Deposits for Workers' Compensation Liabilities in Maryland

STATE OF MARYLAND MARYLAND INSURANCE ADMINISTRATION 525 ST. PAUL PLACE, BALTIMORE, MARYLAND 21202-2272 WRITER’S DIRECT DIAL: 410-468-2119 Facsimile Number: 410-468-2101 e-mail : lschott@mdinsurance.state.md.us BULLETIN 04-6 To: Presidents, Insurers Domiciled in California and Massachusetts that Write Workers' Compensation Business in Maryland Re: Deposits for Workers' Compensation Liabilities in Maryland Date: April 7, 2004 Section 6-303 of the Insurance Article of the Annotated Code of Maryland provides the following: When by or pursuant to the laws of any other state or foreign country any taxes, licenses and other fees other than fees similar to the assessment fee established under Title 2, Subtitle 5 of this article, in the aggregate, and any fines, penalties, deposit requirements or other material obligations, prohibitions or restrictions are or would be imposed upon Maryland insurers, or upon the insurance producers or representatives of such insurers, which are in excess of such taxes, licenses and other fees, in the aggregate, or which are in excess of the fines, penalties, deposit requirements or other obligations, prohibitions, or restrictions directly imposed upon similar insurers, or upon the insurance producers or representatives of such insurers, of such other state or country under the statutes of this State, so long as such laws of such other state or country continue in force or are so applied, the same taxes, licenses and other fees, in the aggregate, or fines, penalties or deposit requirements or other material obligations, prohibitions, or restrictions of whatever kind shall be imposed by the Commissioner upon the insurers, or upon the insurance producers or representatives of such insurers, of such other state or country doing business or seeking to do business in Maryland. The insurance statutes of California and Massachusetts require that insurers writing workers' compensation business in their states, including foreign insurers, to deposit funds with those states to secure their workers' compensation obligations in those states. While similar deposit requirements are not imposed on insurers under Maryland’s insurance laws, pursuant to Section 6-303, the Administration must impose the same deposit requirements on insurers domiciled in California and Massachusetts that are authorized to write workers’ compensation business in Maryland. ROBERT L. EHRLICH, JR. GOVERNOR MICHAEL S. STEELE LIEUTENANT GOVERNOR ALFRED W. REDMER, JR. COMMISSIONER JAMES V. MCMAHAN, III DEPUTY COMMISSIONER LESTER C. SCHOTT ASSOCIATE COMMISSIONER EXAMINATION & AUDITING The Administration has developed a Maryland Retaliatory Deposit Schedule for use by insurers domiciled in California and Massachusetts and authorized to write worker's compensation business in Maryland. The purpose of this Schedule is to determine the amount of the deposit required to be provided to the Administration pursuant to Section 6-303. These insurers are required to perform the following: 1. File a completed Maryland Retaliatory Deposit Schedule with the Administration annually on or before April 1 of each year. 2. On or before May 15 of each year, ensure that the amount of cash and the current market value amount of the securities deposited with the Administration is at least equal to the amount determined on the Maryland Retaliatory Deposit Schedule. For 2004 only, insurers will be required to file a completed Maryland Retaliatory Deposit Schedule with the Administration annually on or before June 1, 2004. In addition, insurers will be required to ensure that the amount of cash and the current market value amount of the securities deposited with the Administration is at least equal to the amount determined on the Maryland Retaliatory Deposit Schedule on or before July 15, 2004. Section 5-701 of the Insurance Article provides that deposits made to satisfy the requirement of Section 6-303 of the Insurance Article shall be in any combination of cash or government securities described in Section 5-510(b) or Section 5-607(b)(1)(i), (ii) or (iii) of the Insurance article. Permitted government securities include: (1) bonds or other evidences of indebtedness of the United States or an agency of the United States if the obligation is guaranteed as to principal and interest by the United States; (2) bonds or other evidences of indebtedness that are the direct obligations of the State or of a county, district, or municipal corporation of the State; or (3) bonds or other evidences of indebtedness that are direct obligations of another state. Insurers subject to this Bulletin must deposit the cash and securities with a custodian approved by the Maryland State Treasurer’s Office. Custodial agreement forms and instructions may be obtained from the State Treasurer’s Office, Room 109, Goldstein Building, 80 Calvert Street, Annapolis, Maryland 21401, telephone (410) 260-7164 A copy of the Maryland Retaliatory Deposit Schedule is attached to this Bulletin. In addition, the Schedule will be posted in Excel format on the Administration’s website, www.mdinsurance.state.md.us. If you have any questions regarding this matter, please contact Neil Miller, Chief Financial Analyst, at (410) 468-2122. Signature on file with original document Lester C. Schott Associate Commissioner For the Year Ended December 31, 2003 NAIC NUMBER NAME OF INSURER ENTER 1 IF MA COMPANY NET Direct Direct WORKERS' (To Agree (To Agree COMPENSATION with MD TOTAL x 70% with MD TOTAL RESERVES State Page) Assumed (COL 1+2-3) State Page) Assumed (COL 5+6-7) (COLS. 4 + 8) (1) (2) (4) (5) (6) (8) (9) - $ 0 - 0 - $ - 0 2001 2002 2003 Total (6) Unpaid compensation losses and loss expense, first period (Part VI, Col. 22, first period) (7) Unpaid compensation losses and loss expense, second period (Part II, Col. 5) (8) Total Deposit Required (Minimum Deposit $100,000) In the schedule below, list all of the ceding insurers and the amounts assumed on Maryland workers' compensation unearned premium reserve (Massachusetts companies only) and unpaid losses (California companies include loss adjustment expenses) from each. No segregation by policy year is required. STATE NAIC OF NUMBER DOMICILE XXX STATE NAIC OF NUMBER DOMICILE XXX XXX State of Date County of Name of Officer (Print or Type) Title Under the penalty of perjury, the above designated officer declares that the foregoing statement is true and correct statement for the period specified, based upon information and belief. - $ - - - - - $ - - $ PREMIUM RESERVES (MA Companies only) WORKERS' COMPENSATION UNEARNED and unpaid losses (California companies include loss adjustment expenses) from each. No segregation by policy year is required. List all reinsurers not authorized NAME OF REINSURER REINSURANCE RECOVERABLE ON UNPAID LOSSES (Total to Agree with Part 1, Col 7 or Part VI, Col 21) (Total to Agree with Part 1, Col 3) Multiply Subtotal by 112.5% Total Bond or Deposit Required (Round up to the nearest $5,000) (Minimum Deposit $50,000 TOTAL - $ (5) CARRY OUT FOR EACH 100,000.00 - - $ PART IV SCHEDULE OF REINSURANCE CEDED (Massachusetts and California Companies) - $ - $ PART I MASSACHUSETTS DEPOSIT SCHEDULE (7) - PART II CALIFORNIA DEPOSIT SCHEDULE (from Part VI) To Transact Business TOTAL - - - - - $ - $ - $ IN COL. 3 OR 4 YEAR AMOUNT STATED RESERVES WORKERS' COMPENSATION LOSS In Maryland To Reinsurers Licensed To Transact Business In Maryland PREMIUM RESERVES Reinsurance Ceded (2) (3) Subtotal Reinsurance Ceded To Reinsurers Licensed Credit Taken on - $ - $ 0 0 - $ - $ - - 0 PREMIUMS WERE UNPAID COMPENSATION 65% OF EARNED DEDUCT LOSS PAYMENT (4) (1) YEAR IN WHICH REMAINDER (COL. 1 EARNED AND LOSSES LOSSES AND LOSS PREMIUM STATED AND EXPENSES STATED LESS COL. 2) IF WERE INCURRED EXPENSES (PART VI, COL. 22) WHICHEVER IS GREATER IN PART VI, COLUMN 5 IN PART VI COLUMN 15 NEGATIVE ENTER "0" Grand Total Section (A) Section (B) Total - - TOTAL - - Signature (Name of Insurer) PART V CERTIFICATION (Massachusetts and California Companies) - $ - $ - $ - $ - MARYLAND RETALIATORY DEPOSIT SCHEDULE (3) for Unpaid Workers' Compensation Losses (Maryland Business). (for the determination of the deposit or bond required under Section 6-303 of the Maryland Insurance Code) (Nearest Dollar) Credit Taken on TOTAL WORKERS' COMPENSATION UNEARNED PART III SCHEDULE OF REINSURANCE ASSUMED (Massachusetts and California Companies) NAME OF REINSURER - In the schedule below list all of the reinsurers and the amounts recoverable on Maryland workers' compensation unearned premiums (Massachusetts companies only) - $ REINSURANCE PAYABLE ON UNPAID LOSSES (Total to Agree with Part 1, Col 6 or Part VI, Cols 17 + 19) WORKERS' COMPENSATION UNEARNED PREMIUM RESERVES (MA Companies only) - - - - PRINCIPAL OFFICE - $ - $ - $ - - - to assume compensation insurance in Maryland in Section B. The data entered in this section cannot be taken as Workers' Compensation credit for depos (Total to Agree with Part 1, Col 2) - $ Page 1 of 3 For the Year Ended December 31, 2003 0 NAIC NUMBER NAME OF INSURER OF PRINCIPAL OFFICE 0.00 0.00 $ 0.00 DURING 2003 PRIOR TO 2001 PRIOR TO 2001 2001 2002 2003 UNPAID COMPENSATION Direct Assumed Direct Assumed (16) (17) (18) (19) PRIOR TO 2001 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2001 0.00 0.00 0.00 0.00 2002 0.00 0.00 0.00 0.00 2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 NET LOSSES PAID CALENDAR YEAR 2003 IN CURRENT PERCENTAGE TOTAL 2003 PRIOR TO 2003 TOTAL TO ACCIDENT REPORTING YEAR DISTRIBUTION PERCENTAGE CALENDAR DATE FOR YEAR (COL 7 PLUS COL. 8 OF COLUMN (1) DISTRIBUTION YEAR EXPENSES COL. 13 LESS COL. 9) COL. (25)+(26) x COLUMN (27) (COL 28 PLUS COL. 29) (23) (24) (27) (28) (30) PRIOR TO 2001 0.00 0 0.00% - $ - $ 2001 0.00 0 0.00% 0.00 0.00 2002 0.00 0 0.00% 0.00 0.00 2003 0.00 0 0.00% 0.00 0.00 Total - $ 0% 0% - $ - $ NOTE: For companies which have been issuing polices for one year or less, disregard columns (23) through (27) and assign all unallocated claim expenses paid to the latest accident year. NOTE: Column 25 total should equal 50%. Column 26 total should equal 50%. Column 27 total should equal 100% - $ 0.00% UNALLOCATED CLAIM EXPENSES PAID PERCENTAGES FOR 0.00% ASSOCIATED WITH YEAR LOSS - $ OCCURRED 0 0% 0.00% (25) (26) 0% LOSS EXPENSE ASSOCIATED WITH COMPENSATION LOSSES 0.00 0.00 0.00 COMPENSATION LOSS EXPENSE PAYMENTS 0.00 0.00 0.00 0.00 0.00 0.00 Total second period 0.00 2001 2002 2003 0.00 xxx Total first period LOSSES WERE INCURRED 0.00 (6) 0.00 (8) (7) - $ - $ CURR. REPORTING YEAR (COL. 6, PLUS COLS. 7 AND 8, LESS COL. 9) LOSS PAYMENTS PRIOR TO CURRENT REPORTING YEAR MD STATE PAGE, ANN. STAT.) COMPENSATION INSURANCE REINSURERS LICENSED LOSSES PAID DURING WERE ISSUED AND TO TRANSACT COMPENSATION POLICIES CURRENT REPORTING YEAR ON REINSURANCE ASSUMED DIRECT LOSSES PAID CURRENT REPORTING YEAR NET COMPENSATION 0.00 0.00 0.00 - $ $ xxx xxx Total (10) Compensation Loss Payments (Net as to Reinsurance) REINSURANCE RECOVERED YEAR IN WHICH ON LOSSES PAID FROM CUMULATIVE TO 0.00 2001 2002 2003 (3) 0.00 0.00 IN MARYLAND 3, LESS COL. 4) (4) (5) - $ xxx xxx CURRENT REPORTING YEAR MD STATE PAGE, ANN. STAT.) PREMIUMS ON REINSURANCE ASSUMED (1) 0.00 0.00 (2) xxx xxx (Nearest Dollar) PART VI CALIFORNIA COMPANIES ONLY NET EARNED COMPENSATION PREMIUMS PRIOR TO AMOUNT OF EARNED COMPENSATION REINSURANCE CEDED COMPENSATION YEARS IN WHICH TO REINSURANCE LICENSED MARYLAND RETALIATORY DEPOSIT SCHEDULE for Unpaid Workers' Compensation Losses (Maryland Business). (for the determination of the deposit or bond required under Section 6-303 of the Maryland Insurance Code) 0.00% 0.00% 0.00% 0.00% 0.00% EARNED COMPENSATION INSURANCE PLUS COLS. 2 AND CURRENT REPORTING YEAR PREMIUMS WERE TO TRANSACT Workers' Compensation Premiums Earned (Maryland Business) EARNED PREMIUMS ON NET EARNED DIRECT PREMIUMS EARNED PREMIUMS (AS 0.00 0.00 - $ 0.00 0.00 $ xxx ADJUSTED) (COL.1 IN MARYLAND (9) - $ - $ (22) LESS COL. 21) (21) COMPENSATION INSURANCE IN MARYLAND COMPENSATION POLICIES LOSSES AND LOSS EXPENSES TOTAL ESTIMATED FROM REINSURERS RESERVE FOR (NET AS TO REINSURANCE RECOVERED FROM REINSURERS AUTHORIZED Grand Total RESERVE FOR COMPENSATION LOSSES AND LOSS EXPENSES REINSURANCE - $ YEAR IN WHICH COMPENSATION 0.00 0.00 - $ TOTAL EXPENSE PAYMENTS (COL. 11 PLUS COL. 14) (15) COMPENSATION LOSS AND LOSS COMPENSATION POLICIES LOSS PAYMENTS LOSSES AND LOSS Total first period xxx WERE ISSUED AND PLUS COL. 13) LOSSES WERE INCURRED UNALLOCATED (COL. 10) TOTAL (COL. 12 0.00 (FROM COL. 30) (13) (14) 0.00 (11) $ xxx 0.00 0.00 RECOVERABLE ON UNPAID TO TRANSACT COMPENSATION INSURANCE IN MARYLAND) (12) - $ WITHOUT DEDUCTION FOR REINSURANCE RECOVERABLE 0.00 0.00 0.00 ALLOCATED 0.00 TOTAL ESTIMATED RESERVE FOR COMPENSATION TOTAL PLUS COL. 18 PLUS COL 19) 0.00 (COL. 16 PLUS COL. 17 0 0 0 Compensation Reserve for Losses and Loss Expenses 0.00 EXPENSES ( AS LICENSED TO TRANSACT 0.00 PAID (ONE HALF OF COLUMN (23) Grand Total Total second period 0.00 $ xxx Total first period Total second period Grand Total WERE INCURRED 0.00 $ xxx 0 - $ 0.00 $ xxx 0.00 WERE ISSUED AND LOSSES $ xxx 0.00 0.00 0.00 0.00 - $ (20) ADJUSTED) (COL. 20 YEAR IN WHICH 0.00 - $ CALENDAR DISTRIBUTION OF UNALLOCATED Distribution of Unallocated Compensation Claim Expenses (Maryland Business) Net as to reinsurance ceded to reinsurers authorized to transact compensation insurance in Maryland CLAIM EXPENSES PAID YEAR LOSSES WERE - $ 0.00 xxx - $ (29) 0.00 0.00 0 0 0.00 YEAR 0.00 0.00 0.00 0.00 - $ - $ xxx $ xxx xxx - $ 0.00 xxx xxx - $ 0.00 $ xxx 0.00 0.00 0.00 - $ 0.00 0.00 0.00 - $ 0.00 Page 2 of 3 INSTRUCTIONS: 1. Report Maryland business only 2. Due Date for this schedule is on or before April 1 of each year. 3. Massachusetts Companies complete Parts I, III, IV and V only. 4. California companies complete Parts II thorough VI. 5. Enter data in fields that are highlighted. All other fields will automatically calculate. 6. Return one copy of this form to the Maryland Insurance Administration, Chief Financial Analyst Examination and Auditing, 525 St. Paul Place, Baltimore, MD 21202-2272 Page 3 of 3