Current through 2024-38, September 18, 2024
A. Performance
standard. In order to ensure that residual market policies are serviced in a
quality manner and that adequate resources are available to provide the
necessary services to insured employers, the servicing performance standards
contained in this chapter shall apply regardless of whether servicing is
provided by insurers, their affiliate service corporations or independent
servicing contractors. For purposes of this chapter, the term "servicing
carrier'' shall include any insurer, insurer-affiliate service corporation or
independent servicing contractor which is providing service for assigned risk
policies.
B. Selection of service
carriers. Servicing of residual market policies shall be provided through one
of the following methods, which are described in order of priority. Any
contractual arrangement entered into by the manager or insurers for the
provision of service functions shall require the servicing carrier to provide
the same quality of service as is provided to insured employers in the
voluntary market and to comply with the minimum performance standards of
subchapter IV of this chapter. The Board shall have responsibility and
authority for enforcement of these standards.
(1) The Plan manager may contract with a
number of insurers to serve voluntarily as Maine servicing carriers.
(2) If adequate servicing cannot be provided
under paragraph (1), the Plan manager may contract with service companies which
are affiliates of insurers, or with a combination of such service companies and
licensed insurers. For purposes of this provision, "affiliate" means a
corporation which is under common ownership, management or control with an
insurer licensed to write workers' compensation insurance in Maine.
Alternatively, a licensed insurer may elect to contract with a servicing
contractor which is not an affiliate, subject to the same servicing fee it
would be paid if utilizing au affiliate for this purpose, provided the insurer
remains responsible for the servicing. In order to be eligible to enter into
servicing contracts under this paragraph, any non-insurer service company must
have a written agreement with a licensed insurer for issuance of policies which
has been approved by both the Plan manager and the Superintendent.
(3) If adequate servicing cannot be procured
through the methods described in paragraphs (1) and (2), the Plan manager may,
with the advice of the Board. award service contracts on the basis of
acceptable price and performance standards. Bid specifications shall be
established by the Board, but shall be no less stringent than servicing
standards applicable in this chapter. Under this method, policies shall be
issued by one or more licensed insurers procured on a voluntary basis by the
Plan manager for this purpose.
(4)
If adequate servicing cannot be procured through the methods prescribed in
paragraphs (1) through (3), the Superintendent may either
(a) award service contracts through a bidding
process or
(b) order the Plan
manager to make servicing assignments to all insurers licensed to write
workers' compensation and employer's liability insurance in this State. In
ordering the Plan manager to make servicing assignments, the Superintendent
shall specify an equitable basis for assignments, taking into consideration
each carrier's present residual and voluntary writings.
(5) If the Superintendent notifies the Plan
manager that efforts to award service contracts through a bidding process under
paragraph 4 have been unsuccessful, the Board may approve servicing contracts
with insurers, service companies which are affiliates of insurers, independent
service companies not affiliated with insurers, or a combination or such
service companies and insurers under terms which exclude any servicing premium
written under these contracts from the premium base of the servicing insurer or
the insurer affiliate of a service company for purposes of ally residual market
deficit assessment for that policy year if the Board fields that entering into
servicing contracts on these terms is in the best interests of the residual
market pool. If the Board declines to approve servicing contracts on a basis
which excludes the servicing premium from the assessment base and adequate
servicing cannot be procured, in whole or in part, through ally method other
than involuntary assignments under paragraph 4, the Superintendent may award
service contracts through a bidding process under terms which exclude the
servicing premium from the assessment base of the servicing insurer or insurer
affiliate of a service company.
C. Service allowance. Service carriers shall
receive a servicing allowance or fee as compensation for all expenses of
servicing.
(1) Except as provided in
paragraph (2), a servicing carrier shall receive as its fee an amount equal to
30% of the total written premium plus producer fees paid on policies serviced.
The amount of the servicing fee shall be subject to annual review by the
Superintendent and modified as appropriate. The review shall consider the
actual expenses of servicing carriers including, but not limited to, state
premium tax, general and other state expenses, unallocated loss adjustment
expenses, allocated loss adjustment expenses for workers' compensation claims,
and state assessments (e.g. second injury fund). Expenses for commissions shall
be separately reimbursed. Allocated loss adjustment expenses for employer
liability claims are reportable as losses and are not included within the
servicing fee. Any guarantee fund assessments shall be an expense of the Plan
and reimbursable to the servicing carriers. For purposes of determining whether
a surcharge shall be imposed, the Superintendent shall make findings on an
aggregate basis as to the amount of the actual expenses covered by the
servicing fee and the portion of the servicing fee which is profit, and shall
take any profit into account in determining the return on residual market
policies.
(2) Where servicing is
provided by servicing contractors which are not insurers or insurer-affiliates
and which are selected in a bidding procedure under subsections B( 3) or (4) ,
the servicing fee shall be determined in the bidding process. Neither that
portion of premium corresponding to servicing contractor fees nor the actual
fees charged by any servicing contractor to administer responsibilities in the
residual market shall be considered in any calculation to determine the amount
of any surcharge or any determination of profit of members of the Pool or the
imposition, if applicable, of any surcharge.
D. Servicing carrier duties. The servicing
carrier shall process, adjust, settle, compromise, defend, litigate and pay
covered compensable loss claims arising out of or in connection with all claims
reinsured by the Pool. The servicing carrier may hire and discharge attorneys
and independent adjusters. The servicing carrier shall establish and maintain
such reported claim reserves as are reasonable and proper. It shall also
maintain complete, orderly, and accurate claim files, records and accounts in
accordance with generally accepted insurance principles and as directed by the
Board. Servicing carrier actions shall at a minimum be in accordance with the
performance standards established by this Rule. Any loss adjustment expense
shall be paid from the servicing carrier allowance unless authorization to
incur such expense and to receive reimbursement for such expense is received
from the Board.
E. Term of
assignment . Each servicing carrier to which a risk has been assigned shall
continue as the servicing carrier until the policy covering such risk
terminates, whether by cancellation or nonrenewal, and thereafter until all
policy obligations are satisfied.
F. Incidental exposure; other states. The
servicing carrier shall, to the extent of its license authority, provide
incidental coverage, as described in Part Three of the Workers' Compensation
and Employers' Liability Insurance Policy. Premiums and losses that develop for
such coverage shall be reported to the Maine Pool.
G. Other states coverage. Any insured or
applicant desiring insurance for known exposures not covered in Maine may
request that the servicing carrier furnish insurance for that exposure. The
servicing carrier may provide coverage in any state where coverage is
reinsurable in any Pool administered or managed by the Plan manager.
The premiums, losses, allowances and producer fees shall be
those applicable in such states and all transactions shall be reported to the
applicable Pool in accordance with the applicable Pool rules.
H. Nonpayment of surcharge. The failure of
any employer to pay a premium surcharge determined to be required pursuant to
24-A M.R.S.A.
§2392(2) or former
24-A
M.R.S.A. §§2367 or
2386-A
shall be considered a nonpayment of premium for purposes of determining the
right of a workers' compensation insurer to cancel a policy.
