Sec. 14.09.14.07. Excess Insurance

A contract or policy of aggregate or specific excess insurance may not be recognized in considering the ability of an applicant to fulfill its financial obligations under the Workers' Compensation Law, unless the contract or policy complies with all of the following:

A. Is issued by a casualty insurance company authorized to transact this business in this State and is rated A- or above by AM Best or equivalent.

B. Is not cancelable or nonrenewable unless written notice by registered or certified mail is given to the other party to the policy and to the Commission not less than 30 days before termination by the party desiring to cancel or not renew the policy.

C. Any contract or policy containing any type of commutation clause shall provide that any commutation effected thereunder does not relieve the underwriter of further liability in respect to claims and expenses unknown at the time of the commutation or in regard to any claim apparently closed at the time of initial commutation which is subsequently reopened by or through a competent authority. If the underwriter proposes to settle their liability for future payments payable as compensation for accidents occurring during the term of the policy by the payment of a lump sum to the employer, to be fixed as provided in the commutation clause of the policy, then not less than 30 days prior notice of the commutation shall be given by the underwriters or their agent by registered or certified mail. If any commutation is effected, then the Commission shall have the right to direct that the sum be placed in trust for the benefit of the injured employee entitled to the future payments of compensation.

D. If a governmental group self-insured employer becomes insolvent or is unable to make compensation payments, the excess carrier shall make, directly to claimants or their authorized representatives, such payments as would have been made by the excess carrier to the employer after it has been determined that the retention level has been reached on the excess contract.

E. All of the following shall be applied toward the reaching of the retention level in the aggregate excess contract:

(1) Payments made by the employer;

(2) Payments due and owing to claimants of the employer;

(3) Payments made on behalf of the employer by any surety bond under a bond required by the Commission.

F. Copies of the complete policies of excess insurance shall be filed with the Commission, together with a certification that these policies fully comply with the regulations of the Workers' Compensation Law.