Self-Insurance
What Is Self-Insurance?
Self-Insurance is the right of an employer to pay workers’ compensation benefits directly to an employee without needing to have a workers’ compensation policy. Utah law allows employers to self-insure if they meet certain specific criteria.
Required Prerequisites
- The employer generally must have been in business for at least five years. A subsidiary of a self-insured employer need not necessarily be in business for five years if the parent self-insured has been in business for five years.
- The employer’s net worth must be at least $10,000,000 and demonstrate its ability to pay workers’ compensation claims. The Labor Commission will evaluate financial strength ratings such as those provided by Dun and Bradstreet (D&B) in determining an employer’s ability to pay. An employer must fall within the top two D&B ratings (5A or 4A) to qualify.
- The self-insured must acquire a surety bond or make a cash deposit with the state treasurer to be held as a security in case the employer becomes unable to pay its workers’ compensation claims. The employer’s worker’s compensation claim history will be reviewed annually to determine the risk the employer poses as a self-insured and to calculate the amount of security required.
- The self-insured must carry excess workers’ compensation coverage to cover claims in excess of a determined annual cap.
How To Apply
To apply for self-insurance status, an employer must submit the following:
- A completed self-insurance application and $1200 nonrefundable application fee.
- A financial statement that has been certified in the last year.
- Profit and loss history.
- Organizational structure and management background.
- A current loss-run report.
- Proposed excess insurance coverage.
- Guarantee by parent company if applicant is a subsidiary of another self-insured.
- A Self-Insurance Aggregate Surety Bond or other security acceptable to the Division.
- A Bankruptcy and Insolvency Endorsement.
After considering the application and all supporting information, the Division will approve or deny the self-insurance application. An applicant whose request is granted will receive a Certificate of Self-Insurance, which can be renewed annually. Denied applicants have the right to appeal the decision to the Labor Commission’s Adjudication Division.
Self-Insurance Renewal
Self-insured status must be reviewed and renewed annually. A renewal application must be submitted at least 60 days prior to the expiration of the current certificate along with a $650 nonrefundable application fee and a recent certified audit report.
