Self-insurance certification requirements and application process.
(1) What requirements must an employer meet to apply for self-insurance certification? An employer must meet all the following minimum criteria:
(a) Be in business for three years prior to applying for self-insurance.
(b) Have a written accident prevention program in place in Washington state for at least six months prior to making application.
(c) Have total assets worth at least twenty-five million dollars as verified by audited financial statements prepared by independent certified accountants.
(d) Demonstrate positive earnings in the current year and two out of the last three years. The overall earnings for the last three years must also be positive.
(e) Have a current liquidity ratio of at least 1.3 to 1, and a debt to net worth ratio of not greater than 4 to 1.
(2) When are applications processed? The department processes applications for certification the quarter after the application is accepted. Self-insurance certification for approved applicants will be effective the quarter following processing.
(3) What documentation must be submitted with an application? The following documentation must be submitted with each self-insurance application:
(a) A completed application form (Form F 207-001-000
) with a nonrefundable application fee. The application fee is reviewed annually by the department and is based on the administrative costs incurred in processing an application, but in no instance will it be less than two hundred fifty dollars.
(b) Three years of audited financial statements prepared by independent certified accountants. The audited financial statements must be in the name of the applicant.
(c) A list of all of the applicant's physical locations and addresses in Washington state, including all subsidiary operations.
(d) A copy of the written accident prevention program for each of the applicant's operations in Washington. If the applicant or any of its subsidiaries has multiple locations, more than one copy of the accident prevention program may be required.
(e) A completed Self-Insurance Certification Questionnaire (Form 207-176-000
(f) A completed self-insurance electronic data reporting system (SIEDRS) enrollment form (Form F 207-193-000
(4) What happens during the application review process? The department:
(a) Assesses the accident prevention program at department-selected sites.
(b) Analyzes the financial information supplied by the applicant. The department may also consider relevant information obtained from other sources to assess the applicant's financial strength.
(c) Reviews the completed Claims Administration Questionnaire and attachments. Additional information may be requested.
The department determines whether the application is denied or tentatively approved. The department notifies each applicant of its decision. If the department denies an application, it will state the reasons for the denial in its notification.
(5) If the application is denied, when may the applicant submit a new application? If an application is denied for deficiencies in its accident prevention program, the applicant may submit a new application for certification after the corrections to the program are made and have been in place for six months.
If the application is denied for financial reasons, the applicant may submit a new application for certification after the next annual audited financial statement is available.
If the application is denied because the claims administration organization is deficient, the applicant may submit a new application for certification after corrections to the program are made.
(6) What if the application is tentatively approved? The applicant must submit the following:
(a) Surety in the amount determined by the department and issued on the department form.
(b) A signed copy of the service agreement with a third-party administrator, if applicable.
(i) The contract copy may delete clauses(s) relating to payment of services.
(ii) However, if payment for services is based on the number of claims filed by the self-insurer's workers, this must be explained in detail.
(c) A copy of any excess insurance (reinsurance) policy including Washington state endorsements, if obtained.
(d) A signed copy of the Acknowledgement of Self-Insurance Responsibilities form.
(e) Payment of any outstanding premium of the applicant's state industrial insurance account.
(f) Payment of the applicant's estimated portion of the deficit, if a deficit condition in the state industrial insurance fund exists at the time of application.
(g) Adequate electronic test data to SIEDRS, to demonstrate the ability to submit claim data electronically in the required format. Requirements are defined in the SIEDRS enrollment package (Publication F 207-194-000
). The department may waive the testing requirement if the applicant has a service agreement with a third-party administrator that already submits data to SIEDRS.
If the required items are not received prior to the end of the quarter, the application may be denied. If the application is denied, the applicant must reapply in order to be considered for self-insurance.
(7) How is the initial surety requirement established? The initial surety requirement is established at the highest of the following:
(a) The annual premiums the applicant pays (or would pay) into the state industrial insurance fund; or
(b) The annual average of the last five years of developed incurred costs to the state industrial insurance fund; or
(c) The minimum surety requirement as established annually by the department. The minimum surety requirement is equal to the average total cost of one permanent total disability award.
The applicant has the option of submitting an independent actuarial analysis of its projected liability. The department reserves the right to accept or reject this analysis. In no event will the surety requirement be established at less than the minimum surety in force at that time.
[Statutory Authority: RCW 51.14.110
. WSR 09-01-177, § 296-15-021, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 51.04.020
, 51.14.020, 51.32.190, 51.14.090, and 51.14.095. WSR 06-06-066, § 296-15-021, filed 2/28/06, effective 4/1/06. Statutory Authority: RCW 51.14.077
, 51.14.120(7), 51.14.150(4), 51.14.160, 51.44.040(3), 51.44.070 and 51.44.150. WSR 99-23-107, § 296-15-021, filed 11/17/99, effective 12/27/99.]