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A. A proposed group shall file with the director an application for a certificate of approval accompanied by a nonrefundable filing fee in an amount established by the director. The application shall include the group’s name, the location of its principal office, the date of organization, the name and address of each member and such other information as the director may reasonably require, together with the following:

(1)     proof of compliance with the provisions of Subsection B of this section; (2)     a copy of the articles of association, if any;

(3)     a copy of agreements with the administrator and with any service company;

(4)     a copy of the bylaws of the proposed group;

(5)     a copy of the agreement between the group and each member securing the payment of workers’ compensation and occupational disease disablement benefits, which shall include provision for payment of assessments as provided for in Section 52- 6-20 NMSA 1978;

(6)     designation of the initial board of trustees and administrator;

(7)     the address in this state where the books and records of the group will be maintained at all times;

(8)     a pro-forma financial statement on a form acceptable to the director showing the financial ability of the group to pay the workers’ compensation and occupational disease disablement obligations of its members; and

(9)     proof of payment to the group by each member of not less than twenty-five percent of that member’s first-year estimated annual net premium on a date approved by the director. Each payment shall be considered to be part of the first-year premium payment of each member if the proposed group is granted a certificate of approval.

B. To obtain and to maintain its certificate of approval, a group shall comply with the following requirements as well as any other requirements established by law or regulation not inconsistent with the following:

(1)     a combined net worth of all members of a group of private employers of three million dollars ($3,000,000) or greater, as determined by the director; provided that if a group’s annual financial statement for the prior calendar year shows that at the end of that year the group had a surplus of at least one-third of its claim reserves and not less than five million dollars ($5,000,000), then for the current calendar year, the group shall not be required to provide the director with evidence of the net worth of all of the group’s members;

(2)     security in a form and amount prescribed by the director, which shall be provided by either a surety bond, security deposit or financial security endorsement or any combination thereof. If a surety bond is used to meet the security requirement, it shall be issued by a corporate surety company authorized to transact business in this state. If a security deposit is used to meet the security requirement, securities shall be limited to bonds or other evidences of indebtedness issued, assumed or guaranteed by the United States or by an agency or instrumentality thereof; certificates of deposit in a federally insured bank; shares or savings deposits in a federally insured savings and loan association or credit union; or any bond or security issued by a state of the United States and backed by the full faith and credit of the state. Any such securities shall be deposited with the director and assigned to and made negotiable by the director pursuant to a trust document acceptable to the director. Interest accruing on a negotiable security so deposited shall be collected and transmitted to the depositor, provided the depositor is not in default. A financial security endorsement, issued as part of an acceptable excess insurance contract, may be used to meet all or part of the security requirement. The bond, security deposit or financial security endorsement shall be for the benefit of the state solely to pay claims and associated expenses and payable upon the failure of the group to pay workers’ compensation or occupational disease disablement benefits it is legally obligated to pay. The director may establish and adjust requirements of the amount of security based on differences among groups in their size, types of local government services provided by members of the group, years in existence and other relevant factors; provided that the director shall not require an amount lower than one hundred thousand dollars ($100,000) for any group during its first year of operation. Subsequent to the first year of operation, the director may waive the requirements of this paragraph;

(3)     specific and aggregate excess insurance in a form, in an amount and by an insurance company acceptable to the director. The director may establish minimum requirements for the amount of specific and aggregate excess insurance based on differences among groups in their size, types of employment, years in existence and other relevant factors and may permit a group to meet this requirement by placing in a designated depository securities of the type referred to in Paragraph (2) of this subsection;

(4)     an estimated annual standard premium of at least two hundred fifty thousand dollars ($250,000) during a group’s first year of operation. Thereafter, the annual standard premium shall be at least five hundred thousand dollars ($500,000);

(5)     an indemnity agreement jointly and severally binding the group and each member of the group to meet the workers’ compensation and occupational disease disablement obligations of each member. The indemnity agreement shall be in a form prescribed by the director and shall include minimum uniform substantive provisions prescribed by the director. Subject to the director’s approval, a group may add other provisions needed because of its particular circumstances. The requirements of this paragraph shall only apply to private employers;

(6)     a fidelity bond for the administrator in a form and amount prescribed by the director; and

(7)     a fidelity bond for the service company in a form and amount prescribed by the director. The director may also require the service company providing claim services to furnish a performance bond in a form and amount prescribed by the director.

C. A group shall notify the director of any change in the information required to be filed under Subsection A of this section or in the manner of its compliance with Subsection B of this section no later than thirty days after that change.

D. The director shall evaluate the information provided by the application required to be filed under Subsection A of this section to assure that no gaps in funding exist and that funds necessary to pay workers’ compensation and occupational disease disablement benefits will be available on a timely basis.

E. The director shall act upon a completed application for a certificate of approval within sixty days. If, because of the number of applications, the director is unable to act upon an application within that period, the director shall have an additional sixty days to so act.

F. The director shall issue to the group a certificate of approval upon finding that the proposed group has met all requirements, or the director shall issue an order refusing the certificate, setting forth reasons for refusal, upon finding that the proposed group does not meet all requirements.

G. Each group shall be deemed to have appointed the director as its attorney to receive service of legal process issued against it in this state. The appointment shall be irrevocable, shall bind any successor in interest and shall remain in effect as long as there is in this state any obligation or liability of the group for workers’ compensation or occupational disease disablement benefits.