Rules & Regulations of the State of Tennessee
Title 0780 - Commerce and Insurance
Subtitle 0780-01 - Insurance Division
Chapter 0780-01-54 - Self-Insured Worker's Compensation Pools
Section 0780-01-54-.11 - PREMIUMS AND RESERVES

Universal Citation: TN Comp Rules and Regs 0780-01-54-.11

Current through September 24, 2024

(1) A pool shall establish and maintain an aggregate surplus equal to:

(a) thirty percent (30%) of the unpaid claims liability of the pool. The pool may accumulate the surplus at a rate of ten percent (10%) per fund year over the next three (3) years. However, each pool shall have an aggregate surplus of thirty percent (30%) of the unpaid claims liability three (3) years from the effective date of this Chapter.

(2) Each pool shall establish through a qualified actuary a premium payment plan for its members and shall submit such to the Commissioner for his/her approval at least thirty (30) days prior to the beginning of the next fund year. The premium payment plan shall not include installment fees. The Commissioner may, in his/her discretion, disapprove a premium payment plan and require the pool to resubmit a premium payment plan for its members that is acceptable to the Commissioner.

(3) The commissioner may hold a hearing in accordance with the procedures set out in Tenn. Code. Ann. Title 4, Chapter 5, Part 3, to determine whether an actuary is qualified and, considering the evidence presented, may rule that the actuary is not qualified for purposes of expressing his or her opinion on the financial statements in the annual audited financial statement made pursuant to this Chapter and require the insurer to replace the actuary with another that the commissioner deems appropriate.

(4) Each pool shall establish and maintain adequate reserves for:

(a) Known claims and expenses associated therewith;

(b) Claims incurred but not reported and expenses associated therewith; and

(c) Bad or uncollectible debt reserves based on the historical experience of the pool or other pools, if no historical experience is available for the pool.

(5) In addition to the minimum requirements for reserves as set out in this Chapter, the Commissioner may require, after notice and opportunity for hearing, additional reserves so that a pool's reserves shall be reasonable in relation to the pool's outstanding liabilities and premiums and adequate to its financial needs. For purposes of this Rule, in determining whether a pool's reserves are reasonable in relation to the pool's outstanding liabilities and premiums and adequate to its financial needs, the following factors, among others, shall be considered:

(a) The size of the pool as measured by its assets, liabilities, reserves, premiums, and other appropriate criteria;

(b) The number and size of members in the pool;

(c) The nature and extent of the pool's excess coverage;

(d) The quality, diversification and liquidity of the pool's investment portfolio; and

(e) The recent past and projected future trend in the size of the pool's investment portfolio.

Authority: T.C.A. §§ 4-5-101 et seq., and 50-6-405(c) and (h).

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