Section R20-5-701. Definitions

In addition to the definitions provided in A.R.S. § 23-901, the fol- lowing definitions apply to this Article:

“Administrator” means an individual or organization chosen by a board to manage the daily operations of a pool.

“Applicant” means a worker compensation pool organized under A.R.S. § 23-961.01 that has filed an initial application for authority to self-insure.

“Board of trustees” or “board” means a body of individuals that manage all operations of a worker compensation pool.

“Cash flow ratio” means a numerical relationship that reflects an ability to meet current financial obligations out of cash flow and is calculated by dividing funds received from operations of a business by current liabilities.

“Certificate of authority” means a document issued by the Commission granting a pool authority to be self-insured for purposes of workers’ compensation.

“Claim” means a worker compensation claim.

“Code classification” means a number assigned by  an approved rating organization that classifies employees.

“Current ratio” means a numerical relationship that reflects an ability to pay current obligations and is calculated by dividing current assets by current liabilities.

“Debt status ratio” means a numerical relationship that reflects the proportion of funds supplied internally relative to the funds supplied by creditors and is calculated by dividing net worth by total liabilities.

“Division” means the Administration Division of the Indus- trial Commission of Arizona.

“Excess insurance carrier” means an insurance carrier autho- rized by the Arizona Department of Insurance to issue policies of excess insurance coverage and casualty insurance coverage to a self-insured.

“Experience modification rate” means a ratio comparing actual losses to expected losses based on a formula determined by an approved rating organization and which includes three years of loss information.

“Financial rating organization” means a nationally recognized organization such as Standard & Poor’s or Moody’s that evalu- ates and rates securities.

“Fiscal year” means a 12 month cycle that begins from the effective date of authority to self-insure.

“Loss fund” means an account from which money is used to pay all workers’ compensation expenses including current and contingent liabilities of a worker’s compensation claim of a pool.

“Member”  means  an  employer  described   in  A.R.S.  §  23-

961.01 that has joined with other employers to form a pool.

“Pool” means a workers’ compensation group organized under A.R.S. § 23-961.01.

“Profitability ratio” means a numerical relationship that rep- resents the return on assets and the efficiency of assets and is calculated by dividing profit before taxes by total assets, mul- tiplied by 100.

“Quick ratio” means a numerical relationship that represents the degree to which liabilities are covered by the most liquid current assets and is calculated by dividing cash and equiva- lents, plus trade receivables, by current liabilities.

“Rate” means an assignment of a code classification based on risk as established by a rating organization and approved by the Arizona Department of Insurance.

“Rating organization” means an entity that meets the require- ments of A.R.S. § 20-363(F) and is approved by the Arizona Department of Insurance to establish rates, codes, and formu- las used to calculate worker compensation premiums.

“Service company” means an entity or organization that is contracted by a pool to receive, process, and pay workers’ compensation claims for a pool.

“Trustee fund” means an account into which premiums, investment proceeds, and other revenues are deposited and are used to cover all administrative or operational expenses of a pool.

“Working capital ratio” means a numerical relationship that measures the sufficiency of working capital to support sales and is calculated by dividing working capital by sales.

Historical Note

Adopted effective September 9, 1998 (Supp. 98-3).