760 IAC 1-75-2 Feasibility study

Sec. 2. (a) A risk pool shall obtain a feasibility study from a qualified actuary, or other expert approved by the commissioner, before submitting an application under section 3 of this rule. The feasibility study shall estimate the contributions necessary to cover losses and expenses for the risk pool. It shall include the expert's opinion that a risk pool is an appropriate vehicle for the founding participants of the risk pool. The following factors shall be considered and addressed in the feasibility study: (1) Risks for which the risk pool will provide coverage. (2) The amounts of initial capital and expenses the founding participants will commit to the risk pool from their own resources until the risk pool becomes self-supporting. (3) The types of services the risk pool will require and their possible source. Services may include the following: (A) Actuarial. (B) Financial. (C) Legal. (D) Management. (4) Goals and future changes anticipated by the organization. (b) The results of the feasibility study shall address the following two (2) distinct parts: (1) A risk management analysis to determine the lines of coverage and types of losses that could best be financed through the risk pool. (2) An operational analysis to project the costs and benefits under different scenarios that the founding participants could expect from the most reasonable use of a risk pool. At a minimum, the operational analysis shall include the following cost/benefit relationships of alternatives as determined from the following: (A) Price quotations from reinsurers or excess insurers. (B) Costs to be charged by management companies. (C) Costs and benefits for other services on all activities relevant to the operation.