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The reinsurance association shall do the following on behalf of its members:
(a) Assume 100 percent of the liability as provided in section 79.34;
(b) Establish procedures by which members shall promptly report to the reinsurance
association each claim which, on the basis of the injury sustained, may reasonably be anticipated
to involve liability to the reinsurance association if the member is held liable under chapter
176. Solely for the purpose of reporting claims, the member shall in all instances consider itself
legally liable for the injury. The member shall advise the reinsurance association of subsequent
developments likely to materially affect the interest of the reinsurance association in the claim;
(c) Maintain relevant loss and expense data relative to all liabilities of the reinsurance
association and require each member to furnish statistics in connection with liabilities of the
reinsurance association at the times and in the form and detail as may be required by the plan of
(d) Calculate and charge to members a total premium sufficient to cover the expected liability
which the reinsurance association will incur, together with incurred or estimated to be incurred
operating and administrative expenses for the period to which this premium applies and actual
claim payments to be made by members, during the period to which this premium applies, for
claims in excess of the prefunded limit in effect at the time the loss was incurred. Each member
shall be charged a premium established by the board as sufficient to cover the reinsurance
association's incurred liabilities and expenses between the member's selected retention limit and
the prefunded limit. The prefunded limit shall be 20 times the lower retention limit established in
section 79.34, subdivision 2. Each member shall be charged a proportion of the total premium
calculated for its selected retention limit in an amount equal to its proportion of the exposure base
of all members during the period to which the reinsurance association premium will apply. The
exposure base shall be determined by the board and is subject to the approval of the commissioner
of labor and industry. In determining the exposure base, the board shall consider, among other
things, equity, administrative convenience, records maintained by members, amenability to audit,
and degree of risk refinement. Each member shall also be charged a premium determined by the
board to equitably distribute excess or deficient premiums from previous periods including any
excess or deficient premiums resulting from a retroactive change in the prefunded limit. The
premiums charged to members shall not be unfairly discriminatory as defined in section 79.074.
All premiums shall be approved by the commissioner of labor and industry;
(e) Require and accept the payment of premiums from members of the reinsurance
(f) Receive and distribute all sums required by the operation of the reinsurance association;
(g) Establish procedures for reviewing claims procedures and practices of members of
the reinsurance association. If the claims procedures or practices of a member are considered
inadequate to properly service the liabilities of the reinsurance association, the reinsurance
association may undertake, or may contract with another person, including another member, to
adjust or assist in the adjustment of claims which create a potential liability to the association.
The reinsurance association may charge the cost of the adjustment under this paragraph to the
member, except that any penalties or interest incurred under sections 176.183, 176.221, 176.225,
and 176.82 as a result of actions by the reinsurance association after it has undertaken adjustment
of the claim shall not be charged to the member but shall be included in the ultimate loss and
listed as a separate item; and
(h) Provide each member of the reinsurance association with an annual report of the
operations of the reinsurance association in a form the board of directors may specify.
History: Ex1979 c 3 s 18; 1980 c 556 s 8; 1981 c 346 s 19,139; 1983 c 290 s 10; 1985 c 234
s 21; 1995 c 231 art 2 s 10; 1995 c 258 s 58