Code of Maine Rules
02 - DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION
031 - BUREAU OF INSURANCE
Chapter 250 - REQUIREMENTS OF ELIGIBILITY TO SELF-INSURE WORKERS' COMPENSATION BENEFITS
Section 031-250-I - General Provisions

1. Act. The Workers' Compensation Act, Titles 39 and 39-A M.R.S.A. as amended.

2. Actuarial Certification. A statement signed by a qualified actuary and based on an actuarial review as of the valuation date in which the actuary expresses an opinion that: reserves are calculated in accordance with generally accepted loss reserving standards; that reserves are stated fairly and in conformity with sound actuarial principles; that recorded reserves make reasonable provision for obligations of the self-insurer; that reasonable provision has been made by taking any required safety margins into account, net of reinsurance credits; and that the funding schedule or rating plan of the group is sufficient to meet the obligations incurred by the self-insurer pursuant to the Act as they become due and payable from time to time.

3. Actuarially determined fully funded trust. A trust which meets all of the following conditions:

4. Actuarial Review. An actuarial evaluation conducted by a Qualified Actuary which includes the following:

5. Audited Financial Statements. Financial statements which have been examined by an independent Certified Public Accountant, according to generally accepted auditing standards (GAAS) as prescribed by the American Institute of Certified Public Accountants. The statements presented must include a Statement of Financial Position, a Statement of Operations and a Statement of Cash Flows, including all footnotes and disclosures which are an integral part of the financial statements. The financial statements must be prepared according to generally accepted accounting principles (GAAP) unless another basis has been approved in advance by the Superintendent.

6. Board. The Workers' Compensation Board as created by section 151 of the Act including a designee of the Board.

7. Confidence Level. As applied to a reserve, a fund, or a prospective funding level, a confidence level means the probability that the actual level of loss and loss adjustment expense costs will be less than or equal to the reserve, fund, or prospective funding level. The required loss and loss adjustment expense values corresponding to a confidence level must be determined by a Qualified Actuary.

8. Consolidating Schedule. A schedule that supplies the underlying detail to support a consolidated financial statement. Such schedule shall separately show each entity included in the consolidated financial statements, including the parent on an unconsolidated basis, and shall reconcile to the consolidated audited financial statements. Entities other than U.S. or Canadian corporations may be aggregated for presentation purposes. The schedule should clearly show the self-insured companies, their relationship to the overall corporate structure, and corresponding detail through each parental level to the ultimate consolidating level.

9. Deposit Value. The market value, at the time of initial deposit and at any subsequent valuation date, of acceptable securities which are deposited with the Treasurer of Maine in support of a self-insurance program.

10. Foreign Parent. A corporation formed under the laws of any country other than the United States.

11. Fund. Those monies maintained in an actuarially determined fully funded trust or a deposit held by the Treasurer of State.

12. Funding Schedule. The schedule of required deposits to meet the funding requirements of an actuarially determined fully funded trust.

13. Governing Body. A group of directors, officers, or trustees that direct the administration of a group self-insurance program.

14. Indemnity Agreement. A written agreement in a form prescribed by the Superintendent between the group self-insurer's governing body and each member of the group self-insurer which: specifies that the group is established for the purpose of securing payment of workers' compensation benefits to employees of the group members; binds the parties to the terms and requirements of the bylaws of the group; and jointly and severally binds the group and each member to comply with the provisions of the Act.

15. Intrastate Experience Modification Rating . The adjustment to manual premium as determined in accordance with the experience rating plan approved for the designated workers' compensation advisory organization using only the exposure and losses only from the State of Maine.

16. Industry. A subset of economic entities with common or related business purposes, usually determined by Standard Industrial Classification (SIC) codes.

17. Loss Development. The change in the value of loss data relating to a given coverage period from one valuation date to another.

18. Manual Premium. Premium determined by multiplying annualized payroll segregated into the proper workers' compensation job classifications by the rates approved by the Superintendent. For a self-insurer for which a rate has not been approved, manual premium is the advisory loss cost rate filed by the principal workers' compensation advisory organization multiplied by 1.20.

19. Net Earnings. Net income (loss) after all operating and nonoperating items, including income taxes and preferred dividends, as presented in the audited financial statements for the respective years.

20. Normal Premium. Standard premium less any applicable premium discount determined in accordance with this rule.

21. Parent Corporation. A corporation that has direct ownership of a majority voting interest of the subsidiary employer.

22. Plan Year. A period of coverage no more than twelve (12) months in duration.

23. Plan Year Surplus or Deficit. The difference between the trust fund balance and the funding level required by statute or this Rule.

24. Public Employer. The State, the University of Maine System, counties, cities and towns.

25. Qualified Actuary. A member of the American Academy of Actuaries who is either a Fellow of the Casualty Actuarial Society or an Associate of the Casualty Actuarial Society with five (5) or more years of experience, and who has no other business relationship with the client which would cause a potential or actual conflict of interest.

26. Rating Plan. The rates by payroll classification and rating adjustments used to fund the trust maintained by a group to secure its obligations under the Act.

27. Reinsurance. An insurance contract covering workers' compensation exposures in excess of risk retained by a self-insurer.

28. Reviewed Financial Statement. Financial statements which have been examined by an independent Certified Public Accountant in accordance with statements on standards for accounting and review services issued by the American Institute of Certified Public Accountants. Statements presented must include a Statement of Financial Position, a Statement of Operations, and a Statement of Cash Flows including footnotes and disclosures which are an integral part of the financial Statements.

29. Safety Margin. The difference between the loss and loss expenses at the required confidence level and the expected loss and loss expense level.

30. Self-Insurer. An employer or a group of employers which operate an ongoing self-insurance program as well as a former self-insurer that still has undischarged liabilities. A group self-insurer is a group of employers approved to operate a plan of self-insurance pursuant to the terms of joint and several liability evidenced by an indemnity agreement executed by the parties. In the case of a group, the term "self-insurer" can indicate the entire group, as well as the individual members.

31. Service Company. A business which has contracted with a self-insurer for the purpose of providing any underwriting, claims adjusting, loss control, safety engineering, administrative services, or payroll auditing services to an approved self-insurance program. The term "Service Agent" is synonymous with the term "Service Company" as used in this rule.

32. Standard Premium. Manual premium modified by the intrastate experience modification rating factor determined in accordance with the experience rating plan filed by the designated workers' compensation advisory organization.

33. Successor Employer. An employer that succeeds a self-insured employer, that assumes 100% of the self-insured workers' compensation liabilities of the self-insured employer, and which maintains substantially the same business operations of the self-insured employer.

34. Superintendent. The State of Maine Superintendent of Insurance.

35. Tangible Net Worth. Equity less assets that have no physical existence and depend on expected future benefits for their ascribed value.

36. Trust Document. A written agreement between a group self-insurer's duly authorized governing body or an individual self-insurer and a trustee bank in a form prescribed by the Superintendent which specifies the respective rights and duties of the parties to the contract.

37. Trustee Bank. A state or national bank located in Maine and subject to regulation by the Federal Deposit Insurance Corporation (FDIC) or the Maine Superintendent of Banking, or other trust company meeting applicable State or Federal qualifications and approved in advance by the Superintendent, that serves in a fiduciary capacity pursuant to a trust document prescribed by the Superintendent to oversee funds placed in trust for the benefit of claimants under the Act.

38. Working Capital. The excess of current assets over current liabilities in accordance with generally accepted accounting principles.