California Code of Regulations
Title 8 - Industrial Relations
Division 1 - Department of Industrial Relations
Chapter 8 - Office of the Director
Subchapter 2 - Administration of Self-Insurance Plans
Article 13 - Group Self-Insurance
Section 15471 - Initial Feasibility Study

(a) An analysis of the advantages and disadvantages of group self-insurance for the proposed group members as compared to the options of individual self-insurance or coverage under a policy issued by a carrier(s);

(b) Identification of all of the initial proposed group members and the combined total payroll for the proposed group self-insurer;

(c) A consolidated summary of the historical workers' compensation claims loss experience and the allocated loss expenses of the proposed group members for a minimum of the three most recent, full policy years, as well as the current policy year through the last completed quarter under the current policy at the time the application is submitted;

(d) A five (5) year pro forma financial statement including, but not limited to, an income statement, balance sheet, projected cash flows, and claims payout projections. The pro forma financial statement must include a detailed separation of assets, liabilities, retained earnings, taxes, and accrual and distribution of excess contributions. If any claims costs are discounted, the interest rate assumptions and payout patterns must be described and must be based on reasonable assumptions.

(e) A summary of the specific details of the group self-insurer's operating plan or the plan itself, including, but not limited to, descriptions of:

(f) The first 12 month budget of the group self-insurer;

(g) The names and credit ratings of any anticipated excess insurance coverage carriers, including estimated cost, levels of retention for specific excess insurance, aggregate excess insurance if obtained, and maximum liability levels of each excess policy;

(h) The company name and name of the person designated as the independent Group Administrator and the company name of the independent third party claims administrator chosen by the Board of Trustees;

(i) A description of safety and loss control services available from the group self-insurer to group members;

(j) A description of the underwriting requirements for member selection for the group self-insurer, including a description of any underwriting requirements or restrictions imposed by the specific excess insurance carrier;

(k) The name of the certified public accountant that will prepare annual financial reports for the group self-insurer;

(l) The name and professional actuarial designation of the actuary who will prepare actuarial reports for the group self-insurer, as well as an indication of how frequently actuarial reports will be completed;

(m) A statement indicating the means by which the group self-insurer will post the required security deposit; and

(n) A statement describing any fidelity insurance coverage and errors and omissions insurance coverage to be maintained by the group self-insurer, and/or by vendors with the group self-insurer named as beneficiary.