R 408.43a Employer individual self-insurer; surety bond or letter of credit; consideration of employer in business less than 5 years; excess liability insurance; required guaranties; claims service companies; self-administered claims.

Rule 13a. (1) A nonpublic self-insurer may be required to furnish a surety bond or letter of credit. The agency will establish the amount of security at the time of initial application. The agency shall review the adequacy of security periodically. The agency shall prescribe the format and language of the bond or letter of credit. The agency shall accept surety bonds only from a surety writer authorized to transact security bond business in Michigan. A surety bond must provide for 60 days' notice of cancellation to the agency. Letters of credit are administered under R 408.43q. (2) An employer that is in business less than 5 years may not be considered for self- insured authority unless its worker’s disability compensation liability will be guaranteed by a parent corporation or combinable affiliated entity that has been in business not less than 5 years and that would qualify for self-insured authority in Michigan. (3) The agency shall require specific excess liability insurance, with policy limit and retention acceptable to the agency, for every self-insured employer, unless the agency, at its discretion, waives the requirement. The agency may require aggregate excess liability insurance as a condition of approval for a self-insured employer. Specific and aggregate excess liability insurance policies are accepted under R 408.43k. (4) Parent corporations shall guaranty all liability incurred by their self- insured subsidiaries under the act, unless the agency, at its discretion, waives the requirement. The agency shall prescribe the form and substance of the guaranties. The agency may require employers, combinable under a single self-insured authority, to execute workers' disability compensation payment guaranties as a condition for approval of the self- insured authority. The agency shall prescribe the form and substance of the guaranties. (5) A self-insurer approved under section 418.611(1)(a) of the act, MCL 418.611, shall contract with a claims service company approved by the agency under R 408.43m. The agency may approve a self-insurer to self-administer claims if the employer has all necessary systems, processes, and reporting capabilities and can demonstrate it has employed competent claims personnel with Michigan workers' compensation adjusting experience.