Section 3:4351.2 - Authorization; trade or professional association; initial financial requirementsA.(1) Five or more Louisiana timber or agriculture operators that are not public entities, each of which has a positive net worth, is financially solvent, and is capable of assuming the obligations set forth under this Part, and that are all members of one or more bona fide trade or professional associations, may agree to pool their liabilities for timber or agriculture transportation vehicle coverages as provided by this Part. This arrangement shall not be deemed to be an insurer or insurance and shall not be subject to the Louisiana Insurance Code, unless specifically referenced in this Part. The members of the arrangement likewise shall not be insurers or be subject to the Louisiana Insurance Code.(2) An agreement to pool liabilities under this Part shall be set forth in an indemnity agreement signed by the members and fund representatives acknowledging and agreeing to the assumption of the liabilities as set forth in this Part.(3) The arrangement shall not be a member insured of the Louisiana Insurance Guaranty Association, nor shall the Louisiana Insurance Guaranty Association be liable under any circumstances for any claims, or increments of any claims, made against the arrangement.(4) The arrangement may include the establishment of a trust fund by a trade or professional association for its members, and the arrangement, whether established by association members or by an association, shall be known as the group self-insurance fund for timber or agriculture transportation vehicle coverage and shall be governed by a board of trustees.(5)(a) The arrangement shall be domiciled in the state of Louisiana. All books, records, documents, accounts, and vouchers shall be kept in such a manner that the arrangement's financial condition, affairs, and operations can be ascertained so that its financial statements filed with the department of insurance can be readily verified and its compliance with the law determined. Any or all books, records, documents, original indemnity agreements, accounts, and vouchers may be photographed or reproduced on film. Any photographs, microphotographs, optical imaging, or film reproductions of any original books, records, documents, original indemnity agreements, accounts, and vouchers shall for all purposes, including but not limited to admission into evidence in any court or adjudicatory proceeding, be considered the same as the originals thereof, and a transcript, exemplification, or certified copy of any such photograph, microphotograph, optical imaging, or film reproduction shall for all purposes be deemed to be a transcript, exemplification, or certified original. Any original considered reproduced may thereafter be disposed of or destroyed, as provided for in Subparagraph (b) of this Paragraph, if provision is made for preserving and examining the reproduction.(b) Except as otherwise provided in Subparagraph (a) of this Paragraph, original books, records, documents, accounts, and vouchers, or such reproductions thereof, shall be preserved and kept in this state for the purpose of examination and until the authority to destroy or otherwise dispose of the records is secured from the department. All original records, or certified reproductions thereof, shall be maintained for the period commencing on the first day following the last period examined by the department through the subsequent examination period, or three years, whichever is longer, except that any original, or certified reproduction thereof, whereby the member agrees to or acknowledges such member's solidary liability for liabilities of the fund shall be permanently maintained.(6)(a) In order to maintain financial stability in the fund, the department shall at all times require one of the following: (i) Two or more members of the fund shall maintain a minimum combined net worth of one million dollars and a ratio of current assets to current liabilities of at least one-to-one.(ii) Five or more principals of members of the fund who have a combined net worth of one million dollars and a ratio of current assets to current liabilities of at least one-to-one.(b) Once the fund has been operating for three years and has a total surplus of three million dollars, the department may waive the requirements of Subparagraph (a) of this Paragraph.(7)(a) In order to further maintain the financial stability of the fund, the fund shall assess each member an amount which is equal to a certain percentage of the premium dollars owed by the member and the percentage paid shall be known as a reserve payment. The percentage amount to be paid by all members shall be approved by the department.(b) All reserve payments shall be deposited into a separate account known as the reserve account and shall be maintained at all times that the fund is in operation. No payments may be paid out of the reserve account unless approved by the department.B. The fund shall submit to the department an application, on an application form prescribed and furnished by the department, for authority to act as a group self-insurance fund for timber and agriculture transportation vehicle coverage. The application shall include evidence of the fund's inception, which establishes financial strength and liquidity of the members to pay timber and agriculture transportation vehicle claims promptly and support the financial ability of the fund to satisfy its obligations upon the establishment of the fund, including:(1) Financial statements, dated not less than one year prior to the application, audited by an independent certified public accountant, showing at the inception of the fund a combined net worth of those members or principals of not less than the amount required by Subsection A of this Section. In lieu of an audited financial statement, the department may require that the fund submit necessary financial documents in a form and manner approved by the department to verify the combined net worth of those members or principals as required in Subsection A of this Section.(2) Current financial statements of all other members dated not less than one year prior to the application.(3) Schedules of the entire membership showing:(a) The ratio of current assets to current liabilities of all members combined to be greater than one-to-one.(b) The working capital of all members combined to be of an amount establishing financial strength and liquidity of the members to pay timber and agriculture transportation vehicle claims promptly.(c) The net worth of all members combined to be not less than the amount required by Subsection A of this Section.(4) Other financial information and documents as required by the department.(5) The application shall be in writing, on a form provided by the department, and the application shall comply with all of the following:(a) Applications shall be submitted to the department at least ninety days prior to the effective date of the establishment of the fund. Any application submitted with fewer than ninety days remaining before the desired effective date, or which does not contain answers to all questions, or which is not sworn to and subscribed before a notary public, or which does not contain all required documents, statements, reports, and required information, may be returned without review by the department.(b) All applications shall be accompanied by the following items: (i) The properly completed indemnity agreement in a form acceptable to the department pursuant to Paragraph (A)(2) of this Section.(ii) Security as required by this Part.(iii) Copies of acceptable excess insurance or reinsurance, as required by this Part. All excess insurance or reinsurance shall be approved by the department prior to use.(iv) A bond covering each third-party administrator as provided by this Part. If the fund employs its own administrator, the fund shall be required to purchase a bond, errors-and-omission insurance, directors-and-officers insurance, or other security approved by the department for the administration of the fund.(v) A certification from a designated depository attesting to the amount of monies on hand.(vi) Copies of fund bylaws and any trust agreement or other governance documents.(vii) Individual application of each member of the fund applying for membership in the fund on the effective date of the fund and copies of each member's executed indemnity agreements.(viii) Evidence of financial strength and liquidity of the members dated as of the date of the filing of the application to satisfy the financial strength and liquidity requirements of this Part.(ix) Proof that the fund shall have the minimum annual earned normal premium required by this Part.(x) The current annual report or financial statement of any casualty insurance company providing excess or reinsurance coverage for the fund meeting the requirements of this Part, if the statement is not already on file with the department.(xi) The name, address, and telephone number of each attorney representing the fund, each qualified actuary for the fund, and each certified public accountant who will be auditing the annual financial statements of the fund, as well as evidence of appointment of each by the fund.(xii) The domicile address in this state where the books and records of the fund will be maintained, and the state from which the fund will be administered.(xiii) Proof of advance payment to the fund by each initial member of the fund of not less than twenty-five percent of that member's first year estimated annually earned normal premiums.(xiv) A feasibility study or other analysis prepared by a qualified actuary utilizing actual loss history of the initial members of the fund.(xv) Pro forma financial statements projecting the first three years of operations of the fund based upon a feasibility study or other analysis prepared by a qualified actuary. The pro forma financial statements shall include a pro forma balance sheet, income statement, and statement of cash flow, each of which shall be prepared in accordance with generally accepted accounting principles.(xvi) A copy of the fund's premium billing policy indicating whether the premium payments to the fund will be paid by members annually, monthly, quarterly, or any combination thereof. Acts 2022, No. 586, §1, eff. June 17, 2022; Acts 2022, No. 598, §1, eff. June 18, 2022; Acts 2023, No. 191, §§1, 2, eff. June 8, 2023.Amended by Acts 2023, No. 191,s. 1, eff. 6/8/2023.Added by Acts 2022, No. 598,s. 1, eff. 6/18/2022.Added by Acts 2022, No. 586,s. 1, eff. 6/17/2022.