Section R. 408.43k - Aggregate excess liability insurance; specific excess liability insurance; individual self-insurer; group self-insurerRule 13k. The agency shall not recognize a policy of aggregate or specific excess liability insurance in considering the ability of a self-insurer to fulfill its financial obligations under the act, unless the policy is issued by a casualty insurance company authorized, as defined in section 108 of the insurance code of 1956, 1956 PA 218, MCL 500.108, to transact such business in this state. The policy must comply with all of the following provisions unless specifically waived by the agency. Policies issued that do not comply with all provisions of this rule may be considered grounds for termination of the employer's self-insured authority.
(a) The policy may not be cancelable or nonrenewable unless written notice, sent by courier, registered mail or certified mail, is given to the other party to the policy and to the agency not less than 60 days before termination by the party desiring to cancel or not renew the policy.(b) The policy may not contain endorsements, provisions, or terms that increase the named insured or insureds retentions or increase the amount that must be paid by the named insured or insureds beyond the retentions reported on the declarations page of the policy and the Michigan certificate of specific/aggregate excess liability insurance. This provision does not apply to customary policy language that may call for increased payments by the insured or insureds for failure to act or abide by a policy provision.(c) A policy that has any type of commutation clause must provide that any commutation effected under the policy may not relieve the casualty insurance company of further liability with respect to claims and expenses unknown at the time of the commutation or in regard to any claim apparently closed at the time of initial commutation that is subsequently reopened by or through a competent authority. If the casualty insurance company proposes to settle its liability for future payments payable as compensation for accidents occurring during the term of the policy by the payment of a lump sum to the employer, to be fixed as provided in the commutation clause of the policy, then the casualty insurance company or the company's agent shall give the agency not less than 30 days' prior notice of the commutation. Notice must be by courier, registered mail, or certified mail. If any commutation is affected, then the agency has the right to direct that the sum be placed in trust for the benefit of the injured employee or employees entitled to future payments of compensation.(d) The policy must state that if a private self-insured employer becomes insolvent and is unable to make compensation payments and the self-insurers' security fund may have responsibility for making payment under section 537 of the act, MCL 418.537, then the excess insurance carrier shall make, directly to the claimants or their authorized representatives, payments as would have been made by the excess insurance carrier to the employer after it has been determined that the retention level has been reached on the excess liability insurance policy.(e) The policy must state that 100% of the following payments must be applied toward reaching the retention level in the specific and aggregate excess liability policy: (i) Benefit payments made by the employer as required in the act.(ii) Benefit payments, as required in the act, that are due and owing to claimants of the employer.(iii) Benefit payments made on behalf of the employer, as required in the act, by a surety under a bond or through the use of other security required by the director.(iv) Payments made by the self-insurers' security fund.(v) Usual and customary claims allocated loss adjustment expenses.(vi) Payments made, as specified in paragraphs (i), (iii), (iv) and (v) of this subdivision, that are reimbursable by the specific excess liability policy may not be considered in reaching the aggregate excess liability retention.(f) The policy must provide for 100% reimbursement of the following payments that exceed the retention levels as defined in the specific or aggregate excess liability policy: (i) Benefit payments made by the employer as required in the act.(ii) Benefit payments made on behalf of the employer as required in the act by a surety under a bond or through the use of other security required by the agency.(iii) Payments made by the self-insurers' security fund.(iv) Usual and customary claims allocated loss adjustment expenses.(g) Reimbursement is pro rata if multiple excess insurers insure the same selfinsured for the same period. A request to waive a provision of this rule must be in writing and approved by the agency before a policy is issued. The carrier shall confirm issuance of an aggregate or specific excess liability policy on a form prescribed by the agency.Mich. Admin. Code R. 408.43k
1980 AACS; 1984 AACS; 1989 AACS; 1996 AACS; 1998-2000 AACS; 2007 AACS; 2021 MR 23, Eff. 12/10/2021