§ 97-133. Powers and duties of the Association.
§ 97‑133. Powers andduties of the Association.
(a) The Associationshall:
(1) Repealed by SessionLaws 1999‑219, s. 7.2, effective June 25, 1999.
(1a) Administer a fund, tobe known as the North Carolina Self‑Insurance Security Fund, which shallreceive the assets of the North Carolina Self‑Insurance Guaranty Fundpreviously established under subdivision (2) of this subsection, theassessments required by subdivisions (2a) and (3a) of this subsection and anyother sums received by the Association. In its discretion, the Board maydetermine that the assets of the Fund should be segregated or that a separateaccounting shall be made in order to identify that portion of the Fund whichrepresents assessments paid by individual self‑insurers and that portionof the Fund which represents assessments paid by group self‑insurers. Ifthe Board segregates the Fund in this manner, the Association shall thereafterpay covered claims against individual member self‑insurers from thatportion of the Fund that represents assessments against individual self‑insurersand shall thereafter pay covered claims against group member self‑insurersfrom that portion of the Fund that represents assessments against group self‑insurers.The costs of administering the Association shall be borne by the Fund. TheAssociation is authorized to secure insurance, primary excess insurance,reinsurance, bonds, other insurance, financial guarantees and related financialinstruments to effectuate the purposes of the Association. The Board will investthe Fund assets pursuant to an investment policy adopted by the Board andreviewed and approved annually by the Department of the State Treasurer. Theearnings from investment of Fund assets shall be placed in or credited to theFund.
(2) Repealed by SessionLaws 2005‑400, s. 4, effective January 1, 2006.
(2a) Establish, operate,and maintain the Association Aggregate Security System as defined in G.S. 97‑130and G.S. 97‑165 as follows:
a. The Associationshall annually prepare and submit to the Commissioner a written plan to providean Association Aggregate Security System through a combination of cash ondeposit in the Fund, securities, surety bonds, irrevocable letters of credit,insurance or other financial instruments or guarantees owned or entered into bythe Association and acceptable to the Commissioner. The written plan shallinclude, but not be limited to, (i) a description of the institutions that willissue or guarantee the securities, surety bonds, irrevocable letters of credit,insurance or other financial instruments or guarantees, including, but notlimited to, the credit rating, financial strength, and AM best rating, ifapplicable to the institutions (ii) applicable cash flow information andfinancial assumptions (iii) a description of the methodology to be used by theAssociation to assess and collect the Association Aggregate Security Systemassessments to be made pursuant to subdivision (3a) of this subsection and (iv)a proposed timetable for the release of existing individual company depositsposted pursuant to G.S. 97‑185(c), provided, however, that no individualcompany deposits posted pursuant to G.S. 97‑185(c) shall be releasedwithout the written consent of the Commissioner. The noncash elements of thecomposite security may be one‑year or multiple‑year instruments.
b. Within 90 daysfollowing the submission of the initial plan under sub‑subdivision a. ofthis subdivision, the Commissioner shall either approve or disapprove theinitial plan and shall notify the Association in writing. If the Commissionerdoes not approve or disapprove the initial plan within 90 days followingsubmission, then the initial plan shall be deemed to be approved by theCommissioner. All subsequent plans shall be either approved or disapprovedwithin 60 days following submission.
c. The Commissionershall also determine the total undiscounted claims liability of each individualself‑insurer that will participate in the Association Aggregate SecuritySystem as well as the aggregate total undiscounted outstanding claimsliabilities of all the individual self‑insurers that are to participatein the Association Aggregate Security System and shall notify the Associationof this determination.
d. Upon approval by theCommissioner of the Association's plan for the Association Aggregate SecuritySystem, the Association shall assess the individual self‑insurers thatparticipate in the Association Aggregate Security System pursuant tosubdivision (3a) of this subsection.
e. If the Commissionerdisapproves the plan for any year, every self‑insurer shall deposit withthe Commissioner, or continue to deposit, the amount required by G.S. 97‑185(b3)in the manner prescribed by G.S. 97‑185(c).
f. Group self‑insurersshall not participate in the Association Aggregate Security System.
(3) Repealed by SessionLaws 2005‑400, s. 4, effective January 1, 2006.
(3a) Assess members of theAssociation as follows:
a. AssociationAggregate Security System assessments. The Association shall assess eachindividual self‑insurer participating in the Association AggregateSecurity System a security system assessment. The amount of the security systemassessment charged to each individual self‑insurer participating in theAssociation Aggregate Security System shall be based on the Association'sreasonable consideration of all of the following factors:
1. The total amount ofassessments necessary to provide aggregate security for all participatingindividual self‑insurers.
2. The individual self‑insurer'stotal workers' compensation liabilities under the Act.
3. The financialstrength and creditworthiness of the participating individual self‑insurer.
4. Any other relevantfactors.
b. Special assessment. In the event that there are covered claims against an insolvent member ormembers and the assets of the Fund are not sufficient to pay the obligations ofthe Association, then the Association may collect a special assessment from themembers in an amount sufficient to pay the aggregate value of such coveredclaims. Each member's special assessment shall be determined by the Board andshall be based on the proportion of the member's total obligations under theAct to the aggregate total of all members' obligations under the Act.
c. Initial assessments. An individual self‑insurer that becomes a member and does not initiallyparticipate in the Association Aggregate Security System shall pay an initialassessment to the Association in an amount determined by the Board. A groupself‑insurer, upon receiving its initial license from the Commissioner,shall pay an initial assessment to the Association in an amount determined bythe Board.
d. Each member shall benotified of assessments no later than 30 days before the assessment is due.
e. Delinquentassessments, except as otherwise provided, shall bear interest at a rate to beestablished by the Board.
f. Group assessments. The Association may annually assess each member group self‑insurer inan amount not to exceed two percent (2%) of the group self‑insurer'sannual gross premiums for the preceding calendar year, as determined under G.S.105‑228.5(b), (b1), and (c).
(4) Be obligated to paycovered claims.
(5) After paying anycovered claim, be subrogated to the rights of the injured employee anddependents and be entitled to enforce liability against the self‑insureror any third party by any appropriate action brought in its own name or in thename of the injured employee and dependents.
(6) Expend Fund assetsin amounts necessary to pay all of the following:
a. The obligations ofthe Association under this Article subsequent to an insolvency.
b. The expenses ofhandling covered claims subsequent to an insolvency.
c. The cost ofexaminations under G.S. 97‑137.
d. The costs ofimplementing and operating the Association Aggregate Security System.
e. All other expensesauthorized by this Article.
(7) Investigate claimsbrought against the Association and adjust, compromise, settle, and pay coveredclaims to the extent of the Association's obligation; and deny all otherclaims. The Association may review settlements to which the insolvent memberwas a party to determine the extent to which such settlements may be properlycontested.
(8) Notify such personsas the Commissioner directs under G.S. 97‑136.
(9) Handle claimsthrough its directors, its employees, or through one or more members or otherpersons designated as servicing facilities. Designation of a servicing facilityis subject to the approval of the Commissioner, but designation of a member asa servicing facility may be declined by such member.
(10) Reimburse eachservicing facility for obligations of the Association paid by the facility andfor expenses incurred by the facility while handling claims on behalf of theAssociation.
(11) Pay any otherexpenses of the Association authorized by this section.
(12) Repealed by SessionLaws 2005‑400, s. 4, effective January 1, 2006.
(b) The Associationmay:
(1) Employ or retainsuch persons, including, but not limited to, adjustors, brokers, accountants,attorneys, financial advisors, investment bankers, placement agents, andconsultants, as the Board may determine are necessary to handle claims, performother duties of, provide services to, and consult with the Association.
(2) Borrow fundsnecessary to effect the purposes of this Article in accord with the Plan,including entering into standby lines of credit.
(3) Sue or be sued.
(4) Negotiate and becomea party to such contracts as are necessary to carry out the purpose of thissection.
(5) Perform such otheracts as are necessary or proper to effectuate the purpose of this section.
(6) Reimburse theDepartment of Insurance up to twenty thousand dollars ($20,000) for consultantsretained by the Department to review the initial plan submitted pursuant toG.S. 97‑133(a)(2a).
(c) Repealed by SessionLaws 2005‑400, s. 4, effective January 1, 2006.
(c1) The Associationshall provide in its Plan that the functions of administration and adjustingclaims shall not be performed by the same entity that provides legalrepresentation to the Association for claims.
(d) Repealed by SessionLaws 2005‑400, s. 4, effective January 1, 2006. (1985 (Reg. Sess., 1986), c.928, s. 1(a); 1985 (Reg. Sess., 1986), c. 1013, s. 1; 1987, c. 528, ss. 4‑10;1989, c. 485, s. 27; 1995, c. 533, s. 1; 1997‑475, ss. 2.3, 2.4; 1999‑219,s. 7.2; 2003‑115, ss. 1, 2; 2005‑400, s. 4; 2009‑242, s. 1.)