La. Admin. Code tit. 40 § I-1723

Current through Register Vol. 50, No. 11, November 20, 2024

Section I-1723 - Individual Self-Insurer-Application

A. Each employer desiring to become a self-insurer individually, as contemplated by Louisiana Statutes, shall make application to the office for such privilege on a form prescribed by the office, and this application shall be filed with the office at least 60 days prior to the desired effective date. The application shall contain answers to all questions propounded and shall be under oath.

B. Before considering the application, the office will require:

1. financial statement of a current date showing a net worth of not less than $750,000 and a current ratio of more than 1.5 to 1 and a working capital of an amount establishing strength and liquidity of the business to pay normal compensation promptly. A surety bond as provided in §1725 shall be considered to be part of the net worth of the employer. However, companies qualified to be self-insured prior to the implementation of these rules who do not meet the requirement of a net worth of $750,000 may nonetheless qualify for continued certification upon a showing that they meet all other requirements of these rules and that they have been continually operating as an approved self-insurer. The requirement for more than 1.5 to 1 current ratio may be waived in the case of a public utility or in those instances where generally recognized accounting principles peculiar to a particular industry make this requirement unreasonable. In no event shall the net worth be less than three times the annual loss fund, or in the event that aggregate excess insurance is not maintained, then the net worth shall be at least three times the self-insurer's annual standard premium. Financial statements dated six months or more prior to the date of application must be accompanied by an affidavit stating that there has been no material lessening of net worth nor significant deterioration of current ratio since the date of the statement;

2. an employer going through or recently acquired through a highly leveraged buyout is not eligible to self-insure until the company has a well established and acceptable financial capacity. Judgment of the company's financial capacity will be based upon financial ratio analysis. This type of company must operate on an insured basis until the financial status is fully known;

3. in considering the financial strength and liquidity of the business to pay normal compensation claims, the office will take into consideration contracts or policies of excess insurance in accordance with §1711;

4. the determination of a company's financial strength will also be based upon a financial ratio analysis and the trends in operating and net income. A number of successive years operating net losses experienced by a company may cause the Office of Workers' Compensation to deem that company unable to assume the responsibility of self-insuring;

5. in addition, a company must have been in business for at least three years unless it is part of an established operation that is able to guarantee the financial stability of the concern;

6. each employer shall execute and file with the office an agreement, which shall be part of his application, whereby he agrees:

a. to fully discharge by cash payment all amounts required to be paid by the provisions of the Act; and

b. to deposit with the office acceptable securities or corporate surety bond to secure guarantee of payment of compensation liabilities;

7. each Individual self-insurer shall satisfy the office that it has complied with the provisions of §1713. A before approval for self-insurer status may be granted by the office. In addition, the office may require periodic proof that the self-insurer is complying with these standards on a continuing basis;

8. the application for the privilege or the renewal of the privilege of being a self-insurer shall be accompanied by a remittance in the amount of $100, payable to the Office of Workers' Compensation. This fee will not be refunded, regardless of the disposition of the application;

9. an investigation and study of the financial and other capabilities of the individual applicant to meet its obligation under the Act will be conducted by the self-insurer department of the office. The administrator of the self-insurer department of the office will submit an evaluation report to the office, after which formal approval for self-insurer status may be granted by the office.

La. Admin. Code tit. 40, § I-1723

Promulgated by the Department of Employment and Training, Office of Workers' Compensation, LR 17:963 (October 1991), amended by the Department of Labor, Office of Workers' Compensation, LR 23:868 (July 1997).

AUTHORITY NOTE: Promulgated in accordance with R.S. 23:1168.