Security Requirements

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SECURITY

All active self-insured employers must have security on file with the Georgia Self-Insurers Guaranty Trust Fund in the form of a surety bond or letter of credit.

Canceled members are required to maintain security on file until they have been canceled for at least two (2) years, and have reported three (3) consecutive years of zero (0) open claims and $0 payments/reserves on the annual Member Information Update Form.

Please see below for the required letter of credit and surety bond language. NO DEVIATIONS FROM THE APPROVED LANGUAGE WILL BE ACCEPTED.

Please send any draft copies of letters of credit/amendments/surety bonds/riders to gafund@deflaw.com so we can review the documents for accuracy and approval, before the original documents are issued and mailed to our office.  

LETTER OF CREDIT

  • Deviations from the approved language are not permitted.
  • Expiration dates are not permitted because there is an “evergreen” clause.
  • In order to be acceptable, a letter of credit must be issued by a Georgia depository. If the letter of credit is not issued by a Georgia depository, it must be confirmed by a Georgia depository.
  • It must be stated that the Georgia Self-Insurers Guaranty Trust Fund can present drafts and documents at a location in Georgia.
  • The language “and self-insured subsidiaries and affiliates, if any” must follow the applicant name everywhere it appears throughout the letter of credit.
  • The “Issuance Date” should be the date the bank issued the letter of credit.
  • The amount of the letter of credit should be the amount required by the State Board of Workers’ Compensation, which was stated on an Order of the State Board.
  • Revisions to a letter of credit presently on file can be done by using an amendment.
DOWNLOAD LETTER OF CREDIT LANGUAGE

Surety Bond

  • Deviations from this form are not permitted.
  • The language “and self-insured subsidiaries and affiliates, if any” must follow the principal name everywhere it appears throughout the surety bond.
  • The “Effective Date” on page 1 should be the date the bond was effective on the books of the company issuing it.
  • In the third paragraph of page 1, the date requested as the date, “the State Board of Workers’ Compensation entered an order”, is the date the State Board issued its initial Order granting an employer the privilege to be self-insured.
  • In Item 2 of page 2, the date requested should be the date the bond was effective on the books of the company issuing it and should be the same as the “Effective Date” on page number 1.
  • The amount of the bond should be the amount required by the State Board of Workers’ Compensation which was stated on an Order of the State Board.
  • Revisions to a bond presently on file can be done using a rider or endorsement.
  • The surety bond company issuing the bond must have an A.M. Best rating of “A” or better in order to be acceptable.
DOWNLOAD SURETY BOND LANGUAGE

Formula for Calculation of Security Requirements

  • The amount of security required by a self-insured employer shall be the greater of the reserves for all of the employer’s outstanding claims, or twice the annual average of the employer’s cumulative medical and indemnity benefits paid during the most recent three (3) year calendar period. In no event shall posted security for an actively self-insured employer be less than $250,000. In no event shall posted security for an employer who has canceled self-insurance be less than $10,000, until the former self-insured employer has satisfied the requirements of, requested, and been granted an elimination of security.
  • In the event the employer’s financial condition or claims audit result, in the sound business judgment of the Board of Trustees of the Georgia Self-Insurers Guaranty Trust Fund and the State Board of Workers’ Compensation, justifies a higher security than specified above, then more security may be required to secure the employer’s self-insured workers’ compensation obligations in this State. Such higher security requirement may only be appealed based on abuse of discretion by the State Board of Workers’ Compensation and the Board of Trustees of the Georgia Self-Insurers Guaranty Trust Fund. However, one (1) year, after posting security in compliance with this rule, an employer may request review of its security requirement based on changed circumstances. The request for security review by an employer may not be made more than once every two (2) calendar years.
  • In determining the amount of security for a self-insured employer, either the Georgia Self-Insurers Guaranty Trust Fund or the State Board of Workers’ Compensation may request the employer to submit to an audit of its workers’ compensation claims, both active and closed, and/or its financial condition.
  • The foregoing provisions shall apply to all self-insured employers, both active and canceled, for so long as there are any open self-insured workers’ compensation claims or the statute of limitations for filing said claims has not run.
  • Security shall be increased or decreased whenever the annual calculation described above results in a discrepancy of twenty percent (20%) or more of the security required. The State Board of Workers’ Compensation and the Board of Trustees of the Georgia Self-Insurers Guaranty Trust Fund reserve the right to also review security on a case-by-case basis when justified by a deterioration of the employer’s financial condition or claims status. Please note: security decreases are not automatically granted. In order to be reviewed for a security decrease, the member must submit a request for a security decrease.

Request for Security Reduction

Every member’s security requirement is reviewed by the Board of Trustees every year, and the security requirement is calculated using the data submitted on the annual Member Information Update Form.

If a security increase is required, the State Board of Workers’ Compensation will issue an Order requiring the security increase; however, security decreases must be requested.  Please submit the required security reduction request documents to gafund@deflaw.com.

Once we have received and reviewed your request for a security reduction, your request will be placed on the Board of Trustees Meeting agenda. The Trustees will make a recommendation regarding your company’s security requirement, which will be forwarded to the State Board of Workers’ Compensation.  If the SBWC agrees with the Trustees’ recommendation, they will issue an Order establishing the new security requirement.

To request a security reduction, we need: 

  • A formal letter from the member requesting a security reduction
  • A current loss run of all open claims (claimant’s name, date of injury, description of injury, last 4 digits of claimant’s SSN, medical paid to date, indemnity paid to date, outstanding medical reserves, outstanding indemnity reserves)
  • A loss run of all claims that have closed in the last two (2) years
  • A TPA Certification signed via DocuSign (please provide the name(s) and email address(es) of your TPA(s) and we will send a request to sign the TPA Certification, confirming the number of open claims and outstanding reserves)
  • Reconcilement of claims with the State Board of Workers’ Compensation (the SBWC’s list of claims must match your loss run as closely as possible)

Request for Security ELIMINATION

To be considered for an elimination of security, a member must meet the following criteria:

  1. Canceled for at least two (2) full years
  2. All self-insured claims have been closed by the State Board of Workers’ Compensation for a period of two (2) years following the cancellation date
  3. No payments made during the last twelve (12) months and confirmation that you have not received any unpaid medical invoice(s) over this same period
  4. Confirmation of the amount of medical paid over the last three (3) years
  5. No indemnity has been paid in the last three (3) years
  6. Confirmation that four (4) years has lapsed since the last indemnity payment related to GA Code Section 34-9-261 or 34-9-262 was made
  7. Some of these requirements may be waived if your final self-insured claimant passed away, or the claim was settled with no possibility of reopening

If these requirements have been met, a member may request an elimination of security. Please submit the required security elimination request documents to gafund@deflaw.com.

 

To request a security elimination, we need: 

  • A formal letter from the member requesting a security elimination
  • A current loss run of all open claims (should be blank/yield 0 results)
  • A loss run of all claims that have closed in the last two (2) years (claimant’s name, date of injury, description of injury, last 4 digits of claimant’s SSN, medical paid to date, indemnity paid to date, outstanding medical reserves, outstanding indemnity reserves)
  • A TPA Certification signed via DocuSign (please provide the name(s) and email address(es) of your TPA(s) and we will send a request to sign the TPA Certification, confirming the number of open claims and outstanding reserves)
  • A Member Certification signed via DocuSign (please provide the names and email addresses of your Corporate Officer/Owner/Partner and Corporate Secretary, and we will send a request to sign the Member Certification to the signers)
  • Reconcilement of claims with the State Board of Workers’ Compensation (the SBWC’s list of claims must show 0 open)