Bill Text: MN HF1410 | 2011-2012 | 87th Legislature | Introduced
Bill Title: Workers' compensation self-insurance groups permitted to substitute an insurance policy for a security deposit to ensure payment of claims.
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Introduced - Dead) 2011-04-27 - Second reading [HF1410 Detail]
Download: Minnesota-2011-HF1410-Introduced.html
1.2relating to insurance; permitting workers compensation self-insurance groups
1.3to substitute an insurance policy for a security deposit to ensure payment of
1.4claims;amending Minnesota Statutes 2010, sections 79A.06, subdivision 5;
1.579A.24, by adding subdivisions.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. Minnesota Statutes 2010, section 79A.06, subdivision 5, is amended to read:
1.8 Subd. 5. Private employers who have ceased to be self-insured. (a) Private
1.9employers who have ceased to be private self-insurers shall discharge their continuing
1.10obligations to secure the payment of compensation which is accrued during the period of
1.11self-insurance, for purposes of Laws 1988, chapter 674, sections 1 to 21, by compliance
1.12with all of the following obligations of current certificate holders:
1.13 (1) Filing reports with the commissioner to carry out the requirements of this chapter;
1.14 (2) Depositing and maintaining a security deposit for accrued liability for the
1.15payment of any compensation which may become due, pursuant to chapter 176. However,
1.16if a private employer who has ceased to be a private self-insurer purchases an insurance
1.17policy from an insurer authorized to transact workers' compensation insurance in this state
1.18which provides coverage of all claims for compensation arising out of injuries occurring
1.19during the entire period the employer was self-insured, whether or not reported during
1.20that period, the policy will:
1.21 (i) discharge the obligation of the employer to maintain a security deposit for the
1.22payment of the claims covered under the policy;
1.23 (ii) discharge any obligation which the self-insurers' security fund has or may have
1.24for payment of all claims for compensation arising out of injuries occurring during the
1.25period the employer was self-insured, whether or not reported during that period; and
2.1 (iii) discharge the obligations of the employer to pay any future assessments to
2.2the self-insurers' security fund; provided, however, that a member that terminates its
2.3self-insurance authority on or after August 1, 2010, shall be liable for an assessment under
2.4paragraph (b). The actuarial opinion shall not take into consideration any transfer of the
2.5member's liabilities to an insurance policy if the member obtains a replacement policy as
2.6described in this subdivision within one year of the date of terminating its self-insurance.
2.7 A private employer who has ceased to be a private self-insurer may instead buy an
2.8insurance policy described above, except that it covers only a portion of the period of time
2.9during which the private employer was self-insured; purchase of such a policy discharges
2.10any obligation that the self-insurers' security fund has or may have for payment of all
2.11claims for compensation arising out of injuries occurring during the period for which the
2.12policy provides coverage, whether or not reported during that period.
2.13 A policy described in this clause may not be issued by an insurer unless it has
2.14previously been approved as to the insurer, form, and substance by the commissioner; and
2.15 (3) Paying within 30 days all assessments of which notice is sent by the security
2.16fund, for a period of seven years from the last day its certificate of self-insurance was in
2.17effect. Thereafter, the private employer who has ceased to be a private self-insurer may
2.18either: (i) continue to pay within 30 days all assessments of which notice is sent by the
2.19security fund until it has no incurred liabilities for the payment of compensation arising
2.20out of injuries during the period of self-insurance; or (ii) pay the security fund a cash
2.21payment equal to four percent of the net present value of all remaining incurred liabilities
2.22for the payment of compensation under sections176.101 and
176.111 as certified by a
2.23member of the casualty actuarial society. Assessments shall be based on the benefits paid
2.24by the employer during the calendar year immediately preceding the calendar year in
2.25which the employer's right to self-insure is terminated or withdrawn.
2.26 (b) With respect to a self-insurer who terminates its self-insurance authority after
2.27April 1, 1998, that member shall obtain and file with the commissioner an actuarial
2.28opinion of its outstanding liabilities as determined by an associate or fellow of the
2.29Casualty Actuarial Society within 120 days of the date of its termination. If the actuarial
2.30opinion is not timely filed, the self-insurers' security fund may, at its discretion, engage
2.31the services of an actuary for this purpose. The expense of this actuarial opinion must be
2.32assessed against and be the obligation of the self-insurer. The commissioner may issue
2.33a certificate of default against the self-insurer for failure to pay this assessment to the
2.34self-insurers' security fund as provided by section79A.04, subdivision 9 . The opinion
2.35may discount liabilities up to four percent per annum to net present value. Within 60 days
2.36after notification of approval of the actuarial opinion by the commissioner, the exiting
3.1member shall pay to the security fund an amount determined as follows: a percentage will
3.2be determined by dividing the security fund's members' deficit as determined by the most
3.3recent audited financial statement of the security fund by the total actuarial liability of all
3.4members of the security fund as calculated by the commissioner within 30 days of the
3.5exit date of the member. This quotient will then be multiplied by that exiting member's
3.6total future liability as contained in the exiting member's actuarial opinion. If the payment
3.7is not made within 30 days of the notification, interest on it at the rate prescribed by
3.8section549.09 must be paid by the former member to the security fund until the principal
3.9amount is paid in full.
3.10 (c) A former member who terminated its self-insurance authority before April 1,
3.111998, who has paid assessments to the self-insurers' security fund for seven years, and
3.12whose annualized assessment is $15,000 or less, may buy out of its outstanding liabilities
3.13to the self-insurers' security fund by an amount calculated as follows:1.35 multiplied by
3.14the indemnity case reserves at the time of the calculation, multiplied by the then current
3.15self-insurers' security fund annualized assessment rate.
3.16 (d) A former member who terminated its self-insurance authority before April 1,
3.171998, and who is paying assessments within the first seven years after ceasing to be
3.18self-insured under paragraph (a), clause (3), may elect to buy out its outstanding liabilities
3.19to the self-insurers' security fund by obtaining and filing with the commissioner an
3.20actuarial opinion of its outstanding liabilities as determined by an associate or fellow of
3.21the Casualty Actuarial Society. The opinion must separate liability for indemnity benefits
3.22from liability for medical benefits, and must discount each up to four percent per annum to
3.23net present value. Within 30 days after notification of approval of the actuarial opinion
3.24by the commissioner, the member shall pay to the security fund an amount equal to 120
3.25percent of that discounted outstanding indemnity liability, multiplied by the greater of the
3.26average annualized assessment rate since inception of the security fund or the annual rate
3.27at the time of the most recent assessment.
3.28 (e) A former member who has paid the security fund according to paragraphs (b) to
3.29(d) and subsequently receives authority from the commissioner to again self-insure shall be
3.30assessed under section79A.12, subdivision 2 , only on indemnity benefits paid on injuries
3.31that occurred after the former member received authority to self-insure again; provided
3.32that the member furnishes verified data regarding those benefits to the security fund.
3.33 (f) In addition to proceedings to establish liabilities and penalties otherwise
3.34provided, a failure to comply may be the subject of a proceeding before the commissioner.
3.35An appeal from the commissioner's determination may be taken pursuant to the contested
3.36case procedures of chapter 14 within 30 days of the commissioner's written determination.
4.1 Any current or past member of the self-insurers' security fund is subject to service of
4.2process on any claim arising out of chapter 176 or this chapter in the manner provided by
4.3section5.25 , or as otherwise provided by law. The issuance of a certificate to self-insure
4.4to the private self-insured employer shall be deemed to be the agreement that any process
4.5which is served in accordance with this section shall be of the same legal force and effect
4.6as if served personally within this state.
4.7EFFECTIVE DATE.This section is effective the day following final enactment.
4.8 Sec. 2. Minnesota Statutes 2010, section 79A.24, is amended by adding a subdivision
4.9to read:
4.10 Subd. 5. Purchase of insurance policy from an authorized insurer. A commercial
4.11self-insurance group may purchase an insurance policy from an insurer authorized to
4.12transact workers' compensation insurance in this state which provides coverage of all
4.13claims for compensation arising out of injuries occurring during the entire period or during
4.14a portion of the period of time in which the commercial self-insurance group has been
4.15in existence. While the insurance policy remains in effect, it discharges the obligation
4.16of the commercial self-insurance group to maintain a security deposit for the claims
4.17covered under the policy. A policy described in this subdivision may not be issued by an
4.18insurer unless it has previously been approved as to the insurer, form, and substance by
4.19the commissioner.
4.20EFFECTIVE DATE.This section is effective the day following final enactment.
4.21 Sec. 3. Minnesota Statutes 2010, section 79A.24, is amended by adding a subdivision
4.22to read:
4.23 Subd. 6. Insolvency of a commercial self-insurance group insurer. In the event
4.24of the insolvency of the insurer that issued a policy under subdivision 5 to a commercial
4.25self-insurance group, eligibility for chapter 60C coverage under the policy is determined
4.26by applying the requirements of section 60C.09, subdivision 2, clause (3), to each
4.27commercial self-insurance group member separately, rather than to the net worth of the
4.28commercial self-insurance group entity or aggregate net worth of all members of the
4.29commercial self-insurance group.
4.30EFFECTIVE DATE.This section is effective the day following final enactment.
1.3to substitute an insurance policy for a security deposit to ensure payment of
1.4claims;amending Minnesota Statutes 2010, sections 79A.06, subdivision 5;
1.579A.24, by adding subdivisions.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. Minnesota Statutes 2010, section 79A.06, subdivision 5, is amended to read:
1.8 Subd. 5. Private employers who have ceased to be self-insured. (a) Private
1.9employers who have ceased to be private self-insurers shall discharge their continuing
1.10obligations to secure the payment of compensation which is accrued during the period of
1.11self-insurance, for purposes of Laws 1988, chapter 674, sections 1 to 21, by compliance
1.12with all of the following obligations of current certificate holders:
1.13 (1) Filing reports with the commissioner to carry out the requirements of this chapter;
1.14 (2) Depositing and maintaining a security deposit for accrued liability for the
1.15payment of any compensation which may become due, pursuant to chapter 176. However,
1.16if a private employer who has ceased to be a private self-insurer purchases an insurance
1.17policy from an insurer authorized to transact workers' compensation insurance in this state
1.18which provides coverage of all claims for compensation arising out of injuries occurring
1.19during the entire period the employer was self-insured, whether or not reported during
1.20that period, the policy will:
1.21 (i) discharge the obligation of the employer to maintain a security deposit for the
1.22payment of the claims covered under the policy;
1.23 (ii) discharge any obligation which the self-insurers' security fund has or may have
1.24for payment of all claims for compensation arising out of injuries occurring during the
1.25period the employer was self-insured, whether or not reported during that period; and
2.1 (iii) discharge the obligations of the employer to pay any future assessments to
2.2the self-insurers' security fund; provided, however, that a member that terminates its
2.3self-insurance authority on or after August 1, 2010, shall be liable for an assessment under
2.4paragraph (b). The actuarial opinion shall not take into consideration any transfer of the
2.5member's liabilities to an insurance policy if the member obtains a replacement policy as
2.6described in this subdivision within one year of the date of terminating its self-insurance.
2.7 A private employer who has ceased to be a private self-insurer may instead buy an
2.8insurance policy described above, except that it covers only a portion of the period of time
2.9during which the private employer was self-insured; purchase of such a policy discharges
2.10any obligation that the self-insurers' security fund has or may have for payment of all
2.11claims for compensation arising out of injuries occurring during the period for which the
2.12policy provides coverage, whether or not reported during that period.
2.13 A policy described in this clause may not be issued by an insurer unless it has
2.14previously been approved as to the insurer, form, and substance by the commissioner; and
2.15 (3) Paying within 30 days all assessments of which notice is sent by the security
2.16fund, for a period of seven years from the last day its certificate of self-insurance was in
2.17effect. Thereafter, the private employer who has ceased to be a private self-insurer may
2.18either: (i) continue to pay within 30 days all assessments of which notice is sent by the
2.19security fund until it has no incurred liabilities for the payment of compensation arising
2.20out of injuries during the period of self-insurance; or (ii) pay the security fund a cash
2.21payment equal to four percent of the net present value of all remaining incurred liabilities
2.22for the payment of compensation under sections
2.23member of the casualty actuarial society. Assessments shall be based on the benefits paid
2.24by the employer during the calendar year immediately preceding the calendar year in
2.25which the employer's right to self-insure is terminated or withdrawn.
2.26 (b) With respect to a self-insurer who terminates its self-insurance authority after
2.27April 1, 1998, that member shall obtain and file with the commissioner an actuarial
2.28opinion of its outstanding liabilities as determined by an associate or fellow of the
2.29Casualty Actuarial Society within 120 days of the date of its termination. If the actuarial
2.30opinion is not timely filed, the self-insurers' security fund may, at its discretion, engage
2.31the services of an actuary for this purpose. The expense of this actuarial opinion must be
2.32assessed against and be the obligation of the self-insurer. The commissioner may issue
2.33a certificate of default against the self-insurer for failure to pay this assessment to the
2.34self-insurers' security fund as provided by section
2.35may discount liabilities up to four percent per annum to net present value. Within 60 days
2.36after notification of approval of the actuarial opinion by the commissioner, the exiting
3.1member shall pay to the security fund an amount determined as follows: a percentage will
3.2be determined by dividing the security fund's members' deficit as determined by the most
3.3recent audited financial statement of the security fund by the total actuarial liability of all
3.4members of the security fund as calculated by the commissioner within 30 days of the
3.5exit date of the member. This quotient will then be multiplied by that exiting member's
3.6total future liability as contained in the exiting member's actuarial opinion. If the payment
3.7is not made within 30 days of the notification, interest on it at the rate prescribed by
3.8section
3.9amount is paid in full.
3.10 (c) A former member who terminated its self-insurance authority before April 1,
3.111998, who has paid assessments to the self-insurers' security fund for seven years, and
3.12whose annualized assessment is $15,000 or less, may buy out of its outstanding liabilities
3.13to the self-insurers' security fund by an amount calculated as follows:
3.14the indemnity case reserves at the time of the calculation, multiplied by the then current
3.15self-insurers' security fund annualized assessment rate.
3.16 (d) A former member who terminated its self-insurance authority before April 1,
3.171998, and who is paying assessments within the first seven years after ceasing to be
3.18self-insured under paragraph (a), clause (3), may elect to buy out its outstanding liabilities
3.19to the self-insurers' security fund by obtaining and filing with the commissioner an
3.20actuarial opinion of its outstanding liabilities as determined by an associate or fellow of
3.21the Casualty Actuarial Society. The opinion must separate liability for indemnity benefits
3.22from liability for medical benefits, and must discount each up to four percent per annum to
3.23net present value. Within 30 days after notification of approval of the actuarial opinion
3.24by the commissioner, the member shall pay to the security fund an amount equal to 120
3.25percent of that discounted outstanding indemnity liability, multiplied by the greater of the
3.26average annualized assessment rate since inception of the security fund or the annual rate
3.27at the time of the most recent assessment.
3.28 (e) A former member who has paid the security fund according to paragraphs (b) to
3.29(d) and subsequently receives authority from the commissioner to again self-insure shall be
3.30assessed under section
3.31that occurred after the former member received authority to self-insure again; provided
3.32that the member furnishes verified data regarding those benefits to the security fund.
3.33 (f) In addition to proceedings to establish liabilities and penalties otherwise
3.34provided, a failure to comply may be the subject of a proceeding before the commissioner.
3.35An appeal from the commissioner's determination may be taken pursuant to the contested
3.36case procedures of chapter 14 within 30 days of the commissioner's written determination.
4.1 Any current or past member of the self-insurers' security fund is subject to service of
4.2process on any claim arising out of chapter 176 or this chapter in the manner provided by
4.3section
4.4to the private self-insured employer shall be deemed to be the agreement that any process
4.5which is served in accordance with this section shall be of the same legal force and effect
4.6as if served personally within this state.
4.7EFFECTIVE DATE.This section is effective the day following final enactment.
4.8 Sec. 2. Minnesota Statutes 2010, section 79A.24, is amended by adding a subdivision
4.9to read:
4.10 Subd. 5. Purchase of insurance policy from an authorized insurer. A commercial
4.11self-insurance group may purchase an insurance policy from an insurer authorized to
4.12transact workers' compensation insurance in this state which provides coverage of all
4.13claims for compensation arising out of injuries occurring during the entire period or during
4.14a portion of the period of time in which the commercial self-insurance group has been
4.15in existence. While the insurance policy remains in effect, it discharges the obligation
4.16of the commercial self-insurance group to maintain a security deposit for the claims
4.17covered under the policy. A policy described in this subdivision may not be issued by an
4.18insurer unless it has previously been approved as to the insurer, form, and substance by
4.19the commissioner.
4.20EFFECTIVE DATE.This section is effective the day following final enactment.
4.21 Sec. 3. Minnesota Statutes 2010, section 79A.24, is amended by adding a subdivision
4.22to read:
4.23 Subd. 6. Insolvency of a commercial self-insurance group insurer. In the event
4.24of the insolvency of the insurer that issued a policy under subdivision 5 to a commercial
4.25self-insurance group, eligibility for chapter 60C coverage under the policy is determined
4.26by applying the requirements of section 60C.09, subdivision 2, clause (3), to each
4.27commercial self-insurance group member separately, rather than to the net worth of the
4.28commercial self-insurance group entity or aggregate net worth of all members of the
4.29commercial self-insurance group.
4.30EFFECTIVE DATE.This section is effective the day following final enactment.
