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Chapter 8. Office of the Director
Subchapter 2. Administration of Self-Insurance Plans
Article 3. Security Deposit Requirements
(a) Current and former self-insurers, other than public self-insured employers, that are required to file a Self-Insurer's Annual Report, shall cause a qualified actuary to submit on their behalf to the Office of Self-Insurance Plans (OSIP) an actuarial study and summary not later than May 1 of each calendar year with a valuation date of December 31 of the immediately prior calendar year. The summary shall be prepared and submitted via an online platform provided by OSIP with a copy of the complete actuarial study attached.
(1) In the absence of an actuarial study or summary for any private self-insurer that fully satisfies the criteria of this section received by the deadline set forth above, the Chief shall establish a security deposit amount on behalf of the self-insurer as the Chief determines appropriate based on consideration of all financial and loss information available to the Chief at the time.
(2) The actuarial study and summary shall be prepared and submitted by an actuary meeting each of the following qualifications:
(A) The actuary must be independent with no common ownership or financial interest in the entity that is the subject of the actuarial study and summary, and
(B) Within the past ten (10) calendar years the actuary must have a minimum of five (5) years of experience making California workers' compensation actuarial projections, and
(C) The actuary must have a designation of Fellow of the Casualty Actuarial Society (FCAS), or be a member of the American Academy of Actuaries (MAAA), or be a member of the Society of Actuaries who is qualified to sign a statement of actuarial opinion on loss reserves.
(3) The qualified actuary or his/her employing actuarial firm shall maintain a minimum of $1,000,000 of professional liability and errors and omissions insurance coverage. Evidence of this coverage and limits must be submitted as a part of the actuarial study.
(4) Private self-insurers shall not be required to file an actuarial study or actuarial summary in years when their current year filed Self-Insurer's Annual Report reports either: (A) 10 or fewer open claims, or (B) less than $1,000,000 of total estimated future liabilities.
(b) The actuarial study shall identify the self-insurer's losses at the undiscounted ‘expected level’, also commonly referred to as the undiscounted ‘actuarial central estimate,’ including each of the following components: incurred but not reported (IBNR) liabilities, Allocated loss adjustment expense (ALAE), Unallocated loss adjusted expense (ULAE) and case reserves. The actuarial central estimate shall be reported at both the gross and net amounts of excess insurance values.
(c) The actuarial study shall identify the estimated future liabilities reported in the Private Self-Insurer Annual Report filed by the self-insurer's Third Party Administrator(s).
(d) The actuarial study and summary shall clearly identify any excess coverage by carrier, policy year and self-insured retentions, by year.
(e) The actuary shall declare in the study and the summary that the study and report may be used by the State of California and the Self-Insurers' Security Fund to set appropriate collateral and deposit amounts, and for any other regulatory purpose under these regulations.
(f) The actuarial study and summary shall specify that it is prepared for use by the Department of Industrial Relations, Office of Self-Insurance Plans and the Self-Insurers' Security Fund. The Office of Self-Insurance Plans and the Self-Insurers' Security Fund may share the study and report with consultants retained by the Department of Industrial Relations or the Self-Insurers' Security Fund for official purposes in accomplishing the purposes of these regulations.
(g) The actuarial study must include all of and only the self-insured employer's California self-insured liabilities for the master certificate holder and all affiliate or subsidiary certificate holders related to the master certificate.
(h) Failure by a self-insurer to submit a timely actuarial study and summary shall constitute good cause grounds for revocation of the self-insurer's self-insurance Certificate.
(i) The Chief may accept or reject any actuarial study or summary that does not fully satisfy the criteria of this section and require a second study and summary by another qualified actuary that does fully satisfy the criteria of this section be completed and submitted to OSIP at the self-insurer's expense.
1. New section filed 12-31-2012 as an emergency; operative 1-1-2013 pursuant to Government Code section 11346.1(d) (Register 2013, No. 1). A Certificate of Compliance must be transmitted to OAL by 7-1-2013 or emergency language will be repealed by operation of law on the following day.
2. Certificate of Compliance as to 1-1-2013 order, including nonsubstantive amendments, transmitted to OAL 7-1-2013 and filed 8-13-2013 (Register 2013, No. 33).
3. Amendment of subsections (b) and (i) filed 12-14-2016; operative 1-1-2017 pursuant to Government Code section 11343.4(b)(3) (Register 2016, No. 51).