Current through Register Vol. 49, No. 6, March 15, 2024
PURPOSE: The purpose of this proposed rule is to
modify Missouri's Alternative Residual Market (ARM) Plan to allow the Director
of Insurance greater flexibility in selecting an entity to administer the
state's residual market for worker's compensation insurance. In addition to the
current arrangement, which requires the selection of a "contract carrier" to be
on the risk for a loss ratio of one hundred fifteen percent ( 115%) of
collected premium, the proposal allows for loss ratios down to one hundred
percent (100%), it allows for "plan administrators" who would not be on the
risk, and it allows for an appointment process if a bid process is not
feasible. The current rule is extensively reorganized to accommodate these
additional options.
PUBLISHER'S NOTE: The secretary of state has
determined that the publication of the entire text of the material which is
incorporated by reference as a portion of this rule would be unduly cumbersome
or expensive. Therefore, the material which is so incorporated is on file with
the agency who filed this rule, and with the Office of the Secretary of State.
Any interested person may view this material at either agency's headquarters or
the same will be made available at the Office of the Secretary of State at a
cost not to exceed actual cost of copy reproduction. The entire text of the
rule is printed here. This note refers only to the incorporated by reference
material.
(1) Definitions.
For purposes of this rule, unless the context clearly requires otherwise, the
terms below are defined as follows:
(A)
Allocated Loss Adjustment Expense (ALAE) shall mean ALAE as that term is
defined in the National Council on Compensation Insurance, Inc. (NCCI)'s
URE Workers Compensation Statistical Plan, as approved by the
department for use in Missouri, in effect on January 1, 2002, and any
subsequently approved amendments thereto;
(B) Alternative Residual Market Plan (ARM
Plan) means the Missouri workers' compensation residual market plan set forth
in this rule, and its predecessor rule, established under section
287.896,
RSMo and in effect since July 1, 1995;
(C) Assessment means the amount owed by and
assessed against reinsurers under the ARM Plan because the amount of losses and
allocated loss adjustment expense paid by the plan administrator and any
servicing carriers, plus the plan administrator's percentage of the premium,
exceed the amount of premium collected by the plan administrator and any
servicing carriers, for the period in question;
(D) Collected premium or premium collected
means premiums for workers' compensation insurance actually received by a
contract carrier, plan administrator or servicing carrier for policies issued
during the period of the contract under the request for proposal (RFP) for the
ARM Plan;
(E) Contract carrier
means an insurer selected by the department to administer the ARM Plan under
the "contract carrier option" or "emergency option" of the ARM Plan, and to
thereby be at risk for the losses of the plan up to the retention level set by
the director, for the term of the contract carrier agreement and any extensions
thereof;
(F) Contract carrier
agreement means the terms of the RFP issued by the department, the proposed
response to that RFP submitted by the insurer ultimately selected to be the
contract carrier by the department, and the performance standards and any
modifications thereto agreed to by the contract carrier and the department to
implement the RFP under the ARM Plan;
(G) Contract carrier option means that
alternative under the ARM Plan whereby the director selects a contract carrier
to administer the Missouri residual market for workers' compensation insurance,
after a formal public bidding process, under which always the contract carrier
will be at risk for the losses of the Missouri residual market up to the
retention level set by the director. Losses in excess of that retention level
shall be reimbursed to the contract carrier by Missouri's voluntary workers'
compensation market insurance companies, which are participating as reinsurers
under this rule;
(H) Day means
calendar day as opposed to business day;
(I) Deficit means the determination made
under the ARM Plan that the amount of losses and allocated loss adjustment
expense paid by the contract carrier which, when divided by the amount of
premium collected by the contract carrier, is greater than or equal to the
retention level selected for the contract carrier for the policies issued
during the one (1)-year period of the contract carrier agreement and any
extensions thereof;
(J) Department
(or regulator) means the Missouri Department of Insurance;
(K) Direct assignment carrier means an
insurer, other than a servicing carrier, that has elected and been authorized
by the department to receive direct assignments pursuant to the servicing
carrier option under the ARM Plan. Whether or not to allow insurers the option
of functioning as a direct assignment carrier as opposed to functioning as a
servicing carrier is up to the director;
(L) Direct assignment means the act of a plan
administrator of assigning a particular employer seeking coverage under the ARM
Plan to an insurer authorized by the director to function as a direct
assignment carrier. The direct assignment carrier will be at risk for all of
the insured losses of an employer so assigned, for period of the policy. The
direct assignment carrier shall be entitled to all of the premium generated by
an employer so assigned, but in return it shall forego the benefit of the
reinsurance normally afforded servicing carriers for losses under the servicing
carrier option of the ARM Plan;
(M)
Director means the director of the Missouri Department of Insurance;
(N) Emergency option means that alternative
under the ARM Plan whereby the director selects either a contract carrier or a
plan administrator to administer the Missouri residual market for workers'
compensation insurance without using a formal public bidding process;
(O) Employer means any business organization
or enterprise that is required under Chapter 287 of the Revised
Statutes of Missouri to maintain workers' compensation insurance in
Missouri, or which has voluntarily decided to elect to be covered by such laws.
The term shall include any business organizations or enterprises that are
affiliated as a result of common management or common ownership;
(P) Losses means losses and allocated loss
adjustment expenses as those terms are defined in the URE Workers
Compensation Statistical Plan of the NCCI, and any other losses in
excess of policy limits or extra-contractual obligations authorized under this
rule;
(Q) National Council on
Compensation Insurance, Inc., (NCCI) means a particular advisory organization
licensed in this state to make and file classifications, loss costs and rating
plans for workers' compensation insurance. The NCCI functions as the
administrator of the Workers' Compensation Insurance Plan (WCIP) plan residual
market mechanism. The NCCI is also the organization named in the Missouri
Aggregate Excess of Loss Reinsurance Mechanism to administer insurance carrier
participation, deficit assessments and other components of that mechanism under
the ARM Plan from July 1, 1995 until the effective date of this rule, and to
function as a reinsurance administrator as defined under this rule;
(R) Performance standards are the standards
to be met by a contract carrier or plan administrator in administering the ARM
Plan;
(S) Plan administrator means
an entity selected by the department to administer the ARM Plan under the
"servicing carrier option" or "emergency option" of the ARM Plan, for the term
of the plan administrator agreement and any extensions thereof;
(T) Plan administrator agreement means the
terms of the RFP issued by the department, the proposed response to that RFP
submitted by the entity ultimately selected to be the plan administrator by the
department, and the performance standards and any modifications thereto agreed
to by the plan administrator and the department to implement the RFP under the
ARM Plan;
(U) Plan administrator's
percentage of premium means that percentage of the premium collected under the
servicing carrier option of the ARM Plan which, per the plan administrator
agreement, the plan administrator is allowed to retain to cover the expenses of
the plan administrator and any servicing carriers used by the plan
administrator. The plan administrator's percentage of premium shall be an
amount sufficient to cover the expenses of the plan administrator in
administering the ARM Plan, plus an additional amount for profit and
contingencies;
(V) Policy or
policies means a policy or policies of workers' compensation insurance as
defined under this rule issued to risks insured under the ARM Plan;
(W) Producer means an insurance producer as
defined in section
375.012, RSMo, whose
privileges under either the WCIP or the ARM Plan have not been suspended or
revoked, provided, however, that such producer shall, for purposes of this
rule, be considered to be acting on behalf of the employer when placing
coverage through the ARM Plan and not as an agent of the contract carrier, the
plan administrator, or any other insurer;
(X) Reinsurance administrator means the
organization identified under this rule to administer the reinsurance
provisions of this rule. The reinsurance administrator shall be the NCCI unless
another entity is appointed by the director;
(Y) Reinsurer means a Missouri voluntary
market workers' compensation insurer in its capacity as a reinsurer for any
deficits under the contract carrier option of this rule or for any losses under
the servicing carrier option of this rule. The term does not include any direct
assignment carriers authorized under the servicing carrier option of this
rule;
(Z) Retention level means the
level of losses, specified by the director as part of a contract carrier
agreement, for which the contract carrier will be responsible, prior to any
responsibility of the reinsurers;
(AA) Request for proposal (RFP) means an RFP
issued by the department setting forth the specifications for the ARM Plan and
inviting potential respondents to submit proposals by which the department can
select a contract carrier under the contract carrier option, or plan
administrator under the servicing carrier option, to administer the ARM Plan.
The department may specify in a single RFP specifications for both a contract
carrier option and a servicing carrier option, and may decide as part of its
bid evaluation process which option to select;
(BB) Servicing carrier means an insurer,
other than a direct assignment carrier, selected by the plan administrator
under the servicing carrier option of the ARM Plan to provide insurance
services to insured employers and injured employees covered under the ARM
Plan;
(CC) Servicing carrier option
means that alternative under the ARM Plan whereby the director selects a plan
administrator to administer the Missouri residual market for workers'
compensation insurance, after a formal public bidding process. The plan
administrator will provide any necessary insurance services itself, if it is a
licensed and admitted Missouri workers' compensation insurer, or through other
insurers functioning as servicing carriers or direct assignment carriers.
Losses paid under the servicing carrier option by or on behalf of the plan
administrator shall be reimbursed to the plan administrator by Missouri's
voluntary workers' compensation market insurance companies, which are
participating as reinsurers under this rule;
(DD) Standard premium means the state premium
determined on the basis of authorized rates, any experience modification, any
applicable schedule rating modification, loss constants and minimum premiums.
The expense constant shall be excluded from determination of the standard
premium;
(EE) Workers' compensation
insurance means:
1. Statutory workers'
compensation and occupational disease including liability under the Longshore
and Harbor Workers' Compensation Act, as amended, and the Federal Coal Mine
Health and Safety Act of 1969, as amended;
2. Employers liability insurance written in
connection with a workers' compensation policy;
3. Such other coverages as are approved by
the director, including those approved after being recommended by the advisory
board authorized under section (3) of this rule;
(FF) Workers' Compensation Insurance Plan
(WCIP) means the NCCI's plan of operation for administering workers'
compensation residual markets. The WCIP was the plan used to administer
Missouri's residual market prior to the commencement of the ARM Plan on July 1,
1995, and may be used in the future if selected by the director under the
servicing carrier option or emergency option of the ARM Plan.
(2) Director's Options for
Administering the ARM Plan. The director may select one (1) of the following
options for administering the ARM Plan.
(A)
The Contract Carrier Option. Under this option, by means of a formal bid
process, the director may select a contract carrier to administer the Missouri
residual market. The contract carrier will then be on the risk for the losses
of the residual market, up to a retention level selected by the director.
1. In its capacity as the contract carrier,
the insurer so selected, and any duly-licensed and approved subcontractors of
that insurer, shall perform all of the functions required of a workers'
compensation insurer, such as employee classification, underwriting, policy
issuance, safety engineering, loss control, premium collection, claims
handling, claims reserving, auditing and benefits payment, all under
performance standards agreed to by the director, for those insured employers
and their injured employees covered under the ARM Plan.
2. If losses exceed the selected retention
level and thereby result in a deficit, each insurer licensed to write workers'
compensation insurance in Missouri (including the contract carrier if it is
also a voluntary market insurer) will participate in any such deficit in a
proportional manner based upon the insurer's pro rata share of
voluntary market premium. The deficit collection function shall be administered
by the reinsurance administrator under the oversight of an advisory board
appointed by the director under section (6) of this rule.
3. In its bid process, the department shall
invite each bidding insurer to specify one (1) or more loss retention levels
for losses, as defined in this rule, that the insurer is willing to retain in
its capacity as contract carrier, provided the levels shall not be lower than
one hundred percent (100%) of collected premium for a given contract year or
greater than one hundred fifteen percent (115%) of collected premium for a
given contract year. The reinsurance administrator shall determine whether or
not the retention level selected by the director is exceeded for any given
year, based on data supplied to it by the contract carrier.
4. The premium rates charged to an insured
employer under the contract carrier option of this rule shall be based on rates
and rating plans recommended by the contract carrier and approved by the
director. Premium rates under the ARM Plan shall be actuarially sufficient to
cover the losses and the reasonable operating expenses of the plan, plus a
reasonable amount to cover profits and contingencies.
(B) The Servicing Carrier Option. Under this
option, by means of a formal bid process, the director may select a plan
administrator to administer the Missouri residual market. The plan
administrator shall not be on the risk for the losses of the residual market,
but shall instead cede those losses to the insurers in the state's voluntary
workers' compensation market, who shall act as reinsurers under this rule, in
return for the premium collected by the plan administrator less the plan
administrator's percentage of that premium, as provided for below. The same
shall be true of any servicing carriers employed by the plan administrator,
provided, however, that a servicing carrier's reimbursement shall be paid out
of the plan administrator's percentage of the premium.
1. If the plan administrator is a licensed
and admitted workers' compensation insurer, the plan administrator, and any
duly-licensed and approved subcontractors of the plan administrator, may
perform all of the functions required of a workers' compensation insurer, such
as employee classification, underwriting, policy issuance, safety engineering,
loss control, premium collection, claims handling, claims reserving, auditing
and benefits payment, all under performance standards agreed to by the
director, for those insured employers and injured employees covered under the
ARM Plan.
2. If the plan
administrator is not itself an insurer, it may delegate any insurance functions
to one (1) or more licensed and admitted servicing carriers selected or
designated by the plan administrator and approved by the director, and, at the
option of the director, one (1) or more licensed and admitted direct assignment
carriers. The plan administrator shall assign risks covered by the ARM Plan to
any such servicing carrier(s) and direct assignment carrier(s) in a manner
specified by the plan administrator in its bid, or any subsequent modifications
thereto agreed to by the director.
3. The plan administrator, and the servicing
carrier(s), if any, shall perform their services in return for a percentage of
premium authorized by the director as part of the bid process to reimburse the
plan administrator and any servicing carriers. The remaining premium shall be
transferred to the insurers licensed to write workers' compensation insurance
in Missouri (including the plan administrator and any servicing carriers) in a
manner specified by the plan administrator in its bid.
4. In return for a share of the ARM Plan's
premiums (less the plan administrator's percentage of premium) which share
shall be based on the insurer's pro rata share of the Missouri
voluntary workers' compensation market premium, each insurer licensed to write
workers' compensation insurance in Missouri (including the plan administrator
or any servicing carriers if they are also voluntary market insurers) shall
participate under this rule by accepting its share of the plan administrator's
liabilities for losses under policies insured by the ARM Plan, in a
proportional manner based on the insurer's pro rata share of
the voluntary market's premium.
5.
The plan administrator shall account for all premiums collected and losses paid
under the ARM Plan in a manner specified under subsection (7)(H) of this
rule.
6. If the director authorizes
the use of direct assignment carriers, such carriers shall be assigned
employers by the plan administrator. A direct assignment carrier shall
thereafter provide to such employers all the services required to be provided
by the plan administrator and servicing carrier(s). A direct assignment carrier
shall receive the premiums of such an assigned insured employer and shall
accept all the liability for the losses of such an employer under the policy,
but shall be exempt from participating further under this rule on a pro
rata basis as to either collected premiums or paid losses. The direct
assignment carrier's portion of the state's voluntary market premium shall be
subtracted from the total voluntary market premium for purposes of calculating
the pro rata shares of the remaining voluntary market carriers
who are functioning as reinsurers for the losses of the ARM Plan.
7. The premium rates charged to an insured
employer under the serving carrier option of this rule shall be based on rates
and rating plans recommended by the plan administrator and approved by the
director. Premium rates under the ARM Plan shall be actuarially sufficient to
cover the losses and the reasonable operating expenses of the plan.
(C) The Emergency Option. Under
this option, based on unusual market conditions, exigent circumstances or other
events deemed by the director to constitute a threat to the life, property,
public health or public safety of Missouri citizens entitled to coverage under
the ARM Plan or which threatens to disrupt services under the plan, the
director may appoint a duly-qualified and willing entity to function as either
a contract carrier or as a plan administrator, as defined above, until such
time as it is practical to conduct a formal bid process under the ARM Plan. Any
contract carrier or plan administrator so appointed shall have the same rights
and responsibilities under this rule as a contract carrier or plan
administrator selected after a bid process. Each insurer licensed to write
workers' compensation insurance in the voluntary workers' compensation market
shall participate in the reinsurance for such an appointed entity under this
rule to the same extent as if the entity had been selected after a formal bid
process. Under this option, the director and the entity so selected may agree
in advance on the premium rates to be charged to insured employers under the
ARM Plan for the period during which the emergency option is in
effect.
(3) Contract
Carrier.
(A) Under the contract carrier
option for administering the ARM Plan, a contract carrier shall be selected by
the director to administer the plan after a formal bid process conducted by
means of a request for proposals (RFP) issued by the department. However, a
contract carrier may also be selected by the director without a formal bid
process under the emergency option for administering the ARM Plan.
(B) The services to be provided and
performance standards to be met by the contract carrier under the ARM Plan are
those set forth in the RFP issued by the director, as supplemented by any
subsequent performance standards agreed to between the director and the
contract carrier following the award of the contract carrier agreement. If a
contract carrier is appointed by the director under the emergency option, the
contract carrier will operate under the most recently issued RFP of the
director, as supplemented by any subsequent performance standards agreed to
between the director and the contract carrier following appointment of the
contract carrier. In no event shall the performance standards to be met by the
contract carrier be less rigorous than those required of a servicing carrier
under the WCIP, except as authorized by the director.
(C) The amended 12/94 RFP shall be considered
incorporated into this regulation by reference.
(D) The contract carrier shall make available
its own staff, office space, facilities and equipment to the extent necessary
to perform its obligations under this rule and the contract carrier agreement.
The contract carrier shall perform its services, exercise its powers, and
perform all of its duties in accordance with the terms of this rule, the
contract carrier agreement, and such performance standards as may be
established from time to time pursuant to this rule.
(E) The services to be provided by the
contract carrier shall include employee classification, policy underwriting,
policy issuance, safety engineering, loss control, premium collection, claims
handling, claims reserving, auditing, and benefits payment, all under
performance standards agreed to by the director, for those insured employers
and injured employees covered under the ARM Plan.
(F) The contract carrier shall process,
adjust, settle, compromise, defend, litigate and pay claims arising out of
workers' compensation policies issued by the contract carrier under the ARM
Plan. The contract carrier shall establish and maintain such 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 the laws of the state of Missouri.
(G) The contract carrier shall comply with
the financial and data reporting requirements and procedures established from
time to time by the advisory board and approved by the director pursuant to the
ARM Plan, with the advice and recommendations of the reinsurance administrator
regarding such requirements and procedures.
(H) The contract carrier shall report to the
director, and to the reinsurers through the reinsurance administrator, as soon
as possible, and, in any event, within ten (10) calendar days, any change in
its ability to perform its obligations as a contract carrier
hereunder.
(I) The contract carrier
shall be fully liable for the payment of any and all workers' compensation
administrative taxes and loss-based assessments under state or federal
law.
(J) The contract carrier shall
permit the director, the reinsurance administrator, or the reinsurers acting
through either the director or the reinsurance administrator, full and free
access during normal business hours to the contract carrier's premises, records
and personnel for the purposes of auditing and reviewing the contract carrier's
performance hereunder upon ten (10) calendar days written notice to the
contract carrier by either the reinsurance administrator or the director. In
the event of a termination of the contract carrier agreement or this rule, this
provision shall survive such termination and remain in full force and effect
until all losses under the policies issued by the contract carrier pursuant to
the ARM Plan have been satisfied or otherwise resolved. Further, the survival
of this provision shall not alter, modify, diminish, or extinguish any
outstanding rights or obligations of the parties that otherwise may exist upon
such termination under such policies, the contract carrier agreement or this
rule.
(K) In its capacity as the
contract carrier, the insurer so selected may perform its functions under this
rule through duly-licensed subcontractors, subject to the approval of the
director.
(L) Nothing in this rule
shall relieve the contract carrier of any other obligations imposed on a
workers' compensation insurer by Missouri law.
(4) Plan Administrator and Servicing
Carriers.
(A) Under the servicing carrier
option for administering the ARM Plan, a plan administrator may be selected by
the director to administer the plan after a formal bid process conducted by
means of a request for proposals (RFP) issued by the department. However, a
plan administrator may also be selected by the director without a formal bid
process under the emergency option for administering the ARM Plan.
(B) The services to be provided and
performance standards to be met by the plan administrator under the ARM Plan
are those set forth in the RFP issued by the director, as supplemented by any
subsequent performance standards agreed to by the director and the plan
administrator following the award of the plan administrator agreement. If a
plan administrator is appointed by the director under the emergency option, the
plan administrator will operate under the most recently issued RFP of the
director, as supplemented by any subsequent performance standards agreed to
between the director and the plan administrator following the appointment of
the plan administrator. In no event shall the performance standards to be met
by the plan administrator be less rigorous than those required of a servicing
carrier under the WCIP except as authorized by the director.
(C) The amended 12/94 RFP shall be considered
incorporated into this regulation by reference.
(D) The plan administrator shall make
available its own staff, office space, facilities and equipment to the extent
necessary to perform its obligations under this rule and the plan administrator
agreement. The plan administrator shall perform its services, exercise its
powers, and perform all of its duties in accordance with the terms of this
rule, the plan administrator agreement, and such performance standards as may
be established from time to time pursuant to this rule.
(E) The services to be provided by the plan
administrator shall include employee classification, policy underwriting,
policy issuance, safety engineering, loss control, premium collection, claims
handling, claims reserving, auditing and benefits payment, all under
performance standards agreed to by the director, for those insured employers
and injured employees covered under the ARM Plan. If the plan administrator is
a licensed and admitted workers' compensation insurer, the plan administrator
shall perform these services.
(F)
If the plan administrator is not itself a licensed and admitted insurer, it
shall not directly accept any insurance risk, but rather, shall assign such
insurance risk and may delegate normal insurance functions required under this
rule to one (1) or more licensed and admitted servicing carriers, selected or
designated by the plan administrator and approved by the director, and, at the
option of the director, one (1) or more direct assignment carriers. The plan
administrator shall assign risks covered by the ARM Plan to any such servicing
carrier(s) and direct assignment carrier(s) in a manner specified by the plan
administrator in its bid, or any subsequent modifications thereto agreed to by
the director. If servicing carriers or direct assignment carriers are utilized,
the plan administrator shall monitor the performance of the servicing carrier
or direct assignment carriers to assure they are meeting the performance
standards agreed to by the plan administrator and the director.
(G) The plan administrator or servicing
carriers shall process, adjust, settle, compromise, defend, litigate and pay
claims arising out of workers' compensation policies issued by the plan
administrator or any servicing carrier under the ARM Plan. The plan
administrator or any servicing carriers shall establish and maintain such claim
reserves as are reasonable and proper. They shall also maintain complete,
orderly and accurate claim files, records and accounts in accordance with
generally accepted insurance principles and the laws of the state of
Missouri.
(H) The plan
administrator and any servicing carriers shall comply with the financial and
data reporting requirements and procedures established from time to time by the
advisory board and approved by the director pursuant to the ARM Plan, with the
advice and recommendations of the reinsurance administrator.
(I) The plan administrator shall report to
the director, and to the reinsurers through the reinsurance administrator, as
soon as possible, and, in any event, within ten (10) days, any change in its
ability to perform its obligations as a plan administrator hereunder. Any
servicing carrier shall report to the plan administrator, who shall in turn
report to the director and the reinsurance administrator, as soon as possible,
and, in any event, within ten (10) days, any change in its ability to perform
its obligations as a servicing carrier hereunder.
(J) The plan administrator or any servicing
carriers shall be fully liable for the payment of any and all workers'
compensation taxes and premium or loss-based assessments under state or federal
law.
(K) The plan administrator and
any servicing carriers shall permit the director, the reinsurance
administrator, or the reinsurers acting through either the director or the
reinsurance administrator, full and free access during normal business hours to
the entity's premises, records and personnel for the purposes of auditing and
reviewing the entity's performance hereunder upon ten (10) days written notice
to the entity by either the reinsurance administrator or the director. In the
event of a termination of the plan administrator agreement and/or this rule,
this provision shall survive such termination and remain in full force and
effect until all losses under the policies issued by the plan administrator or
any servicing carriers pursuant to the ARM Plan have been satisfied or
otherwise resolved. Further, the survival of this provision shall not alter,
modify, diminish, or extinguish any outstanding rights or obligations of the
parties that otherwise may exist upon such termination under such policies, the
contract carrier agreement or this rule.
(L) Nothing in this rule shall relieve the
plan administrator, if the plan administrator is an insurer, of any other
obligations imposed on a licensed workers' compensation insurer by Missouri
law.
(5) Participation
of Reinsurers.
(A) Under the contract carrier
option for the administration of the ARM Plan, reinsurance shall be handled as
follows:
1. For the period of the contract
carrier agreement, the contract carrier shall cede to the reinsurers and the
reinsurers shall accept only that portion of the contract carrier's liability
for losses under the policies issued under the ARM Plan in excess of the
contract carrier's retention level. Such deficit losses shall be paid to the
contract carrier upon evidence of payment by the contract carrier of such
losses and verification of such payment by the reinsurance
administrator;
2. In addition to
their liability for the losses specified in paragraph (5)(A)1. above, the
reinsurers shall also be liable for the expenses of the reinsurance
administrator to the extent these expenses are approved from time-to-time by
the advisory board;
3. If the
period of the contract carrier agreement does not run concurrently with a
calendar year, each successive twelve (12)-month period in the agreement shall
be assigned to the calendar year in which that twelve (12)-month period
commenced for purposes of determining the pro rata share of
losses in excess of the contract carrier's retention for each of the
reinsurers. If the period runs concurrently with a calendar year, each
successive twelve (12)-month period shall be assigned to said calendar
year;
4. Each reinsurer's
proportion of liability in excess of the contract carrier's retention level, or
any reinsurance administrator expenses, shall be based on that percentage of
the total written premium in Missouri's voluntary workers' compensation market
during the calendar year in which the contract carrier agreement commences that
is represented by the reinsurer's total written voluntary market premium for
that same period, subject to verification by the reinsurance
administrator;
5. Each reinsurer's
participation shall become effective and shall terminate on the dates specified
in subsection (7)(N). Each reinsurer's share of the losses under this
subsection shall be calculated with respect to each calendar year for which its
participation is effective and shall be based upon the total amount of the
participation of all the reinsurers in Missouri for that calendar
year;
6. Each reinsurer's liability
for its pro rata share of the losses under this subsection
shall be separate and apart from the liability for the pro
rata shares of the other reinsurers so that each reinsurer shall be
liable solely for its own pro rata share of said losses and
not the pro rata shares of any other reinsurer, except as
otherwise provided in this rule, such as under paragraph (7)(L)5.;
7. A reinsurer shall be assessed for its
pro rata share of any deficit by the reinsurance administrator
after verification by the reinsurance administrator of payment of the losses by
the contract carrier. Failure of a reinsurer to pay its assessment shall be
grounds for discipline of the reinsurer by the department, and legal action by
the contract carrier or the advisory board to recover such unpaid
assessments;
8. At least annually,
the contract carrier, in conjunction with the reinsurance administrator, shall
provide an actuarial estimate as to the likelihood of a deficit to the
department and the advisory board. Such estimates shall include a valuation of
the probability of any future deficits based on amounts already incurred,
determined by an evaluation procedure approved by the department. Such an
evaluation procedure may be recommended to the department by the advisory
board. Should a deficit be indicated by the actuarial estimate, a projection as
to when assessments are expected to begin under this rule shall also be
provided to the department;
9. In
order to assist the determination of the existence of a deficit, the contract
carrier and its affiliated insurers shall, at a minimum, segregate their
Missouri voluntary market workers' compensation financial experience and
business transactions from their Missouri workers' compensation residual market
financial experience and business transactions;
10. The liability for losses of the
reinsurers with respect to each cession under this rule shall commence
simultaneously with that of the contract carrier, except as otherwise provided
in this rule;
11. Except as
otherwise provided under this rule, such as subsection (7)(L), the reinsurers
shall have no obligation for losses within the contract carrier's retention
level.
(B) Under the
servicing carrier option for the administration of the ARM Plan, reinsurance
shall be handled as follows:
1. For the period
of the plan administration agreement, the plan administrator, itself or through
its duly-appointed servicing carriers, if any, shall cede to the reinsurers and
the reinsurers shall accept, each for its own part and not for the others,
quota share reinsurance of the plan administrator's or servicing carrier's
liability for all losses under policies issued through the ARM Plan. Losses
shall be paid to the plan administrator or servicing carrier upon evidence of
payment by the plan administrator or servicing carrier and verification by the
reinsurance administrator;
2. In
addition to their liability for the losses specified in paragraph (5)(B)1.
above, the reinsurers shall also be liable for the expenses of the reinsurance
administrator to the extent these expenses are approved from time to time by
the advisory board;
3. If the
period of the plan administrator agreement does not run concurrently with a
calendar year, each successive twelve (12)-month period in the period shall be
assigned to the calendar year in which that twelve (12)-month period commenced
for purposes of determining the pro rata share for each of the
reinsurers. If the period runs concurrently with a calendar year, each
successive twelve (12)-month period shall be assigned to said calendar
year;
4. Each reinsurer's
proportion of liability for losses, or any reinsurance administrator expenses,
shall be based on that percentage of the total written premium in Missouri's
voluntary workers' compensation market during the calendar year in which the
contract carrier agreement commences that is represented by the reinsurer's
total written voluntary market premium for that same period, subject to
verification by the reinsurance administrator, but not including the premiums
of any direct assignment carriers;
5. Each reinsurer's participation shall
become effective and shall terminate on the dates specified in subsection
(7)(N). Each reinsurer's share of the losses under this subsection shall be
calculated with respect to each calendar year for which its participation is
effective and shall be based upon the total amount of the participation of all
the reinsurers in Missouri for that calendar year;
6. Each reinsurer's liability for its
pro rata share of the losses under this subsection shall be
separate and apart from the liability for the pro rata shares
of the other reinsurers so that each reinsurer shall be liable solely for its
own pro rata share of said losses and not the pro
rata shares of any other reinsurer, except as otherwise provided in
this rule, such as paragraph (7)(L)5.;
7. A reinsurer shall be assessed for its
pro rata share of any losses by the reinsurance administrator
after verification by the reinsurance administrator of payment of the losses by
the plan administrator or servicing carriers. Failure of a reinsurer to pay its
assessment shall be grounds for discipline of the reinsurer by the department,
and legal action by the plan administrator, servicing carriers or the advisory
board to recover such unpaid assessments;
8. In order to assist in the payment of
assessments, the plan administrator and any servicing carriers shall, at a
minimum, segregate their Missouri voluntary market workers' compensation
financial experience and business transactions from their Missouri workers'
compensation residual market financial experience and business
transactions;
9. The liability for
losses of the reinsurers with respect to each cession under this rule shall
commence simultaneously with that of the plan administrator, except as
otherwise provided in this rule.
(C) Under the emergency option for the
administration of the ARM Plan, the handling of any reinsurance shall depend
upon whether the director has selected a contract carrier or a plan
administrator to administer the ARM Plan. If the director has selected a
contract carrier, any reinsurance shall be handled as provided under subsection
(5)(A) above. If the director has selected a plan administrator, reinsurance
will be handled as provided under subsection (5)(B) above.
(6) Reinsurance Administrator and Advisory
Board.
(A) Subject to the direction and
approval of the advisory board, the reinsurance administrator, shall perform
the functions set forth in this rule, including the following:
1. Informing the director as to any insurance
carrier not participating as a reinsurer as required under this rule;
2. Administering the deficit sharing
mechanism under the contract carrier option of this rule or the premium and
loss distribution and assessment mechanism under the servicing carrier option
of this rule;
3. Advising the
department as to the oversight activities requisite to ensuring appropriate
performance by the contract carrier or the plan administrator and any servicing
carriers;
4. Acting as secretary
for the advisory board;
5.
Analyzing a contract carrier's estimate of whether and when a deficit will
occur; and
6. Determining expenses
and fees for the operation of the deficit sharing and assessment provisions of
this rule, and assessing each insurer participating in the ARM Plan for these
expenses and fees, on an equitable basis determined by the advisory board. Such
administrative expenses and fees shall be labeled as such on any assessments to
clearly distinguish them as being in addition to the amount of any underlying
deficit under the contract carrier option or any assessment under the servicing
carrier option.
(B)
Advisory Board.
1. The advisory board shall be
composed of at least nine (9) but no more than thirteen (13) members, appointed
by the director as follows:
A. No fewer than
nine (9) insurers who write workers' compensation insurance in Missouri's
voluntary market, and who are representative of the interests of such
carriers;
B. Other members as
determined by the director, with consideration given to members recommended by
the advisory board.
2.
The function of the advisory board is to oversee the reinsurance administrator,
and to assist and advise the director regarding the execution of the ARM Plan
by a contract carrier, a plan administrator and any servicing carriers, and the
member insurers required to be reinsurers under the ARM Plan. The advisory
board may consider any matter referred to it by the reinsurance administrator
or the director which relates to the operation of the ARM Plan.
3. Each advisory board member shall serve a
term of two (2) years, but may serve additional terms.
4. No advisory board member shall fill more
than one (1) position on the board. All advisory board members shall serve
until their successors are designated by the director. Any vacancy on the
advisory board, by resignation or otherwise, shall be filled by a
representative of the member's insurer or organization, until a replacement is
appointed.
5. The advisory board
members, in person or by proxy, shall hold an annual meeting at which it shall
elect a chairperson. The advisory board shall hold such additional meetings as
necessary whenever requested by the chairperson, the director or upon petition
of three (3) advisory board members. Meetings of the advisory board may be held
or attended, and votes taken, by means of a teleconference.
6. The advisory board shall review any
expenses or fees recommended by the reinsurance administrator to reimburse the
reinsurance administrator, the members of the advisory board and any duly
appointed subcontractors thereof, for their services on behalf of the ARM Plan.
The advisory board shall, on behalf of the reinsurers, approve such
recommendations to the extent the board finds such recommendations fair and
reasonable.
7. The advisory board
shall also approve any amounts needed to indemnify the board or the reinsurance
administrator.
(7) Additional Reinsurance Provisions.
(A) Original Conditions.
1. All reinsurance under this rule shall be
subject to the same rates, terms, conditions and waivers, and to the same
modifications and alterations as the underlying workers' compensation policies,
except as otherwise provided in this rule.
2. Nothing herein shall in any manner create
any obligations or establish any rights against the reinsurers in favor of any
third party unless authorized under this rule.
3. A reinsurer's rights and responsibilities
under this rule shall continue unchanged for the period of each extension of
the contract carrier agreement or plan administrator agreement, except for
revisions necessary to be consistent with the terms of each such
extension.
(B)
Indemnification. Notwithstanding anything stated herein, this rule shall not
apply to any loss incurred by a contract carrier, plan administrator or any
servicing carrier as a result of any willful misconduct or any fraudulent or
criminal act by an employee, officer or director of the contract carrier, plan
administrator or servicing carrier acting individually or collectively or in
collusion with any individual or corporation or any other organization or party
involved in the presentation, defense or settlement of any loss covered under
this rule.
(C) The Reinsurance
Administrator. The reinsurance administrator is recognized as the agent through
whom funds and communications relating to this rule (including but not limited
to notices, statements, reports of premium, losses and loss adjustment expense,
salvage and loss settlements) shall be transmitted.
(D) Premium.
1. The contract carrier or the plan
administrator and any servicing carriers shall be responsible for the
collection of all premiums on all risks assigned to them under the ARM Plan.
The reinsurers shall have no responsibility for the premiums, uncollected
premiums, return premiums, or similar items under this rule.
2. Reinsurers shall not receive any portion
of the premiums on the policies issued by the contract carrier.
(E) Salvage and Subrogation. In
the event that the contract carrier or plan administrator and any servicing
carrier recover any money by way of subrogation or otherwise, other than from
the reinsurers, on a claim for which the contract carrier or plan administrator
and any servicing carriers has been reimbursed by the reinsurers, the contract
carrier or plan administrator and any servicing carriers shall reimburse the
reinsurers for amounts paid by the reinsurers on account of such claim, but not
more than the total amount so recovered less expenses incurred in securing such
recovery.
(F) Losses.
1. Losses shall be reported by the contract
carrier or plan administrator and any servicing carriers in the format and
manner specified in subsection (7)(H) below.
2. All loss settlements made by the contract
carrier or plan administrator and any servicing carriers, whether under strict
contract conditions or by way of compromise, shall be binding unconditionally
upon the reinsurers.
(G)
Losses in Excess of Policy Limits or Extra-Contractual Losses.
1. In the event the contract carrier or plan
administrator and any servicing carrier pays an amount of loss in excess of its
policy limits under a workers' compensation policy issued under the ARM Plan,
but otherwise within the terms of the policy (hereinafter called "loss in
excess of policy limits") including but not limited to any punitive, exemplary,
compensatory or consequential damages, resulting from the alleged improper
conduct of the insured, one hundred percent (100%) of the loss in excess of the
policy limits as well as the loss adjustment expense incurred in connection
therewith shall be added to the losses of the contract carrier or plan
administrator and any servicing carriers, under this rule.
2. Any loss in excess of policy limits shall
be deemed to have occurred on the same date as the loss covered or alleged to
be covered under the policy.
(H) Reports and Remittances.
1. Within forty-five (45) days after the end
of each calendar quarter, the contract carrier or the plan administrator shall
report to the reinsurers, through the reinsurance administrator, premiums,
losses, and other amounts for the quarter, in such detail as the advisory board
shall reasonably require.
2. Any
amounts paid by the contract carrier or plan administrator and any servicing
carriers and recoverable from reinsurers shall be remitted by the reinsurers,
through the reinsurance administrator, as promptly as possible after receipt
and verification of the report of the contract carrier or plan administrator.
Any remittance shall be paid within thirty (30) days of the invoice mailing, or
within other reasonable time periods established by the advisory
board.
(I) Offsets. The
contract carrier or plan administrator and any servicing carriers, or the
reinsurers shall have and may exercise at any time, and from time to time, the
right to offset any balance or balances whether on account of premiums or on
account of losses or obligations otherwise due from one party to the other or
any affiliate thereof in their capacities under the terms of this
rule.
(J) Currency. All limits
under this rule are expressed in United States dollars and all premium and loss
payments shall be made in United States currency. For the purposes of this rule
amounts paid or received by the contract carrier or plan administrator and any
servicing carriers in any other currency shall be converted into United States
dollars at the rates of exchange at which such transactions are converted on
the books of the contract carrier, plan administrator or servicing
carrier.
(K) Inadvertent Delays,
Errors or Omissions in Performance. Inadvertent delays, errors or omissions
made in connection with this rule or any transaction hereunder shall not
relieve either party from any liability which would have attached had such
delay, error or omission not occurred, provided that such error or omission
will be rectified as soon as possible after discovery.
(L) Insolvency.
1. In the event of the insolvency of the
contract carrier, the plan administrator or a servicing carrier, reinsurance
owed under this rule shall be payable directly to the insolvent entity or its
liquidator, receiver, conservator or statutory successor on the basis of the
liability of the insolvent entity without diminution because of the insolvency
of the entity or because the liquidator, receiver, conservator or statutory
successor of the entity has failed to pay all or a portion of any
claim.
2. The liquidator, receiver,
conservator or statutory successor of the insolvent contract carrier, plan
administrator or servicing carrier shall give written notice to the reinsurers
of the pendency of a claim against the insolvent entity indicating the contract
or bond reinsured which claim would involve a possible liability on the part of
the reinsurers within a reasonable time after such claim is filed in the
conservation or liquidation proceeding or in the receivership, and that during
the pendency of such claim, the reinsurers may investigate such claim and
interpose at their own expense, in the proceeding where such claim is to be
adjudicated, any defense or defenses that they may deem available to the
insolvent entity or its liquidator, receiver, conservator or statutory
successor.
3. The expense thus
incurred by the reinsurers shall be chargeable, subject to the approval of the
court, against the insolvent entity as part of the expense of conservation or
liquidation to the extent of a pro rata share of the benefit
which may accrue to the insolvent entity solely as a result of the defense
undertaken by the reinsurers.
4.
The reinsurance shall be payable by the reinsurers to the contract carrier or
the plan administrator and any servicing carriers or their liquidator,
receiver, conservator or statutory successor, except as provided by applicable
law except where this rule specifically provides another payee of such
reinsurance, in the event of the insolvency of such entity and where the
reinsurers, with the consent of the direct insureds, have assumed such policy
obligations of the reinsurers to the payees under such policies and in
substitution for the obligations of the insolvent entity to such
payees.
5. In the event any
reinsurer becomes insolvent, participation by such reinsurer under this rule
shall be deemed terminated at the time such reinsurer becomes insolvent The
outstanding liability of an insolvent reinsurer shall be assumed by and
apportioned among the remaining reinsurers in the same manner for which other
liabilities are apportioned..
(M) Security. If determined by the director
or the reinsurance administrator, the contract carrier, plan administrator,
servicing carriers or the reinsurers will provide such security for the benefit
of the parties to this rule as determined by the director or the reinsurance
administrator.
(N) Commencement and
Termination.
1. This rule shall apply to the
individual contract carrier agreement or plan administrator agreement for the
period of said agreement and any extensions thereto.
2. A reinsurer's responsibility under this
rule may be terminated by the reinsurer only upon surrender of its authority to
write workers' compensation in Missouri. The reinsurance administrator shall
inform the director of any reinsurer that terminates its participation under
this rule.
3. If the reinsurance
administrator determines that the contract carrier, plan administrator or
servicing carrier is not in compliance with any provision of this rule, the
contract carrier or plan administrator agreement, or any performance standards,
it shall notify the director, the contract carrier, plan administrator or
servicing carrier of such noncompliance. The director shall have the right to
take appropriate action as specified in the ARM Plan or the contract carrier
agreement or plan administrator agreement.
4. Reinsurance under this rule shall remain
in full force and effect until all losses under the workers' compensation
policies for the time period in question have been settled and satisfied or
otherwise resolved.
(8) Rules for Eligibility and Assignment.
(A) The provision of this section shall
govern the insuring of employers who are required to carry workers'
compensation insurance, but who are unable to procure such insurance through
ordinary methods. Any employer insured under the ARM Plan shall receive at
least the same quality of service as is available to those employers who are
voluntarily insured. This includes, but is not limited to, safety engineering,
loss control, claims handling, employee classification and reserving practices.
Any dispute arising hereunder shall be subject to section (10) of this rule.
1. Application for insurance shall be filed
with the contract carrier or plan administrator by the employer or its
representative on a form approved by the department.
2. Good faith will be presumed in the absence
of clear and convincing evidence to the contrary. An employer is not, in good
faith, entitled to insurance if any of the following circumstances exist, at
the time of application or thereafter, or other evidence exists that such
employer is not in good faith entitled to insurance:
A. If, at the time of application, a
self-insured employer is aware of pending bankruptcy proceedings, insolvency,
cessation of operations, or conditions that would probably result in
occupational disease or cumulative injury claims from exposure incurred while
the employer was self-insured;
B.
If the employer, while insurance is in force, knowingly refuses to meet
reasonable health and safety requirements designed to remove an imminent threat
of serious bodily harm;
C. If the
employer has an outstanding obligation for workers' compensation premium on
previous insurance about which there is no formal dispute;
D. If the employer, or its representative or
the producer knowingly makes a material misrepresentation on the application by
omission or otherwise, including any of the following: estimated annual
premium, estimated payroll, offers of workers' compensation insurance, nature
of business, name or ownership of business, previous insurance history, or
outstanding premium obligation of the employer.
3. Coverage may be bound under the ARM Plan,
in accordance with the following procedures:
A. The producer should forward the completed
application to the contract carrier or plan administrator with a certified,
cashier's, or producer check payable to the contract carrier or plan
administrator for the estimated annual or deposit premium as computed by the
producer, or determined by contacting the contract carrier or plan
administrator prior to submission of the application. The employer or its
representative shall also include with and as a part of the application a copy
of the employer's latest filed federal employer 941, 941E, 942 or 943 form or
equivalent federal- or state-required verifiable current payroll record, such
as an unemployment wage report. The application form, as approved by the
department, shall indicate the employer's agreement to authorize its current
carrier to release any safety and loss information to the contract carrier or
plan administrator. For all employers other than those formerly self-insured,
coverage will be bound at 12:01 a.m. on the first day following the postmark
time and date on the envelope in which the application is mailed, including the
estimated annual or deposit premium, or the expiration of existing coverage,
whichever is later. If there should be no postmark, coverage will be effective
12:01 a.m. of the date of receipt by the contract carrier or plan administrator
unless a later date is requested. Those applications hand delivered to the
contract carrier or plan administrator will be effective as of 12:01 a.m. the
date following receipt by the contract carrier or plan administrator unless a
later date is requested;
B. For
employers formerly self-insured, coverage will be bound at 12:01 a.m. not later
than sixty (60) days following the postmark time and date on the envelope in
which the application is mailed including the estimated annual or deposit
premium, or the expiration of existing coverage, whichever is later. If there
should be no postmark, coverage will be effective 12:01 a.m. not later than
sixty (60) days following the date of receipt by the contract carrier or plan
administrator unless a later date is requested. Those applications hand
delivered to the contract carrier or plan administrator will be effective 12:01
a.m. not later than sixty (60) days following the date of receipt by the
contract carrier or plan administrator, unless a later date is
requested;
C. If coverage is bound
pursuant to the above, the contract carrier or plan administrator shall issue a
binder with copies to the producer, the insured, and the Missouri Division of
Workers' Compensation.
4. Assignments shall not be made under this
rule unless all workers' compensation premium obligations on any previous
insurance have been met by the employer, unless a formal dispute regarding such
payments has been made. If, subsequent to policy issuance, the insured employer
does not meet all workers' compensation insurance premium obligations under a
previous policy or under a present policy, the contract carrier or plan
administrator shall have the right to cancel the policy currently in force
under the ARM Plan.
5. The policy
shall be issued for a term of one (1) year, unless insurance for a shorter term
has been requested or unless a longer period is authorized by the department. A
copy of the policy declarations and all endorsements, properly stamped ARM
Plan, will be retained by the contract carrier or plan administrator.
6. If, after the issuance of a policy, the
contract carrier or plan administrator determines that an employer is not
entitled to insurance, or has failed to comply with reasonable safety
requirements, or has violated any of the terms and conditions under which the
insurance was issued, and after providing opportunity for cure, the contract
carrier or plan administrator shall initiate cancellation. Any insured employer
so canceled must reestablish eligibility or must demonstrate entitlement before
any further coverage will be provided under the ARM Plan.
7. All policies issued pursuant to the ARM
Plan shall be written utilizing the classifications, forms, rates and rating
data set forth in the contract carrier or plan administrator's RFP response or
as otherwise approved by the director.
8. Unless otherwise authorized by the
director, at least sixty (60) days prior to the expiration date of insurance,
the contract carrier or plan administrator shall send a renewal proposal or
notice of impending expiration of coverage to the named insured at his last
known address and the insured's producer. Upon receipt of the required premium,
the policy shall be renewed and a copy of the policy information page and all
endorsements, properly stamped ARM Plan, shall be retained by the contract
carrier or plan administrator.
9.
Any otherwise eligible employer who agrees to have its workers' compensation
insurance provided by an insurer other than the contract carrier or plan
administrator on a voluntary basis may do so at any time. The contract carrier
or plan administrator shall cancel its coverage on a pro rata
basis as of the effective date of the voluntary insurer's policy.
10. Any employer desiring insurance for
operations in states other than Missouri must notify the contract carrier or
plan administrator regarding the need for insurance in such additional states
in accordance with section (9) of this rule.
11. The employer may designate a licensed
producer and, with respect to any renewal of the contract carrier or plan
administrator, may change the designated producer by notice to the contract
carrier or plan administrator prior to the date of such renewal or, with the
consent of the contract carrier or plan administrator, at any other time. The
contract carrier or plan administrator shall pay a fee to the producer
designated by the employer on new and renewal policies after July 1, 1995, upon
payment of all premium due under the policy. The fee shall be based on the
state standard premium and paid at the rate as set forth in the contract
carrier or plan administrator's RFP response.
(B) Producers through whom employers seek
worker's compensation coverage shall endeavor to place such coverage through
the voluntary market; only where the producer certifies on an application
approved by the department that the producer has been unable to obtain such
coverage at comparable cost and service through the voluntary market shall such
coverage be placed in the ARM Plan. At the direction of the department, a risk
may be removed from the ARM Plan if the department subsequently determines
coverage was available through the voluntary market at comparable cost and
service and this fact was known to the producer.
(C) For purposes of assisting in the
placement of risks in the voluntary market, an expiration list of risks in the
ARM Plan shall be made available, by the contract carrier or plan administrator
and through the department, to producers and insurers, at the normal copying
costs.
(D) Notwithstanding the
above provisions of this section, an approved plan administrator may file a
plan of operation for approval by the director which incorporates its own rules
of eligibility and assignment, which, upon approval, shall supercede the rules
of eligibility and assignment of this section.
(9) Interstate Assignments.
(A) Any employer seeking coverage under this
ARM Plan and desiring coverage for workers' compensation benefits of states
other than Missouri for its Missouri-based employees who may have business
reasons to travel to other states may request the contract carrier or plan
administrator to furnish such insurance on an endorsement form approved by the
department. Such form may indicate that employees based in states other than
Missouri are not covered by this endorsement.
(B) Employers with known exposures in states
other than Missouri may request the contract carrier or plan administrator to
assist them in obtaining coverage in these other states. If the contract
carrier or plan administrator does not wish to provide coverage for the
additional states on a voluntary basis, the contract carrier or plan
administrator shall advise the employer and the producer to submit an
application to the appropriate administrator having jurisdiction.
(10) Dispute Resolution Procedure.
(A) Any person affected by the operation of
the ARM Plan including, but not limited to, insured employers, covered
employees, producers, the contract carrier, the plan administrator, a servicing
carrier or a direct assignment carrier who may have a dispute with respect to
any aspect of the plan, may seek a review of the matter by the department by
setting forth in writing with particularity the nature of the dispute, the
parties to the dispute, the relief sought and the basis thereof. The department
may secure such additional information as it deems necessary to make a
decision.
(B) Appeals from insured
employers and covered employees on plan matters regarding individual employer
disputes shall be within the jurisdiction of the mechanism established to
handle such appeals under the applicable insurance laws, including section
287.335,
RSMo. All other disputes shall be handled as follows:
1. If the dispute relates to the general
operation of the ARM Plan, excluding individual employer disputes and those
arising under this rule, the department shall review the matter and render a
written decision with an explanation of the reasons for the decision within
sixty (60) days after receipt of all the information necessary to make the
decision. In reviewing any such matter, the department shall decide the dispute
in accordance with the state law, regulation and policy and in the interests of
the reasonable and proper administration of the ARM Plan. The department's
decision shall be final, subject to court review;
2. Except as provided below, if the dispute
arises under the reinsurance provisions of this rule, the reinsurance
administrator shall first review the matter and render a written decision to
the complaining party with an explanation of the reasons for the decision
within sixty (60) days after receipt of all the information necessary to make
the decision. Any party affected by the decision may seek a review by the
advisory board established under this rule by requesting such review, in
writing, within thirty (30) days of the date of the decision by the reinsurance
administrator. The advisory board must then review the matter and render its
written decision pursuant to the bylaws adopted by the board. Any party
affected by a decision of the advisory board may seek a de
novo review by the department by requesting such a review in writing
within thirty (30) days of the date of the board's decision.
(11) Rate Monitoring.
(A) It is essential for maintaining the
long-run viability of the ARM Plan that the contract carrier, plan
administrator or prospective contract carriers or plan administrators have the
data necessary to determine appropriate rates. As insureds may, over time, move
between the ARM Plan and the voluntary market, data for the total market must
be maintained. On behalf of the department, the NCCI shall maintain necessary
ratemaking data in order to permit the actuarial determination by the
department and the contract carrier or plan administrator of rates, consistent
with the NCCI-administered classification system, for the business insured
through the ARM Plan. The contract carrier or plan administrator is required to
report its experience on business written under the ARM Plan to the NCCI in the
same format required by the NCCI for carriers writing voluntary market
business. The NCCI shall provide to the contract carrier or plan administrator
and the department all requested information necessary for establishing
reasonable classifications, rates and enabling financial information required
for the successful operation of the ARM Plan and the total market, and for
whatever other purposes the department from time to time may require for said
data.
(B) The contract carrier or
plan administrator shall file any rate requests for the residual market in
accordance with the provisions of section
287.896,
RSMo.
(12) Notice.
Within sixty (60) days of the effective date of this rule, the reinsurance
administrator shall provide notice to all insurers that are required to
participate as reinsurers under this rule. The notice shall include a copy of
this rule or a reference to the department's website, as well as the dates the
rule was effective and shall advise each insurer of the obligation to
participate as reinsurers. The reinsurance administrator shall inform the
Director of any insurer refusing to participate as a reinsurer, as required
under this rule.
(13)
Confidentiality of Information.
(A) For
purposes of this section, the phrase "contract carrier or plan administrator"
shall include any reinsurance market reinsurers, or any subcontractors,
vendors, servicing carriers or other entities or persons utilized by or
associated with the contract carrier or plan administrator in the
administration of and the insuring of the Missouri workers' compensation
residual market under the ARM Plan.
(B) Detailed information, whether provided
orally, in writing, via computer media, or by other means, given to producers,
insurers, or their clients, required to properly evaluate, underwrite and
insure risks under the ARM Plan, shall be provided by such persons and entities
to the contract carrier or plan administrator for evaluation, underwriting and
insurance purposes. In consideration of the disclosure of such information, the
contract carrier or plan administrator agrees to and shall comply with the
following provisions:
1. The contract carrier
plan or administrator shall keep in confidence and shall not, except as
directed by the insured, disclose to any third party, or use for the benefit of
any third party, such detailed information, regardless of the form or format of
the disclosure; such information shall be used by the contract carrier or plan
administrator solely for the evaluating, underwriting and insuring of workers'
compensation and employer's liability insurance coverage under the ARM Plan,
and not for any other purpose without the prior approval of the
insured.
2. The contract carrier or
plan administrator shall take all reasonable measures necessary to protect the
confidentiality of such information in its possession from disclosure to any
other third party, except as directed by the insured.
3. The contract carrier or plan administrator
shall not directly or indirectly request, encourage, or advise any employers
who have acquired or seek to acquire coverage through the ARM Plan to utilize
the services of any specific insurance producer, insurer or group of insurers
for workers' compensation insurance coverage.
4. The contract carrier or plan administrator
shall not give any other person, firm or entity any rights that would
circumvent or violate the provisions of paragraphs 1. through 3.,
above.
(C)
Notwithstanding the confidentiality provisions set forth in subsection (B) of
this section, the contract carrier or plan administrator is expressly
authorized to provide the information delineated in subsection (B) of this
section to the department, the Missouri Division of Workers' Compensation and
any other organization or entity designated by the department to gather and
analyze data for the purpose of establishing rate or loss cost information, or
in conjunction with the issuance of reports concerning the Missouri workers'
compensation market.
(D) In
addition to any other remedies available to the department regarding any
violation of the provisions of this section, including those contained in
section
374.280,
RSMo, the department shall consider the nature and severity of any violations
of the provisions of this section during its consideration of the letting of or
renewal of any contract for the administration of and insurance of the Missouri
workers' compensation residual market under the ARM Plan.
*Original authority: 287.896, RSMo 1993 and 374.045, RSMo
1967, amended 1993, 1995.