Chapter 8. Office of the Director
Subchapter 2. Administration of Self-Insurance Plans
Article 13. Group Self Insurance

§15477. Surplus or Insufficient Funding.

(a) Any surplus moneys for a calendar year in excess of the amount necessary to fulfill all compensation obligations for that calendar year, including a provision for incurred but not reported claims, may be declared to be refundable by the Board of Trustees of the group self insurer at any time.

(1) The amount of such declaration shall be a fixed liability of the group self insurer at the time of the declaration and any surplus in the compensation loss fund shall be held for a minimum period of 12 months from the date of the Board of Trustees' declaration.

(2) The date of payment of such refund shall be as agreed to by the Board of Trustees, except that the moneys not needed to satisfy the compensation loss fund requirements as established by the aggregate excess contract, may be refunded immediately after the end of the calendar year.

NOTE: It is the intent of this regulation to assure that total assets of the group self insurer are greater than the total liabilities of the group self insurer in each calendar year.

(b) In the event that member funds collected and investment income associated with any calendar year are insufficient to completely fund all reported claims and expenses for that year, unfunded amounts by calendar year shall be immediately reported to the Manager with a proposed plan to achieve full funding. The plan to achieve full funding for all claims is subject to approval by the Manager. The plan to achieve full funding may include, but is not limited to, all of the following:

(1) Use of group self insurer funds collected in other calendar years, but that are unnecessary for the payment of claims or expenses for the calendar year collected;

(2) Use of investment earnings associated with other calendar years, but not necessary for the payment of claims or expenses in the calendar year in which the earnings are associated;

(3) Special assessment of all group self insurer members by the Board of Trustees to make up the funding insufficiency.

(d) If the plan to achieve full funding for all claims is not approved by the Manager, the Manager may order the Board of Trustees of the group self insurer to immediately assess the group members for the full amount of the deficiency and/or order that any surplus funds or dividends distributed to group members during the previous 12 calendar months from the date of the discovery of the funding deficiency by the group self insurer by immediately returned.

(e) If the Manager determines that actions specified in subsection (d) of this section will not achieve full funding of all claim liability for the group self insurer, the Manager may request the Director to order an outside Conservator be appointed at the expense of the group self insurer to manage the financial affairs of the group self insurer and to take whatever steps may be necessary in order to return a financially troubled group self insurer to full financial solvency.

NOTE: Authority cited: Sections 54, 55 and 3702.10, Labor Code. Reference: Sections 3700, 3701, 3701.5 and 3702.10, Labor Code.

HISTORY

1. New section filed 6-30-94; operative 6-30-94 (Register 94, No. 26).