Massachusetts General Laws
Chapter 152 - Workers' Compensation
Section 25g - Application for Certificate; Requirements; Issuance

Section 25G. (1) A proposed workers' compensation self-insurance group shall file with the commissioner of insurance its application for a certificate of approval accompanied by a nonrefundable filing fee in the amount of one hundred dollars. The application shall include the group's name, the location of its principal office, the date of organization, the name and address of each member, and such other information as said commissioner may reasonably require, together with the following:
(a) a copy of the by-laws of the proposed group, and a copy of the articles of association, if any;
(b) an individual application of each member of the group applying for coverage by the group on the inception date of the group;
(c) a current certified financial statement of each member, including at a minimum, a balance sheet, a profit and loss statement, a statement of change in fund position, and a statement showing the combined net worth of all members applying for coverage on the inception date of the fund. The combined net worth shall be of an amount that establishes the financial strength and liquidity of the businesses. The requirements of this paragraph shall not apply to a self-insurance group which is composed of more than 1,000 members and has been in existence for at least five years as of December 31, 1999 and at all times remains in compliance with the minimum net worth requirements of paragraph (a) of subsection (2);
(d) a pro forma financial statement on a form acceptable to the commissioner of insurance showing the financial ability of the group to pay the workers' compensation obligations of its members.
(e) a composite listing of the estimated standard premium and annual net premium to be developed for each member individually and in total as a group. Payroll data for each of the three preceding years shall be furnished by risk classification;
(f) a documented agreement by each member to pay to the group not less than twenty-five per cent of that member's estimated annual net premium not later than the initial day of coverage afforded by the group;
(g) a confirmation of any required reinsurance by a recognized carrier in an amount estimated acceptable to the commissioner of insurance;
(h) the designation of the initial board of trustees and administrator;
(i) an indemnity agreement jointly and severally binding the group and each member thereof to comply with the provisions of the chapter, which shall conform to an indemnity agreement prescribed by the commissioner of insurance;
(j) a breakdown of all projected administrative expenses for the group year in dollar amount and as a percentage of the estimated annual normal premium;
(k) proof provided by the trustees, satisfactory to the commissioner of insurance, that the annual gross premiums of the group shall be not less than two hundred and fifty thousand dollars.
(2) To obtain and to maintain its certificate of approval, a workers' compensation self-insurance group shall comply with the following requirements as well as any other requirements established by law or regulation:
(a) A combined net worth of all members of a group of private employers of at least one million dollars;
(b) Security in a form and amount prescribed by the commissioner which shall be provided by either a surety bond, or security deposit, or any combination thereof. If a surety bond is used to meet the security requirement, it shall be issued by a corporate surety company authorized to transact business in the commonwealth. If a security deposit is used to meet the security requirement, securities shall be limited to bonds or other evidences of indebtedness issued, assumed, or guaranteed by the United States of America, or by an agency or instrumentality thereof; certificates of deposit in a federally insured savings and loan association or credit union; or any bond or security issued by a state of the United States of America and backed by its full faith and credit.
The bond, or security deposit, shall be for the benefit of the commonwealth solely to pay claims and associated expenses and payable on the failure of the group to pay workers' compensation benefits which it is legally obligated to pay. The commissioner may establish requirements for the amount of security based on differences among groups in their size, types of employment, years in existence, and other relevant factors; provided, however, that the commissioner of insurance may not require an amount lower than one hundred thousand dollars for any group during its first year of operation;
(c) Specific and aggregate excess insurance in a form, in an amount, and by an insurer acceptable to the commissioner of insurance. The commissioner of insurance may establish minimum requirements for the amount of specific and aggregate excess insurance based on differences among groups in their size, types of employments, types of local government services provided by members of public employers groups, years in existence, and other relevant factors and may permit a group to meet this requirement by placing in a designated depository securities of the type referred to in paragraph (b) of this subsection.
The commissioner may periodically review a group's security deposit or bond and excess and aggregate insurance to determine if the minimum requirements established by the commissioner are being met.
(d) A fidelity bond for the administrator, if any, in a form and amount prescribed by the commissioner of insurance;
(e) A group shall notify the commissioner of insurance of any change in the information required to be filed under subsection (1) or in the manner of its compliance with subsection (2) no later than thirty days after such change.
(3) The commissioner of insurance shall evaluate the information provided by the application required to be filed under subsection (1) of this section to assure that no gaps in funding exist and that funds necessary to pay workers' compensation benefits shall be available on a timely basis.
(4) The commissioner of insurance shall act on a completed application for a certificate of approval within ninety days.
(5) The commissioner of insurance shall issue to the group a certificate of approval on finding that the proposed group has met all requirements, or shall issue an order refusing such certificate setting forth reasons for such refusal on finding that the proposed group does not meet all requirements.
(6) Each workers' compensation self-insurance group shall be deemed to have appointed the commissioner of insurance as its attorney to receive service of legal process issued against it in the commonwealth. The appointment shall be irrevocable, shall bind any successor in interest and shall remain in effect as long as there is in the commonwealth any obligation or liability of the group for workers' compensation benefits.
(7) The provisions of paragraphs (c) and (i) of subsection (1) and paragraphs (a) and (b) of subsection (2) shall not apply to public employer groups.

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