(a) School districts may provide workers' compensation coverage either through private carriers, municipal self-funding groups, or one (1) or more self-funding groups.

(b) Self-funding groups established for this purpose shall meet the following requirements:

(1) Any such group established to provide such coverage only to school districts shall offer coverage to any school district in the state that applies for such coverage;

(2)

(A) Any group established to provide workers' compensation coverage to school districts shall offer such coverage at rates established by the National Council of Compensation Insurance and approved by the State Insurance Department.

(B) Premiums for school districts participating in any such group shall be revised annually based on the loss experience of the particular school district or group of school districts; and

(3) (A) (i) (a) Any self-funding group of participating school districts shall be subject to the regulations of the Workers' Compensation Commission applicable to self-insured groups or providers.

(b) However, school districts shall not be required to enter into an indemnity agreement binding them jointly and severally.

(ii) Each board governing a self-funded group shall be permitted to declare dividends or give credits against renewal premiums based on annual loss experience.

(iii) All self-funded groups shall obtain excess reinsurance from an admitted or approved insurance company doing business in Arkansas.

(B) However, in lieu of the reinsurance requirements in subdivision (b)(3)(A)(iii) of this section, any self-funded group under this section with one million five hundred thousand dollars ($1,500,000) or more in annually collected premiums may provide excess reserves of twenty percent (20%) of annual premiums by any one (1) of the following ways:

(i) Cash or certificates of deposit in Arkansas banks; or

(ii) Letters of credit from an Arkansas bank.