Section 257.532. Security equivalent; qualifications for certificate; excess insurance requirement.

(1) A certificate of self-insurance that is issued pursuant to these rules constitutes security equivalent to that afforded by a policy of insurance that provides for the  payment  of   benefits   pursuant  to  the no-fault law.

(2)   Pursuant to section 531 of the act and section 3101 of the no-fault law, the secretary of state may issue a certificate of self-insurance to an applicant who possesses all the following qualifications:

(a)   Registers in the applicant's name more than 25 motor vehicles, excluding trailers, in Michigan.

(b)   Agrees, in writing, to comply with all of  the   provisions  of  the no-fault law, the financial responsibility law contained in  chapter   V  of the act, and these rules.

(c)     Has not been declared bankrupt within the 5-year  period  immediately preceding the date of application.

(d)   Possesses a net worth of more than $5,000,000.00 and complies with the provisions of subrule (3) of this rule.

(e)     Possesses a sound financial condition and utilizes financial practices and methods that would not bring into question its ability to pay claims fully and in a timely manner.

(f)  Establishes a fully funded loss reserve as described in R 257.536.

(g)   Has not had a certificate of self-insurance denied or canceled  by this state or any other  state  within  1  year  preceding  the   date   of application.

(h)   Submits to the secretary of state a completed application for a certificate of self-insurance with all required documents attached.

(3)     If   an  applicant  possesses  a  net  worth  that  is   less   than $20,000,000.00, the  applicant   shall,  in  addition    to    meeting    the qualifications specified in subrule

(2)   of this rule, secure and maintain an

excess insurance policy, as described in R 257.537, with policy   limits   and retention amounts that are acceptable to the secretary of state.

(4)    Except as provided in subrule (6) of this rule, a parent company and its subsidiaries shall make separate applications for the issuance of a certificate of self- insurance pursuant to these rules.

(5)    Except for a parent company and its wholly owned subsidiaries making a combined application for the issuance of a certificate of self-insurance pursuant to the provisions of subrule (6) of this rule, a parent company and its subsidiaries shall not combine  or   commingle  net  worth,  motor vehicle registrations, or loss reserves for the purpose of qualifying or maintaining qualification for a certificate of self- insurance pursuant   to these rules.

(6)    A parent company and its  wholly  owned   subsidiaries  may  make   a combined application for the issuance of a certificate of self-insurance if either of the following provisions is satisfied:

(a)   Both the parent company and each wholly owned subsidiary included in the combined application otherwise meet the  qualifications  for  the issuance of a certificate of self-insurance set forth in this rule.

(b)   Both of the following conditions are met:

(i)    Both the parent company and each wholly owned subsidiary included in the combined application enter into an indemnity   agreement  jointly   and severally binding each entity for any liability under the no-fault  law, the financial responsibility law contained in chapter V of the act, and these rules. The language and form of the agreement shall  be  approved   by the secretary of state.

(ii)     For  each  wholly owned  subsidiary included   in  the  combined application, the parent company guarantees its subsidiary's liability  for payment of benefits under the no-fault law, the financial responsibility law contained in chapter V of the act, and these rules. The form and substance of the guarantees shall be approved by the secretary of  state.

History: 1993 AACS.