79A.24 COMMERCIAL SELF-INSURANCE GROUP SECURITY DEPOSIT.
Subdivision 1. Annual securing of liability.
Each year every commercial self-insurance
group shall secure its estimated future liability for the payment of compensation and the
performance of the obligations of its membership imposed under chapter 176. A new deposit
must be posted within 30 days of the filing of the commercial self-insurance group's annual
actuarial report with the commissioner.
Subd. 2. Minimum deposit.
The minimum deposit is 125 percent of the commercial
self-insurance group's estimated future liability for the payment of compensation as determined
by an actuary. If the group has been in existence for three years, this minimum deposit shall be
110 percent of the commercial self-insurance group's estimated future liability for the payment
of workers' compensation as determined by an actuary. Each actuarial study shall include a
projection of future losses during a one-year period until the next scheduled actuarial study, less
payments anticipated to be made during that time. Deduction should be made for the total amount
which is estimated to be returned to the commercial self-insurance group from any specific
excess insurance coverage, aggregate excess insurance coverage, and any supplementary benefits
which are estimated to be reimbursed by the special compensation fund. Supplementary benefits
will not be reimbursed by the special compensation fund unless the special compensation fund
assessment pursuant to section
is paid and the required reports are filed with the special
compensation fund. In the case of surety bonds, bonds shall secure administrative and legal
costs in addition to the liability for payment of compensation reflected on the face of the bond.
In no event shall the security be less than the group's selected retention limit of the Workers'
Compensation Reinsurance Association. The posting or depositing of security under this section
shall release all previously posted or deposited security from any obligations under the posting or
depositing and any surety bond so released shall be returned to the surety. Any other security
shall be returned to the depositor or the person posting the bond.
Subd. 3. Type of acceptable security.
The commissioner may only accept as security, and the
commercial self-insurance group shall deposit as security, cash, approved government securities
as set forth in section
176.181, subdivision 2b
, surety bonds or irrevocable letters of credit in any
combination in accordance with the requirements under section
79A.04, subdivision 3
Subd. 4. Custodial accounts.
(a) All surety bonds, irrevocable letters of credit, and
documents showing issuance of any irrevocable letter of credit shall be deposited in accordance
with the provisions of section
(b) Upon the commissioner sending a request to renew, request to post, or request to increase
a security deposit, a perfected security interest is created in the commercial self-insurance group's
and member's assets in favor of the commissioner to the extent of any then unsecured portion
of the commercial self-insurance group's incurred liabilities. The perfected security interest is
transferred to any cash or securities thereafter posted by the commercial self-insurance group with
the commissioner of finance and is released only upon either of the following:
(1) the acceptance by the commissioner of a surety bond or irrevocable letter of credit for the
full amount of the incurred liabilities for the payment of compensation; or
(2) the return of cash or securities by the commissioner. The commercial self-insurance
group loses all right, title, and interest in and any right to control all assets or obligations posted
or left on deposit as security. In the event of a declaration of bankruptcy or insolvency by a
court of competent jurisdiction, or in the event of the issuance of a certificate of default by the
commissioner, the commissioner shall liquidate the deposit as provided in this chapter, and
transfer it to the commercial self-insurance group security fund for application to the commercial
self-insurance group's incurred liability.
(c) No securities in physical form on deposit with the commissioner of finance or the
commissioner or custodial accounts assigned to the state shall be released or exchanged without
an order from the commissioner. No security can be exchanged more than once every 90 days.
(d) Any securities deposited with the commissioner of finance or with a custodial account
assigned to the commissioner of finance or letters of credit or surety bonds held by the
commissioner may be exchanged or replaced by the depositor with any other acceptable securities
or letters of credit or surety bond of like amount so long as the market value of the securities or
amount of the surety bonds or letter of credit equals or exceeds the amount of the deposit required.
If securities are replaced by surety bond, the commercial self-insurance group must maintain
securities on deposit in an amount sufficient to meet all outstanding workers' compensation
liability arising during the period covered by the deposit of the replaced securities.
History: 1995 c 231 art 2 s 33; 1998 c 339 s 7-9; 1999 c 168 s 5; 2000 c 483 s 36; 2003 c
112 art 2 s 50