§ 125.134. Decision on application.
(a) The application of an applicant which meets the requirements of the act relating to matters such as the number of homogeneous employers, aggregate net worth and aggregate premium will be approved if the Bureau determines that the applicant has demonstrated, with reasonable certainty, that it will meet the liabilities incurred by its members under the act and the Occupational Disease Act. The Bureau will include the following factors in assessing the applicant’s ability to meet those liabilities:
(1) The adequacy of member contributions.
(2) The applicant’s plans for the establishment of surpluses to absorb matters such as unexpected losses and uncollected contributions.
(3) The applicant’s plans for member assessments needed to maintain actuarially appropriate loss reserves.
(4) Restrictions on the payment of dividends on surplus.
(5) The overall financial ability of the members to satisfy their obligations to the applicant.
(6) The applicant’s ability to control losses through the safety and loss control program proposed.
(7) The excess insurance coverage obtained by the fund, if any.
(8) The validity of the actuarial assumptions used to predict the likely loss levels, if any.
(9) The liquidity and safety of the fund’s assets.
(10) The likely stability of membership in the fund.
(11) The adequacy of the trust agreement, bylaws and written policies.
(12) The degree to which the total risk of the fund is spread among the members.
(b) If the Bureau’s assessment under subsection (a) is that the applicant can meet its obligations, it will send to the applicant a preliminary approval notice of the application and a list of conditions under subsection (d) that shall be met before the applicant may operate as a fund.
(c) An applicant has 60 days from the receipt of the preliminary approval notice to comply with the conditions set forth by the Bureau. The applicant may toll the 60-day compliance period by filing a request for a conference under subsection (f). An applicant may be granted a 30-day extension to meet the conditions if the applicant requests an extension in writing to the Bureau within the initial 60-day compliance period. The application of an applicant which does not meet the conditions within the compliance period will be deemed withdrawn.
(d) The applicant will be issued a permit which is effective no sooner than 15 days after the following has been filed with the Bureau:
(1) The trust agreement and bylaws as approved by the Bureau and executed by the members.
(2) Security in an amount as determined by the Bureau, if any. This requirement does not apply to funds comprised exclusively of political subdivisions.
(3) A certificate providing evidence of excess insurance as required by the Bureau.
(4) Confirmation of the name and address of the administrator, fiscal agent and of service companies the applicant will use.
(5) Certification by the administrator that each member has paid 25% of its annual contribution to the fund.
(6) One or more fidelity bonds to protect the fund against misappropriation or misuse of assets on a form and in an amount approved by the Bureau. The fidelity bonds shall cover the individuals and contractors who will handle fund assets or who will have authority to gain access to fund assets, including trustees, the administrator, the fiscal agent and the claims service company. The fiscal agent need not be covered by a bond if it is a duly chartered commercial bank or trust company.
(7) Documents relating to other requirements set by the Bureau to protect the compensation rights of employes of members.
(e) If upon review of the pertinent data the Bureau finds that the applicant does not meet the requirements of subsection (a), it will send to the applicant a written preliminary denial notice of the application. The notice will state the documents, evidence and other data received from the applicant or otherwise reviewed or considered by the Bureau in reaching its preliminary determination.
(f) The applicant may request a conference with the Bureau upon receipt of the Bureau’s preliminary approval notice or denial notice. A conference request shall be made in writing within 20 days after the receipt of the preliminary notice. At the conference, the applicant may present additional evidence or data to support its application or the alteration of the conditions required in the preliminary approval notice. The applicant may present that information to the Bureau in writing, or in person, or both.
(g) After a conference and the receipt of written submissions, the Chief of the Self-Insurance Division of the Bureau will promptly review the entire record of the applicant and will issue a reconsideration decision on the application.
(h) An applicant shall have a right to appeal a reconsideration decision issued under subsection (g) with the Bureau within 30 days of the receipt of the reconsideration decision. Untimely appeals will be dismissed without further action by the Bureau. A hearing will be conducted on the appeal as specified in § 125.154 (relating to hearings).
Source The provisions of this § 125.134 amended October 23, 1998, effective October 24, 1998, apply to applicants, self-insurers, runoff self-insurers, group self-insurance funds and runoff funds, 28 Pa.B. 5459. Immediately preceding text appears at serial pages (201159) to (201160).
Cross References This section cited in 34 Pa. Code § 125.133 (relating to application); 34 Pa. Code § 125.141 (relating to annual report); and 34 Pa. Code § 125.148 (relating to security).
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