Maine law and regulations allow employers to form groups to self-insure for workers' compensation coverage. The law and regulations are very detailed and set forth numerous requirements which must be followed by the businesses and group to be an approved self-insurer. Group approval is granted by the Maine Bureau of Insurance and must be renewed annually. Companies are required to meet strict financial security standards adopted by the group and approved by the Maine Bureau of Insurance. In addition to the financial criteria, companies are also required to enter into a Declaration Of Trust and an Indemnity Agreement.
Self-Insured Workers' Compensation Groups are required by law to be Trusts which are governed by a Board of Trustees and By-Laws.
Each business is required to enter into a Declaration Of Trust before being able to participate in the Workers' Compensation program. The Declaration Of Trust is required by Maine regulation and the document itself is approved by the Maine Bureau of Insurance. The Declaration Of Trust sets forth the purpose of the Trust, some of the eligibility and participation criteria, the powers and duties of the Trustees and the manner in which investments of fund proceeds may occur. Each business signs the Declaration Of Trust, as does each Trustee individually.
Because the group entity is a Trust, each member business is also required to enter into an Indemnity Agreement. The Indemnity Agreement sets forth the various funding requirements by which each member is bound. For example, if the Trust Fund is found actuarially insufficient to meet the expected and/or actual claims, then the Trustees may assess each member. If the member fails to make the appropriate payment, then the member will be suspended from the Trust.
The Indemnity Agreement also contains joint and several liability clauses that require each member to be jointly and severally liable for all assessments, premiums and claims with each other member.
The Trust will be governed along with Maine law and regulations by By-Laws and Operating Rules and Regulations. The By-Laws set forth the usual items such as length of terms for Trustees, voting rights and meetings. In addition, the By-Laws grant the Trustees the flexibility in carrying out the daily activities of the Trust by allowing the Trustees to decide certain issues through Operating Rules and Regulations. For example, the Trustees may designate whether billing should be monthly, quarterly or semi-annually. These types of minor administrative issues will be handled through the Operating Rules and Regulations.