WC/Self-Insurance Association Amendments.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 1
SENATE BILL 306

Short Title: WC/Self-Insurance Association Amendments. (Public)
Sponsors: Senator Johnson (Primary Sponsor).
Referred to: Rules and Operations of the Senate
March 18, 2025
*S306-v-1*
A BILL TO BE ENTITLED 1
AN ACT AMENDING LAWS CONCERNING THE NORT H CAROLINA 2
SELF-INSURANCE ASSOCIATION. 3
The General Assembly of North Carolina enacts: 4
SECTION 1. G.S. 97-130 reads as rewritten: 5
"§ 97-130. Definitions. 6
As used The following definitions apply in this Article: 7
(1) "Association" means the Association. – The North Carolina Self -Insurance 8
Security Association established by G.S. 97-131. 9
(1a) "Association Aggregate Security System" means the Association Aggregate 10
Security System. – The security system established by the Association under 11
G.S. 97-133 whereby individual self -insurers collectively secure their 12
aggregate self-insured workers' compensation liabilities incurred while a 13
member through the North Carolina Self-Insurance Security Association. 14
(2) "Board" means the Board. – The Board of Directors of the Association 15
established by G.S. 97-132. 16
(2a) Collateral. – Cash, certificates of deposits, surety bonds, or irrevocable letters 17
of credit provided or pledged to the Association under G.S. 97-133(a)(2a)g. 18
(3) "Commissioner" means the Commissioner. – The North Carolina 19
Commissioner of Insurance. 20
(4) "Covered claim" means an Covered claim . – An unpaid claim against an 21
insolvent individual self-insurer or group self-insurer that which relates to an 22
injury that occurs while the individual self -insurer or group self -insurer is a 23
member of the Association and that is compensable under this Chapter. 24
Notwithstanding the foregoing, no workers' compensation claim filed against 25
the Association more than five years after the applicable claims bar date 26
established by a court of competent jurisdiction in the insolvency proceeding 27
of a former member self -insurer shall be considered a covered claim against 28
the Association. 29
(5) "Fund" means the Fund. – The North Carolina Self-Insurance Security Fund 30
established by G.S. 97-133. 31
(5a) "Group" or "Group self -insurer" means a Group or group self-insurer. – A 32
group self-insurer licensed by th e Commissioner under Part 1, Article 47 of 33
Chapter 58 of the General Statutes. 34
(5b) "Individual self -insurer" means an Individual self -insurer. – An individual 35
employer licensed by the Commissioner under Article 5 of this Chapter. 36
General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 306-First Edition
(6) "Member self -insurer" or "member" means an Member self -insurer or 1
member. – An individual self-insurer or group self-insurer that is required to 2
be a member of the Association under this Article or Part 1, Article 47 of 3
Chapter 58 of the General Statutes. 4
(7) "Plan" means the Plan. – The Plan of Operation authorized by G.S. 97-134. 5
(8) Repealed by Session Laws 2005-400, s. 1.2, effective January 1, 2006. 6
(9) "Servicing facility" means those Servicing facility. – Those persons delegated 7
by the Board to settle or compromise claims and to expend Fund assets to pay 8
claims." 9
SECTION 2. G.S. 97-133(a)(2a) reads as rewritten: 10
"(2a) Establish and operate the Association Aggregate Security System as defined 11
in G.S. 97-130 and G.S. 97-165 as follows: 12
a. The Association shall annually operate and provide an Association 13
Aggregate Security System through a combination of cash on deposit 14
in the Fund, securities, surety bonds, irrevocable letters of credit, 15
insurance, reinsurance, or other financial instruments or guarantees 16
owned or entered into by the Association. The Association shall assess 17
the individual self -insurers that participate in the Association 18
Aggregate Security System pursuant to subdivision (3a) of this 19
subsection. 20
b. through d. Repealed by Session Laws 2011 -196, s. 10, effe ctive July 21
1, 2011. 22
e. If the Association determines it is not feasible or practical to operate 23
the Association Aggregate Security System in any given year, it may 24
terminate or suspend the Association Aggregate Security System and 25
shall notify the Commissioner at least 90 days prior to the termination 26
or suspension of the Association Aggregate Security System for that 27
particular year. During any period that the Associate Aggregate 28
Security System is terminated or suspended, every self -insurer shall 29
deposit with the Commissioner, or continue to deposit, the amount 30
required by G.S. 97-185(b3) in the manner prescribed by 31
G.S. 97-185(c). 32
f. Group self-insurers shall not participate in the Association Aggregate 33
Security System. 34
g. As a precondition to continued participation in the Association 35
Aggregate Security System, the Association may require participating 36
self-insurers as provided in G.S. 97-185(a1) to provide collateral as 37
defined in G.S. 97-165(3a) and G.S. 97-130(2a) with the Association 38
based upon the financial condition of the participating self-insurer." 39
SECTION 3. Article 4 of Chapter 97 of the General Statutes is amended by adding 40
a new section to read: 41
"§ 97-144. Statute of repose. 42
Notwithstanding any other provision of this Article, a workers' compensation claim must be 43
filed against the Association within five years after the claims bar date established by a court of 44
competent jurisdiction in the insolvency proceeding of a former member self-insurer. Any claim 45
not filed within the five-year period shall be forever barred as a claim against the Association." 46
SECTION 4. G.S. 97-165 reads as rewritten: 47
"§ 97-165. Definitions. 48
As used The following definitions apply in this Article: 49
(1) "Act" means the Act. – The Workers' Compensation Act established in Article 50
1 of this Chapter. 51
General Assembly Of North Carolina Session 2025
Senate Bill 306-First Edition Page 3
(1a) "Affiliate of" or "person affiliated with" a specific person means a Affiliate of 1
or person affiliated with a specific person. – A person that indirectly through 2
one or more intermediaries or directly controls , is controlled by, or is under 3
common control with the person specified. 4
(1b) Association. – The North Carolina Self -Insurance Security Association 5
established by G.S. 97-131. 6
(1c) "Association Aggregate Security System" means the Association Aggregate 7
Security System. – The security system established pursuant to G.S. 97-133 8
whereby individual self -insurers collectively secure their aggregate 9
self-insured workers' compensation liabilities incurred while a member under 10
the Act through the North Carolina Self-Insurance Security Association. 11
(2) "Certified audit" means an Certified audit. – An audit on which a certified 12
public accountant or a foreign registered public accounting firm expresses his 13
or her professional opinion that the accompanying statements fairly present 14
the financial position of the self -insurer or the guarantor, in conformity with 15
accounting principles generally accepted in the United States or prepared in 16
accordance with International Financial Reporting Standards. 17
(3) "Certified public accountant" or "CPA" means a Certified Public Accountant 18
or CPA. – A CPA who is in good standing with the American Institute of 19
Certified Public Accountants and in all states in which the CPA is licensed to 20
practice. A CPA shall be recognized as independent as long as the CPA 21
conforms to the standards of the profession, as contained in the Code of 22
Professional Ethics of the American Institute of Certified Public Accountants 23
and Rules and Regulations and Code of Ethics and Rules of Professional 24
Conduct of the North Carolina State Board of Certified Public Accountant 25
Examiners, or similar code. The Commissioner may hold a hearing to 26
determine whether a CPA is independent and, considering the evidence 27
presented, may rule that the CPA is not independen t for purposes of 28
expressing an opinion on financial statements prepared in accordance with 29
United States Generally Accepted Accounting Principles or International 30
Financial Reporting Standards. The Commission may require the self-insurer 31
or the guarantor to replace the CPA with another whose relationship with the 32
self-insurer or the guarantor is independent within the meaning of this 33
definition. 34
(3a) Collateral. – Cash, certificates of deposits, surety bonds, or irrevocable letters 35
of credit provided or pledged to the Association under G.S. 97-133(a)(2a)g. 36
(4) "Commissioner" means the Commissioner. – The Commissioner of Insurance. 37
(4a) "Control", "controlling", "controlled by", and "under common control with" 38
mean the Control, controlling, controlled by, and under common control with. 39
– The direct or indirect possession of the power to direct or cause the direction 40
of the management and policies of a person through ownership of or through 41
proxies for voting of greater than fifty percent (50%) of the voting securities, 42
or in the case of a not -for-profit entity, the power to direct or cause the 43
direction of the management and policies of the entity. 44
(5) "Corporate surety" means an Corporate surety. – An insurance company 45
authorized by the Commissioner to write surety business in this State. 46
(5a) "Financial statement" means a Financial statement. – A financial statement as 47
defined by accounting principles generally accepted in the United States or a 48
financial statement prepared in accordance with International F inancial 49
Reporting Standards. 50
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(6) "Foreign registered public accounting firm" means a Foreign registered public 1
accounting firm. – A public accounting firm that is organized and operates 2
under the laws of a non -United States jurisdiction, government, or po litical 3
subdivision and is registered and in good standing with the Public Company 4
Accounting Oversight Board and authorized by the Board to prepare or issue 5
any audit report with respect to any issuer. 6
(6a) "Guarantor" means a Guarantor. – A person within the same holding company 7
system who controls the applicant, whose financial statement is used by the 8
applicant to become a self-insurer under the Act, and who has guaranteed the 9
payment of the self-insurer's liability under the Act. 10
(7) "Hazardous financial condition" means that, Hazardous financial condition. – 11
That, based on its present or reasonably anticipated financial condition, a 12
self-insurer or guarantor is insolvent or, although not yet financially impaired 13
or insolvent, is unlikely to be able to meet its obligations with respect to 14
known claims and reasonably anticipated claims or to pay other obligations in 15
the normal course of business. 16
(7a) "Holding company system" means an Holding company. – An entity 17
comprising two or more affiliated persons. 18
(7b) Member self -insurer or member. – An individual self -insurer or group 19
self-insurer that is required to be a member of the Association under 20
G.S. 97-130(6), Article 4 of Chapter 97 of the General Statutes , or Part 1 of 21
Article 47 of Chapter 58 of the General Statutes. 22
(8) "Management" means those Management. – Those persons who are 23
authorized to direct or control the operations of a self-insurer. 24
(8a) "Person" means an Person. – An individual, corporation, partnership, limited 25
liability company, association, joint stock company, trust, unincorporated 26
organization, or any similar entity or any combination of the foregoing acting 27
in concert. 28
(9) "Qualified actuary" means a Qualified actuary. – A member in good standing 29
of the Casualty Actuarial Society or a member in good standing of the 30
American Academy of Actuaries, who has been approved as qualified for 31
signing casualty loss reserve opinions by the Casualty Practice Council of the 32
American Academy of Actuaries, and is in compliance with G.S. 58-2-171. 33
(10) "Self-insurer" means an Self-insurer. – An individual self-insurer as defined 34
by G.S. 97-130(5b). 35
(11) "Subsidiary of" a specific person means an Subsidiary of a specific person. – 36
An affiliate controlled by such person indirectly through one or more 37
intermediaries or an affiliate directly controlled by such person." 38
SECTION 5. G.S. 97-185(a1) reads as rewritten: 39
"(a1) All individual self -insurers as defined in G.S. 97-130(5b) shall participate in the 40
Association Aggregate Security System est ablished under G.S. 97-131 unless excluded by the 41
Board of Directors of the North Carolina Self -Insurance Security Association. The Board of 42
Directors of the North Carolina Self -Insurance Security Association shall exclude all of the 43
following from the Association Aggregate Security System: 44
(1) Individual self-insurers whose licenses have previously been revoked by the 45
Commissioner. 46
(2) Individual self-insurers with a debt rating as established by Standard & Poor's 47
Rating Service or by Moody's Investor Service, below the minimum Standard 48
& Poor's or Moody's ratings if a minimum debt rating has been established by 49
the Board of Directors of the North Carolina Self -Insurance Security 50
Association for the Association Aggregate Security System. 51
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(3) Individual self -insurers that have defaulted on the payment of their 1
self-insured workers' compensation liabilities.liabilities incurred whil e a 2
member. 3
(4) Individual self-insurers that fail to submit sufficient financial information to 4
enable the Association to determi ne their total outstanding workers' 5
compensation liabilities, or their creditworthiness, or both.both or fail to 6
provide collateral to the Association in accordance with G.S. 97-133(a)(2a)g. 7
The Board of Directors of the North Carolina Self-Insurance Security Association shall notify 8
the Commissioner of the individual self -insurers that are excluded from participating in the 9
Association Aggregate Security System." 10
SECTION 6. This act is effective when it becomes law. 11