Section R. 408.43j - Group self-insurers' funds; advance premium discounts; surplus money; surplus investment income and premiums; unfunded claimsRule 13j.
(1) The trustees of any group self-insurers' fund shall not authorize advance premium discounts to any member in excess of those authorized by the excess insurance underwriter and approved by the agency. If discounts are approved by the excess carrier and the agency, the excess carrier shall agree to base the loss fund on the premium collected after discount.(2) Any surplus money for a fund year in excess of the amount necessary to fulfill all obligations under the act for that fund year, including a provision for claims incurred but not reported, may be declared to be refundable by the trustees at any time, and the amount of the declaration is a fixed liability of the fund at the time of the declaration. The date of payment is as agreed to by the trustees and the agency, except that money not needed to satisfy the loss fund requirements, as established by the aggregate excess contract, may be refunded immediately after the end of the fund year with the approval of the agency. The intent of this rule is to ensure that sufficient money is retained so that total assets are greater than total liabilities for each fund year.(3) If premiums collected and earned investment income associated with any fund year are insufficient to completely fund all reported claims and expenses for that year, unfunded amounts, by fund year, must be reported immediately to the agency with the proposed plan to achieve 100% funding. The plan to achieve 100% funding for all claims is subject to agency approval. A plan may include, but is not limited to, all of the following:(a) Use of premiums collected in other fund years, but not necessary for payment of claims or expenses in the year collected.(b) Use of investment earnings associated with other fund years, but not necessary for payment of claims or expenses in the year in which associated.(c) Assessment of members by order of the agency.(4) The agency may allow investment income earned by a group selfinsurance fund during a calendar year to be returned to the fund membership without prior agency approval if the fund trustees provide all of the following documentation:(a) Certification, to the agency, in the form of a letter from a certified public accountant, attesting to the amount of investment income earned during the calendar year.(b) Certification to the agency, by the board of trustees, of the amount of the investment income and of the employers to whom the investment income is to be distributed.(c) Certification by the board of trustees and the group's certified public accountant that, after the distribution of investment income, the aggregate retention in the current fund year, as determined by the group's excess insurance carrier, and all administrative expenses will be fully funded.(d) If the fund operates with specific excess insurance only or a letter of credit in place of aggregate excess insurance, the board of trustees and the group's certified public accountant shall certify that, after the distribution of investment income, ultimate loss, as calculated by a certified actuary at a 90% confidence level, and all administrative expenses will be fully funded.(e) Certification by the board of trustees and the fund's certified public accountant that the fund's financial statements are not discounted and do not consider the time value of money. The information specified in subdivisions (a) to (e) of this subrule must be received by the agency not earlier than December 1, and not later than December 31, of the calendar year in which the investment income is earned and is to be distributed. If the information specified in this rule is not received by the agency in a timely manner, then the agency may withdraw the fund's privilege of returning investment income to fund members without prior agency approval.
Mich. Admin. Code R. 408.43j
1980 AACS; 1984 AACS; 1996 AACS; 2021 MR 23, Eff. 12/10/2021