Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
304.50-120,
342.906
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
304.50-010(2), requires the
commissioner to promulgate administrative regulations as necessary to govern
admission, certification and regulation of workers' compensation self-insured
groups.
KRS
304.50-120(1), requires the
commissioner to promulgate administrative regulations setting forth the
requirements for aggregate excess insurance and the standards for granting a
waiver. This administrative regulation establishes requirements for aggregate
excess insurance and for requesting a waiver from the requirement to obtain
aggregate excess insurance.
Section 1.
Definitions.
(1) "Commissioner" means the
Commissioner of the Department of Insurance.
(2) "Department" means the Department of
Insurance.
(3) "Group" means a
Self-insured group.
(4)
"Self-insured group" is defined in
KRS
304.50-015(29).
Section 2. Waiver of Requirement
to Obtain Aggregate Excess Insurance.
(1) A
self-insured group may request an annual written waiver from the commissioner,
which shall not unreasonably be withheld, of the requirement to purchase
aggregate excess insurance by submitting the following:
(a) A statement verifying that the group has
been in continuous operation for at least five (5) years;
(b) Documentation from a qualified actuary
indicating that the fund is adequately reserved to meet all predictable losses;
and
(c) An explanatory narrative
from the group's management describing the variables and factors considered in
the determination to forego aggregate coverage.
(2) A waiver shall be granted or denied in
writing within thirty (30) days of application. The term of a waiver shall be
limited to the upcoming fund year, whether calendar or fiscal.
(3) In determining whether to grant a waiver,
the commissioner director shall consider the following factors:
(a) The self-insured group's operating
history;
(b) Whether the
self-insured group is adequately reserved to meet all predictable losses;
and
(c) Whether the fund has
exercised reasonable care and diligence in evaluating the decision to operate
the fund without aggregate coverage.
Section 3. Terms and Conditions for Aggregate
Excess Insurance.
(1) The minimum limit of
liability of the aggregate excess insurance shall be fifteen (15) percent of
the earned premium but shall not be less than $2,000,000 or more than
$5,000,000.
(2) A contract or
policy of aggregate excess insurance shall comply with the following:
(a) The policy shall state that it is not
cancelable or nonrenewable unless written notice by registered or certified
mail is given to the other party to the policy and to the department at least
forty-five (45) days before termination by the party desiring to cancel or not
renew the policy;
(b) The policy
shall state that the following apply toward reaching the retention amount in
the excess contract:
1. Payments made by the
fund;
2. Payments made on behalf of
the fund from deposits or other forms of security; and
3. Payments made by the Kentucky Group
Self-Insurance Fund, as established in
KRS
342.906; and
(c) The policy shall state that if the fund
is unable to make benefit payments due to insolvency or bankruptcy, the excess
carrier shall make the payments to other parties involved in the paying of the
fund's obligations, as directed by the department, subject to the policy's
retentions and limits.
STATUTORY AUTHORITY:
KRS
304.50-010(2),
304.50-120(1)
