2005 North Carolina Code - General Statutes § 97-133. Powers and duties of the Association.

§ 97‑133.  Powers and duties of the Association.

(a)       The Association shall:

(1)       Repealed by Session Laws 1999‑219, s. 7.2, effective June 25, 1999.

(1a)     Administer a fund, to be known as the North Carolina Self‑Insurance Security Fund, which shall receive the assets of the North Carolina Self‑Insurance Guaranty Fund previously established under subdivision (2) of this subsection, the assessments required by subdivisions (2a) and (3a) of this subsection and any other sums received by the Association. In its discretion, the Board may determine that the assets of the Fund should be segregated or that a separate accounting shall be made in order to identify that portion of the Fund which represents assessments paid by individual self‑insurers and that portion of the Fund which represents assessments paid by group self‑insurers. If the Board segregates the Fund in this manner, the Association shall thereafter pay covered claims against individual member self‑insurers from that portion of the Fund that represents assessments against individual self‑insurers and shall thereafter pay covered claims against group member self‑insurers from that portion of the Fund that represents assessments against group self‑insurers. The costs of administering the Association shall be borne by the Fund. The Association is authorized to secure insurance, primary excess insurance, reinsurance, bonds, other insurance, financial guarantees and related financial instruments to effectuate the purposes of the Association. The Board will invest the Fund assets pursuant to an investment policy adopted by the Board and reviewed and approved annually by the Department of the State Treasurer. The earnings from investment of Fund assets shall be placed in or credited to the Fund.

(2)       Repealed by Session Laws 2005‑400, s. 4, effective January 1, 2006.

(2a)     Establish, operate, and maintain the Association Aggregate Security System as defined in G.S. 97‑130 and G.S. 97‑165 as follows:

a.         The Association shall annually prepare and submit to the Commissioner a written plan to provide an Association Aggregate Security System through a combination of cash on deposit in the Fund, securities, surety bonds, irrevocable letters of credit, insurance or other financial instruments or guarantees owned or entered into by the Association and acceptable to the Commissioner. The written plan shall include, but not be limited to, (i) a description of the institutions that will issue or guarantee the securities, surety bonds, irrevocable letters of credit, insurance or other financial instruments or guarantees, including, but not limited to, the credit rating, financial strength, and AM best rating, if applicable to the institutions (ii) applicable cash flow information and financial assumptions (iii) a description of the methodology to be used by the Association to assess and collect the Association Aggregate Security System assessments to be made pursuant to subdivision (3a) of this subsection and (iv) a proposed timetable for the release of existing individual company deposits posted pursuant to G.S. 97‑185(c), provided, however, that no individual company deposits posted pursuant to G.S. 97‑185(c) shall be released without the written consent of the Commissioner. The noncash elements of the composite security may be one‑year or multiple‑year instruments.

b.         Within 90 days following the submission of the initial plan under sub‑subdivision a. of this subdivision, the Commissioner shall either approve or disapprove the initial plan and shall notify the Association in writing. If the Commissioner does not approve or disapprove the initial plan within 90 days following submission, then the initial plan shall be deemed to be approved by the Commissioner. All subsequent plans shall be either approved or disapproved within 60 days following submission.

c.         The Commissioner shall also determine the total undiscounted claims liability of each individual self‑insurer that will participate in the Association Aggregate Security System as well as the aggregate total undiscounted outstanding claims liabilities of all the individual self‑insurers that are to participate in the Association Aggregate Security System and shall notify the Association of this determination.

d.         Upon approval by the Commissioner of the Association's plan for the Association Aggregate Security System, the Association shall assess the individual self‑insurers that participate in the Association Aggregate Security System pursuant to subdivision (3a) of this subsection.

e.         If the Commissioner disapproves the plan for any year, every self‑insurer shall deposit with the Commissioner, or continue to deposit, the amount required by G.S. 97‑185(b3) in the manner prescribed by G.S. 97‑185(c).

f.          Group self‑insurers shall not participate in the Association Aggregate Security System.

(3)       Repealed by Session Laws 2005‑400, s. 4, effective January 1, 2006.

(3a)     Assess members of the Association as follows:

a.         Association Aggregate Security System assessments. – The Association shall assess each individual self‑insurer participating in the Association Aggregate Security System a security system assessment. The amount of the security system assessment charged to each individual self‑insurer participating in the Association Aggregate Security System shall be based on the Association's reasonable consideration of all of the following factors:

1.         The total amount of assessments necessary to provide aggregate security for all participating individual self‑insurers.

2.         The individual self‑insurer's total workers' compensation liabilities under the Act.

3.         The financial strength and creditworthiness of the participating individual self‑insurer.

4.         Any other relevant factors.

b.         Special assessment. – In the event that there are covered claims against an insolvent member or members and the assets of the Fund are not sufficient to pay the obligations of the Association, then the Association may collect a special assessment from the members in an amount sufficient to pay the aggregate value of such covered claims. Each member's special assessment shall be determined by the Board and shall be based on the proportion of the member's total obligations under the Act to the aggregate total of all members' obligations under the Act.

c.         Initial assessments. – An individual self‑insurer that becomes a member and does not initially participate in the Association Aggregate Security System shall pay an initial assessment to the Association in an amount determined by the Board. A group self‑insurer, upon receiving its initial license from the Commissioner, shall pay an initial assessment to the Association in an amount determined by the Board.

d.         Each member shall be notified of assessments no later than 30 days before the assessment is due.

e.         Delinquent assessments, except as otherwise provided, shall bear interest at a rate to be established by the Board.

(4)       Be obligated to pay covered claims.

(5)       After paying any covered claim, be subrogated to the rights of the injured employee and dependents and be entitled to enforce liability against the self‑insurer or any third party by any appropriate action brought in its own name or in the name of the injured employee and dependents.

(6)       Expend Fund assets in amounts necessary to pay all of the following:

a.         The obligations of the Association under this Article subsequent to an insolvency.

b.         The expenses of handling covered claims subsequent to an insolvency.

c.         The cost of examinations under G.S. 97‑137.

d.         The costs of implementing and operating the Association Aggregate Security System.

e.         All other expenses authorized by this Article.

(7)       Investigate claims brought against the Association and adjust, compromise, settle, and pay covered claims to the extent of the Association's obligation; and deny all other claims. The Association may review settlements to which the insolvent member was a party to determine the extent to which such settlements may be properly contested.

(8)       Notify such persons as the Commissioner directs under G.S. 97‑136.

(9)       Handle claims through its directors, its employees, or through one or more members or other persons designated as servicing facilities. Designation of a servicing facility is subject to the approval of the Commissioner, but designation of a member as a servicing facility may be declined by such member.

(10)     Reimburse each servicing facility for obligations of the Association paid by the facility and for expenses incurred by the facility while handling claims on behalf of the Association.

(11)     Pay any other expenses of the Association authorized by this section.

(12)     Repealed by Session Laws 2005‑400, s. 4, effective January 1, 2006.

(b)       The Association may:

(1)       Employ or retain such persons, including, but not limited to, adjustors, brokers, accountants, attorneys, financial advisors, investment bankers, placement agents, and consultants, as the Board may determine are necessary to handle claims, perform other duties of, provide services to, and consult with the Association.

(2)       Borrow funds necessary to effect the purposes of this Article in accord with the Plan, including entering into standby lines of credit.

(3)       Sue or be sued.

(4)       Negotiate and become a party to such contracts as are necessary to carry out the purpose of this section.

(5)       Perform such other acts as are necessary or proper to effectuate the purpose of this section.

(6)       Reimburse the Department of Insurance up to twenty thousand dollars ($20,000) for consultants retained by the Department to review the initial plan submitted pursuant to G.S. 97‑133(a)(2a).

(c)       Repealed by Session Laws 2005‑400, s. 4, effective January 1, 2006.

(c1)     The Association shall provide in its Plan that the functions of administration and adjusting claims shall not be performed by the same entity that provides legal representation to the Association for claims.

(d)       Repealed by Session Laws 2005‑400, s. 4, effective January 1, 2006. (1985 (Reg. Sess., 1986), c. 928, s. 1(a); 1985 (Reg. Sess., 1986), c. 1013, s. 1; 1987, c. 528, ss. 4‑10; 1989, c. 485, s. 27; 1995, c. 533, s. 1; 1997‑475, ss. 2.3, 2.4; 1999‑219, s. 7.2; 2003‑115, ss. 1, 2; 2005‑400, s. 4.)