Current through Register Vol. 48, No. 3, March 22, 2024
A. An
employer may apply to individually self-insure by filing a Form 7, Application
To Individually Self-Insure, with the Commission's Self-Insurance Division and
as follows.
(1) Complete and sign the Form 7
and attach to the form the following:
(a) A
two hundred fifty dollar application fee; and
(b) A statement describing in detail the
proposed claims administration program including the resume of each member of
the claims administration staff if claims will be administered by the employer,
or a copy of the service contract and quote for service fee if claims will be
administered by a third party claims administrator; and
(c) A description of an outside safety
consultant program and annual fee, if any; and
(d) Three year's audited financial
statements, audited according to generally accepted accounting principles, or a
10K report for each of the previous three years; and
(e) Quotes for excess insurance according to
R.67-1503.
(2) In lieu
of submitting audited financial statements, the sworn statement or affidavit of
an independent auditor may be provided which verifies, based on financial
ratios and guidelines set by the Commission, the financial condition of the
employer.
(a) Upon application to self-insure,
the Self-Insurance Division will provide the applicant with the following
financial ratios to be used by the independent auditor. The ratios provided to
the applicant will be at the twenty-fifth percentile for the applicant's
industry and, if available, asset size will be obtained by the Self-Insurance
Division from an independent financial information provider.
(1) Current Ratio. The current ratio is
calculated by dividing total current assets by total current
liabilities.
(2) Total Liabilities
to Net Worth. Total liabilities to net worth is calculated by dividing total
current liabilities and long term debt by net worth.
(3) Fixed Assets to Net Worth. Fixed assets
to net worth is calculated by dividing fixed assets by net worth.
(4) Return on Sales. Return on sales is
calculated by dividing net profit after taxes by annual net sales.
(5) Return on Assets. Return on assets is
calculated by dividing net profit after taxes by total assets.
(6) Return on Net Worth. Return on net worth
is calculated by dividing net profit after tax by net worth.
(b) The independent auditor must
provide to the Self-Insurance Division a sworn statement or affidavit that the
applicant has a net worth which equals or exceeds ten million dollars, that the
applicant exceeds all six ratios, that the applicant's ratios are based on
financial statements prepared according to generally accepted accounting
principles and that the ratios were calculated according to R.67-1501
A(2)(a).
B.
When a parent company applying to self-insure desires to include a subsidiary
company in the parent's self-insurance program, the parent company shall attach
to the Form 7 the following items in addition to the items in A(1)(a) through
(e) above:
(1) A separate Form 7 and a Form
7A, Corporate Guaranty, for each subsidiary company.
(2) A one hundred dollar application fee for
each subsidiary company.
C. When a subsidiary company applies to
self-insure under a parent company's existing self-insurance program, the
subsidiary company shall file a Form 7 as in A above and attach to the Form 7
the following items in addition to the items in A(1)(a) through (e) above:
(1) A Form 7A, Corporate Guaranty;
and
(2) A one hundred dollar
application fee.
D. When
a subsidiary of a parent company desires to create its own self-insurance
program, the subsidiary company shall file a Form 7, as in A above and attach
to the Form 7 the following items, in addition to the items in A(1)(a) through
(e) above:
(1) A Form 7A, Corporate Guaranty;
and
(2) A two hundred fifty dollar
application fee.
E. To
apply for approval of a proposed self-insurance fund, an officer of the
proposed fund shall file a Form 6, Application to Create a Self-Insurance Fund,
with the Commission's Self-Insurance Division. The Form 6 must be completed,
signed by an officer of the proposed fund, and have attached to it:
(1) A two hundred fifty dollar application
fee; and
(2) A copy of the proposed
fund's by-laws; and
(3) A current
audited financial statement, audited according to generally accepted accounting
principles, for each proposed member of the fund; and
(4) A list of the estimated standard premium
collected by the fund, by month, for the first fiscal year; and
(5) An indemnity agreement which jointly and
severally binds each member of the fund, signed by each proposed member;
and
(6) A statement describing in
detail the proposed claims administration program including the resume of each
member of the claims administration staff if claims will be administered by the
fund, or, a copy of the service contract and quote for service fee if claims
will be administered by a third party claims administrator; and
(7) Quotes for excess insurance according to
R.67-1503;
and
(8) A completed Form 6A,
Application for Membership in a Self-Insurance Fund for each employer applying
for membership in the proposed fund. The proposed members of the fund must have
a minimum combined total net worth of one million dollars.
(9) Fund investments shall be restricted to
bonds, notes, or other evidence of indebtedness by the United States of
America, or by an agency or instrumentality thereof, certificates of deposit in
a federally insured bank, shares or savings deposits in a federally insured
savings and loan association or credit union, certificates of deposit insured
by a commercial bank duly chartered under the laws of this State, and other
investments the Self-Insurance Division approves.
F. An employer may apply for membership in an
existing self-insurance fund as follows.
(1)
Qualify for membership in the self-insurance fund by:
(a) Operating a business similar in nature to
the businesses in the fund; and
(b)
Qualifying under the by-laws of the fund; and
(c) Being financially sound and have a net
worth of not less than twenty-five thousand dollars.
(2) To apply for membership in a
self-insurance fund, file a completed and signed Form 6A, Application for
Membership in a Self-Insurance Fund, with the Commission's Self-Insurance
Division and attach:
(a) A twenty-five dollar
application fee; and
(b) A current
financial statement.
G. The Self-Insurance Division will notify
the applicant by letter if the application does not contain required
information and attachments.
(1) The applicant
shall complete the application process within one hundred and twenty days from
the date of filing the application by providing requested information and
documentation required above.
(2)
Failure to complete the application process within one hundred and twenty days
from the date of filing the application shall be deemed a voluntary withdrawal
of the application.
(3) Further
requests for approval to individually self-insure, to create a self-insurance
fund, or to join a self-insurance fund shall be made by refiling the
application and attaching the application fee and attachments provided
above.
