Current through Register Vol. XLI, No. 38, September 20, 2024
4.1. Before a pool may begin to offer civil
liability coverage to members, the following must be filed with the Commissioner:
4.1.a. A copy of a financial plan which must set
forth:
4.1.a.1. The insurance coverages to be
offered by the pool, applicable deductible levels, and the maximum level of claims
to be self-insured against;
4.1.a.2. The
pool's proposed rates, which should not be excessive, inadequate or unfairly
discriminatory taking into account all underwriting, exposure and claims history
when pricing any current or prospective pool members. A pool's rates are not subject
to prior approval by the Commissioner , however appropriate regulatory action may be
taken if he or she determines that the rates are not in compliance with this
rule;
4.1.a.3. The amount of cash
reserves as are necessary, in the exercise of sound and prudent actuarial judgment,
to cover potential pool members and employee liability, expense, loss, and damage,
which cash reserves may be funded by the issuance of certificates of participation
by the pool and its members and reinsurance; and
4.1.a.4. The amount of aggregate excess insurance
or reinsurance coverage to be purchased in the event that the pool's resources are
exhausted in a given fiscal period;
4.1.b. A copy of a plan of management which
describes the governing authority of the pool, which must be a board of directors,
and provides the following with regard to the board:
4.1.b.1. The manner in which member contributions
to the pool will be determined;
4.1.b.2.
The methods for maintaining reserves, levying and collecting assessments for
deficiencies, the financing of cash reserves and reinsurance, and disposing of
surplus;
4.1.b.3. The basis upon which
new members may be admitted to, and existing members may leave or have membership
terminated by the pool;
4.1.b.4. The
identification of funds and reserves by exposure areas;
4.1.b.5. The manner in which the pool will be
administered in the event of termination or insolvency; and
4.1.b.6. Any other provisions that may be
considered by the members or the Commissioner to be necessary or desirable for the
operation of the pool;
4.1.c.
A copy of the articles of incorporation;
4.1.d. A copy of the bylaws of the proposed
pool;
4.1.e. A copy of the form or forms
to be used for the member agreement, which must set forth at a minimum the rights,
privileges and obligations of the member and the terms, coverages, limits and
deductibles of the plan;
4.1.f. A copy
of the proposed policy form or forms, which are not subject to prior approval by the
Commissioner;
4.1.g. Designation of the
initial or interim supervisory board, at least a majority of which must be pool
members, and the administrator, together with pertinent biographical information for
each member of the board and for the administrator or the principal officers of the
corporation serving as administrator;
4.1.h. The address within West Virginia where the
books and records of the pool will be maintained at all times;
4.1.i. A confirmation of a fidelity bond covering
the administrator and its employees in an amount sufficient to protect the pool
against the misappropriation or misuse of any monies or securities;
4.1.j. A projection of administrative expenses for
the first year of operation in a dollar amount and as a percentage of the estimated
annual contributions;
4.1.k. Proof of
payment of contributions by members into a depository account of an amount between
$250,000 and $500,000 that, in the Commissioner's discretion, constitutes sufficient
capital; and
4.1.l. A composite listing
of the estimated annual gross contributions which may, in addition to cash
contributions, be made up of proceeds from the sale of certificates of participation
in the premium stream of the pool, to be developed by each organizing member of the
pool individually and in the aggregate for the pool. Contributions must be based on
reasonable assumptions and certified by an actuary as to the sufficiency of the
contributions.
4.1.m. The authorization
given in paragraph 3, subdivision a and paragraph 2, subdivision b of this
subsection and in subdivision 1 of this subsection to issue certificates of
participation as a means of providing capital for the pool, establishing adequate
reserves and purchasing reinsurance is limited to those political subdivisions that
are authorized to issue public debt pursuant to other applicable law.
4.2. A pool's application for
authorization to offer workers' compensation coverage is subject to the requirements
of W.Va. Code §
23-2-9(a)(2)
and W.Va. Code St. R. § 85-18-5 except that:
4.2.a. In lieu of the requirement in §5.2 of
such rule that an applicant submit financial statements for the last 3 years, the
pool shall be required to fully secure all of its projected claims liabilities in a
form of surety approved by the Commissioner, and shall continue to fully secure its
projected liabilities on an ongoing basis until such time that the pool is able to
produce 3 years of audited financial statements which do meet the Commissioner's
financial condition benchmarks.
4.2.b.
Instead of the application being subject to approval by the Industrial Council in
accordance with §5.5.a of such rule, the Commissioner is responsible for
approving or disapproving the application.
4.3. Any subsequent revisions to documents filed
with the Commissioner pursuant to subsection 4.1 of this section must also be filed
with the Commissioner.
4.4. Every member
of a group self-insurance pool shall execute a member agreement which shall set
forth the rights, privileges and obligations of the member, and the terms,
coverages, limits, and deductibles of the Plan. Member agreements must, at a
minimum, disclose the following:
4.4.a. The
coverages provided;
4.4.b. The period of
the coverage;
4.4.c. The amount of any
deductible per claim and in the aggregate;
4.4.d. The maximum amount of coverage to be borne
by the pool;
4.4.e. The contribution
amount and dates payment are due for the member;
4.4.f. The basis upon which each member's
contribution is determined and under what circumstances additional assessments of
the members maybe made, including the possibility that assessments may continue
after the member's membership in the pool has been discontinued;
4.4.g. The circumstances under which a member's
participation in the pool may be terminated, including for non payment of
contributions or assessments, and a plan to be followed in the event the pool is
dissolved;
4.4.h. A description of the
excess coverage for the pool as to its coverage per occurrence, coverage per
occurrence per person, if appropriate, and in the aggregate;
4.4.i. The pool's obligations to provide a defense
for the member in the event of a claim; and
4.4.j. With respect to civil liability coverage, a
prominent disclosure notice that must be signed by a duly authorized officer of the
member, which must use the following or substantially similar language:
"The pool is not protected by any West Virginia insurance guaranty
association against default due to insolvency. In the event of insolvency, members
and persons filing claims against members may be unable to collect any amount owed
to them by the pool regardless of the terms of this member agreement. In the event
that the pool is in a deficit position, a member may be liable for any and all
unpaid claims against the member."
4.4.k. With respect to workers' compensation
coverage, a member agreement under which each member agrees to assume and discharge,
jointly and severally, any liability under West Virginia workers' compensation laws
of any and all employers party to the agreement and which provides that, in addition
to the rights of the pool, in the event of failure of the pool to enforce such
rights after reasonable notice to the pool, the Commissioner shall have the right
independently to enforce on behalf of the pool the joint and several liability of
its members under West Virginia workers' compensation laws and the liability of
members for any unpaid contributions and assessments;
4.5. The costs of funding the pool may be
allocated among the funds or accounts of the pool members on the basis of their
relative exposure and loss experience. A pool member is not liable for any amount in
excess of amounts payable pursuant to terms of the member agreement for
participation in the pool.
4.6. The
board must act diligently to limit the pool's exposure on any loss on any one risk
or hazard.
4.7. The board's
responsibilities include, but are not limited to, retaining control of all monies
collected and directing the disbursement of such monies; levying upon the members
additional assessments in proportionate amounts when needed to supplement the pool's
surplus and to assure payment of its obligations; actively collecting delinquent
accounts resulting from past due contributions of members and taking appropriate
action to declare a delinquent member ineligible for coverage from the pool until
such time as the delinquency and cost of collection have been fully recovered; and
adopting its own rules and procedures as it considers necessary for the efficient
and actuarially sound operation of the pool, provided the rules and procedures are
consistent with this rule.
