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SENATE BILL 5668
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Passed Legislature - 1995 Regular Session
State of Washington 54th Legislature 1995
Regular Session
By
Read first time 01/31/95.
Referred to Committee on Labor, Commerce & Trade.
Revising provisions
relating to sureties for industrial insurance self-insurers.
AN ACT Relating to
sureties for industrial insurance self-insurers; and amending RCW 51.14.020.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1. RCW 51.14.020 and 1990 c
209 s 1 are each amended to read as follows:
(1) An employer may
qualify as a self-insurer by establishing to the director's satisfaction that
he or she has sufficient financial ability to make certain the prompt payment
of all compensation under this title and all assessments which may become due
from such employer. Each application for certification as a self-insurer
submitted by an employer shall be accompanied by payment of a fee of one
hundred fifty dollars or such larger sum as the director shall find necessary
for the administrative costs of evaluation of the applicant's qualifications.
Any employer who has formerly been certified as a self-insurer and thereafter
ceases to be so certified may not apply for certification within three years of
ceasing to have been so certified.
(2)(a) A self-insurer
may be required by the director to supplement existing financial ability by
depositing in an escrow account in a depository designated by the director,
money and/or corporate or governmental securities approved by the director, or
a surety bond written by any company admitted to transact surety business in
this state, or provide an irrevocable letter of credit issued by a federally or
state chartered commercial banking institution authorized to conduct business
in the state of Washington filed with the department. The money, securities,
bond, or letter of credit shall be in an amount reasonably sufficient in the director's
discretion to insure payment of reasonably foreseeable compensation and
assessments but not less than the employer's normal expected annual claim
liabilities and in no event less than one hundred thousand dollars. In
arriving at the amount of money, securities, bond, or letter of credit required
under this subsection, the director shall take into consideration the financial
ability of the employer to pay compensation and assessments and his or her
probable continuity of operation. However, a letter of credit shall be
acceptable only if the self-insurer has a net worth of not less than five
hundred million dollars as evidenced in an annual financial statement prepared
by a qualified, independent auditor using generally accepted accounting
principles. The money, securities, bond, or letter of credit so deposited
shall be held by the director ((to secure)) solely for the
payment of compensation by the self-insurer and ((to secure payment of))
his or her assessments. In the event of default the self-insurer loses all
right and title to, any interest in, and any right to control the surety.
The amount of ((security)) surety may be increased or decreased
from time to time by the director. The income from any securities deposited
may be distributed currently to the self-insurer.
(b) The letter of
credit option authorized in (a) of this subsection shall not apply to
self-insurers authorized under RCW 51.14.150 or to self-insurers who are
counties, cities, or municipal corporations.
(3) Securities or money
deposited by an employer pursuant to subsection (2) of this section shall be
returned to him or her upon his or her written request provided the employer
files the bond required by such subsection.
(4) If the employer
seeking to qualify as a self-insurer has previously insured with the state
fund, the director shall require the employer to make up his or her proper
share of any deficit or insufficiency in the state fund as a condition to
certification as a self-insurer.
(5) A self-insurer may
reinsure a portion of his or her liability under this title with any reinsurer
authorized to transact such reinsurance in this state: PROVIDED, That the
reinsurer may not participate in the administration of the responsibilities of
the self-insurer under this title. Such reinsurance may not exceed eighty
percent of the liabilities under this title.
(6) For purposes of the
application of this section, the department may adopt separate rules
establishing the security requirements applicable to units of local government.
In setting such requirements, the department shall take into consideration the
ability of the governmental unit to meet its self-insured obligations, such as
but not limited to source of funds, permanency, and right of default.
(7) The director shall
adopt rules to carry out the purposes of this section including, but not
limited to, rules respecting the terms and conditions of letters of credit and
the establishment of the appropriate level of net worth of the self-insurer to
qualify for use of the letter of credit. Only letters of credit issued in
strict compliance with the rules shall be deemed acceptable.
Passed
the Senate March 15, 1995.
Passed
the House April 4, 1995.
Approved by the Governor April 13, 1995.
Filed in Office of Secretary of State April 13, 1995.
