No. 27488: R590-231. Workers' Compensation Market of Last Resort

DAR File No.: 27488
Filed: 01/13/2005, 08:25
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The changes being proposed to this new rule are a result of input received during the comment period.

 

Summary of the rule or change:

The changes to Section R590-231-5 clarify that the insurer, who is defined as the Workers' Compensation Fund, is the market of last resort. Changes to Section R590-231-6 require the insurer for the market of last resort to file a separate rating plan for that market and can use premium size as an identifying factor. The insurer is also required to follow certain underwriting protocols. Section R590-231-7 changes require the market of last resort insurer and all other insurers writing workers' compensation coverage in Utah to file underwriting and loss data with the state's designated rate service organization. (DAR NOTE: This change in proposed rule has been filed to make additional changes to a proposed new rule that was published in the November 1, 2004, issue of the Utah State Bulletin, on page 15. Underlining in the rule below indicates text that has been added since the publication of the proposed rule mentioned above; strike-out indicates text that has been deleted. You must view the change in proposed rule and the proposed new rule together to understand all of the changes that will be enforceable should the agency make this rule effective.)

 

State statutory or constitutional authorization for this rule:

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

 

Anticipated cost or savings to:

the state budget:

These changes will have no impact on the work of public employees or the state's budget. No fees will be charged or eliminated and no additional filings required.

 

local governments:

The changes to this rule will have no impact on local governments since it only deals with the regulatory requirements of the Insurance Department on its licensees.

 

other persons:

The changes to this rule will allow the Workers' Compensation Fund more latitude in their underwriting requirements regarding premium size in determining who fits within the market of last resort. Where they place that limit will determine its effect on employers seeking coverage with them.

 

Compliance costs for affected persons:

The changes to this rule will allow the Workers' Compensation Fund more latitude in their underwriting requirements regarding premium size in determining who fits within the market of last resort. Where they place that limit will determine its effect on employers seeking coverage with them.

 

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

The additional changes to this rule should have little, if any, effect on the industry and workers' compensation consumer. The changes are mainly for clarification.

 

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:

03/03/2005

 

This rule may become effective on:

03/04/2005

 

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 insurer for the market of last resort.

(2) An employer being insured [in]by the insurer for the market of last resort remains eligible for the market of last resort 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, and a separate rating plan for the market of last resort.

(2) Underwriting criteria for eligibility in the market of last resort [shall]may include but are not limited to:

(a) [a minimum qualifying premium of less than $5,000,]premium size;

(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 or follow underwriting protocols 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 its data, including 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 for all workers' compensation insurance carriers operating in Utah.

(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 revised 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]2005

31A-2-201

31A-19a-404

31A-20-103

31A-22-1010