Section 760 IAC 1-75-3 - Certificate of registrationAuthority: IC 20-42.5-2-1
Affected: IC 4-21.5-5; IC 27-1-3.1; IC 27-1-13-3
Sec. 3.
(a) A risk pool may not engage in business in Indiana without first obtaining a certificate of registration from the department.(b) To obtain a certificate of registration, a risk pool shall submit an application for a certificate of registration. The application shall be on a form prescribed by the department. The application shall be completed and submitted along with the following information: (1) Copies of all current articles, bylaws, participation agreements, trusts, and other documents describing the rights and obligations of risk pool participants.(2) The most recent audited financial statement or, in the case of a start-up operation, a pro forma financial statement of the risk pool for the next twelve (12) months.(3) Proof of a fidelity bond protecting the money, securities, and other property of the risk pool. Coverage shall be at least equal to the insuring agreements of employee theft or employee dishonesty. The definition of "employee" shall be broadened to include the following:(C) Noncompensated officers.(F) Designated agents. The bond shall be written for at least the suggested minimum amount specified in the formula presented in the NAIC examiner's handbook.
(4) A business plan for the risk pool.(5) A feasibility study in compliance with section 2 of this rule.(6) A signed statement from all of the founding participants that they have read the feasibility study and have individually concluded they wish to proceed with the creation of, and participation in, the risk pool.(7) Copies of the following: (A) Specimen coverage forms, rules, rates to be charged, and underwriting guides.(B) All insurance in force.(C) Organizational chart illustrating all entities affiliated with the risk pool.(D) Agreements with service providers.(E) Stop loss, excess, and reinsurance agreements, which shall include the stop loss attachment point and aggregate retention.(F) If a risk pool offers worker's compensation through an insurer, a certificate of insurance from an insurance company as required by section 5(c) of this rule.(8) A statement of the costs for coverage, which must include an itemization of amounts for administration, reserves, and other expenses associated with operation of the risk pool, as required by section 6 of this rule.(9) A statement of the risk pool's contingency provisions for financing in the event of any of the following: (A) Unexpectedly costly or ineffective risk financing.(B) Ongoing expenses above budgeted amounts.(C) Outlays for unexpected or excessive losses.(D) Income loss or expenses incurred.(E) Adverse loss experience incurred from withdrawal of risk pool participants.(10) Any assessment formula used in subdivision (9) for determining the allocation of amounts needed between and among risk pool participants.(11) The risk pool's:(A) formulas for reallocation and reassessment when adding or deleting members;(B) formulas for assessment of risk pool participants' contributions;(C) dividend payment policy and dividend allocation formula; and(D) formula for reassessment or reallocation upon termination or liquidation of the risk pool.(12) Names and addresses of the following: (A) The educational service center or centers associated with the risk pool.(B) The members of the board of trustees of the risk pool.(13) Biographical affidavits submitted on the form prescribed by the NAIC for insurers for the following: (A) The members of the board of trustees.(B) The trust administrator and those performing:(vi) claims; functions to be used by the risk pool.
(C) All other persons with decision making authority for the risk pool.(14) The application fee required by section 15 of this rule.(15) A copy of all proposed marketing materials.(c) The commissioner: (1) shall examine the application and documents submitted by the applicant;(2) may request any additional information that he or she deems relevant to the application; and(3) shall have the power to: (A) conduct any investigation under IC 27-1-3.1 the commissioner may deem necessary;(B) examine under oath any persons interested in or connected with the risk pool; and(C) grant or deny approval of an application submitted under this section.(d) A certificate of registration shall not be issued until the commissioner approves the risk pool's application. The commissioner may not approve an application unless the risk pool meets all of the following requirements:(1) The risk pool must:(A) consist of two (2) or more school corporations;(B) be controlled and sponsored directly by risk pool participants;(C) be operated pursuant to a trust agreement by a board of trustees who shall:(i) have complete fiscal control over the risk pool;(ii) be responsible for all operations of the risk pool; and(iii) be employees of Indiana public school corporations or educational service centers; and(D) be: (i) mutual in organizational form;(iii) a not-for-profit organization.(2) The risk pool shall: (A) have within its own organization adequate facilities and competent personnel, acceptable to the commissioner, to service the risk pool; or(B) contract with a third party administrator.(3) The risk pool shall have applications from not fewer than two (2) prospective risk pool participants. The annual gross contributions to the plan shall not be less than one million dollars ($1,000,000) for a risk pool that covers only worker's compensation liability and one million five hundred thousand dollars ($1,500,000) for a risk pool that covers any lines other than, or in addition to, worker's compensation liability.(4) The risk pool shall possess a written commitment, binder, or policy for stop loss insurance issued by an insurer, reinsurer, or excess insurer with the equivalent of an A.M. Best rating of not less than A-, authorized to do business in this state. The stop loss insurance shall provide the following: (A) Not less than sixty (60) days' notice to the commissioner of any cancellation or nonrenewal of coverage.(B) An aggregate stop loss attachment point of not more than one hundred twenty-five percent (125%) of the amount of expected claims for the following year.(5) The risk pool contributions must be set to fund at least one hundred percent (100%) of the aggregate retention plus all other costs of the risk pool. The aggregate retention shall include all claims below the stop loss attachment point. Amounts contained in a loss fund are considered to be contributions that may be utilized by the risk pool to satisfy this requirement. Funds shall be on deposit with the risk pool upon issuance of its first policy.(6) The risk pool must have procedures acceptable to the commissioner for the following: (A) The routine handling of claims.(B) Handling claims in the event of dissolution of the risk pool.(7) The risk pool shall: (A) obtain a fidelity bond in the amount required by subsection (b)(3); and(B) be operated in accordance with sound actuarial principles.(8) All funds of the risk pool shall be held in trust in the name of the risk pool in a qualified financial institution. A risk pool shall invest funds as described in IC 27-1-13-3(b). Any other form of investment must be specifically approved by the commissioner. The risk pool may:(A) commingle the funds of the risk pool participants; and(B) invest funds using a common investment policy.(9) The risk pool's dividend: (A) allocation formula; and(B) payment policy; must be acceptable to the commissioner.
(10) The risk pool's participation application and participation agreement must contain the language required by section 14 of this rule.(e) A denial of an application shall: (2) specify the reasons for denial; and(3) provide notice of an applicant's right to request a hearing. Any request for a hearing shall be submitted within sixty (60) days of receipt of the department's denial. A final order of the commissioner is a final order subject to judicial review under IC 4-21.5-5.Department of Insurance; 760 IAC 1-75-3; filed Apr 14, 2008, 10:28 a.m.: 20080514-IR-760070144FRAReadopted filed 11/17/2014, 3:39 p.m.: 20141217-IR-760140197RFAReadopted filed 11/24/2020, 10:27 a.m.: 20201223-IR-760200464RFA