Chapter
410
2003 -- S 0857 AS AMENDED
Enacted 08/06/03
A N A C T
RELATING TO INSURANCE --
WORKERS' COMPENSATION INSURANCE FUND
Introduced By: Senator
Roger R. Badeau
Date
Introduced: February 26, 2003
It is enacted by the General
Assembly as follows:
SECTION
1. Title. -- Workers’ Compensation Insurance Fund.
SECTION
2. Definitions. – When used in this act, the following words have the
following meanings:
(1)
“Board” means the board of directors of the state compensation insurance fund;
(2)
“Fund” means the state compensation insurance fund known as The Beacon Mutual
Insurance Company;
(3)
“Chief executive officer” means the chief executive officer of the state
compensation
insurance fund;
(4)
“Personal injury” or “injury” has the meaning given to it in chapter 29 of
title 28.
SECTION
3. Creation of fund. – (a) The purpose of the fund is to ensure that all
employers in the state of Rhode
Island have the opportunity to obtain workers’ compensation
insurance at the lowest possible
price. It is also the policy and purpose of this act to establish and
maintain that the fund shall be
the workers’ compensation insurance carrier of last resort. The
fund is created as a nonprofit
independent public corporation for the purpose of insuring
employers against liability for
personal injuries for which their employees may be entitled to
benefits under chapter 33 of title
28 or under 33 U.S.C. Section 901 et seq., and other employer’s
liabilities incidental to those
provisions.
(b)
The fund shall be organized and, except as provided in subsection (c) of this
section,
subsection (c) of section 11, or
in this act, operated as a domestic mutual insurance company.
(c)
The fund shall be deemed to have met the requirements of sections 27-1-37 and
27-8-
5 when the director of the
department of labor and training has appropriated to the fund any
portion of the amount provided for
in section 18 and all policies issued by the fund shall be
without the contingent mutual
liability of the policyholders for assessment.
(d)
The fund shall be deemed for all purposes to be an insurance company organized
in
accordance with section 7-1-5 and chapter
1.1 of title 7. Without limiting the foregoing, section 7-
1.1-4.1 relating to, among other
things, indemnification of officers, directors, and employees, and
section 7-1.1-33(b) – (e) relating
to directors shall apply to the fund.
(e)
The fund may amend its charter pursuant to section 7-1.1-53.1, subject to the
prior
approval of all amendments by the
director of the department of business regulation.
(f)
The general assembly declares that a stable market for workers’ compensation
insurance for all employers
seeking coverage is necessary to the economic welfare of Rhode
Island; that a stable and
competitive insurance market will benefit all employers, all employees
and their families, and all
insurance companies doing business in Rhode Island; that without this
insurance at a competitive rate,
the orderly growth and economic development of the state would
be severely impeded; and that the
provision of competitive insurance coverage by the fund for
employers in Rhode Island and the
capitalization of the fund through capital assessments as
provided in this act is for the
benefit of the public and in furtherance of a public purpose.
SECTION
4. Board of directors. – The board of directors shall be comprised of
seven
(7) members elected or appointed
as provided in this section and the director of the department of
labor and training and the chief
executive officer of the fund who shall be ex officio members.
Each director shall hold office
until a successor is appointed and qualified. Except for ex officio
members, each director shall be a
policyholder or an officer or employee of a policyholder. The
governor shall appoint four (4)
directors and three (3) directors shall be elected by the fund’s
policyholders. In addition to the director
of the department of labor and training, no more than
one (1) member of the board may be
an elected or appointed official of state or municipal
government. At least three (3)
members of the board shall be policyholders of an officer or
employee of a policyholder which
is a for profit entity. No member other than the chief executive
officer may represent or be an
employee of an insurance company. The terms of board members,
except for ex officio members,
shall be four (4) years in accordance with the provisions for the
election and classification of
directors as may be established in the fund’s bylaws. Any vacancy
occurring during the term of any
director shall be filled as provided in the fund’s bylaws in the
same manner as the member’s predecessor.
The board shall annually elect a chairperson from
among its members, and any other
officers it deems necessary for the performance of its duties.
SECTION
5. Fund management. – The management and control of the fund is vested
solely in the board.
SECTION
6. Power and duties of the board. – The board is vested with full power,
authority, and jurisdiction over
the fund. The board may perform all acts necessary or convenient
in the exercise of any power,
authority, or jurisdiction over the fund, either in the administration
of the fund or in connection with
the insurance business to be carried on by it under the
provisions of this act, as fully
and completely as the governing body of all other domestic
insurance carriers to fulfill the
objectives and intent of this act. The board’s authority to invest
funds is subject to the
limitations imposed on domestic insurance companies in chapter 11.1 of
title 27.
SECTION
7. Chief executive officer. – Subject to the authority of the board, the
chief
executive officer appointed by the
board pursuant to section 12 shall administer the fund.
SECTION
8. Personal liability excluded. – The members of the board and officers
or
employees of the fund are not
liable personally, either jointly or severally, for any debt or
obligation created or incurred by
the fund.
SECTION
9. Insurance of workers’compensation liability. – The fund may insure an
employer against any workers’
compensation claim, claims under 33 U.S.C. Section 901 et seq.,
and other employer’s liabilities
incidental to those provisions arising out of and in the course of
employment, including the
provision of excess workers’ compensation insurance coverage, as
fully as any other insurer.
SECTION
10. General powers and limitations. – For the purposes of exercising the
specific powers granted in this
act and effectuating the other purposes of this act, the fund may:
(1)
Sue and be sued;
(2)
Have a seal and alter it at will;
(3)
Make, amend, and repeal bylaws and rules relating to the conduct of the
business of
the fund;
(4)
Enter into contracts relating to the administration of the fund;
(5)
Rent, lease, buy, or sell property, real and personal, in its own name and may
construct or repair buildings
necessary to provide space for its operations;
(6)
Declare dividends to its policyholders when there is an excess of assets over
liabilities, and minimum surplus
requirements;
(7)
Pay medical expenses, rehabilitation expenses, compensation due claimants of
insured
employers, pay salaries, and pay
administrative and other expenses of the fund;
(8)
Hire personnel and set salaries and compensation; and
(9)
Perform all other functions and exercise all other powers of a domestic mutual
insurance company that are
necessary, appropriate, or convenient to administer the fund and to its
members; provided, that the fund
shall not be a member of the National Council on
Compensation Insurance (NCCI).
SECTION
11. Insurance coverage program. – (a) Provision of workers’ compensation
coverage. Subject to the
limitations set forth in this act, the fund shall provide workers’
compensation insurance against
liabilities arising under title 28 for any employer that tenders the
necessary premium.
(b)
Applications; provisions of coverage.
(1)
Policy applications. -- Applicants may apply for coverage by the fund in good
faith,
either directly or through an
insurance producer licensed by the state of Rhode Island to procure
workers’ compensation insurance
according to rules adopted by the board under section 16.
(2)
Denial, cancellation, and nonrenewal. – The nonpayment of premium for current
or
prior policies issued by the fund
to the applicant, or to another entity for which the fund deems
the applicant to be a successor in
interest, may be a basis for the fund to deny, not renew or
terminate coverage. The failure or
refusal by an applicant or insured to fully and accurately
disclose to the fund information
concerning the applicant’s or insured’s ownership, change of
ownership, operations, or payroll,
including allocation of payroll among state and federal
compensation programs,
classification of payroll, and any other information determined by the
fund to be important in
determining proper rates shall be sufficient grounds for the fund to deny
an application or to not renew or
cancel an existing policy or to assess a premium surcharge
against the insured pursuant to
subsection (d). The failure or refusal by any insured or applicant to
comply with the fund’s safety
requirements or to permit premises inspections to the sole
satisfaction of the fund shall be
sufficient grounds for having its workers’ compensation
insurance coverage surcharged, not
renewed, or cancelled, or an application for the coverage
denied.
(3)
Appeal to director. – Any determination of the fund with respect to the denial,
cancellation, or nonrenewal of any
workers’ compensation insurance policy against liabilities
arising under title 28, with the
exception of cancellation for nonpayment of premium, may be
appealed to the director of the
department of business regulation, in writing, within thirty (30)
days of notice of this action. If
the director determines that the fund has unreasonably denied,
cancelled, or failed to renew any
workers’ compensation insurance policy, the fund shall in good
faith reconsider issuing,
reinstating, or renewing the workers’ compensation insurance policy. If
the fund has not issued, reinstated,
or renewed the workers’ compensation insurance policy within
thirty (30) days of a
determination of the director, the applicant or insured may appeal the denial,
cancellation, or failure to renew
by the fund to the superior court for Providence County.
(c)
Exemptions.
(1)
Except as provided in subsection (d), the fund shall be subject to rate
regulation under
chapter 7.1 of title 27.
(2)
Notwithstanding the provisions of this section, if, at any time, the director
finds that a
rate or filing of the fund is
unjust, unreasonable, inadequate, excessive, or unfairly discriminatory,
he or she shall, after a hearing
held upon not less than ten (10) days written notice, specifying the
matters to be considered at that
hearing, issue an order specifying in what respects he or she finds
that the rate or filing is unjust,
unreasonable, inadequate, excessive, or unfairly discriminatory
and stating when within a
reasonable period after this the rate shall no longer be used or the filing
shall be deemed no longer
effective. That order shall not affect any contract or policy made or
issued prior to the expiration of
the period set forth in the order. If the director finds that an unfair
discrimination exists in the
application of a rate or filing to an individual applicant or insured, the
director may, after a hearing held
on similar notice to the fund, issue an order that the
discrimination be removed.
(d)
Rate regulation.
(1) When
a filing is not accompanied by the information upon which the fund supports
that filing, and the director does
not have sufficient information to determine whether the filing
meets the requirements of
applicable law, the director may require the fund to furnish the
information upon which it supports
the filing. The information furnished in support of a filing
may include: (i) the experience or
judgment of the fund, (ii) its interpretation of any statistical
data it relies upon, (iii) the
experience of other insurers or rating organizations, or (iv) any other
relevant factors.
(2)
Notwithstanding any law to the contrary, the fund and any workers’ compensation
insurance policyholder may
mutually consent to modify the rates for that policyholder’s workers’
compensation insurance policy,
provided the fund files notice of the modification with the
director of the department of
business regulation.
(3)
Notwithstanding any law to the contrary, the fund may establish and apply a
premium
surcharge protocol. The protocol
shall provide for higher premium and surcharge payments by
insured who present higher than
normal risks within a class, including the ability of the fund to
assess from time to time a premium
surcharge of up to three (3) times its applicable premium rate,
as it deems appropriate to further
the public purposes set forth in this act. The surcharge may be
payable, at the option of the
fund, upon assessment, over the policy year, or upon renewal. Any
premium surcharge assessed by the
fund may be appealed to the director of the department of
business regulation within twenty
(20) days of notice of the surcharge, and the director may
modify or rescind the surcharge if
the director determines that the surcharge is unjust,
unreasonable, inadequate,
excessive or unfairly discriminatory.
(4)
Notwithstanding any other provisions of law, immediately upon May 18, 1992, the
fund may issue workers’
compensation insurance policies at an initial rate not in excess of the
rates then in effect for residual
market workers’ compensation insurance coverage offered by any
other insurers within the state of
Rhode Island, subject to the discretion of the fund to apply
discounts and surcharge
multipliers of up to three (3) times the premiums that would otherwise be
applicable under the rates, with
the premium surcharge to be payable as provided in subdivision
(d)(3). The fund may continue to
issue workers’ compensation insurance coverage at the initial
rates until the effectiveness of
any revised rates filed pursuant to subdivision (d)(1).
SECTION
12. Chief executive officer. – Appointment and qualifications. – The
board
shall appoint a chief executive
officer of the fund who shall be in charge of the day to day
operations of the fund. The chief
executive officer shall have proven successful experience as an
executive at the general
management level. The chief executive officer shall receive
compensation as set by the board
and shall serve at the pleasure of the board.
SECTION
13. Chief executive officer’s powers. – Subject to the authority of the
board
and the provisions of this act,
the chief executive officer shall perform the duties of chief
executive officer as provided in the
fund’s bylaws or that have been determined by resolution of
the board of directors. Without
limitation on this provision, the chief executive officer or
qualified officers or employees of
the fund designated by the chief executive officer shall:
(1)
Make safety inspections of risks and furnish advisory services to employers on
safety
and health measures;
(2)
Act for the fund in collecting and disbursing money necessary to administer the
fund
and conduct the business of the
fund; and
(3)
Cause an abstract summary of any audit or survey conducted. The chief executive
officer may perform all other acts
necessary to exercise the powers, authorities and jurisdictions
of the fund, either in the
administration of the fund or in connection with the insurance business
to be carried on by the fund under
this act, including the establishment of premium rates. Subject
to the approval of the board, the
chief executive officer may delegate any duties, on behalf of the
fund, to qualified officers and
employees of the fund, and may contract with the qualified
independent contractors to perform
those duties for the fund.
SECTION
14. Property of fund. – All premiums and other money paid to the fund,
all
property and securities acquired
through the use of money belonging to the fund, all capital
assessment amounts received
pursuant to section 19, and all interest and dividends earned upon
money belonging to the fund and
deposited or invested by the fund are the sole property of the
fund and shall be used exclusively
for the operation and obligations of the fund. The money of the
fund is not state money. The
property of the fund is not state property. The employees of the fund
shall not be considered state
employees.
SECTION
15. Not a state agency. – The fund shall not be considered a state
agency for
any purpose.
SECTION
16. Private independent insurance producers. – Private independent
insurance producers licensed to
sell workers’ compensation insurance in this state may sell
insurance coverage for the fund
according to rules adopted by the board. The board shall by rule
also establish a schedule of
commissions for voluntary risk and residual risk coverage that the
fund will pay for the services of
an insurance producer.
SECTION
17. Annual report. – The board shall submit an annual report to the
governor
and legislature indicating the
business done by the fund during the previous year and containing a
statement of the resources and
liabilities of the fund.
SECTION
18. Funding. – The director of the department of labor and training is
mandated and directed to
appropriate an amount not to exceed five million dollars ($5,000,000) to
the state compensation insurance
fund to be repaid pursuant to a term and at a rate to be
negotiated and determined by the
director of the department of labor and training and the board of
directors of the state
compensation insurance fund. The rate shall not exceed three percent (3%)
over the federal discount rate and
will be adjusted annually on October first of each year. The
payment schedule shall be no less
than ten (10) years or more than fifteen (15) years. Payment
shall not commence until October
1, 1992. The terms of the agreement must be approved by the
state auditor general. Any
scheduled payment may be deferred at the time the payment is due, if
in the opinion of the board, the
director of labor and training, and the state auditor general there
is, or the scheduled payment would
cause there to be if made, insufficient surplus to support the
risk insured by the fund.
SECTION
19. Workers’ compensation capital assessment. – (a) In order to
establish
the capital reserves and surplus
to allow the fund to effect the assumption of residual risk market
in fulfillment of the public
purposes as set forth in this act, a workers’ compensation capital
assessment shall be assessed and
collected by the director of the department of labor and training
against each insurance company
deemed by the director of the department of business regulation
to have been licensed as of
January 1, 1991, to write workers’ compensation insurance in Rhode
Island. The assessment shall be
payable quarterly and due within fifteen (15) days following the
close of each calendar quarter or,
at the discretion of the director of the department of labor and
training, on an annual basis on or
before July first of each year. The director of the department of
labor and training shall have the
power to institute suit to collect any assessment under this
section to the same extent as
provided in section 28-37-28.
(b)
The director of the department of labor and training shall collect all of the
capital
assessment amounts in a separate
restricted purpose account and shall promptly transfer all the
amounts to the fund upon receipt
and the amounts shall become the property of the fund pursuant
to section 14 for capital reserve
and surplus purposes in recognition of the fund’s role as carrier of
last resort. During the transition
period, the assessment for this party shall equal three percent
(3%) of gross premiums received
from workers’ compensation insurance or employer’s liability
insurance written or renewed on
risks within the state or subject to the jurisdiction of the state, or
any other level of gross premiums
that the director of the department of business regulation
deems appropriate to ensure both
the solvency of the fund and the fund’s ability to establish a
surplus reasonably adequate to
allow it to complete the assumption of the residual risk market in
furtherance of the public purposes
stated in this act. For the purpose of this act, “gross premiums”
shall be calculated for insurance
companies in the same manner as provided in section 28-37-14
for the applicable period. From
and after the transition period, the director of the department of
business regulation shall
periodically determine the rate of the assessment at levels adequate to
allow the fund to service the
residual risk market and satisfy the reserve and surplus requirements
of section 20.
(c)
Each insurance company may pass through the entire capital assessment amount to
each of its policyholders on a pro
rata basis.
(d)
In the event that any insurance company deemed by the director of the
department of
business regulation to have been
licensed on January 1, 1991, to write workers’ compensation
insurance discontinues the
issuance of workers’ compensation insurance policies in Rhode Island
prior to December 31, 1994, that
company shall be and remain obligated to pay the capital
assessment surcharge through
December 31, 1994, calculated on the basis of the average
voluntary and residual risk gross
premiums received or the average voluntary and residual risk
gross losses paid in the
thirty-six (36) month period prior to its departure from the Rhode Island
market.
(e)
The fund shall pay an annual fee to the director of the department of labor and
training in the amount of
two-tenths of one percent (.2%) of the earned premiums of the fund for
the prior year in recognition of
the continuing obligations of the department of labor and training
under subsections (a) and (b) of
this section.
SECTION
20. Reserves – Premium to surplus ratio – Insolvency fund. – (a) The
fund
shall maintain a ratio of premiums
on policies written to surplus of not more than three (3) to one
(1), or any greater or lesser
ratio that the director of the department of business regulation deems
appropriate. In determining the
ratio, the director may at all times consider the net present value
of future capital assessment
amounts as current surplus. To facilitate the ongoing oversight of the
fund, the fund shall submit to the
department of business regulation quarterly and annual
statements in the format and scope
specified in section 27-12-2.
(b)
The fund shall not participate in, or be subject to, the insurers’ insolvency
fund
established under section 27-34-6.
(c)
In the event of the liquidation of the fund pursuant to the Insurers’
Rehabilitation and
Liquidation Act, chapter 14.3 of
title 27, the fund’s policyholders, in their capacity as owners of
the fund, shall have no
distributive claims under section 27-14.3-46(8) to the liquidation estate of
the fund and, upon satisfaction of
any other class 1 through class 7 claims under section 27-14.3-
46, the insurance commissioner, as
receiver, shall distribute the residual, if any, of the fund’s
liquidation estate to the director
of the department of labor and training; provided, that in no event
shall these provisions affect the
validity or priority of: (1) any claims arising from and within the
coverage of any policies of the
fund; or (2) claims of the director of the department of labor and
training to repayment of the term
note of the fund issued pursuant to section 18.
SECTION
21. Payment assessments and fees. – (a) Except as provided in this act,
the
fund shall pay assessments in the
same manner as an insurance carrier authorized to issue
workers’ compensation insurance in
Rhode Island.
(b)
In light of the express purpose of the fund to serve as the insurance carrier
of last
resort, the fund shall be exempt
from any taxes due pursuant to chapter 17 of title 44. In no event
shall any amounts received by the
fund relating to the workers’ compensation capital assessment
be subject to any form of state
taxation or assessment.
SECTION
22. The general assembly hereby declares that it is the intent of the general
assembly that this act shall be made
and included as part of the public laws and shall not be
codified as part of the general
laws.
SECTION
23. The general assembly further declares that the placement of this act in the
public laws shall not impair the
continuing existence of the state compensation insurance fund nor
impair the obligation of any
contract or agreement or any rights of the state compensation
insurance fund heretofore
existing, it being expressly recognized and intended that there shall be
full continuity between chapter
27-7.2 of the general laws and the passage of this act.
SECTION
24. Chapter 27-7.2 of the General Laws entitled "Workers' Compensation
Insurance Fund" is hereby
repealed in its entirety.
CHAPTER
27-7.2
Workers' Compensation
Insurance Fund
27-7.2-1.
Definitions. -- When used in this chapter, the following words
have the
following meanings:
(1) "Board" means the board of directors of the state compensation
insurance fund;
(2) "Fund" means the state compensation insurance fund known as The
Beacon Mutual
Insurance Company;
(3) " Chief executive officer" means the chief executive officer of
the state compensation
insurance fund;
(4) "Personal injury" or "injury" has the meaning given to
it in chapter 29 of title 28.
27-7.2-2.
Creation of fund. -- (a) The purpose of the fund is to ensure
that all employers
in the state of Rhode Island
have the opportunity to obtain workers' compensation insurance at the
lowest possible price. It is
also the policy and purpose of this chapter to establish and maintain
that the fund shall be the
workers' compensation insurance carrier of last resort. The fund is
created as a non-profit
independent public corporation for the purpose of insuring employers
against liability for personal
injuries for which their employees may be entitled to benefits under
chapter 33 of title 28 or under
33 U.S.C. section 901 et seq., and other employer's liabilities
incidental to those provisions.
(b) The fund shall be organized and, except as provided in subsection (c) of
this section,
section 27-7.2-9.1(c), or in
this chapter, operated as a domestic mutual insurance company.
(c) The fund shall be deemed to have met the requirements of sections 27-1-37
and 27-8-
5 when the director of the
department of labor and training has appropriated to the fund any
portion of the amount provided
for in section 27-7.2-19 and all policies issued by the fund shall
be without the contingent mutual
liability of the policyholders for assessment.
(d) The fund shall be deemed for all purposes to be an insurance company
organized in
accordance with section 7-1-5
and chapter 1.1 of title 7. Without limiting the foregoing, section 7-
1.1-4.1 relating to, among other
things, indemnification of officers, directors, and employees, and
section 7-1.1-33(b) -- (e)
relating to directors shall apply to the fund.
(e) The fund may amend its charter pursuant to section 7-1.1-53.1, subject to
the prior
approval of all amendments by the
director of the department of business regulation.
(f) The general assembly declares that a stable market for workers'
compensation
insurance for all employers
seeking coverage is necessary to the economic welfare of Rhode
Island; that a stable and
competitive insurance market will benefit all employers, all employees
and their families, and all
insurance companies doing business in Rhode Island; that without this
insurance at a competitive rate,
the orderly growth and economic development of the state would
be severely impeded; and that
the provision of competitive insurance coverage by the fund for
employers in Rhode Island and
the capitalization of the fund through capital assessments as
provided in this chapter is for the
benefit of the public and in furtherance of a public purpose.
27-7.2-3.
Board of directors. -- The board of directors shall be comprised
of seven (7)
members elected or appointed as
provided in this section and the director of the department of
labor and training and the chief
executive officer of the fund who shall be ex officio members.
Each director shall hold office
until a successor is appointed and qualified. Except for ex officio
members, each director shall be
a policyholder or an officer or employee of a policyholder. The
governor shall appoint four (4)
directors and three (3) directors shall be elected by the fund's
policyholders. In addition to
the director of the department of labor and training, no more than
one member of the board may be
an elected or appointed official of state or municipal
government. At least three (3)
members of the board shall be policyholders of an officer or
employee of a policyholder which
is a for profit entity. No member other than the chief executive
officer may represent or be an
employee of an insurance company. The terms of board members,
except for ex officio members,
shall be four (4) years in accordance with the provisions for the
election and classification of directors
as may be established in the fund's bylaws. Any vacancy
occurring during the term of any
director shall be filled as provided in the fund's bylaws in the
same manner as the member's
predecessor. The board shall annually elect a chairperson from
among its members, and any other
officers it deems necessary for the performance of its duties.
27-7.2-4.
Fund management. -- The management and control of the fund is
vested
solely in the board.
27-7.2-5.
Powers and duties of the board. -- The board is vested with full
power,
authority, and jurisdiction over
the fund. The board may perform all acts necessary or convenient
in the exercise of any power,
authority, or jurisdiction over the fund, either in the administration
of the fund or in connection
with the insurance business to be carried on by it under the
provisions of this chapter, as
fully and completely as the governing body of all other domestic
insurance carriers to fulfill
the objectives and intent of this chapter. The board's authority to
invest funds is subject to the
limitations imposed on domestic insurance companies in chapter
11.1 of this title.
27-7.2-6.
Chief executive officer. -- Subject to the authority of the
board, the chief
executive officer appointed by
the board pursuant to section 27-7.2-10 shall administer the fund.
27-7.2-7.
Personal liability excluded. -- The members of the board and
officers or
employees of the fund are not
liable personally, either jointly or severally, for any debt or
obligation created or incurred
by the fund.
27-7.2-8.
Insurance of workers' compensation liability. -- The fund may
insure an
employer against any workers'
compensation claim, claims under 33 U.S.C. section 901 et seq.,
and other employer's liabilities
incidental to those provisions arising out of and in the course of
employment, including the
provision of excess workers' compensation insurance coverage, as
fully as any other insurer.
27-7.2-9.
General powers and limitations. -- For the purposes of exercising
the specific
powers granted in this chapter
and effectuating the other purposes of this chapter, the fund may:
(1) Sue and be sued;
(2) Have a seal and alter it at will;
(3)
Make, amend, and repeal bylaws and rules relating to the conduct of the
business of
the fund;
(4) Enter into contracts relating to the administration of the fund;
(5) Rent, lease, buy, or sell property, real and personal, in its own name and
may
construct or repair buildings
necessary to provide space for its operations;
(6) Declare dividends to its policyholders when there is an excess of assets
over
liabilities, and minimum surplus
requirements;
(7) Pay medical expenses, rehabilitation expenses, compensation due claimants
of
insured employers, pay salaries,
and pay administrative and other expenses of the fund;
(8) Hire personnel and set salaries and compensation; and
(9) Perform all other functions and exercise all other powers of a domestic
mutual
insurance company that are
necessary, appropriate, or convenient to administer the fund and to its
members; provided, that the fund
shall not be a member of the National Council on
Compensation Insurance (NCCI).
27-7.2-9.1.
Insurance coverage program. -- (a) Provision of workers'
compensation
coverage. - Subject to the
limitations set forth in this chapter, the fund shall provide workers'
compensation insurance against
liabilities arising under title 28 for any employer that tenders the
necessary premium.
(b) Applications; provision of coverage.
(1) Policy applications. - Applicants may apply for coverage by the fund in
good faith,
either directly or through an
insurance producer licensed by the state of Rhode Island to procure
workers' compensation insurance
according to rules adopted by the board under section 27-7.2-
17.
(2) Denial, cancellation, and nonrenewal. - The nonpayment of premium for
current or
prior policies issued by the
fund to the applicant, or to another entity for which the fund deems
the applicant to be a successor
in interest, may be a basis for the fund to deny, not renew or
terminate coverage. The failure
or refusal by an applicant or insured to fully and accurately
disclose to the fund information
concerning the applicant's or insured's ownership, change of
ownership, operations, or
payroll, including allocation of payroll among state and federal
compensation programs, classification
of payroll, and any other information determined by the
fund to be important in
determining proper rates shall be sufficient grounds for the fund to deny
an application or to not renew
or cancel an existing policy or to assess a premium surcharge
against the insured pursuant to
subsection (d). The failure or refusal by any insured or applicant to
comply with the fund's safety
requirements or to permit premises inspections to the sole
satisfaction of the fund shall
be sufficient grounds for having its workers' compensation insurance
coverage surcharged, not
renewed, or cancelled, or an application for the coverage denied.
(3) Appeal to director. - Any determination of the fund with respect to the
denial,
cancellation, or nonrenewal of
any workers' compensation insurance policy against liabilities
arising under title 28, with the
exception of cancellation for nonpayment of premium, may be
appealed to the director of the
department of business regulation, in writing, within thirty (30)
days of notice of this action.
If the director determines that the fund has unreasonably denied,
cancelled, or failed to renew
any workers' compensation insurance policy, the fund shall in good
faith reconsider issuing,
reinstating, or renewing the workers' compensation insurance policy. If
the fund has not issued,
reinstated, or renewed the workers' compensation insurance policy within
thirty (30) days of a
determination of the director, the applicant or insured may appeal the denial,
cancellation, or failure to
renew by the fund to the superior court for Providence County.
(c) Exemptions.
(1) Except as provided in subsection (d), the fund shall be subject to rate
regulation
under chapter 7.1 of this title.
(2) Notwithstanding the provisions of this section, if, at any time, the
director finds that a
rate or filing of the fund is
unjust, unreasonable, inadequate, excessive, or unfairly discriminatory,
he or she shall, after a hearing
held upon not less than ten (10) days written notice, specifying the
matters to be considered at that
hearing, issue an order specifying in what respects he or she finds
that the rate or filing is
unjust, unreasonable, inadequate, excessive, or unfairly discriminatory
and stating when within a
reasonable period after this the rate shall no longer be used or the filing
shall be deemed no longer
effective. That order shall not affect any contract or policy made or
issued prior to the expiration
of the period set forth in the order. If the director finds that an unfair
discrimination exists in the
application of a rate or filing to an individual applicant or insured, the
director may, after a hearing
held on similar notice to the fund, issue an order that the
discrimination be removed.
(d) Rate regulation.
(1) When a filing is not accompanied by the information upon which the fund
supports
that filing, and the director
does not have sufficient information to determine whether the filing
meets the requirements of
applicable law, the director may require the fund to furnish the
information upon which it
supports the filing. The information furnished in support of a filing
may include: (i) the experience
or judgment of the fund, (ii) its interpretation of any statistical
data it relies upon, (iii) the
experience of other insurers or rating organizations, or (iv) any other
relevant factors.
(2) Notwithstanding any law to the contrary, the fund and any workers'
compensation
insurance policyholder may
mutually consent to modify the rates for that policyholder's workers'
compensation insurance policy,
provided the fund files notice of the modification with the
director of the department of
business regulation.
(3) Notwithstanding any law to the contrary, the fund may establish and apply a
premium surcharge protocol. The
protocol shall provide for higher premium and surcharge
payments by insured who present
higher than normal risks within a class, including the ability of
the fund to assess from time to
time a premium surcharge of up to three (3) times its applicable
premium rate, as it deems
appropriate to further the public purposes set forth in this chapter. The
surcharge may be payable, at the
option of the fund, upon assessment, over the policy year, or
upon renewal. Any premium
surcharge assessed by the fund may be appealed to the director of
the department of business
regulation within twenty (20) days of notice of the surcharge, and the
director may modify or rescind
the surcharge if the director determines that the surcharge is
unjust, unreasonable,
inadequate, excessive or unfairly discriminatory.
27-7.2-10.
Chief executive officer -- Appointment and qualifications. --
The board
shall appoint a chief executive
officer of the fund who shall be in charge of the day to day
operations of the fund. The
chief executive officer shall have proven successful experience as an
executive at the general
management level. The chief executive officer shall receive
compensation as set by the board
and shall serve at the pleasure of the board.
27-7.2-11.
[Repealed.] --
27-7.2-12.
Chief executive officer's powers. -- Subject to the authority of
the board and
the provisions of this chapter,
the chief executive officer shall perform the duties of chief
executive officer as provided in
the fund's bylaws or that have been determined by resolution of
the board of directors. Without
limitation on this provision, the chief executive officer or
qualified officers or employees of
the fund designated by the chief executive officer shall:
(1) Make safety inspections of risks and furnish advisory services to employers
on safety
and health measures;
(2) Act for the fund in collecting and disbursing money necessary to administer
the fund
and conduct the business of the
fund; and
(3) Cause an abstract summary of any audit or survey conducted. The chief
executive
officer may perform all other
acts necessary to exercise the powers, authorities and jurisdictions
of the fund, either in the
administration of the fund or in connection with the insurance business
to be carried on by the fund
under this chapter, including the establishment of premium rates.
Subject to the approval of the
board, the chief executive officer may delegate any duties, on
behalf of the fund, to qualified
officers and employees of the fund, and may contract with the
qualified independent
contractors to perform those duties for the fund.
27-7.2-13.
[Repealed.] --
27-7.2-14.
Property of fund. -- All premiums and other money paid to the
fund, all
property and securities acquired
through the use of money belonging to the fund, all capital
assessment amounts received
pursuant to section 27-7.2-20.1, and all interest and dividends
earned upon money belonging to
the fund and deposited or invested by the fund are the sole
property of the fund and shall
be used exclusively for the operation and obligations of the fund.
The money of the fund is not
state money. The property of the fund is not state property. The
employees of the fund shall not
be considered state employees.
27-7.2-15.
[Repealed.] --
27-7.2-16.
Not a state agency. -- The fund shall not be considered a state
agency for any
purpose.
27-7.2-17.
Private independent insurance producers. -- Private independent
insurance
producers licensed to sell
workers' compensation insurance in this state may sell insurance
coverage for the fund according
to rules adopted by the board. The board shall by rule also
establish a schedule of
commissions for voluntary risk and residual risk coverage that the fund
will pay for the services of an
insurance producer.
27-7.2-18.
Annual report. -- The board shall submit an annual report to the
governor and
legislature indicating the
business done by the fund during the previous year and containing a
statement of the resources and
liabilities of the fund.
27-7.2-19.
Funding. -- The director of the department of labor and training
is mandated
and directed to appropriate an
amount not to exceed five million dollars ($5,000,000) to the state
compensation insurance fund to
be repaid pursuant to a term and at a rate to be negotiated and
determined by the director of
the department of labor and training and the board of directors of
the state compensation insurance
fund. The rate shall not exceed three percent (3%) over the
federal discount rate and will
be adjusted annually on October first of each year. The payment
schedule shall be no less than
ten (10) years or more than fifteen (15) years. Payment shall not
commence until October 1, 1992.
The terms of the agreement must be approved by the state
auditor general. Any scheduled
payment may be deferred at the time the payment is due, if in the
opinion of the board, the
director of labor and training, and the state auditor general there is, or
the scheduled payment would
cause there to be if made, insufficient surplus to support the risks
insured by the fund.
27-7.2-20.
[Repealed.] --
27-7.2-20.1.
Workers' compensation capital assessment. -- (a) In order to
establish the
capital reserves and surplus to
allow the fund to effect the assumption of residual risk market in
fulfillment of the public
purposes as set forth in this chapter, a workers' compensation capital
assessment shall be assessed and
collected by the director of the department of labor and training
against each insurance company
deemed by the director of the department of business regulation
to have been licensed as of
January 1, 1991, to write workers' compensation insurance in Rhode
Island. The assessment shall be
payable quarterly and due within fifteen (15) days following the
close of each calendar quarter
or, at the discretion of the director of the department of labor and
training, on an annual basis on
or before July first of each year. The director of the department of
labor and training shall have
the power to institute suit to collect any assessment under this
section to the same extent as
provided in section 28-37-28.
(b) The director of the department of labor and training shall collect all of
the capital
assessment amounts in a separate
restricted purpose account and shall promptly transfer all the
amounts to the fund upon receipt
and the amounts shall become the property of the fund pursuant
to section 27-7.2-14 for capital
reserve and surplus purposes in recognition of the fund's role as
carrier of last resort. During
the transition period, the assessment for this party shall equal three
percent (3%) of gross premiums
received from workers' compensation insurance or employer's
liability insurance written or
renewed on risks within the state or subject to the jurisdiction of the
state, or any other level of
gross premiums that the director of the department of business
regulation deems appropriate to
ensure both the solvency of the fund and the fund's ability to
establish a surplus reasonably
adequate to allow it to complete the assumption of the residual risk
market in furtherance of the
public purposes stated in this chapter. For the purpose of this chapter,
"gross premiums" shall
be calculated for insurance companies in the same manner as provided in
section 28-37-14 for the
applicable period. From and after the transition period, the director of the
department of business
regulation shall periodically determine the rate of the assessment at levels
adequate to allow the fund to
service the residual risk market and satisfy the reserve and surplus
requirements of section
27-7.2-20.2.
(c) Each insurance company may pass through the entire capital assessment
amount to
each of its policyholders on a
pro rata basis.
(d) The fund shall pay an annual fee to the director of the department of labor
and
training in the amount of
two-tenths of one percent (.2%) of the earned premiums of the fund for
the prior year in recognition of
the continuing obligations of the department of labor and training
under subsections (a) and (b) of
this section.
27-7.2-20.2.
Reserves -- Premium to surplus ratio -- Insolvency fund. -- (a)
The fund
shall maintain a ratio of
premiums on policies written to surplus of not more than three (3) to one,
or any greater or lesser ratio
that the director of the department of business regulation deems
appropriate. In determining the
ratio, the director may at all times consider the net present value
of future capital assessment
amounts as current surplus. To facilitate the ongoing oversight of the
fund, the fund shall submit to the
department of business regulation quarterly and annual
statements in the format and
scope specified in section 27-12-2.
(b) The fund shall not participate in, or be subject to, the insurers'
insolvency fund
established under section
27-34-6.
(c) In the event of the liquidation of the fund pursuant to the Insurers'
Rehabilitation and
Liquidation Act, chapter 14.3 of
this title, the fund's policy holders, in their capacity as owners of
the fund, shall have no distributive
claims under section 27-14.3-46(8) to the liquidation estate of
the fund and, upon satisfaction
of any other class 1 through class 7 claims under section 27-14.3-
46, the insurance commissioner,
as receiver, shall distribute the residual, if any, of the fund's
liquidation estate to the
director of the department of labor and training; provided, that in no event
shall these provisions affect
the validity or priority of: (1) any claims arising from and within the
coverage of any policies of the
fund; or (2) claims of the director of the department of labor and
training to repayment of the
term note of the fund issued pursuant to section 27-7.2-19.
27-7.2-20.3.
Payment assessments and fees. -- (a) Except as provided in this
chapter,
the fund shall pay assessments
in the same manner as an insurance carrier authorized to issue
workers' compensation insurance
in Rhode Island.
(b) In light of the express purpose of the fund to serve as the insurance
carrier of last
resort, the fund shall be exempt
from any taxes due pursuant to chapter 17 of title 44. In no event
shall any amounts received by
the fund relating to the workers' compensation capital assessment
be subject to any form of state
taxation or assessment.
27-7.2-21.
[Repealed.] --
SECTION
25. This act shall take effect upon passage.
=======
LC02073
=======