§ 58-47-65. Licensing; qualification for approval.
§ 58‑47‑65. Licensing; qualification for approval.
(a) No group shall self‑insureits workers' compensation liabilities under the Act unless it is licensed bythe Commissioner under this Part. Any self‑insured group that wasorganized and approved under the North Carolina law before July 1, 1995, andwhose authority to self‑insure its workers' compensation liabilitiesunder the Act has not terminated after that date, shall not be required to bereapproved to be licensed under this Article.
(b) An applicant for alicense shall file with the Commissioner the information required by subsection(f) of this section on a form prescribed by the Commissioner at least 90 daysbefore the proposed licensing date. The applicant shall furnish to theCommissioner satisfactory proof of the proposed group's financial ability,through its members, to comply with the Act. No application is complete untilthe Commissioner has received all required information.
(c) The group shallcomprise two or more employers who are members of and are sponsored by a singlebona fide trade or professional association. The association shall (i) comprisemembers engaged in the same or substantially similar business or professionwithin the State, (ii) have been incorporated in North Carolina, (iii) havebeen in existence for at least five years before the date of application to theCommissioner to form a group, and (iv) submit a written determination from theInternal Revenue Service that it is exempt from taxation under 26 U.S.C. §501(c). This subsection does not apply to a group that was organized andapproved under North Carolina law before July 1, 1995.
(d) Only an applicantwhose members' employee base is actuarially sufficient in numbers and providesan actuarially appropriate spreading of risk may apply for a license. TheCommissioner shall consider (i) the financial strength and liquidity of theapplicant relative to its ability to comply with the Act, (ii) the applicant'scriteria and procedures regarding the review and monitoring of members'financial strength, (iii) reliability of the financial information, (iv)workers' compensation loss history, (v) underwriting guidelines, (vi) claimsadministration, (vii) excess insurance or reinsurance, and (viii) access toexcess insurance or reinsurance.
(e) Before issuing alicense to any applicant, the Commissioner shall require, in addition to theother requirements provided by law, that the applicant file an affidavit signedby the association's board members that it has not violated any of theapplicable provisions of this Part or the Act during the last 12 months, andthat it accepts the provisions of this Part and the Act in return for thelicense.
(f) The licenseapplication shall comprise the following information:
(1) Biographicalaffidavits providing the education, prior occupation, business experience, andother supplementary information submitted for each promoter, incorporator,director, trustee, proposed management personnel, and other persons similarlysituated.
(2) A forecast for a five‑yearperiod based on the initial capitalization of the proposed group and its planof operation. The forecast shall be prepared by a certified public accountant,a qualified actuary, or both, be in sufficient detail for a complete analysisto be performed, and be accompanied by a list of the assumptions utilized inmaking the forecast.
(3) An individualapplication, under G.S. 58‑47‑125, of each member applying forcoverage in the proposed group on the inception date of the proposed group,with a current GAAP financial statement of each member. The financialstatements are confidential, but the Commissioner may use them in any judicialor administrative proceeding.
(4) A breakdown of allforecasted administrative expenses for the proposed group's fiscal year in adollar amount and as a percentage of the estimated annual premium.
(5) The proposed group'sprocedures for evaluating the current and continuing financial strength ofmembers.
(6) Evidence of thecoverage required by G.S. 58‑47‑95.
(7) Demonstrationprovided by the board, satisfactory to the Commissioner, that the proposedgroup's member employee base is actuarially sufficient in numbers and providesan actuarially appropriate spreading of risk.
(8) An assessment planunder G.S. 58‑47‑135(a).
(9) A listing of theestimated premium to be developed for each member individually and in total forthe proposed group. Payroll data for each of the three preceding years shall befurnished by risk classification.
(10) An executed agreementby each member showing the member's obligation to pay to the proposed group notless than twenty‑five percent (25%) of the member's estimated annualpremium not later than the first day of coverage afforded by the proposedgroup.
(11) Composition of theinitial board.
(12) An indemnityagreement on a form prescribed by the Commissioner.
(13) Proof, satisfactoryto the Commissioner, that either the applicant has within its own organizationample facilities and competent personnel to service its program forunderwriting, claims, and industrial safety engineering, or that the applicantwill contract for any of these services. If the applicant is to perform anyservicing, biographical affidavits of those persons who will be responsible foror performing servicing shall be included with the information in subdivision(1) of this subsection. If a group contracts with a service company or TPA toadminister and adjust claims, the group shall provide proof of compliance withthe other provisions of this Part.
(14) A letter stipulating theapplicant's acceptance of membership in the North Carolina Self‑InsuranceSecurity Association under Article 4 of Chapter 97 of the General Statutes.
(15) Any other specificinformation the Commissioner considers relevant to the organization of the proposedgroup.
(g) Every applicantshall execute and file with the Commissioner an agreement, as part of theapplication, in which the applicant agrees to deposit with the Commissionercash or securities acceptable to the Commissioner. (1997‑362, s. 3; 1999‑132,s. 13.1; 2003‑212, s. 24; 2005‑400, s. 19; 2007‑127, s. 11.)