Current through Register Vol. XLI, No. 50, December 13, 2024
Section 85-18-8 - Security and Bond8.1. In accordance with the provisions of the rules of the Commissioner, self-insured employers must secure certain obligations for payments. In such instances where security or bond is required by the Commissioner, the security or bond shall be tendered to the Commissioner in accordance with this section.8.2. Acceptable types of security and bond include, but are not limited to, occurrence type security or bond, marketable securities, and letters of credit. The Commissioner has sole discretion to determine that a particular type of security or bond is acceptable or unacceptable. a. If the self-insured employer obtains an occurrence-type security or bond, the security or bond is liable in the place of the employer should the employer be unable to meet its obligations for any or all injuries or deaths that may occur during the time period for which the security or bond is effective. The security or bond remains liable at the time any awards for the injuries or deaths are subsequently made and for the entire time period in which benefits will be paid under the awards, including death benefits to surviving dependents. No language to the contrary contained in any writing associated with or included as a part of the security or bond shall defeat this obligation of the security or bond posted by a self-insured employer as described herein. Every surety, guarantor, warrantor, or other person or entity who purports to stand in the place of the self-insured employer for the payment of benefits shall be considered to have given the security or bond in compliance with this subsection, and no statement or disclaimer in the security or bond shall negate this requirement. The surety company issuing the bond must meet and maintain the Commissioner's financial strength requirements. The Commissioner shall review the financial strength of the issuers of all the surety provided by the self-insured employer in the course of the Commissioner's annual review and recommendation to the Industrial Council.
b. If the self-insured employer wishes to post marketable securities to meet its obligation for security or bond, the securities must satisfy the following requirements:1. The securities must be fixed term debt instruments with a fixed and determinable principal amount;2. The issuer of the securities must be a governmental entity or governmental agency or corporation of this state, or any other state or of the United States;3. The maturity date of the instrument cannot be more than ten years from the date the securities are posted with the Commissioner; and4. The payment of both principal and interest are denominated and payable in United States dollars with the interest payable at fixed periodic payment dates and at a fixed rate of the principal amount of the indebtedness.c. If the self-insured employer wishes to post a letter of credit to meet its obligation for security or bond, the letter of credit must satisfy the following requirements: 1. The letter of credit must be issued by a bank operating in the United States;2. The letter of credit must utilize the letter of credit forms approved by the Commissioner and in accordance with this rule; and3. Before it will be considered security for self-insured risks, the letter of credit must contain an "evergreen" clause as specified by the Commissioner, which holds the issuer responsible for the employer-applicant's liability resulting from all injuries incurred by or deaths of the employer's employees prior to the expiration of the letter of credit. In the event that the employer-applicant is unable to obtain the issuance of the evergreen form of letter of credit, then the employer-applicant must obtain permission from the Commissioner to use the letter of credit with a non-renewal draw clause. The employer must also provide the form letter of Authority and Acknowledgment which authorizes the draw of the entire amount of the letter of credit in the event of cancellation of the letter of credit, although the self-insured employer is not then in default under chapter twenty-three of the West Virginia Code or the rules promulgated thereunder.4. The bank issuing the letter of credit must meet and maintain the Commissioner's financial strength requirements.8.3. Employers who are required by chapter twenty-three of the West Virginia Code and the rules promulgated thereunder to provide security shall post an amount as determined by the Commissioner to be adequate and sufficient to compel or secure payment of compensation and expenses to the employer's employees, or their dependents, as required by chapter twenty-three of the West Virginia Code and the rules promulgated thereunder. The Commissioner shall utilize a financial ratio summarization, based upon a comparison of the employer-applicant's solvency, efficiency and profitability ratios to a specific industry's ratios, as defined, for example, in the current Dunn & Bradstreet Industry Norms and Key Business Ratios, in evaluating an employer's financial strength and in making a recommendation to the Industrial Council as to an appropriate amount of security. Whenever possible, the commission shall make a comparison of ratios using the employer's workers' compensation industry classification.
a. If the Commissioner determines that, based on this rule and 85 CSR 19, a self-insured employer's securities or bonds are inadequate or insufficient, the Commissioner shall notify the employer. Thereafter, the Commissioner shall enter a decision directing the employer to increase its securities or bonds by the amount needed to reach the adequate and sufficient level for all time periods originally intended to be covered by the inadequate or insufficient security or bond. An inadequate or failed security or bond includes, but is not limited to instances where the entity issuing the security or bond, based upon the sole discretion of the Commissioner, is no longer a viable entity or, for whatever reason, can no longer meet its obligations.b. The Commissioner shall provide a reasonable amount of time for the employer to obtain the increased or added security or bond or develop a work out agreement and obtain the first installment payment. Absent extenuating circumstances, as determined by the sole discretion of the Commissioner, the period to secure additional security or period to develop a work out agreement and obtain the first installment payment may not exceed ninety (90) days from the date of the Commissioner's notification. The increased security or bond must meet the requirements set forth in this rule.c. A self-insured employer's failure to obtain additional bond or security, as required by the Commissioner's order, may result in a revocation of the privilege of self-insurance and termination of the employer's self-insured status. The Commissioner shall issue a notice specifying the effective date of any such action or actions.