Application For Self-Insurance {A-05}

STATE OF MARYLAND WORKERS' COMPENSATION COMMISSION 10 E. BALTIMORE STREET BALTIMORE, MARYLAND 21202 General Information about Workers' Compensation Self-Insurance Program in the State of Maryland Labor and Employment Article § 9-405 COMAR 14.09.10 PART 1 Application An application [Form MD WCC A-05 (Rev. 2/2009)] with original signatures only will be accepted (a copy will not be accepted). All questions must be answered completely. No changes or modifications to the form are permitted. The application must be accompanied by all supporting documents required: A. Audited financial statements, with accompanying footnotes and auditors' opinion, for up to the five most recent fiscal years (unaudited statements are not acceptable); 10-Ks, if applicable, for up to the last five years. Include most current 10-Q, if applicable. See COMAR 14.09.10.02(a)(ii). B. A $250 non-refundable application fee, payable to the Maryland Workers' Compensation Commission. C. A list of physical locations of each operation to be self-insured with street address, nature of business, FEINs, SIC code, and number of employees by location for each SIC code and whether the location is a subsidiary, affiliate, division, branch, etc. D. An organizational chart. E. If the applicant is a parent company, all local subsidiaries, affiliates or divisions in which the applicant has at least 51% ownership must be included in its self-insurance program. (mixed insurance arrangements are not permitted). For each entity, provide the legal name, date and state of incorporation, FEIN and SIC code and the applicable d/b/a's of any operating division. There is no fee for subsidiaries of the applicant if included as a part of the original application. F. If the applicant is a subsidiary, the financial statements or 10-K report (where applicable) for the parent company must be provided, along with a parental guarantee (on the Commission's form). Audited financial reports of the parent are required. If deemed necessary, the Commission may request a separate financial statement for a subsidiary requesting selfinsurance. The parental guarantee remains in effect until all liability for workers' compensation while self-insured has been paid and any remaining security formally released by the Commission. A-05 Instr. (Rev. 02/2009) 1 of 5 American LegalNet, Inc. www.FormsWorkFlow.com STATE OF MARYLAND WORKERS' COMPENSATION COMMISSION 10 E. BALTIMORE STREET BALTIMORE, MARYLAND 21202 G. A narrative description of the safety program components for the applicant's operations in this state. H. A narrative description of all state and federal agency citations issued for safety violations in this state during the last three years, if any. Include the specific violation as cited, fines or penalties assessed, fine reductions negotiated, and corrective action taken. I. If the applicant has been granted the privilege of self-insurance in other jurisdictions, please attach a list of the States where self-insurance was granted and the amount of the security deposit. (All attachments must clearly identify the applicant. A separate list of attachments is preferred.) PART II The Privilege of Self-Insurance A. SECURITY The minimum is $100,000 but is usually higher based on financial strength and claims experience. Acceptable forms of security are: 1) A surety bond on the form provided by the Commission, issued by an A- or higher rated admitted carrier, with a Power of Attorney. 2) A Letter of Credit on the form provided by the Commission issued or confirmed by a bank acceptable to the Commission. There are to be no expiration dates stated on the LOC unless they are followed by the statement "or any automatically extended date." 3) U.S. notes or bonds, state and municipal bonds or notes with an assignment of interest to the Maryland Workers' Compensation Commission and related board resolution. The notes or bonds must be of a type and quality acceptable to a court for investment of trust funds, e.g. U.S. Treasury Notes or Maryland general obligation bonds. The employer will continue to receive the interest on any securities deposited with the Commission unless there is a default in claims payment. Deposited securities must be substituted as they mature. 4) Book entries with an assignment of interest to the Maryland Workers' Compensation Commission of a type and quality acceptable to a court for investment of trust funds, e.g. U.S. Treasury Notes or Maryland general obligation bonds. The employer will continue to receive the interest unless there is a default in claims payment. Book entries must be substituted as they mature. Note: Numbers 2, 3 and 4 of this section must be irrevocable and not subject to revocation by bankruptcy except that securities may be replaced. A-05 Instr. (Rev. 02/2009) 2 of 5 American LegalNet, Inc. www.FormsWorkFlow.com STATE OF MARYLAND WORKERS' COMPENSATION COMMISSION 10 E. BALTIMORE STREET BALTIMORE, MARYLAND 21202 B. EXCESS INSURANCE Employers are required to obtain specific excess insurance from an A- rated or above insurer. The Commission sets the retention level and limit per claim. Applicants are encouraged to obtain proposals from carriers before applying and to request the desired level of coverage from the Commission. The approved policy levels may not be changed without prior approval of the Commission. A certified copy of a complete specific excess insurance policy, with Maryland endorsements is required. The carrier must be admitted in Maryland and the following endorsements must be included in the policy: Cancellation Notice: "This policy may not be cancelled before its expiration unless, at least 30 days before the date of cancellation, the insurer serves on the employer, by personal service or registered mail addressed to the last known address of the employer, a notice of intention to cancel the policy; and the insurer files a copy of the notice with the Workers' Compensation Commission of Maryland at 10 East Baltimore Street, Baltimore, Maryland 21202 as required by Section 19-406 of the Maryland Insurance Code. The notice under this section shall state when the cancellation takes effect." Bankruptcy/Insolvency: "Bankruptcy or insolvency of the insured shall not relieve the insurer from the payment of compensation for injuries or death sustained by an employee during the life of this policy. Payment shall be made either directly to the claimant or the Workers' Compensation Commission of Maryland, as directed