Chapter 8. Office of the Director
Subchapter 2. Administration of Self-Insurance Plans
Article 2. Certificate to Self Insure

§15203.2. Continuing Financial Capacity.

(a) All private self insurers and all private group self insurers, shall submit annually a current, certified, independently audited financial statement complete with all notes and schedules. If the private self insurer did not prepare a current, certified, independently audited financial statement, the self insurer shall advise the Manager of that fact in writing and submit a consolidated financial statement prepared by an independent certified public accountant (CPA).

(b) Any joint powers authority which is solely responsible for the self insurance claims of its public members shall submit annually to the Manager a consolidated report of its financial condition, and/or if available, a current, certified, independently audited financial statement complete with all notes and schedules.

(c) All private group members of a private group self insurer shall annually submit a current, certified, independently audited financial statement complete with all notes and schedules to the Board of Trustees of the group self insurer. The group administrator shall make any of the financial statements available to the Manager upon request and shall advise the Manager of any group member not having a certified, independently audited financial statement.

EXCEPTION: A private group member authorized to self insure pursuant to Section 15203(e)(2), shall annually submit a current, reviewed financial statement to the Board of Trustees of the group self insurer.

(d) Impairment of solvency indicated by a marked reduction in financial strength or the lack of an independently prepared, audited financial statement, or the lack of the minimum net worth requirement set forth in subsection (e) of this section is good cause for increased security deposit or involuntary revocation of any Certificate to Self Insure, Affiliate Certificate or Subsidiary Certificate by the Director.

(e) After July 1, 1994, all private individual employer applicants for a master Certificate to Self Insure shall demonstrate and maintain a current net worth of at least $5,000,000 and average net income for the past 5 years of at least $500,000.

EXCEPTION: Any existing private self insurer granted a Certificate to Self Insure prior to the July 1, 1994 shall only need to maintain a net worth of at least $2,200,000 and an average net income for the past 5 years of at least $300,000.

(f) All private group self insurers shall demonstrate and maintain a consolidated net worth of the group members of at least $5,000,000 and a consolidated annual net income of the group members of $500,000, and sufficient income to fund:

(1) the group self insurer's actuarially projected claim liabilities at the 80% confidence level;

(2) to pay the expected administrative expenses to operate the group self insurer's business operations; and

(3) to post the security deposit required.

NOTE: Consolidated net worth and consolidated net income of group members shall be determined only from members with current certified, independently audited financial statement.

NOTE: Authority cited: Sections 54, 55 and 3702.10, Labor Code. Reference: Sections 59, 3700, 3701, 3702 and 3702.10, Labor Code.

HISTORY

1. New section filed 12-22-92; operative 1-21-93 (Register 93, No. 2).

2. Amendment of section and Note filed 6-30-94; operative 6-30-94 (Register 94, No. 26).