Section 408.43a. Employer individual self-insurer; surety bond or letter of credit; consideration of employer in business less than 5 years; excess liability Insurance; required guaranties; claims service companies; self-administered claims.

a. (1) A nonpublic self-insurer may be required to furnish a surety bond or letter of credit. The bureau will establish the amount of security at the time of initial application. The bureau shall review the adequacy of security periodically. The bureau shall prescribe the format and language of the bond or letter of credit. The bureau shall accept surety bonds only from a surety writer authorized to transact security bond business in Michigan. A surety bond shall provide for 60 days' notice of cancellation to the bureau. Letters of credit are administered under R 408.43q.

(2)   An employer that is in business less than  5  years  shall  not   be considered for self-insured  authority  unless   its  workers'  disability compensation  liability  will be  guarantied  by  a  parent   corporation  or combinable affiliated entity that has been in

business not less than 5    years and that would qualify for self-insured authority in Michigan.

(3)   The bureau shall require specific excess liability insurance,  with policy limit and retention acceptable to the bureau, for every self-insured employer, unless the bureau, at its discretion, waives the requirement. The bureau may require aggregate excess liability insurance as a condition of approval for a self-insured employer. Specific and aggregate excess liability insurance policies are accepted under R 408.43k.

(4)   Parent corporations shall guaranty all liability incurred by their self- insured subsidiaries under the workers' disability compensation act, unless the bureau, at its discretion, waives the  requirement.   The  bureau shall prescribe the form and substance of the guaranties. The bureau may require employers, combinable under a single self-insured authority, to execute workers' disability compensation payment guaranties as a condition for approval of the self-insured authority. The bureau shall prescribe the form and substance of the guaranties.

(5)   A self-insurer approved under section 418.611(1)(a) of the act shall contract with a claims service company approved by the bureau under R 408.43m.The bureau may approve a self-insurer to self-administer claims if the employer has all necessary systems, processes, and reporting capabilities and can demonstrate it has employed competent claims personnel with Michigan workers' compensation adjusting experience.

History: 1980 AACS; 1998-2000 AACS; 2007 AACS.