760 IAC 1-75-3 - Certificate of registration
Authority: IC 20-42.5-2-1
Affected: IC 4-21.5-5; IC 27-1-3.1; IC 27-1-13-3
Sec. 3.
(a) A risk
pool may not engage in business in Indiana without first obtaining a
certificate of registration from the department.
(b) To obtain a certificate of registration,
a risk pool shall submit an application for a certificate of registration. The
application shall be on a form prescribed by the department. The application
shall be completed and submitted along with the following information:
(1) Copies of all current articles, bylaws,
participation agreements, trusts, and other documents describing the rights and
obligations of risk pool participants.
(2) The most recent audited financial
statement or, in the case of a start-up operation, a pro forma financial
statement of the risk pool for the next twelve (12) months.
(3) Proof of a fidelity bond protecting the
money, securities, and other property of the risk pool. Coverage shall be at
least equal to the insuring agreements of employee theft or employee
dishonesty. The definition of "employee" shall be broadened to include the
following:
(A) Leased employees.
(B) Agents.
(C) Noncompensated officers.
(D) Students.
(E) Volunteer workers.
(F) Designated agents.
The bond shall be written for at least the suggested minimum amount specified in the formula presented in the NAIC examiner's handbook.
(4) A
business plan for the risk pool.
(5) A feasibility study in compliance with
section 2 of this rule.
(6) A
signed statement from all of the founding participants that they have read the
feasibility study and have individually concluded they wish to proceed with the
creation of, and participation in, the risk pool.
(7) Copies of the following:
(A) Specimen coverage forms, rules, rates to
be charged, and underwriting guides.
(B) All insurance in force.
(C) Organizational chart illustrating all
entities affiliated with the risk pool.
(D) Agreements with service
providers.
(E) Stop loss, excess,
and reinsurance agreements, which shall include the stop loss attachment point
and aggregate retention.
(F) If a
risk pool offers worker's compensation through an insurer, a certificate of
insurance from an insurance company as required by section 5(c) of this
rule.
(8) A statement of
the costs for coverage, which must include an itemization of amounts for
administration, reserves, and other expenses associated with operation of the
risk pool, as required by section 6 of this rule.
(9) A statement of the risk pool's
contingency provisions for financing in the event of any of the following:
(A) Unexpectedly costly or ineffective risk
financing.
(B) Ongoing expenses
above budgeted amounts.
(C) Outlays
for unexpected or excessive losses.
(D) Income loss or expenses
incurred.
(E) Adverse loss
experience incurred from withdrawal of risk pool participants.
(10) Any assessment formula used
in subdivision (9) for determining the allocation of amounts needed between and
among risk pool participants.
(11)
The risk pool's:
(A) formulas for reallocation
and reassessment when adding or deleting members;
(B) formulas for assessment of risk pool
participants' contributions;
(C)
dividend payment policy and dividend allocation formula; and
(D) formula for reassessment or reallocation
upon termination or liquidation of the risk pool.
(12) Names and addresses of the following:
(A) The educational service center or centers
associated with the risk pool.
(B)
The members of the board of trustees of the risk pool.
(13) Biographical affidavits submitted on the
form prescribed by the NAIC for insurers for the following:
(A) The members of the board of
trustees.
(B) The trust
administrator and those performing:
(i)
actuarial;
(ii) financial;
(iii) legal;
(iv) loss control;
(v) underwriting; and
(vi) claims;
functions to be used by the risk pool.
(C) All other persons with
decision making authority for the risk pool.
(14) The application fee required by section
15 of this rule.
(15) A copy of all
proposed marketing materials.
(c) The commissioner:
(1) shall examine the application and
documents submitted by the applicant;
(2) may request any additional information
that he or she deems relevant to the application; and
(3) shall have the power to:
(A) conduct any investigation under IC
27-1-3.1 the commissioner may deem necessary;
(B) examine under oath any persons interested
in or connected with the risk pool; and
(C) grant or deny approval of an application
submitted under this section.
(d) A certificate of registration shall not
be issued until the commissioner approves the risk pool's application. The
commissioner may not approve an application unless the risk pool meets all of
the following requirements:
(1) The risk pool
must:
(A) consist of two (2) or more school
corporations;
(B) be controlled and
sponsored directly by risk pool participants;
(C) be operated pursuant to a trust agreement
by a board of trustees who shall:
(i) have
complete fiscal control over the risk pool;
(ii) be responsible for all operations of the
risk pool; and
(iii) be employees
of Indiana public school corporations or educational service centers;
and
(D) be:
(i) mutual in organizational form;
(ii) assessable; and
(iii) a not-for-profit
organization.
(2) The risk pool shall:
(A) have within its own organization adequate
facilities and competent personnel, acceptable to the commissioner, to service
the risk pool; or
(B) contract with
a third party administrator.
(3) The risk pool shall have applications
from not fewer than two (2) prospective risk pool participants. The annual
gross contributions to the plan shall not be less than one million dollars
($1,000,000) for a risk pool that covers only worker's compensation liability
and one million five hundred thousand dollars ($1,500,000) for a risk pool that
covers any lines other than, or in addition to, worker's compensation
liability.
(4) The risk pool shall
possess a written commitment, binder, or policy for stop loss insurance issued
by an insurer, reinsurer, or excess insurer with the equivalent of an A.M. Best
rating of not less than A-, authorized to do business in this state. The stop
loss insurance shall provide the following:
(A) Not less than sixty (60) days' notice to
the commissioner of any cancellation or nonrenewal of coverage.
(B) An aggregate stop loss attachment point
of not more than one hundred twenty-five percent (125%) of the amount of
expected claims for the following year.
(5) The risk pool contributions must be set
to fund at least one hundred percent (100%) of the aggregate retention plus all
other costs of the risk pool. The aggregate retention shall include all claims
below the stop loss attachment point. Amounts contained in a loss fund are
considered to be contributions that may be utilized by the risk pool to satisfy
this requirement. Funds shall be on deposit with the risk pool upon issuance of
its first policy.
(6) The risk pool
must have procedures acceptable to the commissioner for the following:
(A) The routine handling of claims.
(B) Handling claims in the event of
dissolution of the risk pool.
(7) The risk pool shall:
(A) obtain a fidelity bond in the amount
required by subsection (b)(3); and
(B) be operated in accordance with sound
actuarial principles.
(8) All funds of the risk pool shall be held
in trust in the name of the risk pool in a qualified financial institution. A
risk pool shall invest funds as described in IC
27-1-13-3(b).
Any other form of investment must be specifically approved by the commissioner.
The risk pool may:
(A) commingle the funds of
the risk pool participants; and
(B)
invest funds using a common investment policy.
(9) The risk pool's dividend:
(A) allocation formula; and
(B) payment policy;
must be acceptable to the commissioner.
(10) The risk pool's participation
application and participation agreement must contain the language required by
section 14 of this rule.
(e) A denial of an application shall:
(1) be in writing;
(2) specify the reasons for denial;
and
(3) provide notice of an
applicant's right to request a hearing. Any request for a hearing shall be
submitted within sixty (60) days of receipt of the department's denial. A final
order of the commissioner is a final order subject to judicial review under IC
4-21.5-5.
Notes
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