Kentucky Statutes 304.50-045 – Initial and continuing financial solvency requirements
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(1) To obtain and maintain a certificate of filing, a workers’ compensation self-insured group shall have sufficient financial strength to pay all benefits for compensation required by KRS Chapter 342 for risks covered by the group, including known claims and expenses and incurred but not reported claims and expenses.
(2) (a) The trustees and administrators shall provide a fidelity bond to the commissioner in the amount of not less than three hundred thousand dollars ($300,000), which may be subject to a deductible not exceeding ten thousand dollars ($10,000), for each trustee, each administrator and the administrator’s employees.
(b) The fiscal agent shall provide a fidelity bond to the trustees of not less than fifty percent (50%) or one million dollars ($1,000,000), whichever is lower, of the funds to be handled by the fiscal agent. This requirement shall be waived if the fiscal agent is a national bank.
(c) The service organization shall provide a fidelity bond to the trustees of not less than two (2) times the amount of the revolving fund.
(d) In lieu of the bonds required under paragraphs (a), (b), and (c) of this subsection, the trustees may secure a fidelity blanket bond in an amount not less than fifty percent (50%) of the self-insured group’s premium or two million dollars ($2,000,000), whichever is lower. The fidelity blanket bond shall include the trustees, the administrator, the service organization, personnel of the service organization, and the fiscal agent, unless the fiscal agent is a national bank.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1631, effective July 15, 2010. — Created
2005 Ky. Acts ch. 7, sec. 9, effective March 1, 2005.
(2) (a) The trustees and administrators shall provide a fidelity bond to the commissioner in the amount of not less than three hundred thousand dollars ($300,000), which may be subject to a deductible not exceeding ten thousand dollars ($10,000), for each trustee, each administrator and the administrator’s employees.
Terms Used In Kentucky Statutes 304.50-045
- Agent: means an individual or business entity required to be licensed by the Department of Insurance under Subtitle 9 of this chapter, to sell or solicit applications for insurance or to negotiate insurance contracts. See Kentucky Statutes 304.50-015
- Certificate of filing: means the certificate issued to a workers' compensation self- insured group to indicate that it has complied with the provisions of this subtitle which are prerequisites to its operation. See Kentucky Statutes 304.50-015
- Fiscal agent: means a person or legal entity, other than a service organization or employees or agents of a service organization, designated by the trustees to receive, invest, and disburse the self-insured group's funds. See Kentucky Statutes 304.50-015
- National Bank: A bank that is subject to the supervision of the Comptroller of the Currency. The Office of the Comptroller of the Currency is a bureau of the U.S. Treasury Department. A national bank can be recognized because it must have "national" or "national association" in its name. Source: OCC
- Premium: means the amount of money charged each member of the self-insured group to fund the obligations and expenses of the self-insured group. See Kentucky Statutes 304.50-015
- Self-insured group: means a group self-insurance fund. See Kentucky Statutes 304.50-015
- Service organization: means a person or entity that provides services to a self- insured group and includes claims adjustment, safety engineering, statistical compilation, preparation of premium charges, loss and tax reports or other reports required by the commissioner, administration of the self-insured group, marketing services, placement of excess insurance, development of member payroll audits, administration of investments, or legal assistance. See Kentucky Statutes 304.50-015
- Trustee: A person or institution holding and administering property in trust.
- Trustees: means persons elected by the group members or appointed by the board of directors of the sponsoring trade association or association of governmental entities to oversee the administration of the self-insured group. See Kentucky Statutes 304.50-015
(b) The fiscal agent shall provide a fidelity bond to the trustees of not less than fifty percent (50%) or one million dollars ($1,000,000), whichever is lower, of the funds to be handled by the fiscal agent. This requirement shall be waived if the fiscal agent is a national bank.
(c) The service organization shall provide a fidelity bond to the trustees of not less than two (2) times the amount of the revolving fund.
(d) In lieu of the bonds required under paragraphs (a), (b), and (c) of this subsection, the trustees may secure a fidelity blanket bond in an amount not less than fifty percent (50%) of the self-insured group’s premium or two million dollars ($2,000,000), whichever is lower. The fidelity blanket bond shall include the trustees, the administrator, the service organization, personnel of the service organization, and the fiscal agent, unless the fiscal agent is a national bank.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1631, effective July 15, 2010. — Created
2005 Ky. Acts ch. 7, sec. 9, effective March 1, 2005.