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AN ACT

RELATING TO WORKERS' COMPENSATION; REVISING REPORTING

REQUIREMENTS FOR SELF-INSURED GROUPS; AMENDING THE GROUP

SELF-INSURANCE ACT.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 52-6-5 NMSA 1978 (being Laws 1986,

Chapter 22, Section 79, as amended) is amended to read:

"52-6-5. INITIAL APPROVAL AND CONTINUED APPROVAL TO ACT

AS A GROUP--QUALIFICATIONS.--

A. A proposed group shall file with the director

an application for a certificate of approval accompanied by a

nonrefundable filing fee in an amount established by the

director. 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 the director may reasonably require,

together with the following:

(1) proof of compliance with the provisions

of Subsection B of this section;

(2) a copy of the articles of association,

if any;

(3) a copy of agreements with the

administrator and with any service company;

(4) a copy of the bylaws of the proposed

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group;

(5) a copy of the agreement between the

group and each member securing the payment of workers'

compensation and occupational disease disablement benefits,

which shall include provision for payment of assessments as

provided for in Section 52-6-20 NMSA 1978;

(6) designation of the initial board of

trustees and administrator;

(7) the address in this state where the

books and records of the group will be maintained at all

times;

(8) a pro-forma financial statement on a form

acceptable to the director showing the financial ability of

the group to pay the workers' compensation and occupational

disease disablement obligations of its members; and

(9) proof of payment to the group by each

member of not less than twenty-five percent of that member's

first-year estimated annual net premium on a date approved by

the director. Each payment shall be considered to be part of

the first-year premium payment of each member if the proposed

group is granted a certificate of approval.

B. To obtain and to maintain its certificate of

approval, a group shall comply with the following

requirements as well as any other requirements established by

law or regulation not inconsistent with the following:

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(1) a combined net worth of all members of a

group of private employers of three million dollars

($3,000,000) or greater, as determined by the director;

provided that if a group's annual financial statement for the

prior calendar year shows that at the end of that year the

group had a surplus of at least one-third of its claim

reserves and not less than five million dollars ($5,000,000),

then for the current calendar year, the group shall not be

required to provide the director with evidence of the net

worth of all of the group's members;

(2) security in a form and amount prescribed

by the director, which shall be provided by either a surety

bond, security deposit or financial security endorsement 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 this state.

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 or by an agency or instrumentality thereof;

certificates of deposit in a federally insured bank; shares

or savings deposits in a federally insured savings and loan

association or credit union; or any bond or security issued

by a state of the United States and backed by the full faith

and credit of the state. Any such securities shall be

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deposited with the director and assigned to and made

negotiable by the director pursuant to a trust document

acceptable to the director. Interest accruing on a

negotiable security so deposited shall be collected and

transmitted to the depositor, provided the depositor is not

in default. A financial security endorsement, issued as part

of an acceptable excess insurance contract, may be used to

meet all or part of the security requirement. The bond,

security deposit or financial security endorsement shall be

for the benefit of the state solely to pay claims and

associated expenses and payable upon the failure of the group

to pay workers' compensation or occupational disease

disablement benefits it is legally obligated to pay. The

director may establish and adjust requirements of the amount

of security based on differences among groups in their size,

types of local government services provided by members of the

group, years in existence and other relevant factors;

provided that the director shall not require an amount lower

than one hundred thousand dollars ($100,000) for any group

during its first year of operation. Subsequent to the first

year of operation, the director may waive the requirements of

this paragraph;

(3) specific and aggregate excess insurance

in a form, in an amount and by an insurance company

acceptable to the director. The director may establish

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minimum requirements for the amount of specific and aggregate

excess insurance based on differences among groups in their

size, types of employment, 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 (2) of this subsection;

(4) an estimated annual standard premium of

at least two hundred fifty thousand dollars ($250,000) during

a group's first year of operation. Thereafter, the annual

standard premium shall be at least five hundred thousand

dollars ($500,000);

(5) an indemnity agreement jointly and

severally binding the group and each member of the group to

meet the workers' compensation and occupational disease

disablement obligations of each member. The indemnity

agreement shall be in a form prescribed by the director and

shall include minimum uniform substantive provisions

prescribed by the director. Subject to the director's

approval, a group may add other provisions needed because of

its particular circumstances. The requirements of this

paragraph shall only apply to private employers;

(6) a fidelity bond for the administrator in

a form and amount prescribed by the director; and

(7) a fidelity bond for the service company

in a form and amount prescribed by the director. The

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director may also require the service company providing claim

services to furnish a performance bond in a form and amount

prescribed by the director.

C. A group shall notify the director of any change

in the information required to be filed under Subsection A of

this section or in the manner of its compliance with

Subsection B of this section no later than thirty days after

that change.

D. The director shall evaluate the information

provided by the application required to be filed under

Subsection A of this section to assure that no gaps in

funding exist and that funds necessary to pay workers'

compensation and occupational disease disablement benefits

will be available on a timely basis.

E. The director shall act upon a completed

application for a certificate of approval within sixty days.

If, because of the number of applications, the director is

unable to act upon an application within that period, the

director shall have an additional sixty days to so act.

F. The director shall issue to the group a

certificate of approval upon finding that the proposed group

has met all requirements, or the director shall issue an

order refusing the certificate, setting forth reasons for

refusal, upon finding that the proposed group does not meet

all requirements.

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G. Each group shall be deemed to have appointed

the director as its attorney to receive service of legal

process issued against it in this state. The appointment

shall be irrevocable, shall bind any successor in interest

and shall remain in effect as long as there is in this state

any obligation or liability of the group for workers'

compensation or occupational disease disablement benefits."

Section 2. EFFECTIVE DATE.--The effective date of the

provisions of this act is July 1, 2007.