Section R20-5-717. Gross Annual Premium of Pool; Calculation and Payment of Workers’ Compensation Premiums; Discounts; Refunds

A.      The gross annual workers’ compensation premium for a pool shall be sufficient to fund the administrative expenses and total incurred losses of the pool.

B.       A pool shall calculate a member’s workers’ compensation pre- mium and experience modification rate using formulas described in a rating plan that meets the following:

1.        The rating plan is filed by an Arizona licensed rating organization, and

2.        The rating plan has not been disapproved by the Arizona Department of Insurance.

C.      Each member shall pay to a pool the premium due in equal monthly or quarterly payments for the premium year, except that upon admission into a pool, a new member shall pay no later than five days after the effective date of membership not less than 25% of the annual premium calculated for the new member. The remaining premium due after a new member has advanced 25% of the annual premium shall be paid in equal monthly or quarterly payments for the premium year. A pool shall permit a member to pay a premium in advance of the monthly or quarterly schedule.

D.      Deviations from rates.

1.        A pool shall not deviate from established workers’ com- pensation rates unless the pool complies with the follow- ing:

a.        The deviation is based upon the expense and loss experience of the pool,

b.        The deviation is supported and justified by an actu- ary’s feasibility study, and

c.        The pool provides the information required under this subsection to the Division and receives approval from the Division.

2.        The Division shall approve the deviation if the deviation is based upon the expense and loss experience of a pool and is justified in an actuary’s feasibility study.

E.       Refunds. A pool may declare a refund of surplus money, including excess investment income, to its members under the following conditions:

1.        Surplus money exists, including excess investment money, for a fiscal year in excess of the amount necessary to meet all financial obligations for the fiscal year, includ- ing financial obligations arising from incurred but not reported claims;

2.        Total assets of a pool are greater than total liabilities for each fiscal year;

3.        An actuary approves the amount of the refund;

4.        The amount of refund is a fixed liability of the pool at the time the refund is declared; and

5.        The board sets a date for the refund that shall not be less than 12 months after the end of the fiscal year in which the excess is reported.

Historical Note

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