KRS 304.48-070: Scope of section -- Financial strength required.

(1) This section applies to a group applying for and holding a certificate of filing as a

liability self-insurance group.

(2) To obtain and to maintain its certificate of filing a liability self -insurance group

shall have sufficient financial strength to pay a ll public or professional liabilities

covered by the group, including known claims and expenses and incurred but not

reported claims and expenses.

(3) The commissioner, if not satisfied with the financial strength of a liability self -

insurance group, may require any or all of the following of a liability self -insurance

group:

(a) Security in the form and amount prescribed by the commissioner as follows:

1. A surety bond issued by a corporate surety authorized to transact

business in the Commonwealth of Kentucky; or

2. Any financial security endorsement issued as part of an acceptable

excess insurance contract issued by an authorized insurer may be used to

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

security endorsement shall be for th e benefit of the insured creditors

solely to pay claims and associated expenses and shall be payable upon

the failure of the group to pay professional or public liability claims it is

legally obligated to pay. The commissioner may establish and adjust the

requirements for the amount of security based on differences among

groups in their size, types or business, years in existence, or other

relevant factors.

(b) Specific and aggregate excess insurance in a form, in an amount, and issued

by an insurer acceptable to the commissioner.

(c) A fidelity bond for the administrator and a fidelity bond for the service

company in forms and amounts prescribed by the commissioner. The

commissioner may require the service company providing claim service to

furnish a perfor mance bond in a form and amount prescribed by the

commissioner.