§2393. Initial funding of pool
1. Payments by insurers.
Insurers shall pay to the pool on or before January 1, 1996 the amount of $65,000,000,
as follows.
A. Major insurers shall pay to the pool 90% of the $65,000,000 payment, which is $58,500,000.
Each major insurer shall pay to the pool that major insurer's allocated share of the
payment required by this paragraph as determined in accordance with the following:
(1) If the major insurer's percentage of the total net direct written premium in
the voluntary workers' compensation market in the State for the calendar years 1989
and 1990 was less than 3.4% according to data compiled by the National Council on
Compensation Insurance, then the major insurer must pay to the pool $4,906,000;
(2) If the major insurer's percentage of the total net direct written premium in
the voluntary workers' compensation market in the State for the calendar years 1989
and 1990 was equal to or greater than 3.4%, according to data compiled by the National
Council on Compensation Insurance, then the major insurer must pay $4,906,000 less
one of the following credits:
(a) If the major insurer's percentage of total net direct written premium in the
voluntary market exceeded 25% for each of the calendar years 1989 and 1990, then $1,811,000;
(b) If the major insurer's percentage of total net direct written premium in the
voluntary market exceeded 10% for each of the calendar years 1989 and 1990, then $1,772,000;
(c) If the major insurer's percentage of total net direct written premium in the
voluntary market exceeded 10% for either calendar year 1989 or 1990, then $807,000;
(d) If the major insurer's percentage of total net direct written premium in the
voluntary market exceeded 7.5% for each of the calendar years 1989 and 1990, then
$596,000; or
(e) For any other major insurer that qualifies for credit under this subparagraph,
$289,000;
(3) One or more major insurers may agree in writing to pay more or less than the
amount of their allocated share under subparagraph (1) or (2); except that:
(a) A major insurer may not pay less than the allocated share under subparagraph
(1) or (2), unless the written agreement is executed by all major insurers that have
timely paid or agreed in writing to timely pay in full at least their allocated share;
(b) The total amount of timely payments to the pool by major insurers is equal to
or greater than $58,500,000;
(c) The pool is made a 3rd-party beneficiary to a written agreement among certain
major insurers that provides for:
(i) Timely payments to the pool by major insurers that are equal to $58,500,000;
and
(ii) An express right of the pool to enforce the payments required by that agreement;
and
(d) Timely payment of any share agreed upon in writing pursuant to this subparagraph
in an amount less than the allocated share under subparagraph (1) or (2) constitutes
timely payment in full of an allocated share for purposes only of subsection 1, paragraph
C or section 2396, subsection 1.
(4) If the total amount paid according to the requirements of subparagraphs (1),
(2) and (3) exceeds $58,500,000, the pool must disburse within 30 days the excess
amount by refunding to each major insurer that has timely paid in full at least its
allocated share under subparagraph (1) or (2) in direct proportion to the amount that
each major insurer paid to the pool as part of the total major insurers' payment required
by this paragraph. [1995, c. 289, §11 (NEW).]
B. Minor insurers shall pay to the pool 10% of the $65,000,000 payment, which is $6,500,000.
Each minor insurer shall pay to the pool an allocated share of the payment required
by this paragraph as determined in accordance with the following.
(1) Except as provided in subparagraph (2), an allocated share equal to the sum
of the amounts described in divisions (a) to (c) must be paid to the pool.
(a) Minor insurers authorized to provide workers' compensation insurance in the
State at any time during 1989 pay 59% of the $6,500,000 payment, with each minor insurer
paying a per capita share.
(b) Minor insurers authorized to provide workers' compensation insurance in the
State at any time during 1990 pay 38% of the $6,500,000 payment, with each minor insurer
paying a per capita share.
(c) Minor insurers authorized to provide workers' compensation insurance in the
State at any time during 1991 pay 3% of the $6,500,000 payment, with each minor insurer
paying a per capita share.
(2) A minor insurer that qualifies for a partial exemption under this subparagraph
shall pay to the pool the greater of $10,000 or 2% of the minor insurer's average
annual after-tax adjusted earnings for the 3 calendar years immediately prior to enactment
of this chapter as reported in the minor insurer's annual statement filed with the
superintendent. A minor insurer qualifies for a partial exemption from the per capita
share payment required by this paragraph if, for the 3 calendar years immediately
prior to enactment of this chapter, as reported in the minor insurer's annual statement
filed with the superintendent, the minor insurer's:
(a) Average annual after-tax adjusted earnings were less than $2,000,000; and
(b) Surplus as to policyholders did not exceed $12,500,000.
(3) A minor insurer that has not received a partial exemption under subparagraph
(2) is entitled to participation credits determined as follows.
(a) For any policy year beginning on or after January 1, 1989, the share for each
minor insurer authorized to write workers' compensation insurance in the year to which
the calculation in this division pertains is reduced by .05% for each .10% that its
participation ratio for the year to which the assessment relates exceeds its participation
ratio for the base period as calculated by dividing the minor insurer's net direct
written premium for the base period by the total minor insurer's net direct written
premium for the base period. For purposes of this division, "base period" means the
calendar years 1983 to 1986. The participation ratio for the year to which the assessment
relates is calculated by dividing the minor insurer's net direct written premium in
that calendar year by the total net direct written premium of minor insurers that
were authorized at any time during that year;
(b) Credits earned by a minor insurer may not result in a minor insurer's participation
ratio being adjusted to less than 1/2 of its otherwise allocated share;
(c) For a minor insurer not authorized to write workers' compensation insurance
in 1986, its adjusted participation ratio is 1/2 of its participation ratio in the
year to which the calculation applies;
(d) Any deficiency must be distributed among all minor insurers in proportion to
the adjusted participation ratio, after credit adjustments; and
(e) For purposes of this subparagraph, "adjusted participation ratio" means a minor
insurer's participation ratio as calculated in accordance with this subparagraph and
after application of any credits. For purposes of this subparagraph, net direct written
premium does not include premiums for residual market risks reinsured by the pool
or retrospective rating plan adjustments on policies effective prior to January 1,
1988.
(4) The total amount of the differences between the following must be paid by those
minor insurers that actually paid their allocated share as of January 1, 1996 by allocating
the difference to those minor insurers in the same proportion as each such minor insurer's
payment bears to the total aggregate amount actually paid by minor insurers as of
January 1, 1996:
(a) The otherwise allocated share payments under subparagraph (1); and
(b) The payments made by minor insurers that qualify for a partial exemption as
provided in subparagraph (2) and any participation credits under subparagraph (3).
(5) In the event a minor insurer for any reason fails to pay its allocated share,
as described in this paragraph, by January 1, 1996, then the pool may charge the deficiency
resulting from those uncollected amounts to all minor insurers that actually pay their
allocated share as of January 1, 1996 by allocating that deficiency to those minor
insurers in the same proportion as each such minor insurer's payment bears to the
total aggregate amount actually paid by minor insurers as of January 1, 1996. Those
minor insurers are subrogated to the pool's right to collect such amounts from the
delinquent minor insurer.
(6) One or more minor insurers may agree in writing to pay more or less than the
amount of their allocated share under subparagraphs (1) to (4), except that:
(a) A minor insurer may not pay less than the allocated shares under subparagraphs
(1) to (4) unless the written agreement is executed by all minor insurers that have
timely paid or agreed in writing to timely pay in full at least their allocated share;
(b) The total amount of timely payments to the pool by minor insurers is equal to
or greater than $6,500,000;
(c) The pool is made a 3rd-party beneficiary to a written agreement among certain
minor insurers that provides for:
(i) Timely payments to the pool by minor insurers that are equal to $6,500,000;
and
(ii) An express right of the pool to enforce the payments required by that agreement;
and
(d) Timely payment of any share agreed upon in writing pursuant to this subparagraph
in an amount less than the allocated share under subparagraphs (1) to (4) constitutes
timely payment in full of an allocated share for purposes only of subsection 1, paragraph
C or section 2396, subsection 1.
(7) If the total amount paid according to the requirements of subparagraphs (1)
to (6) exceeds $6,500,000, the pool must disburse within 30 days the excess amount
by refunding to each minor insurer that has timely paid in full at least its allocated
share under subparagraphs (1) to (4) in direct proportion to the amount that each
minor insurer paid to the pool as part of the total minor insurers' payment required
by this paragraph. [1995, c. 289, §11 (NEW).]
C. The pool shall bill and collect from each insurer the allocated share established
by paragraphs A and B. If an insurer has not timely paid its allocated share in full
to the pool on or before January 1, 1996, then the insurer is considered delinquent
and the following applies.
(1) The pool has all the rights, powers and authority to take all necessary and
appropriate action, as determined in the pool's discretion, against the delinquent
insurer to collect any amounts not paid as and when due, and any deficiency is assessed
interest at the rate of 10% per annum from January 1, 1996 until full payment from
the insurer is received by the pool. The pool is entitled to an award of and reimbursement
from any delinquent insurer of the costs of enforcement and collection of any amounts
not paid as and when due, including all costs and expenses, reasonable attorney's
and paralegal's fees and any other professional fees and expenses associated with
the pool's enforcement and collection efforts.
(2) If the pool has received $58,500,000 from major insurers or $6,500,000 from
minor insurers, valued as of January 1, 1996, the pool shall provide prompt written
notice of this fact to insurers in the same category, either major or minor. Within
90 days following a request, the pool shall assign all such rights, powers and authority,
including the entitlement to costs and expenses, to any insurers in the same category
of the delinquent insurer that have requested an assignment and timely paid in full
at least the allocated share established by paragraphs A and B.
(3) The pool has the right to set off any amounts due under this chapter to the
pool from a delinquent insurer against any sums credited by or due from the pool to
the delinquent insurer and against any other property of the delinquent insurer in
the possession or under the control of the pool.
(4) Regardless of whether any action is taken pursuant to subparagraphs (1) to (3),
the superintendent is authorized to exercise all authority as may be provided by and
in accordance with law to take appropriate action against any delinquent insurer.
In addition to any other authority the superintendent may possess under law, the superintendent
upon notice and hearing may suspend a delinquent insurer's authority to transact the
business of insurance in the State for so long as the insurer remains delinquent.
The authority granted to the superintendent under this paragraph and jurisdiction
vested in the bureau are concurrent with other actions by other parties authorized
in this paragraph.
(5) Any collection by or on behalf of the pool, or amounts obtained by setoff with
respect to a delinquent insurer, are retained by the pool, until the insurers in the
same category as the delinquent insurer have paid the total amount required for that
category, plus interest pursuant to subparagraph (1) and costs and expenses of the
pool for collection in an amount not to exceed the delinquent share, valued as of
January 1, 1996, to the pool. Any excess must be distributed within 90 days among
the insurers in the same category as the delinquent insurer that have timely paid
in full at least the allocated share established by paragraphs A and B in direct proportion
to that insurer's payment to the pool as part of the total payments required by paragraph
A or B, except that any collection on behalf of the pool as the result of an assignment
pursuant to subparagraph (2) must be distributed as agreed among the insurers that
receive the assignment from the pool.
(6) No defense or substantive argument that could have been raised or asserted related
to an insurer's status as a major insurer or minor insurer or any purported contractual
rights under prior or existing law is extinguished or otherwise abridged in any proceeding
against a delinquent insurer instituted under subparagraphs (1) to (5). [1995, c. 289, §11 (NEW).]
[
1995, c. 289, §11 (NEW)
.]
2. Payments by employers.
Employers shall pay to the pool the following amounts.
A. Employers shall pay initial surcharges, in the manner described in this subsection,
in an aggregate amount equal to $110,000,000, calculated on a net present value basis
using January 1, 1995 as the valuation date, a discount rate of 5% and the midpoint
of each calendar quarter as the date of actual receipt of surcharge proceeds remitted
to the pool for each calendar quarter. Proceeds included in determining when the
$110,000,000 initial surcharge is fully paid consist of:
(1) All proceeds from surcharges under this chapter on policies with effective dates
on or after July 1, 1995 and surcharges under this chapter on self-insured employers
with plan years commencing on or after July 1, 1995; and
(2) All proceeds from surcharges actually received in immediately available funds
by the pool after 5:00 p.m., September 30, 1995, whether the proceeds result from
a surcharge under this chapter or under laws existing prior to enactment of this chapter. [1995, c. 289, §11 (NEW).]
B. Proceeds from surcharges under existing laws actually received in immediately available
funds by the pool on or before 5:00 p.m., September 30, 1995 may not be credited against
the initial surcharge requirement. [1995, c. 289, §11 (NEW).]
C. The pool shall maintain records reflecting actual dates of receipt of proceeds from
surcharges sufficient to enable the net present value calculation. [1995, c. 289, §11 (NEW).]
D. The initial surcharges must be paid in accordance with the following provisions.
(1) Beginning July 1, 1995 every insurer writing workers' compensation insurance
in the State shall collect from workers' compensation insurance policyholders and
pay to the pool a surcharge on all surchargeable premiums received by the insurer
for those policies. During the initial surcharge period, the surcharge is at a fixed
rate of 6.32% of the surchargeable premium. The surcharge may be applied only to
policies with an effective date on or after 12:01 a.m., July 1, 1995. All surcharges
received by each insurer during the preceding calendar quarter must be remitted to
the pool within 15 days following the end of each calendar quarter, except that servicing
carriers shall remit on February 15th, May 15th, August 15th and November 15th of
each year. Any surcharge proceeds not remitted on a timely basis accrue interest
at the rate of 10% per annum from the due date until paid in full. The pool is entitled
to reimbursement from any insurer failing to remit surcharge proceeds on a timely
basis for the pool's costs of collection of those amounts, including all collection
costs and fees, reasonable attorney's and paralegal's fees and any other professional
fees and expenses associated with the pool's collection efforts. The surcharges described
in this subparagraph do not apply to reinsurance recognized by the superintendent
pursuant to Chapter 250, section 2, paragraph G or section 3, paragraph G, procured by an individual
self-insured employer or a self-insured employer group.
(2) Self-insured employers that secured their obligation to provide workers' compensation
benefits under the Workers' Compensation Act through issuance or renewal at any point
during the fresh start period of an insurance policy for any portion of any of the
policy years 1988 to 1992 are subject to a surcharge as provided in the following.
(a) During the initial surcharge period the rate of surcharge is 6.32% of the surchargeable
premium as adjusted pursuant to this paragraph for the self-insured employer's current
plan year utilizing estimated payroll as submitted with the self-insured employer's
renewal application for authority to self-insure, in accordance with Chapter 250,
section 2, paragraph C, subparagraph 1, division c or Chapter 250, section 3, paragraph
C, subparagraph 1, division g as applicable, subject to audit pursuant to division
(d), subdivision (iii). If the plan year in which a surcharge is collected or a credit
is distributed is shorter than 12 months, due to a change in accounting period or
termination of self-insurance authorization, the surcharge or credit for that plan
year must be based upon the final audited payroll for the short plan year.
(b) All surcharges must be collected or distributed on a plan year basis. In each
plan year, the percentage of the surchargeable premium to be surcharged is the same
percentage as is applied to an insured employer whose policy period coincided with
the plan year.
(c) Except for a successor self-insured employer, each self-insured employer shall
pay surcharges relating to only that portion of the policy years 1988 to 1992 in which
the self-insured employer insured its workers' compensation obligations. The surcharge
factor, as determined by the board under this chapter, must be adjusted to take into
consideration the policy years or portions of policy years 1988 to 1992 in which a
self-insured employer was self-insured.
The self-insured employer adjustment is determined as follows. The surcharge factor
must be multiplied by the factor attributed to each of the years 1988 to 1992, as
set forth in the table below. If a self-insured employer was insured only during
a portion of a policy year, then the factor for that year is prorated based on the
ratio of the number of days in the policy year during which the self-insured employer
was insured to 365 days.
Policy Year
Factor
1988
28.48%
1989
30.70%
1990
23.26%
1991
11.55%
1992
6.01%
(d) The board shall administer the surcharges on self-insured employers as follows.
(i) The board shall issue surcharge billings to self-insured employers, pursue collection
of all invoiced surcharges, initiate legal proceedings as necessary to collect surcharges
and maintain records adequate to administer the surcharge process. The records of
the board and of the bureau form the basis for identifying self-insured employers
who are subject to this paragraph.
(ii) Annual surcharges may be paid in a single lump sum within 30 days of the receipt
of the pool's invoice or in quarterly installments at the self-insured employer's
option. The board shall issue a yearly invoice as soon as practicable after the self-insured
employer's plan approval or renewal date and receipt of all necessary supporting information
from the superintendent. Each invoice must contain a schedule of dates when quarterly
installments are due and clearly state the policy year or years for which the surcharge
is imposed, the surcharge percentage multiplied by the factor applicable to each policy
year and the amount of the surchargeable premium.
(iii) Each individual self-insured employer shall report final audited payrolls to
the pool not later than 60 days after the end of each plan year and each self-insured
employer that is a member of a self-insured group or the group's administrator, as
the group may select, shall report final audited payrolls to the pool not later than
120 days after the end of each plan year and shall remit with the audit information
any additional surcharges resulting from the audit.
(iv) Upon the request of a self-insured employer, including a successor self-insured
employer or an administrator of a self-insurance group, the board may determine whether
there was a factual inaccuracy in the information underlying a surcharge billing issued
by the board for the fresh start period or whether the surcharge calculated by the
board is consistent with the provisions of this subparagraph. The request must be
filed within 180 days from the date on which the final payment is due and must be
in writing, including a statement of the reason for the request and the amount, if
known, of the alleged overcharge. If an appeal based upon an alleged overcharge is
sustained, the board shall refund the overcharge, together with any investment earnings
on those amounts. If a self-insured employer is aggrieved by the final action or decision
of the board, or if the board does not act on the written request within 60 days,
the self-insured employer may appeal to the superintendent within 60 days of such
action or decision of the board. Notwithstanding a pending appeal, a self-insured
employer must pay any surcharge billing issued by the board.
(e) Self-insured employers have the following obligations with respect to the surcharge
process.
(i) As a condition of continuing authorization to self-insure, each self-insured employer
and each group self-insurance administrator shall assist the board and the superintendent
in the calculation, billing and collection of any applicable surcharge. The required
assistance includes maintaining and providing, upon request of the board or the superintendent,
actual premium history and all payroll and experience information necessary to calculate
self-insured employer premiums, as specified in this subparagraph. Information provided
by the self-insured employer is subject to audit by the pool and the superintendent
at any time and self-insured employers shall provide to the pool, or its designee,
and to the superintendent full and complete access to all books and records relating
in any way to the audit. Group self-insurance administrators shall give prompt notice
to the superintendent of any changes in group membership.
(ii) Information provided by self-insured employers to the board pursuant to this
paragraph is confidential. The board shall protect the confidentiality of all self-insured
employer information in its possession, whether the information is obtained directly
from the self-insured employer or from the superintendent or a group administrator.
All information relating to a self-insured employer provided pursuant to this paragraph
and in the possession of the board or superintendent continues to be confidential
until that information is destroyed.
(iii) A self-insurance group may act as the collection agent for its members. Any
group so electing shall notify the board. The board shall bill the group on a consolidated
basis. The group shall remit its entire quarterly payment to the board within 30 days
after receiving the invoice, whether or not any members remain in default and notify
the board and the superintendent of any delinquency.
(iv) Each self-insured employer shall make provisions for possible surcharges in the
normal course of operations and pay the full amount of any surcharge installment within
30 days after receiving an invoice from the board or the self-insured employer's self-insurance
group. Late payments are subject to interest at the rate of 10% per annum.
(v) The failure of any self-insured employer or self-insurance group to comply with
its duties under this paragraph constitutes grounds for suspension, revocation, termination
of the option to self-insure, expulsion from a self-insurance group or other appropriate
sanctions authorized under section 12-A, in addition to all procedures for the collection
of past-due accounts otherwise available by law to the board or the governing body
of the self-insurance group.
(f) The superintendent has the following responsibilities with respect to the surcharge
process.
(i) The superintendent shall furnish to the board, on a monthly basis, a list of all
self-insurance plan approvals, renewals and anniversaries that have occurred since
the last report or for any other reason were not included in any previous report,
including all approvals, terminations and membership changes for group self-insurers.
For each employer listed, the superintendent shall provide all available information
necessary for the board's imputed calculations under this paragraph, including: the
date the new plan year began; the self-insurance group, if any, to which the self-insured
employer belongs; the dates of coverage under each policy issued or renewed in policy
years 1988 to 1992; the rating information for the current plan year, including estimated
payroll by classification, premium rate for each classification, experience modification
and other applicable rating adjustments; information relating to changes of ownership
or control, changes of operations, changes of name or organizational structure; and
other information necessary to determine successorship.
(ii) The superintendent shall supplement promptly the initial report as necessary,
including any revision to the self-insured employer's rating information on audit,
any other additions or corrections to incomplete or inaccurate information provided
in the initial report and the length of the plan year, if shorter than 12 months.
(g) A successor self-insured employer is subject to surcharge on the same basis as
the predecessor employer would be if still actively doing business and self-insured.
If a self-insured employer is the successor to more than one employer, then the successor
employer's self-insured employer adjustment is the sum of each predecessor employer's
self-insured employer adjustment multiplied by the ratio of the employer's surchargeable
premium for the 12-month period immediately preceding the succession transaction to
the combined surchargeable premium of all predecessor employers for that 12-month
period.
(i) If one or more of the predecessor employers was insured at the time of the succession
transaction, its self-insured employer adjustment is calculated pursuant to division
(c), (h) or (i) as if it had become self-insured at the time of the succession transaction.
(ii) If business operations that were covered under a single workers' compensation
policy or certificate of self-insurance authority are subsequently separately owned
by virtue of any succession transaction, dissolution, reincorporation or other transaction
or series of transactions, for purposes of this subparagraph each business is treated
as a distinct employer, subject to surcharge as either an insured employer or a self-insured
employer.
(iii) If substantial changes in operations during the 12-month period immediately
preceding the succession transaction make the 12-month surchargeable premium an inappropriate
measure of a predecessor employer's workers' compensation exposure prior to the transaction,
the board may adopt procedures for calculating an annualized premium in a manner consistent
with the intent of this subparagraph.
(h) A self-insured employer that secured its obligation to provide workers' compensation
benefits under the Workers' Compensation Act through a self-insurance program approved
by the superintendent for the entirety of that self-insured employer's policy years
1988 to 1992, in which the self-insured employer actually had an obligation to secure
benefits under the Workers' Compensation Act is not subject to the surcharge.
(i) Except for any successor self-insured employer, self-insured employers that commence
operations in the State on or after July 1, 1995 are subject to surcharge under this
subparagraph on the same basis as self-insured employers that secured compensation
under the Workers' Compensation Act by the purchase of an insurance policy throughout
the entire fresh start period.
(3) An employer may, as specified in this subparagraph, prepay all of its surcharges
for a period of 10 consecutive policy years or plan years. The 10-year period starts
with the employer's first renewal date or plan year following July 1, 1995. Within
30 days after the inception of the first plan year or first policy renewal date following
July 1, 1995, if the employer intends to exercise this option, the employer must file
with the pool written notice electing to make a lump-sum payment of surcharges and
shall include with the notice the employer's full lump-sum payment. If the election
is not made within 30 days after the first day of the first plan year or policy year
following July 1, 1995, the option expires and is no longer available. The pool shall
implement such procedures for administering this option as the board determines necessary.
An employer that elects this option shall reimburse the pool for its expenses of administering
this option for that employer, including the cost of individually allocating those
costs to individual employers, in accordance with billing procedures developed and
implemented by the board. This subparagraph does not eliminate or limit the employer's
liability to pay adjusted surcharges or supplemental surcharges pursuant to paragraph
E or section 2394.
For purposes of this subparagraph, "lump-sum payment" is the surcharge for the first
year multiplied by 10 and discounted to net present value using:
(a) A 5% discount rate;
(b) The first day of the first plan year or policy year starting on or after July
1, 1995; and
(c) An assumption that the surcharge for each of the 10 plan years or policy years
would have been paid on the first day of each subsequent plan year or policy year. [2011, c. 524, §11 (AMD).]
E. The initial surcharge percentage may be adjusted by the pool in accordance with
the following provisions.
(1) Each July 1st beginning in 2003, the board shall establish a surcharge percentage
to be imposed on all workers' compensation insurance policies issued or renewed on
or after that date until the effective date of any subsequent adjustment in the surcharge
percentage established by the board; except that, if supplemental surcharges and assessments
have commenced under section 2394, no further adjustments may be made under this subparagraph.
The surcharge must be at a level determined by the board to be sufficient to produce
cash receipts over the ensuing 24 months that, together with all other funds reasonably
anticipated by the board to be available on a cash basis over that period, produce
an amount not less than the pool's projected cash requirements to meet its obligations
over that period. In making that determination, the board shall employ and rely upon
the advice of professional and consulting services, including services available through
the pool's internal staff, as the board determines necessary.
(2) If the surcharge percentage established under this subparagraph exceeds 6.32%,
then a prepaid employer shall pay surcharges for that future assessment period at
the same rate as those employers who paid annually, based upon the employer's surchargeable
premium for the policy year or plan year to which the increased surcharge percentage
applies. A prepaid employer may take a credit for the surcharges prepaid for that
assessment period pursuant to section 2393, subsection 2, paragraph D, subparagraph
(3) in an amount equal to the net present value calculated on a basis consistent with
paragraph D, subparagraph (2), division (d), subdivision (ii). If the surcharge percentage
is less than 6.32% for that future assessment period, then the pool shall refund to
a prepaid employer an amount equal to the difference between the value of the lump-sum
surcharge paid for the future assessment period calculated on a basis consistent with
paragraph D, subparagraph (2), division (d), subdivision (ii) and the amount of surcharge
due based upon the adjusted surcharge percentage and applicable surchargeable premium.
For purposes of this subparagraph, "prepaid employer" means an employer who has elected
to pay surcharges on a lump-sum basis pursuant to paragraph D, subparagraph (3).
(3) The board has authority to make interim adjustments in the surcharge percentage
on or after July 1, 2003, to be effective on dates other than July 1st as specified
by the board, to the extent considered necessary by the board to produce sufficient
cash receipts from surcharges over the ensuing 24 months that, together with all other
funds reasonably anticipated by the board to be available on a cash basis to the pool
over the ensuing 24 months, will be sufficient to meet the pool's anticipated cash
requirements over that period.
(4) In projecting the pool's anticipated cash requirements, the board shall maintain
a reserve equal to 25% of the cash expenditures of the pool over the immediately preceding
12-month period. [1995, c. 289, §11 (NEW).]
F. The surcharges required by this subsection are considered premium for cancellation
and nonrenewal purposes only and are not subject to premium tax, Maine Insurance Guaranty
Association assessments, agents' commissions or other payments required on insurance
policy premiums. [1995, c. 289, §11 (NEW).]
G. Employer surcharges required by this chapter are suspended if:
(1) The board determines that the pool's assets are adequate to satisfy all remaining
obligations, including any necessary repayment to insurers that satisfy the requirements
of subparagraph (2); and
(2) The insurers and employers have been repaid by the pool in amounts necessary
to produce a ratio of actual surcharges under this subsection paid by employers calculated
on a net present value basis using January 1, 1995 as a valuation date and a discount
rate of 5% to actual payments by insurers to the pool under subsection 1, valued as
of January 1, 1996, not including employer surcharges remitted to the pool by insurers,
that is the same as 11 to 6.5, for employers and insurers respectively. [1995, c. 289, §11 (NEW).]
H. If the board suspends initial surcharges and the pool subsequently requires additional
assets to satisfy remaining obligations, the board shall order additional initial
surcharges consistent with this subsection. The board shall review the relationship
between the pool's assets and liabilities as often as determined necessary by the
board, but at least annually. Projections of assets and liabilities contained in
any quarterly or annual statements of operation prepared by or at the direction of
the board do not constitute a determination under this subsection. [1995, c. 289, §11 (NEW).]
[
2011, c. 524, §11 (AMD)
.]
3. Payments by Maine Insurance Guaranty Association.
The association shall pay to the pool $1,538,039 on or before February 15th, May
15th, August 15th, and November 15th of each year for 40 consecutive calendar quarters
beginning August 15, 1996.
A. Each payment made by the association to the pool under this subsection is treated
as a covered claim pursuant to section 4435, subsection 4, except that any provision
or authority for the association to seek reimbursement or recoupment from any source
other than by assessments to association member insurers does not apply. This section
does not limit or impair a member insurer's right to recoupment under section 4447. [1995, c. 289, §11 (NEW).]
B. The quarterly payments by the association to the pool as required by this subsection
must be made regardless of the financial condition or actual or projected cash requirements
of the pool. [1995, c. 289, §11 (NEW).]
[
1995, c. 289, §11 (NEW)
.]
SECTION HISTORY
RR 1995, c. 2, §52 (COR).
1995, c. 289, §11 (NEW).
1995, c. 619, §§2-6 (AMD).
1995, c. 619, §§2-6 (AMD).
1995, c. 619, §8 (AFF).
1995, c. 619, §8 (AFF).
2011, c. 524, §11 (AMD).
