Sec. 38a-1003. Group certificate of approval. Application. Fees. (a) A proposed workers’ compensation self-insurance group shall file with the commissioner its application for a certificate of approval accompanied by a nonrefundable filing fee in the amount of two hundred fifty dollars. Such application shall include the group’s name, location of its principal office, date of organization, name and address of each member and such other information as the commissioner may reasonably require, together with the following:
(1) Proof of compliance with the provisions of subsection (b) of this section;
(2) A copy of the articles of association, if any;
(3) A copy of agreements with the administrator and with any service company;
(4) A copy of the bylaws of the proposed group;
(5) A copy of the agreement between the group and each member securing the payment of workers’ compensation benefits, which shall include a provision for payment of assessments as provided in section 38a-1018;
(6) Designation of the initial board of trustees and administrator;
(7) The address in this state where the books and records of the group shall be maintained at all times;
(8) A pro forma financial statement on a form acceptable to the commissioner showing the financial ability of the group to pay the workers’ compensation obligations of its members;
(9) An actuarial feasibility study prepared (A) by an independent person with a designation of Fellow of the Casualty Actuarial Society (FCAS) or (B) by a member of the American Academy of Actuaries (MAAA) with experience in making Connecticut workers’ compensation actuarial projections. Such study shall be based on a consolidated summary of the historical workers’ compensation claims loss experience and the allocated loss expenses of the member applicants of the group over a period of the most recent completed three full policy years, as well as the current partially completed policy year to the most current quarter under the current policy; and
(10) Proof of payment to the group by each member of not less than twenty-five per cent of that member’s first year estimated annual net premium on a date prescribed by the commissioner. Each payment shall be considered to be part of the first year premium payment of each member, if the proposed group is granted a certificate of approval by the commissioner.
(b) To obtain and to maintain its certificate of approval, a workers’ compensation self-insurance group shall comply with the following requirements as well as any other requirements established under the provisions of chapter 568. Such group shall have:
(1) A combined net worth of all members of a group of private employers of at least five million dollars. Such group shall maintain a minimum working capital of two hundred fifty thousand dollars. The minimum premium or portion thereof required in subdivision (1) of subsection (a) of section 38a-1017 shall be used to satisfy the working capital requirements of this section.
(2) A security, in the amount of five hundred thousand dollars or more and such security shall be in the form of a surety bond, security deposit or financial security endorsement or any combination thereof. If a surety bond is used to meet the security requirement, it shall be issued by a corporate surety company authorized to transact business in this state. If a security deposit is used to meet the security requirement, such securities shall be limited to bonds or other evidence or indebtedness issued, assumed or guaranteed 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; or any bond or security issued by a state of the United States of America and backed by the full faith and credit of the state. Any such securities shall be deposited with the State Treasurer and assigned to and made negotiable by the chairman of the Workers’ Compensation Commission pursuant to a trust document acceptable to the commissioner. Interest accruing on a negotiable security so deposited shall be collected and transmitted to the depositor provided the depositor is not in default. A financial security endorsement, issued as part of an acceptable excess insurance contract, may be used to meet all or part of the security requirement. The bond, security deposit or financial security endorsement shall be: (A) For the benefit of the state solely to pay claims and associated expenses; and (B) payable upon the failure of the group to pay workers’ compensation benefits that it is legally obligated to pay. The commissioner may establish and adjust from time to time, requirements for the amount of security based on differences among groups in their size, types of employment, years in existence and other relevant factors.
(3) Specific and aggregate excess insurance in a form, in an amount, and by an insurance company acceptable to the commissioner. The commissioner may establish minimum requirements for the amount of specific and aggregate excess insurance based on differences among groups in their size, types of employment, years in existence and other relevant factors, and may permit a group to meet this requirement by placing in a designated depository securities of the type referred to in subdivision (2) of this subsection.
(4) An estimated annual standard premium of at least one million dollars during a group’s first year of operation and annually thereafter. Such amount may be offset or reduced by depositing equivalent liquid assets in an interest-bearing claims reserve account established in the name of the proposed workers’ compensation self-insurance group. Such proposed workers’ compensation self-insurance group shall not pledge, hypothecate or otherwise encumber its assets to secure its debt, guaranty or obligations. No single member applicant shall have more than twenty per cent of the total combined standard premium of the group.
(5) An indemnity agreement jointly and severally binding the group and each member thereof to meet the workers’ compensation obligations of each member. The indemnity agreement shall be in a form prescribed by the commissioner and shall include minimum uniform substantive provisions prescribed by the commissioner. Subject to the commissioner’s approval, a group may add other provisions as are necessary to perform its obligations.
(6) A fidelity bond for the administrator in a form and amount prescribed by the commissioner.
(7) A fidelity bond for the service company in a form and amount prescribed by the commissioner. The commissioner may also require the service company providing claim services to furnish a performance bond in a form and amount he prescribes.
(c) A group shall notify the commissioner of any change in the information required to be filed under subsection (a) of this section or in the manner of its compliance with subsection (b) of this section no later than thirty days after the change.
(d) The commissioner shall evaluate the information provided by the application required to be filed under subsection (a) of this section to assure that no breach in funding exists and that the funds necessary to pay workers’ compensation benefits will be available.
(e) The commissioner shall act upon a completed application for a certificate of approval within sixty days. If, because of the number of applications, the commissioner is unable to act upon an application within the initial sixty-day period, the commissioner shall have an additional sixty days to act.
(f) The commissioner shall issue to the group a certificate of approval upon finding that the proposed group has met all requirements, or the commissioner shall issue an order refusing the certificate setting forth reasons for such refusal and his finding as to why the proposed group does not meet all of the requirements.
(g) Each workers’ compensation self-insurance group shall be deemed to have appointed the commissioner as its agent for receipt of service of legal process pursuant to section 38a-25. The appointment shall be irrevocable, shall bind any successor in interest and shall remain in effect as long as there is in this state any obligation or liability of the group for workers’ compensation benefits.
(P.A. 96-267, S. 4; P.A. 08-181, S. 4.)
History: P.A. 08-181 amended Subsec. (b)(4) by adding provisions re offset or reduction of estimated annual standard premium by depositing equivalent liquid assets in reserve account.