B. The company shall annually file with the superintendent an actuarial analysis of its reserves and its proposed rate level. The company shall establish its reserves, including provisions for incurred but not reported reserves, at not less than the confidence level set by the superintendent.

C. Any surpluses from any fund year must be retained by the company and credited toward its surplus account. No surplus may be returned to policyholders or credited to other fund years until the superintendent has certified that the company has achieved the surplus level required of an assessable domestic mutual insurance company authorized to write casualty insurance.

D. Not later than 10 years from January 1, 1993, the company, through premiums, retained dividends, sale of bonds, assessments or any other legally authorized means, shall accumulate surplus and obtain certification from the superintendent that the company has obtained the surplus otherwise required under this Title. If the superintendent finds, after hearing, that inadequate surplus exists and the 10-year transition period has expired, the superintendent shall declare the company impaired and take appropriate action to rehabilitate or liquidate the company. If the superintendent finds that surplus is not being accumulated at an adequate rate consistent with its premium volume during the 10-year period, the superintendent shall so inform the board.

E. If the superintendent finds at the expiration of 10 years of company operations, or earlier, that the company has accumulated or otherwise obtained surplus as required pursuant to this Title for casualty insurance companies operating on the cash plan, the requirements contained in paragraphs A to C terminate. The company shall at that point be subject to the standards of section 410 and other sections of this Title applicable to a mutual casualty insurer writing workers' compensation insurance.

Sec. 4. 24-A MRSA §3712-A, as enacted by PL 1997, c. 661, §11, is repealed.

Sec. 5. 24-A MRSA §3714, first ¶, as enacted by PL 1991, c. 885, Pt. C, §8, is amended to read:

The following provisions apply to the financial operation of the company and the divisions.

Sec. 6. 24-A MRSA §3714, sub-§1, as amended by PL 1997, c. 661, §13, is repealed.

Sec. 7. 24-A MRSA §3714, sub-§3, as enacted by PL 1991, c. 885, Pt. C, §8, is repealed.

Sec. 8. 24-A MRSA §3714, sub-§6, as corrected by RR 1993, c. 1, §66, is repealed.

Sec. 9. 24-A MRSA §3714, sub-§7 is enacted to read:

7.__High-risk program.__The company shall maintain a high-risk program subject to the following provisions.

A.__An employer must be placed in the high-risk program if the employer has at least 2 lost-time claims, each greater than $10,000, and a threshold loss ratio greater than 1.0 over the last 3 years for which data is available.

B.__The board, with the approval of the superintendent, may modify the eligibility standards for the high-risk program if those standards limit those in the program to employers who have measurably adverse loss experience, have a relatively high claim frequency record or have demonstrated an attitude or practice of noncompliance with reasonable safety requirements or claims management standards.

C.__Eligibility requirements must be applied annually at the policy renewal date or, if the necessary claim history is not available at that time, 30 days after notice to the insured.

D.__Deductibles in the high-risk program are subject to this paragraph.

(1)__A deductible applies to all coverage for policyholders in the high-risk program that meet the following qualifications:

(a)__A net annual premium of $20,000 or more, subject to adjustment pursuant to this paragraph, in the State;

(b)__A premium not subject to retrospective rating; and

(c)__The policyholder's threshold loss ratio is 1.0 or greater.

The deductible is $1,000 a claim but applies only to wage loss benefits paid on injuries occurring during the year of coverage.__The sum of all deductibles in one year of coverage may not exceed the lesser of 15% of net annual payment for coverage or $25,000.__Each loss to which a deductible applies must be paid in full by the company.__After the year of coverage has expired, the policyholder shall reimburse the company the amount of the deductibles.__This reimbursement is considered as payment for coverage for purposes of cancellation or nonrenewal.

The board shall adjust annually the $20,000 payment-of- coverage level established in this subparagraph to reflect any change in rates for the high-risk program and any change in wage levels in the preceding calendar year.__Changes in wage levels are determined by reference to changes in the state average weekly wage, as computed by the Department of Labor.__Any adjustment is rounded off to the nearest $1,000 increment.

(2)__The board may modify, with the approval of the superintendent, the mandatory deductible elements.__Any modification or elimination of this rating feature must consider the incentive impact on an employer, the reasonableness of the retained cost relative to the claim history, safety record or claims management practices of affected employers and the ability of all employers to absorb these costs.

E.__The board may file with the superintendent retrospective rating plans that, after hearing, may be imposed on an employer with a demonstrated record of repeated serious violations of workplace health and safety rules and regulations such as those adopted under Title 26, chapter 6 or 29 United States Code, Chapter 15, whichever is applicable.

F.__The board shall develop and file with the superintendent and, if not disapproved by the superintendent, make available to policyholders on a voluntary basis retrospective rating plans.

G.__Not more than 30 days after assignment to the high-risk program, a policyholder may appeal the assignment in writing to the bureau.

SUMMARY

This bill updates the charter of the Maine Employers' Mutual Insurance Company, or MEMIC. The bill eliminates MEMIC industry or geographic divisions and their advisory boards because of the substantially diminished role such divisions and boards play in the operation of MEMIC. It also eliminates certain funding and accounting language rendered obsolete since the Superintendent of Insurance certified the company as having adequate surplus. It preserves the high-risk division as a separate program subject to standards that previously applied to the high-risk division.