616B.353 - Indemnity agreement; policy of excess insurance; assessment; bond or similar security; minimum combined tangible net worth; combined net cash flows; bond required of association’s administr
616B.353 Indemnity agreement; policy of excess insurance; assessment; bond or similar security; minimum combined tangible net worth; combined net cash flows; bond required of association’s administrator or third-party administrator; Account for Associations of Self-Insured Public and Private Employers.
1. An association of self-insured public or private employers shall:
(a) Execute an indemnity agreement jointly and severally binding the association and each member of the association to secure the payment of all compensation due pursuant to chapters 616A to 617, inclusive, of NRS. The indemnity agreement must be in a form prescribed by the Commissioner. An association may add provisions to the indemnity agreement if they are first approved by the Commissioner.
(b) Except as otherwise provided in this subsection, maintain a policy of specific and aggregate excess insurance in a form and amount required by the Commissioner. The excess insurance must be written by an insurer approved by the Commissioner. To determine the amount of excess insurance required, the Commissioner shall consider:
(1) The number of members in the association;
(2) If the association is an association of self-insured public employers, the types of governmental services provided by the members of the association;
(3) If the association is an association of self-insured private employers, the classifications of employment of the members of the association;
(4) The number of years the association has been in existence; and
(5) Such other information as the Commissioner deems necessary.
Ê Nothing in this paragraph prohibits an association from purchasing secondary excess insurance in addition to the excess insurance required by this paragraph.
(c) Collect an annual assessment from each member of the association in an aggregate amount of at least $250,000 or in an aggregate amount which the Commissioner determines is satisfactory based on an annual review conducted by the Commissioner of the actuarial solvency of the association.
(d) Except as otherwise provided in paragraph (e), deposit as security with the Commissioner a bond executed by the association as principal, and by a licensed surety, payable to the State of Nevada, and conditioned upon the payment of compensation for injuries and occupational diseases to their employees. The bond must be in an amount determined by the Commissioner to be reasonably sufficient to ensure payment of such compensation, but in no event may it be less than $100,000.
(e) In lieu of a bond, deposit with the Commissioner a like amount of lawful money of the United States or any other form of security authorized by NRS 100.065. If security is provided in the form of a savings certificate, certificate of deposit or investment certificate, the certificate must state that the amount is unavailable for withdrawal except upon order of the Commissioner.
2. Except as otherwise provided in subsection 3, in addition to complying with the requirements of subsection 1, an association of self-insured private employers shall:
(a) At the time of initial qualification and until the association has operated successfully as a qualified association of self-insured private employers for 3 years, as determined by the Commissioner, have a combined tangible net worth of all members in the association of at least $2,500,000, as evidenced by a statement of tangible net worth provided to the Division of Insurance of the Department of Business and Industry by an independent certified public accountant; or
(b) After 3 years of successful operation as a qualified association of self-insured private employers, as determined by the Commissioner, have combined net cash flows from operating activities plus net cash flows from financing activities of all members in the association of five times the average of claims paid for each of the last 3 years or $7,500,000, whichever is less.
3. In lieu of complying with the requirements of subsection 2, the association’s administrator shall ensure that a solvency bond, in a form prescribed by the Commissioner and in an aggregate amount of at least $2,500,000, is deposited with the Commissioner by the association or members of the association on behalf of the association.
4. The association’s administrator shall deposit with the Commissioner a bond executed by the association’s administrator as principal, and by a licensed surety, payable to the State of Nevada, and conditioned upon the faithful performance of his or her duties. The bond must be in an amount determined by the Commissioner.
5. Any third-party administrator providing claims services for the association shall deposit with the Commissioner a bond executed by the third-party administrator as principal, and by a licensed surety, payable to the State of Nevada, and conditioned upon the faithful performance of its duties. The bond must be in an amount determined by the Commissioner.
6. The Commissioner may increase or decrease the amount of any bond or money required to be deposited by this section in accordance with chapter 681B of NRS and the Commissioner’s regulations for loss reserves in casualty insurance. If the Commissioner requires an association, association’s administrator or third-party administrator to increase its deposit, the Commissioner may specify the form of the additional security. The association, association’s administrator or third-party administrator shall comply with such a requirement within 60 days after receiving notice from the Commissioner.
7. The Account for Associations of Self-Insured Public and Private Employers is hereby created in the State Agency Fund for Bonds. All money received by the Commissioner pursuant to this section must be deposited with the State Treasurer to the credit of the Account. All claims against this Account must be paid as other claims against the State are paid.
(Added to NRS by 1993, 670; A 1995, 1979; 2007, 3335)