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342.906 Guaranty funds -- Required participation -- Purpose -- Operating
procedures -- Use of moneys -- Liability for actions.
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There is created a nonprofit, unincorporated legal entity to be known as the
Kentucky individual self-insurance guaranty fund to function as the guaranty
fund for individually insured employers, excluding individually self-insured coal
employers, to secure workers' compensation liabilities under this chapter and
pursuant to administrative regulations promulgated by the commissioner. Each
noncoal, individually self-insured employer who has qualified and been certified
by the commissioner as a self-insured employer on or after March 1, 1997,
shall participate as a member of the guaranty fund created pursuant to this
subsection as a condition of maintaining its certificate required to be
self-insured under this chapter. The commissioner shall revoke any
self-insurer's certificate and authority to be self-insured if the self-insured
employer fails to maintain membership in the guaranty fund or fails to pay
assessments levied by the guaranty fund created pursuant to this subsection.
There is created a nonprofit, unincorporated legal entity known as the
Kentucky group self-insurance fund to function as a guaranty fund for
self-insured groups or associations established under KRS 342.350(4) and
304.50-010, to secure workers' compensation liabilities under this chapter and
pursuant to administrative regulations promulgated by the commissioner of the
Department of Insurance. Each self-insured group or association that is
authorized to self-insure and certified by the commissioner of the Department
of Insurance to self-insure on or after March 1, 1997, shall participate as a
member of the guaranty fund created pursuant to the provisions of this
subsection, as a condition of maintaining its authorization and certificate to
self-insure. The commissioner of the Department of Insurance shall revoke any
authorization and certificate to self-insure of any self-insured group or
association for failure to maintain membership in the guaranty fund or failure to
pay assessments levied by the guaranty fund created pursuant to the
provisions of this subsection.
There is created a nonprofit, unincorporated legal entity known as the
Kentucky coal employers self-insurance fund to function as a guaranty fund for
individually self-insured coal employers to secure workers' compensation
liabilities under this chapter and pursuant to administrative regulations
promulgated by the commissioner. Each coal employer that is individually
self-insured and that has been authorized and certified to self-insure on or after
March 1, 1997, shall participate as a member of the guaranty fund created
pursuant to the provisions of this subsection as a condition of maintaining
authorization and certification to self-insure. The commissioner shall revoke a
coal employer's authority and certification to self-insure for failure to maintain
membership in the guaranty fund or to pay assessments levied by the guaranty
fund created pursuant to the provisions of this subsection.
The guaranty funds created pursuant to this section are created for the
purposes of meeting the obligations of insolvent individually self-insured
employers or members of a self-insured group or association incurred while
members of a guaranty fund and after exhaustion of all security, including
bonds, escrow deposits, insurance, or reinsurance, required by this chapter or
KRS 304.50-045 and 304.50-050. The method of operation of each guaranty
fund created pursuant to the provisions of this section shall be established by a
plan of operation pursuant to administrative regulations promulgated by the
commissioner.
(5) The Kentucky individual self-insurance guaranty fund and the Kentucky coal
employers self-insurance guaranty fund shall each be governed by a nine (9)
member board of directors who shall serve staggered terms not to exceed four
(4) years, be representative of individual self-insurers, and be elected by the
members of the guaranty fund. Each member of the board shall have one (1)
vote. In addition to the nine (9) directors elected by the members, the
commissioner of the Department of Workers' Claims and the commissioner of
the Department of Insurance, or their designees, shall be ex officio nonvoting
members of the board of directors. A member of the board of directors may
designate another member to act in the member's place as though the member
were acting, and the designee's actions shall be deemed those of the member.
(6) The Kentucky group self-insurance guaranty fund shall be governed by a board
of directors composed of one (1) representative of each self-insured group or
association. In addition, the commissioner of the Department of Workers'
Claims and the commissioner of the Department of Insurance, or their
designees, shall be ex officio nonvoting members of the board of directors. A
director may designate another member to act in the member's place, and the
designee's actions shall be deemed those of the director.
(7) Each guaranty fund created pursuant to this section shall establish bylaws and
a plan of operation subject to prior approval of the commissioner, necessary to
the purposes of this chapter and to carry out the responsibilities of each
guaranty fund. Each guaranty fund may carry out its responsibilities directly or
by contract and may purchase services and insurance and borrow funds as it
deems necessary for the protection of the members and their employees.
(8) Security called by the commissioner and disbursed to the guaranty funds, and
assessments made upon members, shall vest in the guaranty funds, shall not
thereafter be deemed state property, and shall not be subject to appropriation
by the General Assembly or any other state agency.
(9) All moneys in the individual guaranty funds, exclusive of costs reasonably
necessary to conduct business, shall be used solely to compensate persons
entitled to receive workers' compensation benefits from a Kentucky member
who has defaulted in performance of its workers' compensation benefit
payment obligations under this chapter.
(10) No liability shall lie, whether at law or in equity, against any director, agent, or
employee of a guaranty fund created pursuant to this section, on account of
any action or inaction taken by any of them in the administration of a guaranty
fund.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1858, effective July 15, 2010. -Amended 2005 Ky. Acts ch. 7, sec. 48, effective March 1, 2005. -- Created 1996
(1st Extra. Sess.) Ky. Acts ch. 1, sec. 23, effective December 12, 1996.
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