Code of Massachusetts Regulations
452 CMR - DEPARTMENT OF INDUSTRIAL ACCIDENTS
Title 452 CMR 5.00 - Self Insurers
Section 5.04 - Criteria for Self Insurance
Universal Citation: 452 MA Code of Regs 452.5
Current through Register 1531, September 27, 2024
(1) The Department may decline to approve an application for self insurance if the applicant is unable to demonstrate that it will be able to meet all obligations and requirements of M.G.L. c. 152 and 452 CMR 5.00. The following factors shall be used in determining if the applicant can meet these obligations:
(a) Ratio of tangible net worth to annual
self insurance retention;
(b) Ratio
of current assets to current liabilities;
(c) Ratio of debt to tangible net
worth;
(d) Profit and loss
history;
(e) Organizational
structure and management background;
(f) Compensation loss history and proposed
excess insurance coverage;
(g)
Source and reliability of financial information;
(h) Ratio of net worth to annual compensation
premium;
(i) Number of
employees;
(j) Excess
reinsurance;
(k) Guarantee by
parent company;
(l) Surety bond or
other security;
(m) Claims
administration arrangements; and
(n) SEC Form 10K or 10Q, where
applicable.
(2) In addition to the requirements of 452 CMR 5.04(1), every new applicant for the privilege of self insurance in Massachusetts must:
(a) have been in business for at least five
years (where a company formed through merger, acquisition or reorganization has
been in business for less than five years, the period of time the former
corporate entities have been in business may be taken into account);
(b) have 300 or more employees; however, the
Director may waive this requirement for good cause;
(c) have an unmodified manual premium of
$750,000.00 or more; however the Director may waive this requirement for good
cause.
(d) provide to the
Department a financial study and cash flow analysis(at applicant's expense) if
an available Standard & Poor's or Moody's rating is below AA,A1 or Aa,aa
respectively, or if the Dun & Bradstreet rating is below 5A1;
(e) provide to the Department an actuarial
study and risk management study (at applicant's expense) showing trending and a
plan for corrective action if the inter or intra state experience modification
factor is 1.25 or higher as determined by a duly authorized rating
bureau;
(f) demonstrate
profitability in each of three most recent years, (or, if a non profit
institution, an excess of revenues over operating expenses in each of the three
most recent years), provided that where a company or institution formed through
merger, acquisition or reorganization has been in business for less than five
years, the past history of profitability of the former entities may be taken
into account, and provided further that the Director may waive this
requirement, in whole or in part, for good cause;
(g) have not been declared insolvent or
discharged from federal bankruptcy proceedings in the past five
years.
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