2010 Arkansas Code
23-67-304. Plan for coverage.
Title 23 - Public Utilities and Regulated Industries
Subtitle 3 - Insurance
Chapter 67 - Rates and Rating Organizations
Subchapter 3 - Arkansas Workers' Compensation Insurance Plan
§ 23-67-304 - Plan for coverage.
(a) The Arkansas Workers' Compensation Insurance Plan shall give consideration to:
(1) The need for adequate and readily accessible coverage;
(2) Optional methods of improving the market affected;
(3) The need for reasonable underwriting standards;
(4) The need for adequate supervisory and servicing procedures to ensure proper operation of the plan;
(5) The need to establish procedures that will have minimum interference with the voluntary market;
(6) Distributing the obligations imposed by the plan and any profits or losses experienced by the plan equitably and efficiently among the participating insurers; and
(7) Establishing procedures for applicants and participants to have their grievances reviewed and resolved.
(b) (1) The plan shall provide for the issuance of a policy covering the entire liability of the employer as to the business for which workers' compensation insurance has been rejected.
(2) Nothing in this subsection shall modify or repeal the provisions of 23-92-409.
(c) The rates and supplementary rate information of the plan shall meet the standards specified in 23-67-208.
(d) The plan may obtain reinsurance for any part or all of its risks.
(e) (1) (A) At his or her discretion, the Insurance Commissioner is authorized to delegate all or any part of the commissioner's responsibility to establish and operate the plan.
(B) However, any such plan, or plan of operation, and any amendments thereto must receive the prior approval of the commissioner.
(2) Any person or entity to whom the establishment, implementation, or operation of the plan is delegated pursuant to this subsection shall file with and obtain the approval of the commissioner as to all policy forms, rates, or supplementary rate information necessary to effectuate the plan.
(3) (A) In delegating all or part of the commissioner's responsibility, the commissioner shall not approve any plan or filing that abrogates or restricts his or her authority to select the plan administrator or servicing carriers.
(B) The commissioner shall competitively select the organization or organizations to whom the responsibility of plan administrator shall be delegated.
(C) If the administration of the plan is delegated, the plan administrator or administrators shall have an office in Arkansas adequately staffed, outfitted, and maintained to provide the plan services delegated.
(D) The commissioner shall specify duties and functions of plan administrators and may structure and delegate administrative functions separately such as, but not limited to, rates, forms, and statistics for the best operation of the plan.
(4) Under the provisions of this subsection, the commissioner shall vigorously promote competition for the designation of the plan administrator and servicing carrier for the most effective operation of the plan.
(5) (A) The office in Arkansas is established to improve services provided by the plan, to promote and secure courteous and timely service, and to assure that the minimum standards as provided under subdivision (f)(2) of this section are met.
(B) The office in Arkansas shall also assist employers or agents with questions, problems, or complaints pertaining to the servicing carriers and secure and expedite prompt and fair treatment to employers for servicing carrier errors and service failures.
(6) (A) The Arkansas office manager shall have the authority to intervene with servicing carriers to secure an adequate level of service and prevent servicing carriers from imposing unreasonable demands or actions.
(B) The office manager shall keep a record of all employer or agent problems and complaints by a servicing carrier, including a description of the problem. This record shall be provided to the commissioner within sixty (60) days of each calendar year or upon the request of the commissioner.
(C) The manager shall promptly notify the commissioner of any problems upon a request by an employer.
(f) (1) (A) In order to promote competition and improve servicing carrier performance, the commissioner shall competitively select those servicing carriers who shall serve the plan.
(B) Any insurer licensed to transact workers' compensation and employers' liability insurance in Arkansas may apply for selection as a servicing carrier, but if an adequate number of qualified insurers do not apply, the commissioner may appoint any such insurer, as needed, to serve as a servicing carrier.
(2) All servicing carriers shall be subject to the following minimum standards:
(A) Each insurer shall continually employ such number of qualified administrative personnel and dedicate such equipment and facilities to the administration of the plan as the commissioner, in his or her reasonable discretion, deems adequate to service the needs of the plan; and
(B) Each such insurer shall comply with the following specific service or performance standards and such further standards as the commissioner may by rule and regulation provide:
(i) Provide a level of service comparable to that provided to employer-insureds in its voluntary workers' compensation line of business and assure the same by putting into effect internal administrative procedures, which shall assure that such is the case;
(ii) Maintain with the commissioner a list of responsible management personnel of the insurer qualified to make administrative decisions on the insurer's behalf concerning policies issued within the plan;
(iii) Keep the commissioner continually advised of the address and telephone number of the insurer's office servicing the plan on its behalf;
(iv) Maintain a toll-free telephone number or numbers adequate to service the plan and keep the commissioner, employers, and agents continually apprised of same;
(v) (a) Maintain its billing and rating procedure in timely compliance with orders of the commissioner.
(b) In particular, no insurer shall ever purport to effect a retroactive rate adjustment based upon a succeeding rate filing unless the insurer has specifically included within its policies a specific notice of pending rate change.
(c) No insurer shall fail to physically implement any rate change later than sixty (60) days of the date the order effecting the change is entered;
(vi) Such other service or performance standards, including, but not limited to, matters relating to loss experience, safety and loss control success, and profitability as the commissioner shall by rule and regulation prescribe; and
(vii) Such further standards as the commissioner may by rule and regulation provide.
(g) The commissioner is vested with the power and the reasonable discretion, after notice and hearing, to impose upon any servicing carrier not meeting the standards herein prescribed or set forth by rule and regulation an administrative fine or penalty in the sum of not more than one thousand dollars ($1,000) for each such violation of standards. The commissioner shall use this authority to discourage unreasonable or unfair actions by the servicing carriers.
(h) In considering performance of servicing carriers, the commissioner shall require the plan administrator to:
(1) File with the State Insurance Department quarterly results of the plan, including, but not limited to, premiums written and earned, losses paid, incurred losses, and administration and servicing carrier allowances; and
(2) File with the department annually the performance review and plan results of each plan servicing carrier.
(i) (1) Servicing carriers may join cooperatively with other licensed insurers or general business corporations for the purpose of satisfying their duties as servicing carriers, including, but not limited to, claim review and payment, and loss control and safety functions.
(2) The commissioner shall actively encourage additional financially sound licensed carriers or combinations of licensed carriers to join together as joint venturers with shared responsibilities for servicing functions and, also, to utilize the services of such claim, safety, and other service organizations as reasonably necessary to provide the best servicing carrier service economically possible.
(j) The commissioner shall establish within the plan an alternate preferred plan for employers who have carried workers' compensation insurance continually for at least four (4) policy years and who have had better than average loss experience and meet such additional reasonable standards as the commissioner shall by rule and regulation prescribe.
(k) (1) The commissioner shall by rule and regulation establish a performance plan related to the aforementioned service or performance standards and others to be promulgated with incentives and penalties to improve servicing carrier performance.
(2) The performance plan shall provide for up to thirty-three percent (33%) of the servicing carrier's remuneration to be based on performance.
(3) The servicing carrier performance plan shall provide an annual basis for penalties on carriers performing below standard to the extent of their underperformance under the criteria as hereinafter established by rule and regulation up to thirty-three percent (33%) of their remuneration.
(4) These penalties shall be distributed as incentives to carriers performing at or above standard up to thirty-three percent (33%) of their remuneration.
(5) (A) (i) The commissioner shall conduct a comprehensive performance review of the plan administrator as often as the commissioner deems advisable, which shall not be less frequent than one (1) time every five (5) years to the extent necessary for the proper operation of the plan.
(ii) The commissioner shall conduct a performance review of each servicing carrier as often as the commissioner deems advisable in order to assure adequate levels of service.
(B) This comprehensive performance review shall be conducted independently of any other performance review conducted by an organization owned or controlled by the insurance carriers.
(C) A report of this review and action taken to improve plan performance shall be made to the Legislative Council and the House Interim Committee on Insurance and Commerce and the Senate Interim Committee on Insurance and Commerce no later than September 1 after the calendar year reviewed.
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