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

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§15484. Continuing Financial Capacity of Groups Self Insurers.

(a) Each group self insurer shall submit annually the group's un-audited financial statement to the Chief by March 1. The group self insurer shall obtain a current certified, independently audited financial statement complete with all notes and schedules. The financial statement shall be prepared according to Generally Accepted Auditing Principles (GAAP) and shall be submitted to the Chief by July 1 following the end of the program year.

(b) The group self insurer's financial statement for each year shall include exhibits indicating specific amounts collected as group member contributions and earned from investments, as well as specific amounts for the year reported for the following administrative costs:

(1) Fees and commissions paid to the Group Administrator

(2) Commissions paid to brokers

(3) Fees paid to the third party administrator

(4) Premium paid for excess insurance

(5) Premium paid for fidelity and errors and omissions coverage

(6) Fees paid for surety bonds, letters of credit, or any other security deposit related cost

(7) Fees paid to actuaries

(8) Fees paid to accountants

(9) Regulatory costs

(10) Taxes

(11) Other expenses

(c) Each group self insurer shall ensure that group members maintain their suitability for group self insurer membership as follows:

(1) Annually obtaining current certified, independently audited financial statements or reviewed financial statements together with all schedules and notes showing that the core members of the group self insurer meet in aggregate the financial requirements provided in Section 15472(a) of these regulations;

(2) For each other group member, the group self insurer may annually determine the group member's suitability for membership in the group self insurer by review of a tax return, credit report, or other appropriate documentation as specified in the bylaws of the group self insurer.

(d) The Group Administrator shall submit to the Chief on request any financial documentation received pursuant to subsection (c), and shall advise the Chief of any group member not submitting its financial documentation to the group self insurer.

(e) Each group self insurer shall demonstrate sufficient income from annual member contributions and/or assessments to fund:

(1) One and one half (1.5) times the group self insurer's most recent three-year average paid indemnity and medical claims expenses as reported on their current year filed Self Insurer's Annual Report;

(2) The expected administrative and operating expenses needed to meet the group self insurer's day to day financial obligations during the current calendar year;

(3) The continued posting of the required security deposit; and

(4) Any additional amount determined by the Chief, upon a showing of good cause, to ensure adequate funding of the group self insurer.

(f) The Group Administrator shall immediately advise the Chief in writing if the group self insurer's core members do not meet in aggregate the financial requirements set forth in Section 15472(a) of these regulations.

(g) A group self insurer's solvency is presumed impaired if any of the following occurs:

(1) There is a marked reduction in financial strength as evidenced by the findings in the annual audit by the independent certified public accountant;

(2) The group self insurer fails to submit a financial statement pursuant to subsection (a) of this section;

(3) The Group Administrator fails to submit documentation as provided by subsection (d) to substantiate that core members meet financial requirements as set forth in subsection (c)(1) and Section 15472(a);

(4) The contribution rates, rating plan, or contributions fail to generate sufficient funds to cover the requirements of subsection (e) of this Section.

(h) Demonstration of impaired solvency of the group self insurer as described in subsection (g) of this section is good cause for increased security deposit or involuntary revocation of a Certificate of Consent to Self Insure, Interim Certificate of Consent to Self Insure, and/or Affiliate Certificate of Consent to Self Insure.

(i) The Group Administrator shall, on or before March 1st of each year, file with the Office of Self Insurance Plans the budget for the group's current year together with:

(1) The rates of contribution from members in effect for the current year,

(2) Any deviation from these rates,

(3) All actuarial reports and other documents supporting the rates of contribution,

(4) All minutes of board of trustees meetings or other evidence of board of trustees action where rates of contributions from members were discussed or approved.

(j) The Group Administrator shall file any changes in the rates of contribution from members with documents listed in subsection (i), (1) through (4) within 30 days of such change.

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


1. New section filed 3-2-2009; operative 3-2-2009 pursuant to Government Code section 11343.4 (Register 2009, No. 10).

2. Amendment of subsections (a), (e) and (g)(3), new subsections (i)-(j) filed 9-19-2011; operative 10-19-2011 (Register 2011, No. 38).

3. Amendment of subsections (a), (d), (e)(1) and (f) filed 12-31-2012 as an emergency; operative 1-1-2013 pursuant to Government Code section 11346.1(d) (Register 2013, No. 1). A Certificate of Compliance must be transmitted to OAL by 7-1-2013 or emergency language will be repealed by operation of law on the following day.

4. Certificate of Compliance as to 1-1-2013 order, including nonsubstantive amendments, transmitted to OAL 7-1-2013 and filed 8-13-2013 (Register 2013, No. 33).

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