodology and formula for making assignments to servicing carriers pursuant
to Section 15 and securing the necessary information in order to make the
assignments;
(3) processing
assigned risk applications pursuant to the requirements of this Plan;
(4) establishing eligibility criteria for
servicing carriers and appointing servicing carriers, each of which shall be
subject to the prior approval of the Commissioner;
(5) establishing written performance
requirements for servicing carriers, including, but not limited to:
- verification of ongoing Plan eligibility of the employer
- timely and accurate issuance of policies and
endorsements
- timely and accurate filings with administrative agencies, as
required
- maintenance of premiums on policies consistent with manual
rules, rates, rating-plans, and classifications
- timely and accurate completion and billing of final
audits
- collection of premium
- claim services, including investigation, disability management,
and medical cost control
- loss control services and safety information to encourage
employers to make safety a part of their business
- Cooperation with the Commissioner and with the Workers
Compensation Commission and Arkansas Department of Labor in carrying out and
effectuating the safety mandates of Act 796 of 1993 and such Rules and
Regulations as may be promulgated thereunder
- payment of producer fees
- issuance of renewal proposals and non-renewal notices
- assurance of insured and insurer compliance with all terms and
conditions of policy contract
- resolution of complaints and response to insured/producer
inquiries
- reporting financial and statistical data to producers and
insureds, as well as to the Commissioner
- requirement to consult with and keep insureds apprised of
developments in incurred claim cases;
(6) keeping servicing carriers apprised of
all required Performance Standards, monitoring servicing carrier performance
and' enforcing performance requirements and incentives;
(7) administering the dispute resolution
mechanism as provided in Section 16;
(8) developing and implementing assigned risk
operating rules and forms to the extent necessary to carry out the purposes of
this Plan;
(9) informing the
Commissioner of any insurer that is improperly not participating in this Plan;
and
(10) monitoring the performance
and operation of the Plan and initiating and requesting approval of amendments
thereto as appropriate.
The Plan Administrator shall also be responsible for determining
the expenses for the operation of the Plan, exclusive of the Plan
Administrator's expenses incurred in connection with responsibilities it has
under the Articles, and shall assess each insurer participating in the Plan for
those expenses on an equitable basis as determined by the Plan Administrator
and approved by the Commissioner.
E. Commencing with the first quarter of 1994
and quarterly thereafter, the Plan Administrator shall file with the
Commissioner a statement of expenses for the operation of the Plan and a report
of the quarterly results of the servicing carriers under the Plan. The report
shall include written and earned premium; paid and incurred losses;
administration and servicing carrier allowances and remuneration; such other
factors or elements as the Commissioner may from time to time determine; and
effective for the first quarter of 1995, it shall include servicing carrier
complaints reported by employers or producers. The statement and report shall
be filed within ninety (90) days of the close of the applicable quarter. In
addition, with regard to insurers previously authorized as direct assignment
carriers, the Plan Administrator shall file annually on or before October 1 of
the following year, a report of the annual results of such direct assignment
carriers similar to that applicable to servicing carriers.
Further, and within ninety (90) days following the end of the
fourth quarter of 1994, and annually thereafter, the Plan Administrator shall
file with the Commissioner a performance review and evaluation of each
servicing carrier in accord with the "Performance Standards and Procedures for
Measuring Servicing Carrier Performance" in Section 12 and the criteria set
forth in paragraph D(5) above.
SECTION 9. SERVICING CARRIERS
With respect to the servicing carriers appointed by the Plan
Administrator and approved by the Commissioner, the following shall
apply:
(1) Eligibility to Act As a
Servicing Carrier. The Plan Administrator shall establish written requirements
that insurers must meet in order to be eligible to act as a servicing carrier.
. Those requirements shall consider, among other things, the insurer's
financial standing, availability of resources, length and quality of experience
in the state writing workers compensation insurance, market share, and
demonstrated compliance with the mandates of Ark. Code Ann. §§
23-67-201 et.
seq. From among those insurers that are eligible and have applied to act as a
servicing carrier, the Plan Administrator shall appoint a sufficient number of
servicing carriers as are needed to handle the assignments made pursuant to
this Plan. The Plan Administrator may terminate the servicing carrier status,
subject to the approval of the Commissioner, of any insurer that fails to meet
the servicing carrier requirements on a continuing basis. During the first year
this Plan is in effect, any insurer that is qualified as a servicing carrier
under any similar Plan which was previously in effect in this State and
continues to be qualified as of the date this Plan takes effect will be deemed
to be a qualified servicing carrier under this Plan.
(2) Quarterly Operations Report. Each
servicing carrier shall provide a quarterly report to the Plan Administrator in
such format and at such time as determined by the Plan Administrator. This
report, among other things, shall provide information on the servicing
carrier's operations related to Plan business in the following areas:
underwriting, auditing, claims, loss control, premium collection, and customer
service.
(3) Standards for
Servicing Carrier Performance, Compensation, and Incentives. The Plan
Administrator shall, with the approval of the Commissioner, establish written
minimum levels of acceptable performance for servicing carriers and shall
establish procedures for measuring servicing carrier performance. Servicing
carriers shall manage losses in compliance with the performance standards
established hereunder. The Plan Administrator shall also establish the
compensation for servicing carriers which shall take into consideration, among
other things, provisions for (a) rewarding servicing carriers for positive
action targeted at reducing losses and costs, and (b) disincentives for
inefficiencies and poor service, and (c) servicing carrier capacity. And, in
accordance with Ark. Code §
23-67-204(k)
the performance plan shall provide that up to Thirty-three percent (33%) of the
servicing carrier's remuneration shall be based upon how well or how poorly it
complies with the standards for servicing carrier performance, including
particularly, but not limited to, a review of collected premium as versus
written premium and by review of loss ratios of its book of business and degree
of improvement therein. Such compensation system shall be made effective with
respect to and shall apply to all servicing carrier contracts effective on or
after September 1, 1993. The Plan Administrator, as approved by the
Commissioner, shall on an equitable and consistent basis provide that those
monies that would otherwise have gone to servicing carriers that did not
perform up to an acceptable standard shall be distributed amongst those
servicing carriers that met or exceeded the performance standards.
(4) Each servicing carrier shall continually
employ such number of qualified administrative personnel and dedicate such
equipment and facilities to the administration of the Arkansas Workers'
Compensation Insurance Plan as the Commissioner, in his reasonable discretion,
deems adequate to service the needs of the Plan; and, further, the standards
for servicing carrier performance shall include a requirement that each of them
shall:
(i) provide a level of service equal to
that provided to employer-insureds in its voluntary workers compensation line
of business and assure same by putting into effect internal administrative
procedures which shall assure that such is the case;
(ii) maintain with the Commissioner a list of
responsible management personnel of the insurer qualified to make '
administrative decisions on the insurer's behalf concerning policies issued
within the Plan;
(iii) keep the
Commissioner continually advised of the address and telephone number of the
insurer's office servicing the Plan on its behalf;
(iv) maintain a toll-free telephone number or
numbers adequate to service the Plan and keep the Commissioner, employers, the
Workers Compensation Commission, and producers continually apprised of
same-;
(v) establish a program and
procedure whereby such carriers shall not make ultimate determination as to
joint settlement of claims without consulting with the employer insured;
nothing herein shall be deemed to alter or abridge the servicing carrier's
ultimate right and authority under the law and contract to handle and determine
the defense of workers' compensation claims;
(vi) maintain its billing and rating
procedure in timely compliance with applicable Orders of the Commissioner
approved rate filings and approved rule and rating plans; and
(vii) such other service or performance
standards including, but not limited to, matters relating to loss experience,
safety and loss control success, profitability, underwriting, billing and
collection of premium, audits, claims, customer service, and such accounting
and statistical results reporting as may be specifically required by the
Commissioner.
The written "Performance Standards and Procedures for Measuring
Servicing Carrier Performance" hereunder are those currently in effect and and
are those established by the Council. All of which said provisions are
expressly incorporated herein and made a part hereof; such Performance
Standards and Procedures for Measuring Servicing Carrier Performance may be
amended and supplemented from time to time with the prior, express written
approval of the Commissioner; provided, however, that no servicing carrier
shall be subjected to the administrative fine or penalty provided for in
subparagraph (7) hereof as to any particular performance standard of which it
has not had at least three (3) month's notice. All servicing carriers shall be
deemed to have Notice upon the Plan Administrator's receipt of approval from
the Commissioner.
(5) Servicing carriers may, within the
reasonable discretion of the Commissioner, join cooperatively with other
licensed casualty insurers or general business corporations for the purpose of
satisfying other duties as servicing carriers, including but not limited to
policy issuance, claim review and payment, accounting and auditing and loss
control and safety functions. Any insurer applying for approval as a servicing
carrier, or any currently approved servicing carrier which has contracted or
agreed to contract with a third party, shall make full disclosure of such party
and provide the Plan Administrator and Commissioner with all such information
regarding same as they may request. All such third party contractual
arrangements . and amendments thereof shall he subject to review, examination
and approval or disapproval of the Commissioner upon request. No such contract
of a servicing carrier with another entity will in any manner lessen the duties
and obligations of the servicing carriers or the standards by which their
performance is to be measured.
(6)
Monitoring and Enforcement. The Plan Administrator, on behalf of the
Commissioner, shall monitor and review servicing carrier performance by (1)
reviewing the quarterly and annual reports; (2) requiring and reviewing
self-audits; (3) conducting on-site audits of all servicing carriers no less
often than once per triennium; however, the Commissioner may at his own
initiative direct the Plan Administrator to conduct an audit of any servicing
carrier whenever circumstances merit such audit; and (4) reviewing any other
information available that relates to the servicing carrier. The Plan
Administrator shall require servicing carriers to maintain desired performance
levels and will take appropriate remedial action where necessary including, but
not limited to the remuneration adjustment program discussed above, and the
establishment and administration of a progressive discipline program which may
lead to terminating an insurer's servicing carrier status. In order to fulfill
its responsibilities under this Plan, the Plan Administrator shall have the
right, itself or through authorized representatives, at all reasonable times
during regular business hours, to audit and inspect the books and records of
any servicing carrier with respect to any policies, claims, or related
documents coming within the purview of this Plan, the Articles, or the
reinsurance mechanism. Each servicing carrier shall, further, have the
responsibility of reimbursing the Commissioner for any reasonable expenses of
travel and lodging, including meals, which he or any of his designees may incur
in carrying out their duty of monitoring and enforcement.
(7) In addition to the adjustments to
remuneration of servicing carriers as discussed above and the progressive
discipline procedure, servicing carriers are subject to the imposition by the
Commissioner, after notice and hearing, of administrative fine or penalty in
the sum of not more than One Thousand Dollars ($1,000.00). for each violation
of standard. Violations of standards of performance shall be reviewed annually
by the Plan Administrator and the Commissioner and determined cumulatively
under each separate performance standard.
SECTION 10. INTERSTATE ASSIGNMENTS
A.
Voluntary
Coverage. Any employer assigned under this Plan and desiring
workers' compensation insurance for operations in states other than Arkansas
may request its servicing carrier to furnish such insurance in such additional
states. Workers' compensation insurance in such additional states may be
written by the servicing carrier on a voluntary basis and in accordance with
the law, rates, rules, classifications, and regulations applicable to the
voluntary workers' compensation market in those states.
B.
Assigned Risk
Coverage.
(1)
"
Similar" Assigned Risk States. If the servicing
carrier does not wish to provide coverage in the additional states on a
voluntary basis, if those states have a Workers Compensation Insurance Plan
that is similar to this Plan and if such other Plan allows employers applying
for coverage thereunder to obtain coverage for their operations in Arkansas,
then the servicing carrier must provide assigned risk coverage in such
additional states as follows:
(1) A servicing
carrier providing such insurance shall collect all premiums due on operations
located in such other states. The effective date of such insurance in such
additional states shall be the day after premium is received; however, in the
event coverage in such additional states is on an "if any" basis, the effective
date of such coverage shall be the day following receipt of an acceptable
request for such insurance by the carrier. A copy of the policy Information
Page and all endorsements, properly stamped "AR. WCIP," shall be submitted to
the appropriate Plan Administrator having jurisdiction in the state where the
coverage is effected.
(2) The
rates, rating plans, classifications, and policy forms used to provide coverage
in such additional states shall be those applicable to residual market risks
that are on file and approved by the regulators in those additional
states.
(3) The servicing carrier
must also be a signatory to an agreement providing reinsurance for residual
market risks similar to the Articles of Agreement in each state where the
coverage will be provided.
A servicing carrier unable to provide insurance for an employer
in additional states in accordance with this Section 13.B. or unwilling to
write voluntary coverage in accordance with Section 13.A., shall refer the
request to the Plan Administrator which shall re-assign the employer to a
servicing carrier or carriers that is/are able to provide coverage in
accordance with this Section 13.A. and Section 13.B..
(2)
All Other
States. If the servicing carrier does not wish to provide coverage
in an additional state on a voluntary basis, and if the state in question does
not have a Workers Compensation Insurance Plan that is similar to this Plan,
then the servicing carrier must provide coverage for operations of an Arkansas
employer in such additional state IF AND ONLY IF:
a. the employer has made application to no
fewer than two (2) voluntary workers compensation insurers authorized to insure
such risks in such state and has been declined, if such state in fact, has a
voluntary workers' compensation insurance market; and
b. the employer has made application to
either an "unsimilar" assigned risk plan, or to either a competitive or
mandatory state workers compensation fund in such state and has been declined
for coverage.
In the event coverage in another state cannot be obtained, in the
fashion as set forth above, then the services as rendered by employees of the
Arkansas employer shall be deemed to be services rendered pursuant to a
contract of "employment in this State" as provided by Ark. Code Ann. §
11-9-102(12)
and as amended by Section 2 of Act 796 of 1993, and' the servicing carrier
shall provide coverage for such operations under this Plan and under the
mandate of Ark. Code Ann. §
11-9-404(a)(1);
PROVIDED, HOWEVER, that in the event any employee of any such employer incurs
an injury or occupational disease compensable under the law of such other
State, elects to recover under such laws and is finally successful in so doing,
the servicing carrier shall be entitled to recoup from such employer the
additional premium, if any, that would have been billed to that employer for
the services of that employee in that other State by:
(i) either the risk plan or competitive or
monopolistic fund operating in such State; or
(ii) a licensed workers compensation insurer
legally providing coverage to an employer in such State pursuant to the laws
thereof. Such carrier recouping premium in this manner shall be entitled to
recoup premium for a period of coverage equal to the period of time the injured
employee performed services in such State (subject to the maximum differential,
if any, between the Arkansas rates and the other State rates for a period of
one policy year) and shall be entitled to bill and collect from the employer
the said premiums as premium due hereunder and subject to the cancellation
procedures set forth in Section 9 hereof.
C.
Foreign
Employers.
(1)
From
Similar Assigned Risk State. Employers who make application for
workers' compensation insurance under another state's Workers' Compensation
Insurance Plan may purchase coverage for operations in Arkansas without meeting
the application requirements of this Plan, provided:
(1) the employer qualifies for such insurance
under the other state's Plan;
(2)
the employer is in good faith entitled to insurance under this Plan;
(3) the other state's Plan is similar to this
Plan;
(4) that Plan also provides
for interstate assignments; and
(5)
the payroll for the employer's operation in this State is not greater than the
payroll in the other state.
The rates, rating plans, classifications, and policy forms used
to provide coverage in Arkansas shall be those that are applicable to residual
market risks in this State and are on file and have been approved by the
Commissioner.
The Administrator of the other Plan is authorized to assign
employers with operations in Arkansas to the other Plan's servicing carriers
subject to the following conditions:
(1) The assigned carrier must be a signatory
to the Articles of Agreement in this State. In addition, if the payroll for the
employer's operation in this State is greater than $250,000, the assigned
carrier must also be a servicing carrier in this State.
(3) The other state's Plan must give the Plan
Administrator in this State similar authority to make interstate
assignments.
(2)
From All Other States. Employers who are either:
(i) insured under an assigned risk plan not
"similar" to that of this State;
(ii) insured voluntarily by a workers
compensation insurer from such other State; or
(iii) insured under or by a competitive or
monopolistic state fund in such other state, shall be eligible for coverage
under this Plan as to its known and anticipated operations in this State if it
is otherwise eligible for coverage under the terms of Section 5
hereof.
D.
Jurisdiction. With regard to interstate assignments
and policies, this Plan shall have jurisdiction over all disputes resulting
from the application of rules, programs, and procedures that are specific to
this State. Disputes regarding application requirements shall be under the
jurisdiction of the state's Plan where the application was
filed.
SECTION 11.
ASSOCIATION OR SPONSORED MULTIPLE COORDINATED POLICIES
Pursuant to the provisions of Ark. Code Ann. §
11-9-408(d)
[as added by §12 of Act 796 of 1993] and Ark. Code Ann. §
23-67-211
[as added by §1 of Act 1269 of 1993] the Plan Administrator shall develop
and administer a plan for the issuance of multiple coordinated policies of
workers' compensation and employers' liability insurance subject to the
approval of the Commissioner. Such multiple coordinated or group policies may
only be issued to cover groups containing no fewer than five (5) separate
employers who shall not be affiliated with one another in terms of ownership,
control, or right to participate in the profits of an affiliated enterprise.
The "sponsor" or administrator of such policies must either be a general
contractor meeting the financial capacity and continuity guidelines as shall be
set forth in the rating plan and approved by the Commissioner or a recognized
industry association which is incorporated or organized as a not-for-profit
corporation or association and which has been in existence for no fewer than
three (3) years prior to application for approval as a "sponsor".
Further,
(i) each employer within the
association or group must be engaged in the same general business activity as
determined by the Plan Administrator and within the principles and guidelines
of the Scopes of Basic Manual Classifications as published from time to time by
the National Council on Compensation Insurance, or some such similar
classification system as may be chosen by the Commissioner, such as the
Standard Industrial Classifications Manual;
(ii) the sponsor assumes joint responsibility
with each of the employers for the payment of all required premium, including
deposit, and agrees in writing to subject itself to audit and review of all of
his records and practices relating to the business to which the association or
multiple coordinated policies shall pertain; and
(iii) the sponsor provides the Plan
Administrator with such additional security in the way of cash deposit, or
marketable securities, or a letter of credit from a National Banking
Association unaffiliated with the sponsor as the Plan Administrator reasonably
deems necessary; the Plan Administrator may adjust the amount of the required
additional deposit from time to time depending upon the claim experience of the
association groups and the audited and collected premium.
Multiple coordinated policies shall be issued in the name of each
employer but delivered to the sponsor, and all premiums shall be calculated
upon the wages paid to or received by the employers in accordance with Plan
Rules. All claims experience shall be identified to each employer and records
maintained relative thereto by the Plan Administrator, including experience
modifiers as appropriate.
SECTION 12. ASSIGNMENT FORMULA
The Plan Administrator shall develop and provide to the
Commissioner detailed procedures for the equitable distribution of employers
under this Plan to servicing carriers. These procedures shall provide for the
random distribution of employers based on the amount of estimated premium in
the Plan, so far as practicable. The procedures shall also define those
circumstances where the Plan Administrator will have the discretion to override
the random selection process and shall account for the variations necessitated
by the "striking procedure" set forth at Section 6 hereinabove.
SECTION 13. DISPUTE RESOLUTION
PROCEDURE
Any person affected by the operation of the Plan including, but
not limited to, participating companies, employers, producers, and servicing
carriers, who may have a dispute with respect to any aspect of the Plan,
including rating and classification, eligibility, and auditing disputes and any
dispute arising under the Articles of Agreement, may seek a review of the
matter by the Plan Administrator by setting forth in writing with particularity
the nature of the dispute, the parties to the dispute, the relief sought and
the basis thereof. The Plan Administrator, as designee of the Commissioner, may
secure such additional information as it deems necessary to make a decision and
shall in the instance of disputes involving, comply with all requirements of
due process and Ark. Code Ann. . § 23-67-119(3) and the Arkansas Appeals
Board Objectives and Rules as approved by the Commissioner.
Appeals from employers and insurers on Plan matters regarding
employer disputes shall be within the jurisdiction of the mechanism established
to handle such appeals under the applicable rating law i.e. Ark. Code §
23-67-119(3). All other disputes shall be handled as follows:
(1) If the dispute relates to the general
operation of the Plan, excluding individual employer disputes as noted above
and those arising under the Articles of Agreement, the Plan Administrator will
review the matter and render a written decision with an explanation of the
reasons for the decision within thirty (30) days after receipt of all the
information necessary to make the decision. Any party affected by a decision
made by the Plan Administrator may seek a review by a committee appointed by
the President of the National Council on Compensation Insurance for such
purpose. Such committee shall consist of three (3) senior officers of the
Council. A request for a review by such committee must be made to the Plan
Administrator in writing within thirty (30) days of the date of the Plan
Administrator's decision. Any party affected by the decision of such committee
may seek a de novo, review by the Commissioner by requesting such review, in
writing, within thirty (30) days after the date of such decision.
In reviewing any such matter not coming with the scope of Ark.
Code Ann. § 23-67-119(3)(B), the Commissioner shall follow those
procedures applicable to administrative hearings in this State. The
Commissioner shall decide the dispute in accordance with the state law,
regulation, and policy and in the interests of the reasonable and proper
administration of this Plan. The Commissioner's decision shall be final,
subject D court review under Ark. Code Ann. §
23-61-307.
(2) Except as provided below, if the dispute
arises under the Articles of Agreement, the Administrator designated under the
Articles of Agreement shall first review the matter and render a written
decision with an explanation of the reasons for the decision within thirty (30)
days after receipt of all the information necessary to make the decision. Any
party affected by the decision may seek a review by the Board of Governors
established under the Articles by requesting such review, in writing, within
thirty (30) days of the date of the decision by the Administrator under the
Articles of Agreement. The Board of Governors must then review the matter and
render its written decision pursuant to the procedures set forth in the
Articles of Agreement. Any party affected by a decision of the Board of
Governors may seek a de novo review by the Commissioner by requesting such a
review in writing within thirty (30) days of the date of the Board of
Governors' decision.
If the dispute relates to the expulsion of a participating
company, under the Articles of Agreement by the Board of Governors, any appeal
may be taken directly to the Commissioner without first complying with the
procedures contained herein.
SECTION 14. SELF-FUNDED PLAN
It is ultimately essential for maintaining the viability of the
Plan to establish and maintain rates at a level that will permit the Plan to
operate as a self-funded mechanism. The Plan Administrator shall maintain
necessary ratemaking data in order to permit the actuarial determination of
rates and rating plans appropriate for the business insured through the Plan.
All assigned carriers are required to report their experience on business
written under the Plan to the Administrator in a format prescribed by the
Council. It is the responsibility of the Plan. Administrator to monitor both
rate adequacy and Plan results. The Plan . Administrator shall notify the
Commissioner if excessive losses are indicated to enable the Commissioner to
take corrective action.
SECTION
15. SMALL DEDUCTIBLE POLICY OPTION
The Commissioner deems a small deductible policy option to be
"feasible" within the meaning of Ark. Code Ann. §
11-9-813(d),
and, accordingly, a Small Deductible Policy Rating Plan which shall be
applicable to both the voluntary market and to the WCIP shall be made
effective, under which each employer shall have the option, in accordance with
the dictates of Ark. Code Ann. §
11-9-813,
of applying for coverages which incorporate deductible amounts of no less than
$1,000 per incident and further deductibles in further increments of $500 each
up to a maximum of $5,000 per incident. The Plan Administrator shall develop an
appropriate application incorporating the deductible option and policy form,
along with an actuarially sound premium adjustments for submission to and
approval by the Commissioner. The Commissioner hereby determines under the
dictates of Ark. Code Ann. §
11-9-813(d),
however, that it is not "feasible" to require insurers or the Plan
Administrator and servicing carriers to ignore claim frequency and/or severity
if losses happen to be within the deductible limit chosen by an employer, and,
accordingly, there shall be no prohibition against insurers, the Plan
Administrator, or servicing carriers using true loss data, including frequency
and severity of losses even within deductibles, far purposes of experience
rating.
SECTION 16. OTHER
STANDARDS AND PENALTIES
A. Any insurer,
servicing carrier, or producer who refuses or neglects to comply with the
provisions of this Rule and Regulation shall be subject to administrative
action provided for in the Arkansas Insurance Code, Arkansas Code Annotated
§§
23-60-101, et
seq.
B. Any servicing carrier who
fails to comply with the requirements of Section 12 of this Rule and
Regulation, as reported to the Commissioner by the Plan Administrator, may have
their designations to act in such capacity hereunder suspended or revoked upon
notice and hearing pursuant to Arkansas Code Annotated §§
23-61-301,
et seq.
C. No servicing carrier
insuring an employer through the Plan may utilize any information gained
through its administrative services for the purpose of securing other insurance
business from such employer. No such carrier shall share or reveal any such
proprietary information with or to any of its agents or brokers, with or to any
other carrier, or, if it is' a direct writer, with or to any of its in-house
marketing personnel. Violation of this prohibition shall be considered an
Unfair Method of Competition in violation of the Trade Practices Act.
D. No licensed agent, broker or solicitor or
any insurer (whether or not a servicing carrier) may knowingly submit an offer
of workers' compensation insurance coverage to an employer on a monoline basis
on a rating plan that has not been previously approved by the Commissioner, nor
shall any such person or entity make any offer of workers' compensation
insurance in combination or coordination with other property and/or casualty
coverages or limits which are not desired by the employer, nor shall such
person or entity apply its filed and approved rates or rating plans (including
all applicable discounts or credits) to such employer in an unfairly
discriminatory manner. Any person or entity determined to have knowingly
violated this prohibition shall be deemed guilty of an unfair or deceptive act
or practice in the business of insurance as provided at Ark. Code Ann.
§§
23-66-205
et. seq.
SECTION 17.
SEVERABILITY
If any provision of this Rule and Regulation, or the application
thereof to any person or circumstance, is held invalid, such invalidity shall
not affect other provisions or applications of this Rule and Regulation which
can be given effect without the invalid provision or application, and to that
end the provisions of this Rule and Regulation are severable.
