(a)As an alternative to each employer securing its own incurred liabilities, the association shall provide in its plan of operation for a risk-based security program whereby all member self-insurers designated for participation by the association collectively secure their aggregate incurred liabilities through the association. The plan of operation must provide for the association to set a total security requirement for these participating employers based on a review of each participating employer's annual reports and any other self-insurer information as the association deems relevant. The association shall propose to the commissioner an annual plan by June 1, which must set forth a combination of cash and securities, surety bonds, irrevocable letters of credit, insurance, or other finan
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(a) As an alternative to each employer securing its own incurred liabilities, the association shall provide in its plan of operation for a risk-based security program whereby all member self-insurers designated for participation by the association collectively secure their aggregate incurred liabilities through the association. The plan of operation must provide for the association to set a total security requirement for these participating employers based on a review of each participating employer's annual reports and any other self-insurer information as the association deems relevant. The association shall propose to the commissioner an annual plan by June 1, which must set forth a combination of cash and securities, surety bonds, irrevocable letters of credit, insurance, or other financial instruments satisfactory to the commissioner. Upon approval of the plan by the commissioner, the combination comprises the risk-based security program and satisfies the security deposit requirements for participating employers, in lieu of individual collateral. An employer's individual collateral must be returned to the employer upon payment of the assessment. If the commissioner does not approve the plan within thirty (30) days of receipt, then the plan is deemed approved. (b) A member self-insurer who is deemed eligible to participate must participate in the risk-based security program, pay all assessments arising from the self-insurer's participation, and satisfy the self-insurer's security requirements as required by the association. (c) To provide for the risk-based security program, the association shall assess each participating member self-insurer a deposit assessment payable within thirty (30) days. The amount of the deposit assessment charged to each participating employer must be set by the association, based on the association's reasonable consideration of the following factors: (1) The amount needed to cover the association's operation costs; (2) The employer's actuarially determined workers' compensation liabilities; (3) The financial strength and creditworthiness of the self-insured; and (4) Any other reasonable factors as may be authorized by the plan of operation or the risk-based security program plan. (d) The commissioner and the bureau of workers' compensation may share with the association information held by them related to the member self-insurers, under terms and conditions as set by the commissioner, to preserve the confidentiality of the financial information. (e) A member self-insurer does not have a right, title, or interest in the funds paid as assessments to the association, nor to any interest or earning thereon. (f) To the extent that the total assessments paid by self-insured employers is not exhausted by the association, the surplus plus any interest earned thereon must remain with the association for its use in future years. Such funds must be used to pay self-insured workers' compensation liabilities and the costs and expenses of the association, and shall not be used for any other purposes by this state. (g) If an employer fails to pay the deposit assessment in the time provided, then the commissioner may order the employer to pay a penalty of not less than ten percent (10%) of its deposit assessment, plus interest on any unpaid amount at the prejudgment rate, and to post a separate security deposit. The penalty and interest must be paid directly to the association. The commissioner may also revoke the certificate of authority to self-insure of any employer who fails to pay the deposit assessment in the time provided. The association may specify additional penalties within the risk-based security program plan. (h) The association shall set minimum credit, financial, or other conditions that an employer must meet in order to participate in the risk-based security program. If an employer is unable to meet the conditions set by the association for participation, then the association must exclude the employer from participation in the risk-based security program. If an employer is excluded from participation in the risk-based security program, then the employer must post a separate security deposit and pay a deposit assessment set by the association. (i) An employer whose certificate of authority is inactive may participate in the risk-based security program if the association approves the participation of the employer. (j) At all times, an employer shall have secured its incurred workers' compensation liabilities as allowed by law and shall not have a lapse in the security of its incurred workers' compensation liabilities.