Session Laws

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 8E of chapter 26 of the General Laws, as so appearing in the 1990 Official Edition, is hereby amended by adding the following three paragraphs:-

There shall also be within the rating bureau at least the following persons who shall perform the duties of the rating bureau relating to workers' compensation insurance: an actuary, a rate attorney, a mathematician, a researcher and an accountant. The actuary shall be a member of the Casuality Actuarial Society or shall have attained a doctoral degree in a related discipline. The mathematician shall be engaged in the program of study recommended by said Casualty Actuarial Society or shall have substantial mathematical and statistical training.

Such actuary, rate attorney, mathematician, researcher and accountant shall be appointed by the commissioner and shall be exempt from the provisions of chapter thirty and chapter thirty-one.

The commissioner is authorized to make an assessment against any corporation, unincorporated association, partnership or individual licensed as a rating organization pursuant to section fifty-two C of chapter one hundred and fifty-two to pay for the rating bureau's expenses as they relate to workers' compensation. Such assessment shall be deposited into the Rating Bureau's Workers' Compensation Trust Fund. All monies deposited into the trust fund shall be expended, without appropriation, exclusively by the rating bureau. Such assessment shall be made at a rate sufficient to produce five hundred thousand dollars in nineteen hundred and ninety-two, and may be increased annually thereafter by a rate not to exceed the most recent annual consumer price index calculated by the Bureau of Labor Statistics of the United States Department of Labor for the northeast region for all urban consumers. In addition to such assessment, the commissioner of insurance shall also collect, for the persons within the rating bureau who perform the duties relating to workers' compensation insurance, an amount equal to the cost of fringe benefits as established by the commissioner of administration pursuant to section five D of chapter twenty-nine to be credited to the General Fund. Said amount shall be expended, without appropriation, to pay for such persons' fringe benefits. If the commissioner shall fail to expend any money collected under this paragraph in any fiscal year, such unexpended amount shall be credited against the assessment to be made in the following year and the assessment in the following year shall be reduced accordingly. Funds collected under this section may be used to compensate consultants retained by the rating bureau and to defray its reasonable operating expenses and administrative overhead costs. The assessment, including the collection for fringe benefits, shall be collected by the commissioner of insurance. Any rating organization licensed pursuant to section fifty-two C of chapter one hundred and fifty-two shall pay the amount assessed within thirty days after the date of the notice of assessment from the commissioner. The rating bureau shall regularly perform market conduct examinations as often as the commissioner deems appropriate.

SECTION 2. Chapter 152 of the General Laws is hereby amended by striking out section 65C, as so appearing, and inserting in place thereof the following section:-

Section 65C. (1) All losses incurred under policies issued to employers under section sixty-five A shall be equitably distributed among all insurers authorized to transact and transacting workers' compensation insurance in the commonwealth. Such distribution of losses shall be effected through a reinsurance pool constituted by and comprised of all insurers writing workers' compensation insurance in the commonwealth. No insurer, as defined in subparagraph (7) of section one, and including any insurance company, reciprocal or interinsurance exchange which has contracted with an employer to pay the compensation provided for by this chapter, shall be authorized to write or to continue to write workers' compensation insurance in this commonwealth unless such insurer is a member of the reinsurance pool established herein.

The commissioner of insurance shall designate a rating organization, duly qualified under section fifty-two C, to administer the reinsurance pool in such manner as shall be approved by the commissioner. Such rating organization shall adopt a plan of operation, which shall be submitted for approval to the commissioner of insurance and, upon approval by the commissioner, shall be binding upon all members of the reinsurance pool. If a rating organization fails to adopt a plan of operation within a reasonable period of time of its designation by the commissioner, the commissioner may promulgate a plan of operation for the administration of the reinsurance pool. Such plan of operation shall contain rules and procedures for the allocation of losses of the reinsurance pool among its members consistent with this section, and shall otherwise be consistent with law. Amendments to such plan of operation may be made by the rating organization designated by the commissioner or may be made at the direction of the commissioner upon reasonable notice to such rating organization and after a hearing. All amendments to the plan of operation proposed by the rating organization designated to administer the reinsurance pool shall be submitted for approval to the commissioner of insurance.

(2) Notwithstanding the provisions of subsection (1), in order to reduce the number of risks in and the volume of premium in the reinsurance pool the commissioner shall establish and maintain cost containment programs in the reinsurance pool, including a program requiring service carriers to establish and maintain a comprehensive employer safety assistance program, and may take any or all of the following actions:

(a) require all insurers that write workers' compensation insurance to participate as service carriers, but allow any such carrier to contract with another insurer or third party administrator approved by the commissioner to service the claims;

(b) in conjunction with paragraph (a), require insurers to assume a percentage of losses for an individual risk for which the insurer is designated as the servicing carrier, such percentage to be as the commissioner shall reasonably determine;

(c) consider, in allocating the losses of the pool, the number of risks and the volume of premium rejected, non-renewed, cancelled, or terminated by an insurer;

(d) prohibit a service carrier, in its handling and servicing of claims, from differentiating claims originating from insureds in the pool and claims originating from insureds written voluntarily by the insurer;

(e) establish credits, discounts or other incentives to encourage insurers to voluntarily write coverage;

(f) impose an assessment on insurers to pay for the pool's cost containment and anti-fraud programs; and

(g) establish rates or rating plans which reasonably estimate the additional risk of business in the reinsurance pool.

(3) On or before January fifteen, nineteen hundred and ninety-two, the commissioner shall hold a hearing regarding the development of a plan, based on the powers authorized under this section, designed to reduce the number of risks and amount of premium in the pool. The commissioner may issue regulations designed to implement the plan. These regulations shall be effective no later than April first, nineteen hundred and ninety-two.

(4) In developing the plan required to be submitted under this section, the insurance commissioner shall attempt to reduce the number of risks, at a minimum, in the pool as percentage of all risks in the state to sixty percent by September first, nineteen hundred and ninety-two, fifty percent by February first, nineteen hundred and ninety-three; forty-five percent by September first, nineteen hundred and ninety-three; and thereafter, such reductions as the commissioner may determine are reasonable and appropriate.

SECTION 3. The commissioner of insurance is hereby authorized and directed to make an annual assessment each year in the amount of one hundred thousand dollars against the Automobile Insurers Bureau of Massachusetts, or its successor licensed under the provisions of section eight of chapter one hundred and seventy-five A of the General Laws and also to make an annual assessment each year in the amount of one hundred thousand dollars against the Workers' Compensation Rating and Inspection Bureau of Massachusetts or its successor licensed under the provisions of section fifty-two C of chapter one hundred and fifty-two of the General Laws. Said assessments shall be paid to the commissioner within thirty days after the date of notice from the commissioner of said assessment. Said assessments shall be utilized by the attorney general for the purpose of the investigation and prosecution of automobile insurance fraud matters and workers' compensation insurance fraud matters referred to the attorney general by said insurance fraud bureau established pursuant to the provisions of chapter three hundred and thirty-eight of the acts of nineteen hundred and ninety. The attorney general shall designate at least one assistant attorney general who shall devote full-time to the investigation and prosecution of automobile insurance fraud matters which are referred by said insurance fraud bureau, and shall designate at least one assistant attorney general who shall devote full-time to the investigation and prosecution of workers' compensation insurance fraud matters which are referred by said insurance fraud bureau. The attorney general may designate additional assistant attorney generals for the investigation and prosecution of insurance fraud matters as deemed necessary.