§ 687a. Self-insurance by associations
(a) Any association which has been in existence in this State for five or more continuous years may establish and maintain a nonprofit corporation to secure workers' compensation insurance for employees of participating member employers and for employees of the association. The Commissioner of Financial Regulation shall assist with the establishment of a nonprofit corporation organized for the purpose of providing compensation under this chapter.
(b) No association electing to provide workers' compensation benefits under this chapter shall commence business for the purpose of distributing, sharing, or pooling any workers' compensation risk until a plan for the operation of the corporation and all contracts, agreements, and any other documents underlying or implementing the plan, and all amendments to those documents, have been approved by the Commissioner of Financial Regulation.
(c) The Commissioner of Financial Regulation shall promptly adopt interim rules to assist in the formation of the nonprofit corporations and to expedite approval of any plan of operation. The Commissioner shall also adopt rules relating to the administration and operation of the nonprofit corporations in order to provide for the fiscal integrity of agreements and to provide that trade, market, and claim practices engaged in by the nonprofit corporations are equitable, fair, and consistent. In adopting these rules, the Commissioner shall recognize that the nonprofit corporations are not for profit; that they are undertaking a service to the association's participating employers to control excessive workers' compensation insurance premiums; and that they shall not be considered insurance companies or insurers under the laws of this State. The rules shall be modeled after the rules now in effect for intermunicipal insurance agreements authorized by 24 V.S.A. chapter 121, subchapter 6, and for captive insurance companies chartered under 8 V.S.A. chapter 141.
(d) A nonprofit corporation established under this section:
(1) Shall have as its purposes: reducing the risk of its members; safety inspections; distributing, sharing, and pooling risks; acquiring insurance, excess loss insurance, or reinsurance; and processing, paying, and defending claims of employees of employers who are members of the association.
(2) Shall have the same persons serve as directors who serve as directors of the association.
(3) Shall have the same name as the association with the additional words: "Workers' Compensation Self-Insurance Corporation."
(4) May enter into agreements for obtaining or effecting insurance by self-insurance, for obtaining or effecting workers' compensation insurance from any insurer authorized to transact business in this State as an admitted or surplus lines carrier, or for obtaining and effecting insurance secured in accordance with any other method provided by law, or by combination of the provisions of this section for obtaining and effecting insurance. Agreements made pursuant to this subsection shall provide for pooling of self-insurance reserves, risks, claims and losses, and administrative services and expenses associated with the agreement among participating employers.
(e) Any contributions made to a nonprofit corporation established under this section for the purpose of distributing, sharing, or pooling risks, shall be made on an actuarially sound basis, and the nonprofit corporation shall have its books, records, and financial affairs audited annually. A copy of the annual audit shall be provided to the board of directors of the association or its governing body, to each participating employer, and to the Commissioner of Financial Regulation. (Added 1993, No. 225 (Adj. Sess.), § 31; amended 1995, No. 180 (Adj. Sess.), § 38(a); 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012.)