304.50-055 Plans for premium payment, assessments, and dividends -- Approval by
commissioner -- Investments.
(1)
(2)
(3)
(4)
(5)
(6)
A workers’ compensation self-insured group shall establish plans for premium
payment, determination and collection of assessments, and for declaration and
payment of dividends or other disbursements, which shall be filed for prior approval
with the commissioner. Any change in the plans for premium payment,
assessments, or dividends shall be filed for prior approval with the commissioner.
Approval of plans for assessments and dividends does not constitute approval of
any particular assessment or dividend by the commissioner.
Prior to the inception of each group member's self-insurance year, the trustees shall
collect from that member at least twenty-five percent (25%) of the estimated
premium for the ensuing year, except that in the case of a self-insured group formed
by governmental entities twenty-five percent (25%) of the estimated premium for
the ensuing year shall be collected no later than thirty (30) days after the beginning
of the self-insured group's self-insurance year. The balance of the estimated
premium shall be collected in either quarterly or monthly installments as set forth in
the enabling documents described in KRS 304.50-030(2)(b) or 304.50-060(2)(b).
Each group member's payroll shall be audited annually and an adjustment to
premium shall be made accordingly.
A disbursement from a workers' compensation self-insured group fund shall be for a
purpose related to the self-insured group. A dividend shall not be approved or paid
until at least thirty-six (36) months after the expiration of the self-insurance year
and shall be paid from surplus funds not required for payment of claims or other
liabilities. The dividends shall be paid or credited to members according to the
reasonable classifications the trustees may establish. A dividend shall not be paid
which unfairly discriminates between members of the same classifications. A
dividend plan shall specify whether past group members are eligible for the
dividend. Payment of a dividend under a dividend plan shall not be made unless the
self-insured group has notified the commissioner of its intent to make a dividend
payment at least thirty (30) days prior to the payment, and the commissioner has not
disapproved the payment within that time.
The formula to be used for collection of assessments shall be determined by the
trustees and approved by the commissioner. Assessments shall be fair and equitable
and shall not unfairly discriminate between members of the same classification.
A trustee, fiscal agent, or service organization shall not utilize an asset of the selfinsured group for a purpose unrelated to workers' compensation. The trustees shall
maintain cash or cash equivalent accounts as may be prudently necessary to pay
expenses without having to liquidate long-term investments.
The trustees may invest funds in:
(a) United States Government bonds, United States Treasury notes, Treasury
bills, or other direct obligations guaranteed by the full faith and credit of the
United States Government or its agencies;
(b)
(7)
Tax exempt obligations issued by the Commonwealth of Kentucky or its
agencies with a minimum rating of "A" by Standard & Poor;
(c) Obligations issued by a county, district, municipality, or other legal authority
within the Commonwealth with a minimum rating of "AA" by Standard &
Poor;
(d) Investment share accounts in a savings and loan association in the
Commonwealth whose deposits are insured by a federal agency;
(e) Certificates of deposit if issued by a duly chartered commercial bank;
(f) At the time of purchase, equity securities actively traded on the New York or
NASDAQ Stock Exchanges or other registered national securities exchanges
with no individual equity holding comprising greater than ten percent (10%)
of the equity portion of the portfolio reflected on the most recent quarterly or
annual statement of financial condition on file with the commissioner.
1.
An investment in an individual equity holding shall not represent at the
time of purchase more than five percent (5%) of the total market value
of the security.
2.
At the time of purchase, investments in equity securities shall not exceed
twenty percent (20%) of the total market value of the investment
portfolio of the self-insured group reflected on the most recent quarterly
or annual statement of financial condition on file with the commissioner;
(g) Corporate bonds if:
1.
The bond is issued, assumed, or guaranteed by a solvent institution
created or existing under the laws of the United States, or a state,
province, district, or territory;
2.
At the time of purchase, the corporate bond investments do not exceed
twenty-five percent (25%) of the total market value of the investment
portfolio reflected on the most recent quarterly or annual statement of
financial condition on file with the commissioner; and
3.
The bond has a minimum rating of "A" by Standard and Poor; and
(h) At the time of purchase, mutual funds and exchange traded funds if the
investments do not exceed twenty percent (20%) of the total market value of
the investment portfolio reflected on the most recent quarterly or annual
statement of financial condition on file with the commissioner.
Of the aggregate investments made by the trustees of the self-insured group under
this section:
(a) Not less than fifty percent (50%) of the total market value of the entire
investment portfolio shall be held in cash, cash equivalents, or securities as
described in subsection (6)(a) to (e) of this section; and
(b) A minimum of five percent (5%) of the total investment portfolio value shall
be maintained in cash or cash equivalent accounts or United States Treasury
and Federal Agency Securities with a remaining maturity of one (1) year or
less.
(8)
The commissioner may permit variation from the requirements of this section for
good cause.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1633, effective July 15, 2010. -Amended 2008 Ky. Acts ch. 183, sec. 4, effective July 15, 2008. -- Created 2005 Ky.
Acts ch. 7, sec. 11, effective March 1, 2005.
Legislative Research Commission Note (3/1/2005). 2005 Ky. Acts ch. 7, which creates
this section, contains the enrolled text of Senate Bill 86 as amended by a Senate
committee substitute. In drafting the committee substitute, an additional subsection
was inserted into this section, but a reference to "subsection (5)(a) of this section" in
subsection (7) was not changed to reflect this addition. Pursuant to KRS 7.136(1), the
reference has been changed to "subsection (6)(a) of this section" in codification.
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