No. 27488 (New Rule): R590-231. Workers' Compensation Market of Last Resort

DAR File No.: 27488
Filed: 10/14/2004, 10:03
Received by: NL

 

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this proposed new rule is to define the "Market of Last Resort" and to provide eligibility criteria, requirements for the designation of existing insured employers, and reporting requirements. The market of last resort has never been defined. Definition is required to monitor assignment to the market of last resort, the size of the market of last resort, rating and rates in the market of last resort, and reporting about the market of last resort. During the last legislative session neither the Department nor the market of last resort were able to answer questions about the market of last resort because the market of last resort had never been defined. This rule provides a process to answer these questions.

 

Summary of the rule or change:

This rule defines the "Market of Last Resort," and provides eligibility criteria, requirements for the designation of existing insured employers, and reporting requirements.

 

State statutory or constitutional authorization for this rule:

Sections 31A-2-201, 31A-19a-404, 31A-20-103, and 31A-22-1010

 

Anticipated cost or savings to:

the state budget:

There will be a minor increase in the Department's workload due to the requirement to file a report with the department. This will not require the hiring of an additional employee.

 

local governments:

This rule does not affect local government since it deals solely with the relationship between the workers' compensation market and the Department.

 

other persons:

The requirements in the rule setting underwriting requirements, rating criteria and filing a report with the department regarding the Market of Last Resort will increase the workload of the Workers' Compensation Fund. Whether additional employees will need to be hired to handle this work or not is not known at this time. The rule should have no monetary impact on consumers of workers' compensation insurance since the rule is meant just to identify a segment of the Workers' Compensation Fund's pool of policyholders.

 

Compliance costs for affected persons:

The requirements in the rule setting underwriting requirements, rating criteria and filing a report with the department regarding the Market of Last Resort will increase the workload of the Workers' Compensation Fund. Whether additional employees will need to be hired to handle this work or not is not known at this time. The rule should have no monetary impact on consumers of workers' compensation insurance since the rule is meant just to identify a segment of the Workers' Compensation Fund's pool of policyholders.

 

Comments by the department head on the fiscal impact the rule may have on businesses:

The fiscal impact of this rule, if any, is not known by the department or the Workers' Compensation Fund at this time.

 

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Insurance
Administration
Room 3110 STATE OFFICE BLDG
450 N MAIN ST
SALT LAKE CITY UT 84114-1201

 

Direct questions regarding this rule to:

Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at [e-mail]

 

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

12/01/2004

 

Interested persons may attend a public hearing regarding this rule:

11/23/2004 at 10:00 AM, State Office Building (behind the Capitol), Room 3112 (third floor), Salt Lake City, UT

 

This rule may become effective on:

12/02/2004

 

Authorized by:

Jilene Whitby, Information Specialist

 

 

RULE TEXT

R590. Insurance Administration.

R590-231. Workers' Compensation Market of Last Resort.

R590-231-1. Authority.

This rule is promulgated pursuant to the following statutes:

(1) 31A-19a-404, rulemaking authority for the recording and reporting of statistical data and experience rating data;

(2) 31A-20-103, rulemaking authority to define lines and classes of insurance;

(3) 31A-22-1010, rulemaking authority for reporting requirements for workers' compensation deductible policies; and

(4) 31A-2-201, rulemaking authority to implement the provision of Title 31A.

 

R590-231-2. Findings and Interpretation.

(1) The commissioner finds that the legislature intended that the Workers' Compensation Fund created under Title 31A, Chapter 33, was to provide workers' compensation insurance for Utah employers who are not able to obtain such insurance in the voluntary marketplace.

(2) Based upon this finding, the commissioner interprets Section 31A-22-1001 to mean that the Workers' Compensation Fund, created under Title 31A, Chapter 33, is the insurer that provides workers' compensation insurance for the market of last resort in Utah.

 

R590-231-3. Purpose and Scope.

(1) The purpose of this rule, regarding the workers' compensation market of last resort, is to:

(a) define the workers' compensation market of last resort;

(b) provide eligibility criteria;

(c) provide requirements for designation of existing insured employers; and

(d) provide reporting requirements to the department and the designated rate service organization.

(2) This rule applies to the insurer for the market of last resort.

 

R590-231-4. Definitions.

(1) "Insurer for the market of last resort" means the Workers' Compensation Fund.

(2) "Market of Last Resort" means the workers' compensation class of risk that cannot be placed with a voluntary workers' compensation insurer because of certain underwriting restrictions or class codes.

(3) "Reasonable rating plan" means a rating plan approved by the department.

(4) "Voluntary workers' compensation insurer" means an admitted workers' compensation insurer actively seeking workers' compensation business in Utah, including the Workers' Compensation Fund.

 

R590-231-5. Eligibility.

(1) To be eligible for the workers' compensation market of last resort, an employer must meet the underwriting and rating criteria established by the market of last resort.

(2) An employer being insured in the market of last resort remains eligible until the employer obtains workers' compensation insurance from a voluntary workers' compensation insurer.

 

R590-231-6. Underwriting and Rating.

(1) The insurer for the market of last resort shall file separate underwriting and rating criteria for the market of last resort.

(2) Underwriting criteria for eligibility in the market of last resort shall include:

(a) a minimum qualifying premium of less than $5,000,

(b) class code and risk characteristics, and

(c) loss and payroll experience.

(3) Policy files for employers eligible for the market of last resort must include the underwriting criteria used for placement in the market of last resort.

 

R590-231-7. Designation and Reporting.

(1) Because the Workers' Compensation Fund is a voluntary workers' compensation insurer, and the insurer for the market of last resort, the Workers' Compensation Fund shall:

(a) Designate its existing insured employers as insured in the voluntary workers' compensation market or in the market of last resort; and

(b) Such designation can be done:

(i) immediately; or

(ii) as each employer renews; or

(iii) at the time a new application is made for workers' compensation coverage.

(2) The insurer for the market of last resort shall report market of last resort data to the designated rate service organization. Such reporting shall be timely and consistent with the designated rate service organization's reporting requirements.

(3) Upon request, the insurer for the market of last resort shall make available to the Insurance Department, information about the market of last resort. Requested information may include the market of last resort data reported to the designated rate service organization.

 

R590-231-8. Enforcement Date.

The commissioner will begin enforcing the provisions of this rule 45 days from the effective date of the rule.

 

R590-231-9. Severability.

If any provision or clause of this rule or the application of it to any person is for any reason held to be invalid, the remainder of the rule and the application of any provision to other persons or circumstances shall not be affected.

 

KEY: workers' compensation insurance

2004

31A-2-201

31A-19a-404

31A-20-103

31A-22-1010