Ariz. Admin. Code § 20-5-1520

Current through Register Vol. 30, No. 49, December 6, 2024

Section R20-5-1520 - Security Amount and Type; Apportionment Credit; Excess Insurance Credit; Release

A. Except as provided in R20-5-1525, and subject to the minimum requirements in A.R.S. § 23-961:

1. A newly approved Self-Insurer shall post security in an amount equal to the prior three-year average of annual total paid medical and indemnity benefits, unless the Commission requires a different amount according to R20-5-1509(C).

2. A Self-Insurer renewing authority to self-insure shall post security in an amount equal to 125% of its total estimated future indemnity and medical liability as calculated on the Workers' Compensation Liability Form, unless the Commission requires a different amount according to R20-5-1509(C).

3. A Self-Insurance Pool adding a new member shall post security in an amount equal to the prior three-year average of annual total paid medical and indemnity benefits of the new member, unless the Commission requires a different amount according to R20-5-1509(C).

B. Except as provided in R20-5-1525, a Self-Insurer shall post a type of security authorized in R20-5-1521 through R20-5-1524. A SelfInsurer or former Self-Insurer may substitute one type of authorized security with a different type of authorized security.

C. The Commission shall approve a credit for apportionment against the amount of security required under this Article, which credit may not result in an amount of security that is less the minimum security required by A.R.S. § 23-961, if the Self-Insurer provides proof that apportionment has been approved for one or more claims.

D. The Commission shall approve a credit for excess insurance against the amount of security required under this Article, which credit may not result in an amount of security that is less the minimum security required by A.R.S. § 23-961, if:

1. The excess insurance requirements in R20-5-1526(A) are satisfied;

2. The Self-Insurer provides proof that excess insurance coverage exists for incurred claims;

3. The Self-Insurer has timely notified the excess insurance carrier of the incurred claims or the excess insurance carrier has accepted the incurred claims;

4. The excess insurance carrier has not denied coverage for the incurred claims; and

5. The excess insurance carrier is solvent.

E. The Self-Insurer shall calculate apportionment or excess insurance credits using the Workers' Compensation Liability Form.

F. Subject to A.R.S. § 23-961(A)(2), a former Self-Insurer may request a reduction in the amount of security that must remain posted with the Commission by filing a written request with the Division. The written request must attach the information specified in R20-5-1506(B)(1) through (4). The Division may request additional information and documentation reasonably related to the Division's review and evaluation under subsection (G).

G. Upon the filing of a request to reduce the amount of security by a former Self-Insurer, the Division shall review the documentation and information and:

1. Evaluate and determine whether the former Self-Insurer has the financial ability to process and pay benefits required under the Act for claims that were incurred during the period of self-insurance; and

2. Evaluate and determine an appropriate amount of security to fully protect the Special Fund in the event of an assignment under A.R.S. § 23-966.

H. The Division shall present its evaluation, findings, and recommendations according to subsection (G) to the Commission. The Commission may approve a reduction in the amount of security, deny a reduction, or remand an application to the Division for further review or to request additional documentation or information. A decision of the Commission shall be made by a majority vote of a quorum of Commission members present at a public meeting.

Ariz. Admin. Code § R20-5-1520

New section made by final rulemaking at 28 A.A.R. 3435, effective 10/5/2022.