Rules & Regulations of the State of Tennessee
Title 0780 - Commerce and Insurance
Subtitle 0780-01 - Insurance Division
Chapter 0780-01-83 - Self-Insured Workers' Compensation Single Employers
Section 0780-01-83-.04 - APPLICATION FOR CERTIFICATE OF AUTHORITY

Universal Citation: TN Comp Rules and Regs 0780-01-83-.04

Current through September 24, 2024

(1) To apply for a Certificate of Authority, an Employer shall file with the Commissioner an application on a form adopted by the Commissioner, accompanied by a non-refundable filing fee as set under T.C.A. § 56-4-101(a)(1). A person in this state applying for a Certificate of Authority to act as an Employer shall, under penalty of refusal, suspension or revocation of the certificate of authority , declare therein that the statements made in the application are true, correct and complete to the best of the person's knowledge and belief.

(2) An application of an Employer or prospective Employer shall include the following documentation, together with such other information or documentation as the Commissioner may require:

(a) Financial statements.
1. The last three (3) Form 10-K's filed by the Employer with the U. S. Securities and Exchange Commissioner, if such Employer files such 10-K's; and

2. The Employer's independently audited financial statements according to Generally Accepted Auditing Standards of the American Institute of Certified Public Accountants with the accompanying footnotes and the auditor's opinion for the preceding three (3) fiscal years.

(b) Loss history.
1. Documentation evidencing the applicant's loss history to include the following:
(i) The applicant's organizational structure and management background;

(ii) The applicant's profit and loss history for the past three (3) years;

(iii) The applicant's workers' compensation loss history for the past three (3) years; and

(iv) The number of Employees employed by the applicant and/or affected by the applicant's self-insurance program.

(c) Administration.
1. A plan for claims administration that is acceptable to the Commissioner and that designates a third party administrator.
(i) An Employer may not contract for services with a third party administrator unless the third party administrator holds a certificate of authority issued by the Commissioner pursuant to any applicable statutes or rules.

2. Copies of each contract entered into with a person that provides claims services, underwriting services, or accident prevention services if the provider of those services is not an Employee of the applicant.

(3) The Commissioner shall evaluate the information contained in the application required to be filed under this Rule to assure that no gaps in funding exist and that funds necessary to pay the financial obligations of the Employer will be available on a timely basis. The Commissioner may, in addition to any other factors set forth in this Chapter, consider the following factors in reviewing an application for a Certificate of Authority under this Rule:

(a) The applicant's organizational structure and management background;

(b) The applicant's profit and loss history;

(c) The applicant's workers' compensation loss history;

(d) The source and reliability of the financial information submitted by the applicant;

(e) The number of Employees affected by self-insurance;

(f) The applicant's access to excess insurance markets;

(g) Financial ratios, indexes, or other financial measures that the Commissioner finds appropriate, including but not limited to the following:
1. Liquidity ratio;

2. Ratio of current assets to current liabilities;

3. Ratio of tangible net worth to long-term debt;

4. Ratio of tangible net worth to total liabilities;

5. Cash flow;

6. Working capital; and

7. Profitability.

(h) Any other information considered appropriate by the Commissioner.

(4) If an applicant is a subsidiary, the applicant's parent organization must guarantee the obligations imposed on the applicant by this Chapter and the Tennessee workers' compensation obligations as contained in T.C.A. § 50-6-405(a).

(5) The Commissioner may require any documents from the Employer necessary to verify the information contained in an application.

Authority: T.C.A. §§ 50-6-405(a), 50-6-405(b)(1)-(b)(2), 50-6-405(b)(8), and 50-6-405(h).

Disclaimer: These regulations may not be the most recent version. Tennessee may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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