806 KAR 39:050. Self-insurance.
RELATES TO: KRS 304.39-020(12),
304.39-080, 304.39-290, 304.39-170
STATUTORY AUTHORITY: KRS 304.2-110,
NECESSITY, FUNCTION, AND CONFORMITY: KRS
304.39-080 allows the Executive
Insurance to approve applications for self-insurance and set standards which
must be met by such applicants thereof. The purpose of this administrative
regulation is to set forth in detail the criteria that must be met in order to
apply for self-insurance, and the grounds on which the executive director may revoke
Section 1. Any person desiring to be
self-insured for the purposes of KRS Chapter 304, Subtitle 39, shall submit an
application to the Executive
Insurance on forms provided by the Office of Insurance.
Section 2. The applicant shall agree in
writing to pay all tort liability and basic reparation benefits incurred and
required by KRS Chapter 304, Subtitle 39, and shall further agree to become a
member of the Kentucky Arbitration Association, to meet all obligations
incurred thereby; and further, shall agree to become a member of the Assigned
Claims Bureau, and to meet all obligations incurred thereby.
Section 3. The applicant shall file with
the application, and annually thereafter, a balance sheet and income statement
which shall reflect the actual financial condition of the applicant as of the
last complete calendar or fiscal year preceding the date of the application;
and, in the case of an individual, such balance sheet and income statement
shall be certified, under oath, by the individual that it truly reflects his
financial condition and income as of that time. In the case of a corporation or
partnership, it shall be certified by a Certified Public Accountant or
responsible accounting officer of the applicant. Such information shall be
confidential, and the Executive
Insurance shall not release such information unless he has the prior written
consent of the applicant.
Section 4. The application shall list the
vehicles as of the date of application and annually thereafter for which the
self-insurance shall provide security and advise the executive director of any changes in the
number thereof unless they have furnished maximum security.
Section 5. The applicant shall furnish
security to the executive director to meet his continuing obligations as agreed
to in Section 2 of this administrative regulation. The security so furnished
may be in the form of a bond, with surety thereon, by an insurer authorized by
the Office of Insurance to engage in surety insurance contracts, or with such
other surety as the executive
Section 6. Security may also be furnished
by depositing with the Custodian of Insurance Securities cash or assets of the
kind which may be deposited by a domestic insurer pursuant to KRS 304.8-030.
Where the security tendered to the executive director is of a kind which
tends to vary in market value (U.S. obligations, bonds, stocks or real estate),
may, in his discretion, require the amount so tendered to have a current market
value greater than the minimum required security, but not in excess of 150
percent of minimum required security.
Section 7. The minimum requirement
security that must be furnished to the executive director is for one (1) secured
vehicle, $50,000; and for each additional vehicle: $10,000, up to a maximum of
Section 8. The executive director shall hold the
securities furnished under Sections 5, 6, and 7 of this administrative regulation
for the benefit of those persons to whom the self-insured is obligated under
the provisions of KRS Chapter 304, subtitle 39.
Section 9. Each self-insured shall
furnish to the executive
no later than January 10, April 10, July 10, and October 10 of each year, a
report on forms, prescribed by the executive director, of all claims incurred
during the preceding calendar year.
Section 10. If, based upon the number of
claims incurred by the self-insured, the executive director determines the security
furnished is inadequate, he may require additional security and more frequent
report of claims incurred.
Section 11. If a self-insured fails to
meet its obligations under KRS Chapter 304, Subtitle 39, or fails to make his
required report of claims, or to post additional security required by the executive director, the executive director shall disapprove the
self-insured for self-insurance.
Section 12. A self-insured may, at any
time, by written request to the executive director, withdraw as a self-insured.
Section 13. When a self-insured
voluntarily withdraws as a self-insured, or when the executive director disapproves the
self-insured, the executive
shall retain the security furnished to him until such time as he is satisfied
that the self-insured has met all obligations incurred as a self-insured under
KRS Chapter 304, Subtitle 39. If any said obligation remains unsatisfied for
ninety (90) days, the executive
may institute proceedings to assure that all person to whom the self-insured is
obligated under KRS Chapter 304, Subtitle 39 shall receive their equitable
share of the securities available. (1 Ky.R. 880; eff. 5-14-75; TAm eff.