Section 0780-01-54-.08 - MEMBERS OF THE POOL(1) The board of trustees shall establish underwriting guidelines with respect to the addition of members to the pool as well as the renewal of its members. At a minimum, such underwriting guidelines shall set forth requirements for the members to be able to provide the pool evidence that the member is solvent. Each pool shall file such guidelines and any amendments thereto with the Commissioner no later than thirty (30) days prior to their proposed effective date.(2) A person joining a pool as a member shall:(a) Submit an application for membership to the board of trustees or its administrator; and(b) Enter into an indemnity agreement binding such person jointly and severally to the financial obligations of the pool incurred during a fund year in which the person was a member of the pool, as required by Rule 0780-01-54-.04(3)(d).(3) No applicant shall become a member of a pool until the board of trustees for the pool determines that the applicant meets the current and approved underwriting guidelines and approves the membership of the applicant.(a) If the Commissioner determines that a member does not qualify under a pool's current and approved underwriting guidelines, the Commissioner may order the pool to cancel the membership of the non-qualifying member after the member receives thirty (30) days notice of the cancellation. Notwithstanding a member's disqualification, a pool may charge this member a pro-rata amount of the quoted yearly premium as well as any amount due upon audit of the member.(b) Any person aggrieved by an order of the Commissioner issued under Subparagraph (a) may request a hearing to appeal such an order. Such request shall be filed in writing with the Commissioner within fifteen (15) days of the entry of the order.(4) Membership and coverage of a pool member may take effect no earlier than each member's date of approval by the board of trustees. A board of trustees may allow the pool's administrator to bind coverage on a member that qualifies under the pool's current and approved underwriting guidelines so long as that member's approval is subsequently voted on by the board of trustees at its next meeting. The pool shall notify the Commissioner within ten (10) days of granting membership to a new member, and shall file a copy of the new member's indemnity agreement.(5) Each member's application for membership and its document evidencing approval to belong to the pool shall be maintained as permanent records of the pool.(6) No approval for membership in a pool may be granted to, nor shall any claims be paid on behalf of, any person who has not completed, signed and notarized the indemnity agreement required by Rule 0780-01-54-.04(3)(d).(7) Individual members of a pool shall be subject to cancellation by the pool pursuant to the pool's by-laws or when the Commissioner determines that a member does not qualify for membership under a pool's current and approved underwriting guidelines in accordance with Subparagraph (3)(a) of this Rule. In addition, individual members may elect to terminate their participation in the pool at any time. The pool shall notify the Commissioner and the Commissioner of Labor and Workforce Development of the termination or cancellation of a member within ten (10) days of such cancellation or termination and shall maintain coverage of each cancelled or terminated member for a period of thirty (30) days after such notice unless the pool is notified sooner by the Commissioner of Labor and Workforce Development that the cancelled or terminated member has procured workers' compensation insurance through an insurer, has become a licensed self-insurer, or has become a member of another pool. A cancelled or terminated member that receives the thirty (30) days of extended coverage shall remain liable to the pool for premiums during that period in the pro-rata amount of the quoted yearly premium as well as any amount due upon audit of the member.(8) The pool shall pay all workers' compensation benefits for which each member incurs liability during the member's period of membership in the pool. Notwithstanding the foregoing, a pool may only pay workers' compensation benefits for claims incurred by employees that meet the requirements of T.C.A. § 50-6-115. Each member shall attest to the pool annually that the employees covered under the employer's membership in the pool meet the extraterritorial requirements of T.C.A. § 50-6-115.(9) A pool shall cancel a member that cannot promptly pay its premiums when they become due or in accordance with the pool's cancellation policy. A pool shall cancel a member that is more than one hundred twenty (120) days late in making a premium payment. A pool shall cancel a member that does not pay its assessments when due.(10) A member who elects to terminate its membership or is cancelled by a pool remains jointly and severally liable for the financial obligations of the pool and its members incurred during any fund year in which the person was a member of the pool.(11) The insolvency, bankruptcy, or a member's refusal to pay does not relieve the pool or any other members of liability for the payment of any financial obligations, liabilities or workers' compensation benefits incurred by the pool for such insolvent, bankrupt or refusing member during that member's period of membership.(12) The pool shall file with the Commissioner on or before the day it is required to file its audited financial statement a copy of the financial condition of each member of the pool for the most recently ended fiscal year. The statement of financial condition can be an annual audited financial statement, a compilation report prepared by a certified public accountant, a Tennessee Franchise and Excise Tax Return including a Form 1120, or such other financial statements that the Commissioner may accept.Tenn. Comp. R. & Regs. 0780-01-54-.08
Original rule filed April 8, 1986; effective May 8, 1986. Repeal and new rule filed August 31, 2005; effective November 14, 2005. Amendments filed December 31, 2008; effective March 16, 2009.Authority: T.C.A. §§ 50-6-405(c) and (h) and 50-6-115.