Current through Register Vol. 56, No. 6, March
18, 2024
(a) The
commissioners shall prepare and, after the approval by resolution of the board
or owner of each participating member, shall adopt bylaws for the joint
insurance fund. The bylaws shall include, but not be limited to:
1. Procedures for the organization and
administration of the joint insurance fund, the insurance fund commissioners
and alternates and, if appropriate, the executive committee of the fund and
alternates. The procedures may include the designation of one participating
member to serve as the lead agency to be responsible for the custody and
maintenance of the assets of the fund and such other duties as may be assigned
by the fund commissioners;
2.
Procedures for the assessment of members for their contributions to the fund
and for the collection of contributions in default;
3. Procedures for the establishment,
maintenance and administration of appropriate reserves in accordance with sound
actuarial principles;
4. Procedures
for the purchase of direct insurance or reinsurance, if any;
5. Contingency plans for paying losses in the
event that the fund is exhausted, including provision for supplemental
assessments as provided at
11:15-6.1 6;
6. Procedures governing loss adjustment and
legal fees;
7. Procedures for the
joining of the fund by non-members;
8. Procedures in compliance with
11:15-6.1 0 for the withdrawal or
expulsion from the fund by a member, including any requirement that a
terminated or withdrawing member provide security in a form and an amount
acceptable to the Commissioner and fund commissioners as applicable, as a
guarantee for the continued payment of the member's obligations pursuant to
11:15-6.1 0(c);
9. Procedures for the termination and
liquidation of the joint insurance fund and the payment of its outstanding
obligations; and
10. Procedures
governing trust fund accounts, including transfers, withdrawals and
distribution of surplus therefrom and supplemental assessments.
(b) In addition, the bylaws shall:
1. Include the fund's name, location of its
principal office, date of organization, and name and address of each initial
member;
2. Specify the insurance
coverages to be provided by the fund and the minimum participation required of
any member;
3. Describe the
responsibilities and obligations of the participants, the terms and conditions
of continued participation and discontinuance of participation in the
fund;
4. Be accompanied by a pro
forma financial statement, with underlying assumptions and methodology, on a
form acceptable to the Commissioner showing the financial strength and
liquidity of the fund to assure that all obligations shall be met
promptly;
5. Where self-insured,
provide a plan for specific and aggregate excess insurance or reinsurance and
for retention in accordance with sound actuarial principles and the plan of
risk management;
6. Be accompanied
by proof of competent personnel and ample facilities within the fund
organization with respect to claims administration, underwriting matters, loss
prevention and safety engineering or present a contract with a servicing
organization(s) for the provision of such services;
7. Establish the claims handling procedure to
be utilized by the fund which procedure shall provide for the prompt, fair and
equitable settlement of claims;
8.
Establish the complaint handling procedure to be utilized by the
fund;
9. Be accompanied by a sample
copy of the resolution and written agreement adopted by each participating
member as specified at
11:15-6.3. Within 30 days of
approval, the fund shall send certified copies of the resolution and written
agreement from each participant to the Commissioner;
10. Be accompanied by a sample copy of its
indemnity and trust agreement as defined in
11:15-6.2, and in a form
satisfactory to the Commissioner.
i. The
agreement shall create a trust and govern the operation thereof under which
monies shall be held by the trustees as fiduciaries for the benefit of fund
claimants.
ii. Where a fund shall
provide for the retention on a self-insured basis of any or all of the risks or
liabilities specified below, the agreement shall require and provide for the
establishment of separate trust accounts from which monies shall be disbursed
solely for the payment of claims, allocated claims expenses and excess
insurance or reinsurance premiums for each risk or liability, and may provide
for the establishment of contingency accounts, each by fund year, as follows:
(1) Workers' compensation and employers'
liability;
(2) Liability, other
than motor vehicle;
(3) Property
damage, including automobile physical damage;
(4) Automobile liability;
(5) General contingencies, if deemed
appropriate by the fund, to replenish the administrative account established
pursuant to
11:15-6.1 4 for that specific fund
year; and
(6) Loss fund
contingencies, if deemed appropriate by the fund, to replenish a trust account
established pursuant to (b)10ii(1) through (4) above for that specific fund
year; and where the total amount of monies assessed and allocated to the
accounts established pursuant to (b)10ii(1) through (4) and this
sub-subparagraph are utilized to satisfy the amounts estimated by the fund's
actuary to be necessary to pay claims, allocated claims expenses and excess
insurance or reinsurance premiums for each risk or liability set forth in
(b)10ii(1) through (4) for that fund year.
iii. A fund shall not be otherwise required
to establish separate trust accounts as required by (b)10ii above for each fund
year, or for each risk or liability as specified in (b)10ii above, provided the
fund provides a plan in its bylaws which provides for the recording and
accounting of all transactions by fund year for each risk or liability as
specified in (b)10ii, as applicable.
iv. Within 30 days of approval, the fund
shall send certified copies of the indemnity and trust agreement from each
participant to the Commissioner;
11. Provide procedures for the establishment,
maintenance and administration of reserves for unearned assessments, loss
reserves and loss expense reserves and for the determination and distribution
of assessment and/or investment refunds, in accordance with sound actuarial
principles, including the assumptions and methodology used;
12. With respect to funds providing for
self-insurance of workers' compensation liabilities; the bylaws of each fund
shall:
i. Guarantee benefit levels equal to
those required by the workers' compensation law and other applicable statutes
and provide a plan for the prompt payment of such benefits. Information
documenting an individual member's financial strength and liquidity shall be
made available to the Department upon the Department's written request and in a
form specified by the Department;
ii. Mandate a loss fund in an amount at least
$ 250,000 for the fund's first year of operation and at least $ 500,000 for
each subsequent year of operation unless otherwise approved by the
Commissioner;
iii. Unless otherwise
approved by the Commissioner, provide for assessments based upon the Experience
Rating Plan provided for in the New Jersey Workers' Compensation and Employers'
Liability Insurance Manual on file with the Commissioner; and
13. Be accompanied by a
nonrefundable filing fee in the amount of $ 1,500.
(c) The bylaws shall be accompanied by the
following information and documentation and any amendments thereto:
1. Designation of the fund commissioners,
administrator and custodian of the fund's assets, as well as the chairman and
secretary, if any;
2. Copies of the
fund's prospective and executed agreements or contracts and any renewal or new
agreements or contracts with any administrator, servicing organization or
custodian of the fund's assets. Such agreements or contracts shall specify the
duties of, and compensation to be paid to, each such entity. Copies of the
above shall be accompanied by a list of all parties having or deriving any
interest, right or benefit in the servicing organization or administrator;
i. To the extent the terms and conditions of
any renewal agreement or contract and the parties thereto remain unchanged from
the prior year, a copy of the renewal agreement or contract shall not be
required. In lieu of filing a copy of the renewal agreement or contract, the
fund shall file a notice with the Department in the format of Exhibit A in the
chapter Appendix incorporated herein by reference, that the agreement or
contract and parties thereto remain unchanged from the prior year.
ii. Copies of any changes to the agreements
or contracts shall be filed with the Department within 10 days after such
changes are approved by the fund;
3. Where the fund retains risk on a
self-insured basis, a surety bond for the fund with a minimum penal sum of $
250,000, or a deposit in the amount of $ 250,000. The funds for the deposit
shall be obtained through an assessment solely for that purpose;
4. A fidelity bond for all persons handling
fund assets in a form and amount acceptable to the Commissioner;
5. A surety bond for the claims
administrator, or any other servicing organization deemed necessary by the
Commissioner in a form and amount acceptable to the Commissioner, and a surety
bond for any other servicing organization as deemed appropriate by the fund
commissioners in a form and amount acceptable to them;
6. Evidence of errors and omissions insurance
coverage for the servicing organization(s), administrator and producer, if
employed by the fund, who negotiates excess insurance or reinsurance on behalf
of the fund;
7. A designation and
appointment of an agent in New Jersey to receive service of process on behalf
of the fund as well as the address in this State where the books and records of
the fund will be maintained at all times;
8. A list of the fund commissioners and
executive officers, updated annually;
9. Data forms, in the format set forth in
Exhibit B in the chapter Appendix incorporated herein by reference,
incorporating the appropriate and necessary professional qualifications for
senior officers and directors of the administrator and servicing organizations
providing services to the fund updated and submitted to the Commissioner
annually. An entity providing services to more than one fund may submit one
data form for all funds formed pursuant to this subchapter that the entity
services;
i. To the extent the information
contained in the data forms remains unchanged from the prior year, the fund
need not file updated forms, provided that the fund files a notice with the
Department, in the format of Exhibit C in the chapter Appendix incorporated
herein by reference, that the same individuals are utilized and that the
information in the data forms remains unchanged from the prior year;
10. Copies of each insurance
policy or excess insurance contract purchased by the fund, including a copy of
the cover note or binder; and
11. A
description of any producer arrangement plan by which producers, who shall be
licensed pursuant to N.J.S.A. 17:22A-1 et seq., represent members in their
dealings with the fund. The description shall include, but not be limited to,
copies of all producer contracts, which shall include a description of the
producer's obligations, responsibilities and compensation; the duration of such
contracts; and an indication whether the contracts are subject to renewal.
Copies of renewal contracts or a notice of renewal shall also be provided
consistent with the requirements set forth in (c)2 above.
i. The compensation paid to producers shall
be reasonable;
12. A
cash management plan, which shall include the designation of depository
institution(s) for the holding of fund monies and the fund's investment
policy;
13. A copy of the
application form to be utilized by the fund for prospective new members
applying for membership in the fund; and
14. Where the fund retains risk on a
self-insured basis, copies of audited financial statements of each prospective
member for each of the three years immediately preceding the date of
application for approval.
(d) Each joint insurance fund shall,
concurrently with the filing of its bylaws as provided at
11:15-6.6(a),
file its risk management program and any amendments thereto with the Department
as specified in (e) below.
(e) The
commissioners shall prepare, or cause to be prepared, a plan of risk management
for the joint insurance fund. The program description shall include, but not be
limited to:
1. The perils or liabilities to
be insured against;
2. The limits
of coverages, whether self-insurance, direct insurance purchased from a
commercial carrier, or reinsurance;
3. The amount of risk to be retained by the
fund;
4. The amount of unpaid
claims to be established;
5. The
proposed method of assessing contributions to be paid by each member of the
fund;
6. Procedures governing loss
adjustment and legal fees;
7.
Coverage to be purchased from a commercial insurer, if any;
8. Reinsurance to be purchased, if any, and
the amount of premium therefor;
9.
Procedures for the closure of fund years including the maintenance of all
relevant accounting records;
10.
The assumptions and methodology used for the calculation of appropriate
reserves required to be established, maintained and administered in accordance
with sound actuarial principles pursuant to (a)10 above; and
11. The maximum amount a certifying and
approving officer may approve for payment pursuant to
11:15-6.2 1.
(f) The Commissioner may, at the time of
filing of the bylaws and plan of risk management and whenever thereafter he or
she deems it expedient, but at a minimum not less frequently than once every
five years, make or cause to be made, an examination of the assets and
liabilities, financial condition, method of conducting business and all other
affairs of any fund. For the purpose of the examination, the Commissioner may
retain attorneys, appraisers, independent actuaries, independent certified
public accountants or other professionals or specialists as examiners, or may
request the fund commissioners to authorize and employ such person or persons
to conduct the same or to assist therein as he deems advisable. The reasonable
expenses of the examination shall be fixed and determined by the Commissioner,
and such expenses shall be paid by the fund examined to the appropriate entity
or person upon presentation of a detailed account.
1. For purposes of completing an examination
of any fund pursuant to
17:49A-14 and this subchapter, the
Commissioner may examine or investigate any person, or the business of any
person, insofar as such examination or investigation is, in the sole discretion
of the Commissioner, necessary or material to the examination of the
fund.
2. Every fund or person from
whom information is sought, including its officers, directors and agents, shall
provide the Commissioner or other person appointed as an examiner pursuant to
this subsection, timely, convenient, and free access at all reasonable hours at
its offices to all books, records, accounts, papers, documents and any or all
computer or other recordings relating to the property, assets, business and
affairs of the fund being examined.
3. The administrator and servicing
organization(s), and their officers, directors, employees and agents, or other
person, shall facilitate the examination and aid in the examination so far as
it is in their power to do so. The Commissioner may, in accordance with the
procedures set forth in
11:15-6.8, suspend or terminate
the authority of any fund, if the fund, by its administrator, servicing
organizations, or officers, directors, employees, or agents thereof, refuses to
submit to an examination or to comply with any reasonable request of the
examiners.