2014 Kentucky Revised Statutes CHAPTER 304 - INSURANCE CODE Subtitle 50 - Workers' Compensation Self-Insured Groups 50.50-050 Security deposits -- Dividends on and exchange of assets -- Collection by commissioner -- Release -- Commissioner to approve custodian bank or trust company for security deposits -- Qualifications for approval.
Download as PDF
304.50-050 Security deposits -- Dividends on and exchange of assets -Collection by commissioner -- Release -- Commissioner to approve
custodian bank or trust company for security deposits -- Qualifications
for approval.
(1)
(2)
(3)
(4)
The group shall provide security deposits to the commissioner on a form
prescribed by the commissioner in an amount not less than two hundred fifty
thousand dollars ($250,000), ten percent (10%) of the annual premium, or ten
percent (10%) of the reserve requirement as established in the most recent
audited statement of financial condition on file with the commissioner,
whichever is greater.
The trustees may file cash, cash equivalents, or United States Treasuries as
security deposit or a bank letter of credit on a form or forms prescribed by the
commissioner, in satisfaction of the security deposit requirement.
Notwithstanding any other provision of law to the contrary, the deposit required
under this section shall be under trust agreements to which depositories, a
self-insured group, and the commissioner are parties. The commissioner may
at any time inventory assets on deposit for any self-insured group. Assets shall
not be removed or deposited in or from the bank or trust company in which the
assets are deposited, except upon a written order, approved by the
commissioner, of at least two (2) officers authorized for such purpose by the
workers' compensation group self-insurance fund's board of directors or other
governing body, except that assets may be deposited or removed under the
direction and upon the order of a court of competent jurisdiction, and in the
presence of the commissioner. Deposit assets shall be valued at market.
(a) Unless a fund fails to cure a deficiency, is insolvent, subject to a
delinquency proceeding, or is in default as to taxes or other charges due
under state law, a group self-insurance fund shall be entitled:
1.
To collect and receive interest, dividends, and payments accruing
upon assets held on deposit for its account.
2.
From time to time, to exchange and substitute for any such assets,
other assets eligible for deposits.
(b) If the group self-insurance fund fails to cure a deficiency when required, is
insolvent, subject to delinquency proceedings, or is in default as to taxes
or other charges due to the Commonwealth under law, the commissioner
shall collect such interest, dividends, and payments and add them to the
group self-insurance fund's deposit.
(a) Any required deposit shall be released, in addition to circumstances
already provided for in the following instances only:
1.
Upon extinguishment of substantially all liabilities of the group
self-insurance fund for the security for which the deposit is held;
2.
If the deposit is no longer required under this subtitle; or
3.
Upon proper order of a court of competent jurisdiction, the deposit
shall be released to the receiver, conservator, rehabilitator, or
liquidator of the group self-insurance fund.
(b) No release of a deposit shall be made except on application to and
written order of the commissioner made upon proof satisfactory to the
(5)
(6)
commissioner of the existence of one (1) of the grounds required in
paragraph (a) of this subsection. The commissioner shall not have any
personal liability for any such release of any deposit or part thereof so
ordered by the commissioner in good faith.
(a) A proposed custodian bank or trust company for security deposits shall
be approved by the commissioner and shall be under a custodial
agreement approved by the commissioner.
(b) An approved custodian bank or trust company shall possess the following
qualifications:
1.
The custodian bank or trust company's custodial functions for the
self-insured group shall be carried out under its trust department;
2.
The custodian bank or trust company shall be audited annually by
independent certified public accountants, and the audit report,
related financial statements, and report on internal controls shall be
available to the self-insured group and the commissioner;
3.
The custodian bank or trust company shall be organized under the
laws recognizing that the custodied securities are special deposits
rather than general deposits, remain the specific property of the
self-insured group, and are not subject to any creditor relationship of
the custodian bank or trust company;
4.
The custodian bank or trust company shall maintain blanket
coverage relating to its custodial functions with limits to or exceeding
those suggested by the American Bankers Association;
5.
The custodian bank or trust company's capital and surplus shall
equal or exceed twenty-five million dollars ($25,000,000) unless it is
licensed and regulated by the Commonwealth of Kentucky, in which
case its capital and surplus shall equal or exceed ten million dollars
($10,000,000); and
6.
The custodian bank or trust company has demonstrated sufficient
experience in handling custodial accounts.
The commissioner shall publish a list of banks or trust companies for the
security deposits or letter of credit as proposed by the group self-insurance
fund.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1632, effective July 15, 2010. -Amended 2008 Ky. Acts ch. 183, sec. 3, effective July 15, 2008. -- Created 2005
Ky. Acts ch. 7, sec. 10, effective March 1, 2005.
Disclaimer: These codes may not be the most recent version. Kentucky may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.