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Chapter 8. Office of the Director
Subchapter 2. Administration of Self-Insurance Plans
Article 3.1. Alternative Composite Deposits

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15220.4. Deposit Assessments by the Security Fund for Participants of the Alternative Composite Deposit.

(a) The Security Fund shall collect an annual deposit assessment from all private self insurers participating in the alternative composite deposit as follows:

  (1) A pro-rata cash contribution to build the net worth of the Security Fund to pay existing or future defaults on covered workers' compensation liabilities of eligible private self insured employers under an alternative composite deposit. This portion of the deposit assessment shall be called the Default Loss Fund Fee.  


  (2) A pro-rata cash contribution to pay the cost of any aggregate loss protection in excess of the level of liability provided through the Default Loss Fund. This portion of the deposit assessment shall be called the Excess Liability Protection Fee.  


  (3) A pro-rata cash contribution to fund security deposit shortfalls from existing private self insurer insolvencies and defaults formerly funded exclusively by the Security Fund's Insolvency Assessment pursuant to Labor Code Section 3745. This portion of the deposit assessment shall be called the Pre-Existing Deposit Shortfall Fee.  


  Exception: Private self insurers whose Certificate of Consent to Self Insure was revoked before January 1, 2003, shall remain subject to the assessments as provided by Labor Code Section 3745.  


(b) Each private self insured employer participating in an alternative composite deposit with the Security Fund shall be required to annually pay the Security Fund deposit assessment.

(c) The Security Fund shall determine the pro-rata amount of the deposit assessment for each fully participating and partially participating private self insured employer based on all the following:

  (1) Labor Code Section 3701.8(b) requirements;  


  (2) the cost of the security instruments permitted in Section 15220.2 including any cash holdings that will make up the Default Loss Fund and/or the Excess Liability Protection Fee portions of any alternative composite deposit proposed to the Director;  


  (3) the amount of the security deposit required by the Manager for each participating private self insured employer to secure its self insured workers' compensation liabilities;  


  (4) the participating private self insured employer's credit ratings or equivalent credit ratings as determined by Sections 15220, 15220.1, or Section 15220.3;  


  (5) an amount, if needed, for the pro-rata share of incurred but not fully reported liabilities aggregated across all private self insurers;  


  (6) an amount for the pro-rata share of pre-existing, unfunded defaulted liabilities of the Self Insurers' Security Fund to be collected for funding cash flow needs by the Pre-Existing Deposit Shortfall Fee;  


  (7) other measures of each private self insured employer's contribution to the cost of the alternative composite deposit proposed to the Director; and  


  (8) the amount, if any, of the security deposit required to be separately posted with the Director pursuant to Labor Code Section 3701 to secure that portion of the employer's self insured workers' compensation liabilities that is not secured in the alternative composite deposit.  


(d) Where the participating self insurer has more than one credit rating from the credit rating agencies and the ratings are not in agreement, the most recently published credit rating shall be used to calculate the deposit assessment.

(e) Excluded private self insured employers shall be required to participate in the assessments. The Manager shall determine the amount of each deposit assessment due from private self insured employers excluded from participation in any alternative composite deposit and submit it to the Security Fund. The Security Fund shall collect the deposit assessments from excluded employers.

(f) The Security Fund may repay any indebtedness incurred as contemplated by Section 15220.3 from the annual deposit assessment. At the time the annual deposit assessment is determined, it may not be known whether any such indebtedness will be incurred, or the amount or repayment terms thereof. Accordingly, a portion of the annual deposit assessment may be contingent upon the actual incurrence of such indebtedness and delayed until the amount and repayment terms are known.

(g) If the Manager increases the security deposit requirement of a participating self-insured employer after the Security Fund has issued the annual assessment for the alternative composite deposit, the amount of the increase may be addressed through a supplemental assessment or by the posting of additional deposit separately as a partially participating self-insurer.


     Note: Authority cited: Sections 3701, 3701.8, 3702.10 and 3745, Labor Code. Reference: Sections 3701, 3701.8, 3701.8(b), 3702.10 and 3745, Labor Code.

HISTORY

1. New section filed 5-30-2003 as an emergency; operative 5-30-2003 (Register 2003, No. 22). A Certificate of Compliance must be transmitted to OAL by 9-29-2003 or emergency language will be repealed by operation of law on the following day.

2. Certificate of Compliance as to 5-30-2003 order, including amendment of Note, transmitted to OAL 9-29-2003 and filed 11-12-2003 (Register 2003, No. 46).

3. Amendment of subsection (c)(4), new subsections (d), (f) and (g) and subsection relettering filed 7-6-2004 as an emergency; operative 7-6-2004 (Register 2004, No. 28). A Certificate of Compliance must be transmitted to OAL by 11-3-2004 or emergency language will be repealed by operation of law on the following day.

4. Amendment of subsection (c)(4), new subsections (d), (f) and (g) and subsection relettering refiled 11-3-2004 as an emergency; operative 11-3-2004 (Register 2004, No. 45). A Certificate of Compliance must be transmitted to OAL by 3-3-2005 or emergency language will be repealed by operation of law on the following day.

5. Certificate of Compliance as to 11-3-2004 order transmitted to OAL 1-26-2005
and filed 3-8-2005 (Register 2005, No. 10).

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