§ 97‑185. Deposits;surety bonds; letters of credit.
(a) Repealed by SessionLaws 2005‑400, s. 13, effective January 1, 2006.
(a1) All individual self‑insurersas defined in G.S. 97‑130(5b) shall participate in the AssociationAggregate Security System established under G.S. 97‑131 unless excludedby the Board of Directors of the North Carolina Self‑Insurance SecurityAssociation. The Board of Directors of the North Carolina Self‑InsuranceSecurity Association shall exclude all of the following from the AssociationAggregate Security System:
(1) Individual self‑insurerswhose licenses have previously been revoked by the Commissioner.
(2) Individual self‑insurerswith a debt rating as established by Standard & Poor's Rating Service or byMoody's Investor Service, below the minimum Standard & Poor's and Moody'sratings established in the written plan for the Association Aggregate SecuritySystem submitted by the Association and approved by the Commissioner under G.S.97‑133(a)(2a).
(3) Individual self‑insurersthat have defaulted on the payment of their self‑insured workers'compensation liabilities.
(4) Individual self‑insurersthat fail to submit sufficient financial information to enable the Associationto determine their total outstanding workers' compensation liabilities, ortheir creditworthiness, or both.
The Board of Directors of theNorth Carolina Self‑Insurance Security Association shall notify theCommissioner of the individual self‑insurers that are excluded fromparticipating in the Association Aggregate Security System.
(b) Repealed by SessionLaws 2003‑115, s. 3, effective January 1, 2004.
(b1) Repealed by SessionLaws 2005‑400, s. 13, effective January 1, 2006.
(b2) An individual self‑insurerthat is excluded from participation in the Association Aggregate SecuritySystem, including individual self‑insurers that are granted a license toself‑insure after the North Carolina Self‑Insurance SecurityAssociation annually implements the Association Aggregate Security System,shall deposit with the Commissioner an amount not less than one hundred percent(100%) of the individual self‑insurer's total undiscounted outstandingclaims liability per the most recent report from a qualified actuary asrequired by G.S. 97‑180(b), but not less than five hundred thousanddollars ($500,000), or such greater amount as the Commissioner prescribes basedon, but not limited to, the financial condition of the individual self‑insurerand the risk retained by the individual self‑insurer.
(b3) During any period oftime that no Association Aggregate Security System is in effect, individualself‑insurers with a debt rating of BBB or better from Standard &Poor's Rating Service, a division of McGraw Hill, Inc., or an equivalent ratingfrom another national rating agency shall deposit with the Commissioner anamount not less than fifty percent (50%) of the individual self‑insurer'stotal undiscounted outstanding claims liability per the most recent report froma qualified actuary as required by G.S. 97‑180(b), but not less than fivehundred thousand dollars ($500,000). An individual self‑insurer licensedpursuant to G.S. 97‑177 may utilize the debt rating of its guarantor forthe purpose of establishing the application of this subsection. TheCommissioner shall consider and may, in the Commissioner's discretion, increaseor reduce the deposit to a greater or lesser percentage of the individual self‑insurer'sclaims liability based on the financial strength of the individual self‑insurerand other financial information submitted by the individual self‑insurer.All other individual self‑insurers shall deposit with the Commissioner anamount not less than one hundred percent (100%) of the individual self‑insurer'stotal undiscounted outstanding claims liability per the most recent report froma qualified actuary as required by G.S. 97‑180(b), but not less than fivehundred thousand dollars ($500,000), or such greater amount as the Commissionerprescribes based on, but not limited to, the financial condition of theindividual self‑insurer and the risk retained by the individual self‑insurer.
(c) Deposits received,changes to existing deposits, or deposits exchanged after the effective date ofthis section, shall be comprised of one or more of the following:
(1) Interest‑bearingbonds of the United States of America.
(2) Interest‑bearingbonds of the State of North Carolina, or of its cities or counties.
(3) Certificates ofdeposit issued by any solvent bank domesticated in the State of North Carolinathat have a maturity of one year or greater.
(4) Surety bonds in aform acceptable to the Commissioner and issued by a corporate surety. A suretybond deposited pursuant to this subsection shall require that the suretyreimburse the Commissioner, or his successors, assigns, or transferees, for anycosts incurred in the collection of the proceeds of the surety bond, includingreasonable attorneys' fees, and any costs incurred in administering theinsolvent self‑insurer's workers' compensation claims.
(4a) Irrevocable lettersof credit in a form acceptable to the Commissioner issued by a bank acceptableto the Commissioner. An irrevocable letter of credit deposited pursuant to thissubsection shall require that the bank reimburse the Commissioner, or hissuccessors, assigns, or transferees for any costs incurred in the collection ofthe proceeds of the letter of credit, including reasonable attorneys' fees.
(4b) The reimbursement ofattorneys' fees and collections cost provided for in subdivisions (4) and (4a)of this subsection shall be no greater than fifteen percent (15%) of the penalamount of the bond and shall not come from the proceeds of the bond or theletter of credit but shall be in addition to the proceeds of the bond or theletter of credit.
(5) Any otherinvestments that are approved by the Commissioner.
(d) All bonds orsecurities that are posted as a security deposit shall be valued annually atmarket value. If the market value is less than the face value, the Commissionermay require the self‑insurer to post additional securities. In makingthis determination, the Commissioner shall consider the self‑insurer's orguarantor's financial condition, the amount by which market value is less thanface value, and the likelihood that the securities will be needed to providebenefits.
(e) Securitiesdeposited under this section shall be assigned to the Commissioner, theCommissioner's successors, assigns, or trustees, on a form prescribed by theCommissioner in a manner that renders the securities negotiable by theCommissioner. If a self‑insurer or guarantor is deemed by theCommissioner to be in a hazardous financial condition, the Commissioner maysell or collect, or both, such amounts that will yield sufficient funds to meetthe self‑insurer's obligations under the Act. In the case of a letter ofcredit, the Commissioner may draw the full amount of a letter of credit if theletter of credit is not renewed within 90 days prior to its expiration or atany time that the bank issuing the letter of credit is no longer acceptable tothe Commissioner. Interest accruing on any negotiable security deposited underthis Article shall be collected and transmitted to the self‑insurer ifthe self‑insurer or guarantor is not in a hazardous financial condition.
(f) No judgmentcreditor, other than a claimant entitled to benefits under the Act, may levyupon any deposits made under this section.
(g) Pursuant to theprovisions of this section and with the approval of the Commissioner, depositsheld by the Commissioner may be replaced with other acceptable forms of depositin amount determined by the Commissioner. Any deposit to be replaced withanother form of deposit shall not be released until the approved replacementdeposit is received by the Commissioner.
(h) Any self‑insurerthat ceases to self‑insure, whether by voluntary termination or byrevocation of license, shall continue to secure and be liable for itsobligations under the Act and shall continue to report to the Commissionerpursuant to G.S. 97‑180. Upon the request of the Commissioner, a self‑insurerthat ceases to self‑insure shall submit filings, as prescribed in G.S. 97‑180,to determine whether the deposit is sufficient to satisfy those workers'compensation obligations incurred during the period that the self‑insurerwas licensed as a self‑insurer. The Commissioner may require an increasein the deposit amount or may grant a reduction in the deposit amount to ensurethat the deposit is sufficient to cover all existing and future obligationsincurred by the self‑insurer while subject to the provisions of the Act.
(i) An endorsement toa surety bond shall be filed with the Commissioner within 90 days after theeffective date of the endorsement. (1997‑362, s. 4; 2003‑115, ss. 3, 4, 5;2005‑400, s. 13; 2009‑242, ss. 2, 3, 4.)
§ 97‑185. Deposits;surety bonds; letters of credit.
(a) Repealed by SessionLaws 2005‑400, s. 13, effective January 1, 2006.
(a1) All individual self‑insurersas defined in G.S. 97‑130(5b) shall participate in the AssociationAggregate Security System established under G.S. 97‑131 unless excludedby the Board of Directors of the North Carolina Self‑Insurance SecurityAssociation. The Board of Directors of the North Carolina Self‑InsuranceSecurity Association shall exclude all of the following from the AssociationAggregate Security System:
(1) Individual self‑insurerswhose licenses have previously been revoked by the Commissioner.
(2) Individual self‑insurerswith a debt rating as established by Standard & Poor's Rating Service or byMoody's Investor Service, below the minimum Standard & Poor's and Moody'sratings established in the written plan for the Association Aggregate SecuritySystem submitted by the Association and approved by the Commissioner under G.S.97‑133(a)(2a).
(3) Individual self‑insurersthat have defaulted on the payment of their self‑insured workers'compensation liabilities.
(4) Individual self‑insurersthat fail to submit sufficient financial information to enable the Associationto determine their total outstanding workers' compensation liabilities, ortheir creditworthiness, or both.
The Board of Directors of theNorth Carolina Self‑Insurance Security Association shall notify theCommissioner of the individual self‑insurers that are excluded fromparticipating in the Association Aggregate Security System.
(b) Repealed by SessionLaws 2003‑115, s. 3, effective January 1, 2004.
(b1) Repealed by SessionLaws 2005‑400, s. 13, effective January 1, 2006.
(b2) An individual self‑insurerthat is excluded from participation in the Association Aggregate SecuritySystem, including individual self‑insurers that are granted a license toself‑insure after the North Carolina Self‑Insurance SecurityAssociation annually implements the Association Aggregate Security System,shall deposit with the Commissioner an amount not less than one hundred percent(100%) of the individual self‑insurer's total undiscounted outstandingclaims liability per the most recent report from a qualified actuary asrequired by G.S. 97‑180(b), but not less than five hundred thousanddollars ($500,000), or such greater amount as the Commissioner prescribes basedon, but not limited to, the financial condition of the individual self‑insurerand the risk retained by the individual self‑insurer.
(b3) During any period oftime that no Association Aggregate Security System is in effect, individualself‑insurers with a debt rating of BBB or better from Standard &Poor's Rating Service, a division of McGraw Hill, Inc., or an equivalent ratingfrom another national rating agency shall deposit with the Commissioner anamount not less than fifty percent (50%) of the individual self‑insurer'stotal undiscounted outstanding claims liability per the most recent report froma qualified actuary as required by G.S. 97‑180(b), but not less than fivehundred thousand dollars ($500,000). An individual self‑insurer licensedpursuant to G.S. 97‑177 may utilize the debt rating of its guarantor forthe purpose of establishing the application of this subsection. TheCommissioner shall consider and may, in the Commissioner's discretion, increaseor reduce the deposit to a greater or lesser percentage of the individual self‑insurer'sclaims liability based on the financial strength of the individual self‑insurerand other financial information submitted by the individual self‑insurer.All other individual self‑insurers shall deposit with the Commissioner anamount not less than one hundred percent (100%) of the individual self‑insurer'stotal undiscounted outstanding claims liability per the most recent report froma qualified actuary as required by G.S. 97‑180(b), but not less than fivehundred thousand dollars ($500,000), or such greater amount as the Commissionerprescribes based on, but not limited to, the financial condition of theindividual self‑insurer and the risk retained by the individual self‑insurer.
(c) Deposits received,changes to existing deposits, or deposits exchanged after the effective date ofthis section, shall be comprised of one or more of the following:
(1) Interest‑bearingbonds of the United States of America.
(2) Interest‑bearingbonds of the State of North Carolina, or of its cities or counties.
(3) Certificates ofdeposit issued by any solvent bank domesticated in the State of North Carolinathat have a maturity of one year or greater.
(4) Surety bonds in aform acceptable to the Commissioner and issued by a corporate surety. A suretybond deposited pursuant to this subsection shall require that the suretyreimburse the Commissioner, or his successors, assigns, or transferees, for anycosts incurred in the collection of the proceeds of the surety bond, includingreasonable attorneys' fees, and any costs incurred in administering theinsolvent self‑insurer's workers' compensation claims.
(4a) Irrevocable lettersof credit in a form acceptable to the Commissioner issued by a bank acceptableto the Commissioner. An irrevocable letter of credit deposited pursuant to thissubsection shall require that the bank reimburse the Commissioner, or hissuccessors, assigns, or transferees for any costs incurred in the collection ofthe proceeds of the letter of credit, including reasonable attorneys' fees.
(4b) The reimbursement ofattorneys' fees and collections cost provided for in subdivisions (4) and (4a)of this subsection shall be no greater than fifteen percent (15%) of the penalamount of the bond and shall not come from the proceeds of the bond or theletter of credit but shall be in addition to the proceeds of the bond or theletter of credit.
(5) Any otherinvestments that are approved by the Commissioner.
(d) All bonds orsecurities that are posted as a security deposit shall be valued annually atmarket value. If the market value is less than the face value, the Commissionermay require the self‑insurer to post additional securities. In makingthis determination, the Commissioner shall consider the self‑insurer's orguarantor's financial condition, the amount by which market value is less thanface value, and the likelihood that the securities will be needed to providebenefits.
(e) Securitiesdeposited under this section shall be assigned to the Commissioner, theCommissioner's successors, assigns, or trustees, on a form prescribed by theCommissioner in a manner that renders the securities negotiable by theCommissioner. If a self‑insurer or guarantor is deemed by theCommissioner to be in a hazardous financial condition, the Commissioner maysell or collect, or both, such amounts that will yield sufficient funds to meetthe self‑insurer's obligations under the Act. In the case of a letter ofcredit, the Commissioner may draw the full amount of a letter of credit if theletter of credit is not renewed within 90 days prior to its expiration or atany time that the bank issuing the letter of credit is no longer acceptable tothe Commissioner. Interest accruing on any negotiable security deposited underthis Article shall be collected and transmitted to the self‑insurer ifthe self‑insurer or guarantor is not in a hazardous financial condition.
(f) No judgmentcreditor, other than a claimant entitled to benefits under the Act, may levyupon any deposits made under this section.
(g) Pursuant to theprovisions of this section and with the approval of the Commissioner, depositsheld by the Commissioner may be replaced with other acceptable forms of depositin amount determined by the Commissioner. Any deposit to be replaced withanother form of deposit shall not be released until the approved replacementdeposit is received by the Commissioner.
(h) Any self‑insurerthat ceases to self‑insure, whether by voluntary termination or byrevocation of license, shall continue to secure and be liable for itsobligations under the Act and shall continue to report to the Commissionerpursuant to G.S. 97‑180. Upon the request of the Commissioner, a self‑insurerthat ceases to self‑insure shall submit filings, as prescribed in G.S. 97‑180,to determine whether the deposit is sufficient to satisfy those workers'compensation obligations incurred during the period that the self‑insurerwas licensed as a self‑insurer. The Commissioner may require an increasein the deposit amount or may grant a reduction in the deposit amount to ensurethat the deposit is sufficient to cover all existing and future obligationsincurred by the self‑insurer while subject to the provisions of the Act.
(i) An endorsement toa surety bond shall be filed with the Commissioner within 90 days after theeffective date of the endorsement. (1997‑362, s. 4; 2003‑115, ss. 3, 4, 5;2005‑400, s. 13; 2009‑242, ss. 2, 3, 4.)
§ 97‑185. Deposits;surety bonds; letters of credit.
(a) Repealed by SessionLaws 2005‑400, s. 13, effective January 1, 2006.
(a1) All individual self‑insurersas defined in G.S. 97‑130(5b) shall participate in the AssociationAggregate Security System established under G.S. 97‑131 unless excludedby the Board of Directors of the North Carolina Self‑Insurance SecurityAssociation. The Board of Directors of the North Carolina Self‑InsuranceSecurity Association shall exclude all of the following from the AssociationAggregate Security System:
(1) Individual self‑insurerswhose licenses have previously been revoked by the Commissioner.
(2) Individual self‑insurerswith a debt rating as established by Standard & Poor's Rating Service or byMoody's Investor Service, below the minimum Standard & Poor's and Moody'sratings established in the written plan for the Association Aggregate SecuritySystem submitted by the Association and approved by the Commissioner under G.S.97‑133(a)(2a).
(3) Individual self‑insurersthat have defaulted on the payment of their self‑insured workers'compensation liabilities.
(4) Individual self‑insurersthat fail to submit sufficient financial information to enable the Associationto determine their total outstanding workers' compensation liabilities, ortheir creditworthiness, or both.
The Board of Directors of theNorth Carolina Self‑Insurance Security Association shall notify theCommissioner of the individual self‑insurers that are excluded fromparticipating in the Association Aggregate Security System.
(b) Repealed by SessionLaws 2003‑115, s. 3, effective January 1, 2004.
(b1) Repealed by SessionLaws 2005‑400, s. 13, effective January 1, 2006.
(b2) An individual self‑insurerthat is excluded from participation in the Association Aggregate SecuritySystem, including individual self‑insurers that are granted a license toself‑insure after the North Carolina Self‑Insurance SecurityAssociation annually implements the Association Aggregate Security System,shall deposit with the Commissioner an amount not less than one hundred percent(100%) of the individual self‑insurer's total undiscounted outstandingclaims liability per the most recent report from a qualified actuary asrequired by G.S. 97‑180(b), but not less than five hundred thousanddollars ($500,000), or such greater amount as the Commissioner prescribes basedon, but not limited to, the financial condition of the individual self‑insurerand the risk retained by the individual self‑insurer.
(b3) During any period oftime that no Association Aggregate Security System is in effect, individualself‑insurers with a debt rating of BBB or better from Standard &Poor's Rating Service, a division of McGraw Hill, Inc., or an equivalent ratingfrom another national rating agency shall deposit with the Commissioner anamount not less than fifty percent (50%) of the individual self‑insurer'stotal undiscounted outstanding claims liability per the most recent report froma qualified actuary as required by G.S. 97‑180(b), but not less than fivehundred thousand dollars ($500,000). An individual self‑insurer licensedpursuant to G.S. 97‑177 may utilize the debt rating of its guarantor forthe purpose of establishing the application of this subsection. TheCommissioner shall consider and may, in the Commissioner's discretion, increaseor reduce the deposit to a greater or lesser percentage of the individual self‑insurer'sclaims liability based on the financial strength of the individual self‑insurerand other financial information submitted by the individual self‑insurer.All other individual self‑insurers shall deposit with the Commissioner anamount not less than one hundred percent (100%) of the individual self‑insurer'stotal undiscounted outstanding claims liability per the most recent report froma qualified actuary as required by G.S. 97‑180(b), but not less than fivehundred thousand dollars ($500,000), or such greater amount as the Commissionerprescribes based on, but not limited to, the financial condition of theindividual self‑insurer and the risk retained by the individual self‑insurer.
(c) Deposits received,changes to existing deposits, or deposits exchanged after the effective date ofthis section, shall be comprised of one or more of the following:
(1) Interest‑bearingbonds of the United States of America.
(2) Interest‑bearingbonds of the State of North Carolina, or of its cities or counties.
(3) Certificates ofdeposit issued by any solvent bank domesticated in the State of North Carolinathat have a maturity of one year or greater.
(4) Surety bonds in aform acceptable to the Commissioner and issued by a corporate surety. A suretybond deposited pursuant to this subsection shall require that the suretyreimburse the Commissioner, or his successors, assigns, or transferees, for anycosts incurred in the collection of the proceeds of the surety bond, includingreasonable attorneys' fees, and any costs incurred in administering theinsolvent self‑insurer's workers' compensation claims.
(4a) Irrevocable lettersof credit in a form acceptable to the Commissioner issued by a bank acceptableto the Commissioner. An irrevocable letter of credit deposited pursuant to thissubsection shall require that the bank reimburse the Commissioner, or hissuccessors, assigns, or transferees for any costs incurred in the collection ofthe proceeds of the letter of credit, including reasonable attorneys' fees.
(4b) The reimbursement ofattorneys' fees and collections cost provided for in subdivisions (4) and (4a)of this subsection shall be no greater than fifteen percent (15%) of the penalamount of the bond and shall not come from the proceeds of the bond or theletter of credit but shall be in addition to the proceeds of the bond or theletter of credit.
(5) Any otherinvestments that are approved by the Commissioner.
(d) All bonds orsecurities that are posted as a security deposit shall be valued annually atmarket value. If the market value is less than the face value, the Commissionermay require the self‑insurer to post additional securities. In makingthis determination, the Commissioner shall consider the self‑insurer's orguarantor's financial condition, the amount by which market value is less thanface value, and the likelihood that the securities will be needed to providebenefits.
(e) Securitiesdeposited under this section shall be assigned to the Commissioner, theCommissioner's successors, assigns, or trustees, on a form prescribed by theCommissioner in a manner that renders the securities negotiable by theCommissioner. If a self‑insurer or guarantor is deemed by theCommissioner to be in a hazardous financial condition, the Commissioner maysell or collect, or both, such amounts that will yield sufficient funds to meetthe self‑insurer's obligations under the Act. In the case of a letter ofcredit, the Commissioner may draw the full amount of a letter of credit if theletter of credit is not renewed within 90 days prior to its expiration or atany time that the bank issuing the letter of credit is no longer acceptable tothe Commissioner. Interest accruing on any negotiable security deposited underthis Article shall be collected and transmitted to the self‑insurer ifthe self‑insurer or guarantor is not in a hazardous financial condition.
(f) No judgmentcreditor, other than a claimant entitled to benefits under the Act, may levyupon any deposits made under this section.
(g) Pursuant to theprovisions of this section and with the approval of the Commissioner, depositsheld by the Commissioner may be replaced with other acceptable forms of depositin amount determined by the Commissioner. Any deposit to be replaced withanother form of deposit shall not be released until the approved replacementdeposit is received by the Commissioner.
(h) Any self‑insurerthat ceases to self‑insure, whether by voluntary termination or byrevocation of license, shall continue to secure and be liable for itsobligations under the Act and shall continue to report to the Commissionerpursuant to G.S. 97‑180. Upon the request of the Commissioner, a self‑insurerthat ceases to self‑insure shall submit filings, as prescribed in G.S. 97‑180,to determine whether the deposit is sufficient to satisfy those workers'compensation obligations incurred during the period that the self‑insurerwas licensed as a self‑insurer. The Commissioner may require an increasein the deposit amount or may grant a reduction in the deposit amount to ensurethat the deposit is sufficient to cover all existing and future obligationsincurred by the self‑insurer while subject to the provisions of the Act.
(i) An endorsement toa surety bond shall be filed with the Commissioner within 90 days after theeffective date of the endorsement. (1997‑362, s. 4; 2003‑115, ss. 3, 4, 5;2005‑400, s. 13; 2009‑242, ss. 2, 3, 4.)
