New York Codes, Rules and Regulations
Title 12 - DEPARTMENT OF LABOR
Chapter V - Workers' Compensation
Subchapter B - Self-insurers
Part 317 - Group Self-insurance
Section 317.8 - Integrity of the group self-insurer's trust funds

Universal Citation: 12 NY Comp Codes Rules and Regs ยง 317.8

Current through Register Vol. 46, No. 12, March 20, 2024

Every effort shall be made by the group self-insurer, its trustees, its group administrator or other agent(s) to preserve the integrity, strength and liquidity of the group's fund so as to permit the timely and complete payment of all group claims and other liabilities. With the exception of groups consisting of municipal corporations, unless otherwise authorized by the chair, group self-insurers shall be subject to the following requirements with respect to trust funds.

(a) The group self-insurer, its trustees, its group administrator or other agent(s) shall not utilize any of the trust funds collected from group members or earned by the trust for any purpose not directly related to the payment of claims, security deposits, assessments, penalties, reasonable costs of operation, fixed costs such as excess insurance, the payment of earnings or refunds to group members, or other trust obligations. The group self-insurer, its trustees, its group administrator or other agent(s) shall not borrow money from the trust fund or in the name of the trust and shall not permit any lending, issuance of debt instruments or other forms of obligations and encumbrances, nor shall the group self-insurer, its trustees, its group administrator or other agent(s) extend credit to a member for the payment of contributions or assessments. This restriction shall not preclude the group self-insurer from permitting fixed installment plans, not to exceed one year, for the payment of members' contributions or assessments.

(b) The trust assets of the group self-insurer shall not be commingled with the assets of any member, nor shall the funds dedicated to the payment and administration of claims, assessments, and other costs arising under the Workers' Compensation Law, or to employer liability costs, be commingled with any other funds, such as those dedicated to pension and health benefits.

(c) Subject to the limitations set forth in subdivision (d) of this section, a group self-insurer, its trustees, its group administrator or other agent(s) may invest any funds of the trust which are not necessary for the payment of short term obligations of the trust in the following:

(1) government obligations: obligations which are not in default as to principal or interest, which are valid and legally authorized, and which are issued or guaranteed by:
(i) the United States or by any agency or instrumentality thereof;

(ii) any state in the United States; or

(iii) any agency or instrumentality of any state in the United States, provided that such government obligations shall be by law payable, as to both principal and interest, from taxes levied or adequate special revenues pledged or otherwise appropriated;

(2) obligations of American institutions: obligations which are issued by any solvent American institution which are not in default as to principal or interest provided such obligations:
(i) are rated A or higher (or the equivalent thereto) by a securities rating agency recognized by the superintendent; or

(ii) have been given the highest quality designation by the Securities Valuation Office of the National Association of Insurance Commissioners;

(3) preferred shares of American institutions: preferred shares issued by a solvent American institution.

(4) Equity interests: investments in common shares of any solvent American institution, if such equity interests are registered on a national securities exchange, as provided in the Securities Exchange Act of 1934, 15 U.S.C. sections 78 a - 78kk or otherwise registered pursuant to said act and, if so otherwise registered, price quotations therefor are furnished through a nationwide automated quotations system approved by the National Association of Securities Dealers, Inc.

(d) Investments of group self-insurers under subdivision (c) of this section shall be subject to the following limitations:

(1) no group self-insurer shall invest in the obligations or the preferred or common shares of any one American institution in an amount which exceeds five percent of total trust assets nor shall any group self-insurer invest in the obligations or the preferred or common shares of American institutions in an amount which exceeds 25 percent of total trusts assets; and

(2) no group self-insurer shall invest trust assets in investment securities or obligations of a group member or a group member's parent, subsidiary, or affiliate or any person or entity under contract with the group self-insurer.

(e) A group self-insurer, its trustees, its group administrator or other agent(s) shall not distribute dividends or excess earnings if such distribution reduces total assets below total liabilities. Prior written notification shall be provided to the chair at least 30 days prior to the issuance of any such distribution.

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