72-306A. DEDUCTIBLE CONTRACT. (1) A surety issuing a worker’s compensation insurance contract may offer deductibles optional to the policyholder for benefits payable thereunder so long as the director of the department of insurance approves the contract.

(2) The director of the department of insurance shall approve a contract containing such a deductible if, but only if, he finds the following standards have been met:

(a) Claimants’ rights are properly protected and claimants’ benefits are paid without regard to any such deductible;

(b) Premium reductions reflect the type and level of the deductible, consistent with accepted actuarial standards;

(c) Premium reductions for deductibles are determined before application of any experience modification, premium surcharge or premium discount;

(d) Recognition is given to policyholder characteristics, including size, financial capabilities, nature of activities and number of employees;

(e) The policyholder is liable to the surety for the deductible amount in regard to benefits paid for compensable claims;

(f) The surety pays all of the deductible amount, applicable to a compensable claim, to the person or provider entitled to benefits and then seeks reimbursement from the policyholder for the applicable deductible amount;

(g) Failure to reimburse deductible amounts by the policyholder to the surety is treated under the policy in the same manner as nonpayment of premiums; and

(h) Losses subject to the deductible shall be reported and recorded as losses for purposes of ratemaking and application of the experience rating plan on the same basis as losses under policies providing first dollar coverage; and

(i) The contract otherwise complies with the statutes of this state.

(3) The premium tax required to be paid pursuant to section 72-523, Idaho Code, shall be calculated based on premiums which would have been charged but for the deductible. For all other taxes and assessments, including residual market assessments, based on premium, the amount of premium shall be determined after application of the deductible.

History:

[72-306A, added 1993, ch. 223, sec. 1, p. 759.]