Code of Massachusetts Regulations
211 CMR - DIVISION OF INSURANCE
Title 211 CMR 67.00 - Workers' Compensation Self-insurance Groups
Section 67.21 - Reinsurance and Excess Insurance Contract Provisions
Current through Register 1531, September 27, 2024
(1) Specific excess coverage limit for each group shall be at least $5,000,000 per occurrence (per claim for disease). Groups composed of businesses with a high risk of multiple injury from a single occurrence may be required to maintain higher limits.
(2) Retention. The retention allowed for a group's specific excess policy shall be actuarially sound and shall be not more than 30% of the net premium of the group up to a maximum of $500,000. The maximum retention may be revisited after groups have been in operation for three years.
(3) Aggregate excess insurance shall attach at 105% of standard premium, and groups may choose their aggregate limit from the following two options:
Option A: An amount not less than 50% of the group's in-force premium of which the first $1,000,000 of this aggregate reinsurance coverage must be total reimbursement reinsurance and the remainder may be total reimbursement reinsurance or financial reinsurance.
Option B: An amount of not less than ten times the specific retention, all of which shall be total reimbursement insurance. Groups with in-force premium in excess of $15,000,000, shall obtain additional reinsurance, which may be financial reinsurance, in the amount of 50% of the in-force premium in excess of $15,000,000.
The aggregate excess insurance or reinsurance requirements may be revisited after groups have been in operation for three years.
(4) No more than one group shall be covered by any contract or policy of excess insurance or reinsurance and the named insured shall be the group or its statutory successor in interest.
(5) Except as otherwise provided in 211 CMR 67.21, reinsurers and excess insurers shall be subject to the Commissioner's approval, and shall meet all of the following criteria:
Top Two Categories |
Minimum Acceptable Rating |
||
A. M. Best & Company |
A++, |
A+ |
A- |
Duff & Phelps |
AAA, |
AA+ |
AA |
Moody's Investors Services |
AAA, |
AA1 |
AA2 |
Standard & Poor Corporation |
AAA, |
AA |
A |
The requirements of 211 CMR 67.21(5)(b) may be waived annually, in whole or in part, by the Commissioner as applicable to a group with a minimum rating of "A" from any rating agency named in 211 CMR 67.21(5)(b) upon a determination by the Division that the reinsurer or excess insurer is financially strong and that the condition of the reinsurance/excess insurance market is such that compliance would place undue financial hardship on a particular group.
(6) No contract or policy of specific or aggregate excess insurance or reinsurance shall be recognized by the Commissioner in considering the ability of the group to fulfill its financial obligations unless such contract or policy shall contain the following statement:
"This policy is in compliance with all the provisions of 211 CMR 67.21(7). Provisions at variance with 211 CMR 67.21(7) will be automatically amended to comply with that regulation."
(7) The policy or contract shall be subject to the following provisions, whether included or not:
(8) Finite risk or financial reinsurance is permitted only for that portion of the aggregate excess coverage specified in 211 CMR 67.21(3). Loss portfolio transfers, time and distance contracts, and all other methods of transferring investment or timing risk alone are excluded.