Current through Register Vol. 35, No. 6, March 26, 2024
A.
Application and maintenance:
(1) All the
requirements for application and maintenance of a certificate of group
self-insurance are contained in NMSA 1978, Section 52-6-5. In addition, the
following shall apply:
(a) Submit with the
application a non-refundable fling fee of five hundred dollars
($500.00).
(b) The application
shall include the group's pro forma financial statement, following generally
accepted accounting principles, presented in a format acceptable to the
director.
(c) If a surety bond is
posted to satisfy the security requirements of the act, the surety bond shall
be written by an insurance company rated "A" or better by A.M. Best or similar
rating service approved by the director written by a New Mexico admitted
surety.
(d) If a financial security
endorsement is posted to satisfy the security requirements of the act, the
instrument shall be written by a financial institution with locations in New
Mexico rated "good" or better by Bauer Financial or similar rating service
approved by the director.
(e)
Specific excess insurance shall be written with statutory upper limits. The
insurance shall be written by an insurance company rated "A" or better by A.M.
Best or similar rating service approved by the director, domiciled within the
United States of America or an alien insurer listed in the national association
of insurance commissioner's (NAIC) quarterly listing of alien insurers, the
policy must include the current New Mexico amendatory endorsement.
(f) The required fidelity bond for the
service company providing claims service shall be written at a minimum of two
hundred fifty thousand dollars ($250,000) and issued by a New Mexico admitted
carrier.
(g) A performance bond
issued by a New Mexico admitted carrier of two hundred fifty thousand dollars
($250,000) shall be provided for the service company providing claims service,
if requested by the director.
(h) A
fidelity bond for any member of the board of trustees of the group having
signatory authority with respect to the group's funds or investments, or as a
condition precedent to any board of trustees action creating or changing such
signatory authority, is required and shall be written at a minimum of two
hundred fifty thousand dollars ($250,000) and issued by a New Mexico admitted
carrier.
(i) The required fidelity
bond for the administrator shall be written at a minimum of two hundred fifty
thousand dollars ($250,000) and issued by a New Mexico admitted
carrier.
(j) A statement of the
type of business in which employers in the proposed group are engaged and an
explanation of how they meet the criteria of "same or similar" contained in
NMSA 1978, Section 52-6-2(B).
(k)
An actuarial report/study based on at least 3 years loss history of the group's
proposed members, including loss projections for the group.
(2) After considering the group's
application and all supportive documentation, the director shall act upon a
completed application for a certificate of approval within sixty (60) business
days. If, because of the number of applications pending, the director is unable
to act upon an application within that period, the director shall have an
additional sixty (60) days to act.
(3) The definitions in Subsections A and B of
11.4.9.7
NMAC shall be applied prospectively only, commencing with the effective date of
this rule. Existing members of a group which would be ineligible for membership
under this rule shall not be excluded from membership in the group on the basis
of this rule. In the event that a member's coverage is not reinstated within
thirty days of the delivery to the director of the notice of cancellation or
termination required in NMSA 1978, Section 52-6-9 (B), the former member will
be considered a new applicant for purposes of qualifying as a member of the
group.
(4) Each group will screen
applicants to their group based upon the definition of "same or similar type of
business" contained in this rule. No group shall admit any prospective member
that is not in the same or similar type of business.
(a) Each group will designate in writing for
the director, a general category from the standard industrial classification
manual, designated as a lettered division heading, which most closely fits the
type of businesses represented by the sponsoring trade or professional
association.
(b) The director will
presume that businesses properly included in that division are in the same or
similar type of business as are other businesses in the group.
(c) A group may request in writing that
additional two digit major group codes, three digit industry group codes or
four digit industry codes from the standard industrial classification manual,
other than those under the group's designated lettered division heading, be
approved.
(i) The request for designation of
a business as a same or similar type of business for a group shall be
accompanied by a written explanation which must satisfy the director that the
businesses are significantly related to the sponsoring trade association's
industry.
(ii) The director may
consult widely accepted publications which classify types of businesses for the
purpose of considering the approval or disapproval of such requested
designations.
(d) Upon
prior written approval by the director, a group may add to its roster an
individual business which is not otherwise clearly eligible for membership. A
request for approval of such individual business shall be accompanied by a
written explanation demonstrating to the satisfaction of the director that the
business, because of its particular circumstances should be deemed to be in the
same or similar type of business as the other members of the group.
(e) The director shall approve or disapprove
such requests in writing.
(f) The
WCA will follow its established protocol to ensure prompt response to requests
for such designations.
(5) By submitting the roster of additions the
group certifies that any additions to the group's roster are in the same or
similar type of business as the other members of the group.
(6) Groups may offer claims "buy back"
programs to their members provided: a written narrative describing the program
shall be provided to the participants and the WCA; and, details of claims
bought back must be provided to the participating member, or its designee, or
to the WCA upon request.
B. Evaluation factors: The director shall
decline to approve an application for group self-insurance upon a finding that
the proposed group does not meet all the requirements of the Group
Self-Insurance Act and the rules thereunder. In determining whether a group can
meet the requirements of the Group Self-Insurance Act (NMSA 1978, Sections
52-6-1 through 52-6-25) and the rules thereunder, the factors to be considered
by the director shall include, but not be limited to, the following:
(1) organizational structure and management
background;
(2) compliance with
NMSA 1978, Section 52-6-2(B);
(3)
services provided by the group;
(4)
statistical reporting and expertise;
(5) workers' compensation loss history and
risk;
(6) source and reliability of
financial information;
(7)
sufficiency of premium;
(8)
proposed bylaws, underwriting guidelines, membership application, and
membership agreement;
(9) the
distribution of group members as to size, premium and loss exposure;
(10) adequacy of reserve
methodology;
(11) proposed excess
insurance coverage;
(12) adequacy
and form of security;
(13) claims
administration personnel, policies and procedures;
(14) safety program;
(15) financial condition of proposed
members;
(16) results of financial
evaluation of the group.
C. Financial responsibility:
(1) The group shall submit audited financial
statements on an annual basis within one hundred and eighty (180) days of its
fiscal year end.
(2) Every group
self-insured shall have actuarially determined financial strength sufficient to
meet their obligations.
(3) The
actuarial opinion and report required by NMSA 1978, Section 52-6-12, shall be
fled annually and include the actuarial report from which the reserves for
known claims and associated expenses and claims incurred but not reported and
associated expenses were obtained.
(4) The group shall set rates utilizing the
advisory loss costs published by the national council of compensation
insurance, and adhere to uniform classification system, uniform experience
rating plans, and manual rules fled with the superintendent of insurance,
provided, however:
(a) Permission to apply
premium discounts shall be requested by the group, subject to approval by the
director, and shall be based on the group's expense levels and loss
experience.
(b) Permission to make
and use its own rates shall be requested by the group, subject to approval by
the director and shall be based on at least three years of the group's
experience.
(c) All requests for
permission regarding rates or discounts shall be accompanied by an actuarial
opinion supporting the request.
(d)
Retroactive rate decreases and retroactive premium discounts are
prohibited.
(e) All requests for
rate reductions or premium discounts shall be approved or disapproved by the
director within sixty (60) days after the submission of the request and any
additional data requested by the director.
(5) Except as provided for in Section
52-6-5
B(1) NMSA 1978, each group shall annually certify to the director the group's
continued compliance member net worth requirements by submitting a compilation
consisting of each member's assets, liabilities and net worth. No member's
financial statements used for this compilation shall be more than 12 months
old.
(6) In any month where the
group's membership roster changes, each group shall submit to the
administration an update of additions and deletions to the group's membership
roster.
(7) Each group shall
provide within 30 days of the end of each calendar quarter a roster of members
including the number of employees employed by each member on the last day of
the quarter.
(8) The group shall
promptly notify the director of insolvencies or bankruptcies of
members.
(9) The board of trustees
shall adopt a policy statement regarding the admission to, or continued
membership in, the group of any prospective member or current member with
negative net worth. Such statement shall be provided to the director and to
each member and prospective member of the group.
(10) Permission to declare and issue a
dividend or refund shall be requested by the group not less than twelve months
after the end of the fund year, subject to approval by the director, and shall
be based on funds in excess of the amount necessary to fund all obligations for
that fund year.
(a) All requests for dividend
distributions shall be accompanied by financial information and an actuarial
opinion supporting the request.
(b)
All dividend refunds shall be approved or disapproved by the director within
sixty (60) days after the submission of the request, and any additional data
requested by the director.
(11) The group shall provide proof of
coverage for all excess insurance policies and fidelity bonds within thirty
(30) days of effective date or renewal, and complete excess insurance policies,
and fidelity bonds within ninety (90) days. Unauthorized changes appearing in
any policy will require immediate remediation by way of retroactive
reinstatement of approved terms or other measures deemed necessary by the
director.
(12) The group must
provide proof of renewal or replacement of posted security fifteen (15) days
before expiration date.
(13) The
group shall provide loss runs on a semi-annual basis on a format approved by
the director, by January 31 and July 31 each year.
D. Certification: By signing and submitting
an application, and as a condition of the continuing privilege of certification
as a group self-insurer under the Group Self-Insurance Act, the group agrees
to:
(1) promptly discharge all of the group's
liabilities to injured employees or their dependents in accordance with the
requirements of the Act and to comply with the Act and any rules of the
director adopted thereunder;
(2)
obtain the director's approval prior to making any change in any excess
insurance policy, fidelity bond, or security which results in diminished
coverage;
(3) notify the director
of changes in the kind or amount of services provided by any third party claims
administrator;
(4) promptly notify
the director of any material change in the group's financial condition or group
operations;
(5) cooperate fully
with administration representatives in any evaluation or audit of the group
self-insurance program, and to resolve, in good faith, issues raised in those
evaluations or audits; it is specifically contemplated that such evaluation and
audit issues may include notice of inadvertent or mistaken failures to pay
benefits which were not paid when due, where no apparent ground existed at the
time to contest the payment in good faith; failure to correct such inadvertent
or mistaken failures to pay, after notice, may constitute a failure to resolve
such audit issues in good faith in violation of this rule, and may result in
any sanction appropriate under the group Self-Insurance Act; any dispute
concerning issues raised shall be referred by the self-insurance bureau chief
to the director for determination if not first informally resolved;
(6) the group shall be responsible for
compliance with the act and the rules and shall be subject to sanction by the
administration for acts or omissions in violation of the act or the rules by
itself or by any person or entity acting in an agency relationship with the
group; it shall be a defense to any sanction proposed that the group has
appropriately fulfilled its duty to monitor, educate and control its agents;
nothing in this rule is intended to alter the liability for workers
compensation benefits of groups or their agents;
(7) The group agrees to comply with any
requirements specified in the group's regular, probationary or provisional
certificate of self-insurance.
E. Probationary certification: The group
shall be responsible for compliance with the Act and the rules. Failure to
comply with the Act or the rules may result in the issuance of a probationary
certificate of group self-insurance.
(1) A
probationary certificate means the revocation of the group's existing
self-insurance certificate.
(2) The
duration of the probationary period shall be within the director's discretion
but shall not extend for more than one year's time.
(3) The group may be sanctioned for any
violations that occur during the probationary period pursuant to NMSA 1978,
section
52-6-21.
(4) If the group fails to come into
compliance with the act and the rules by the end of the probationary period,
the group's status as a self-insured may be revoked.
(5) All conditions of the act and the rules
still apply and nothing in this rule is intended to alter the responsibilities
for workers' compensation benefits of groups or their agents.
(6) The probationary certificate may be
withdrawn and the original certificate of self-insurance may be reinstated if
the group comes into full compliance with the Act and the rules. The
reinstatement of the original certificate shall be at the sole discretion of
the director.
(7) A probationary
certificate of self-insurance shall be made by an order signed by the director
or by his authority. Every such order shall state its effective date and shall
concisely state: what is ordered; the grounds on which the order is based; and
the provisions of the act or rules pursuant to which the action is
taken.
F. Waiver: Any
requirement not mandated by statute contained in these rules may be varied or
waived by specific written authorization of the director. Any interested person
may request such a variance or waiver in writing.