Self-Insured Employer Securitization Requirements
Ohio Revised Code (ORC) 4123.35 (B) and 4123.351 (E)
Ohio Administrative Code (OAC) 4123-17-15.5,
(E) - (H) and 4123-19-03.1
August 1, 2015
Self-Insured Department/Employer Services
New Policy August 1, 2015
August 1, 2020
This policy outlines the
securitization requirements for employers that have been granted the privilege
This policy applies to Self-Insuring
Employers, Self-Insuring PEOs, and the Self-Insured Department.
A. SI: Self-Insured.
B. SI-40: Report
of Paid Compensation and Case Reserves.
C. SI employer: Self-Insuring
D. SI-PEO: Professional
Employer Organization that has been granted the privilege to self-insure
for workers’ compensation purposes.
Employer: Employer with an active State Insurance Fund policy that has been
approved to participate in a PEO agreement with a SI-PEO.
Lease Agreement: Written contract with a duration of not less than twelve (12)
months to co-employ employees between a professional employer organization and
a client employer.
Pursuant to OAC 4123-19-03
a SI employer may be required to provide additional security in a form and
amount determined by the BWC.
If it is determined that additional
security is required for a newly established self-insured policy, the security
amount will be established using the MIRA reserves for all claims, regardless
of the date of injury, associated with all predecessor state fund policies
included as part of the application for self-insurance.
Reserve information will be established
using the quarterly claim
b. The initial security amount required will be 100% of the
MIRA reserves, as of the effective date self-insured status was granted, for
all state fund policies included as part of the application for self-insurance.
PEOs approved for self-insurance will be required to provide additional
The minimum security amount required will
The security must be provided in the
form of a Letter of Credit, unless otherwise approved by the Director of the SI
The issuer of the security:
Must be a financial institution with a
physical U.S. location.
May not be an entity affiliated with
the SI employer.
Must use the specified language as outlined
by the BWC.
i. The letter
of credit language will be provided by the SI department upon request of the
employer or issuing institution.
amount of security required from a SI employer will be evaluated annually, at a
minimum, as part of the self-insured renewal process.
security requirements for a SI-PEO will be evaluated quarterly and may be
adjusted at that time based on the quarterly claim and client reports submitted
by a SI-PEO.
the Self-Insured Professional Employer Organization Client and Claims
Reporting Requirements Policy.
SI department will evaluate the claims and credit risk of an employer to
determine if additional security is required.
1. The evaluation
of claims risk will be based on a number of factors, including:
a. The current and
historical claim case reserves as self-reported by the employer on the SI-40.
b. Paid costs for current
and historical claims associated with the self-insured policy as reported on
c. The SI department
may request a loss run claims report that identifies costs for individual
claims associated with the policy.
d. Any claims that
are being indemnified by an excess insurance policy.
e. Upon request by
the SI department, the claims loss liabilities identified in an independent
actuarial study provided by an employer.
2. The evaluation
of credit risk is based on a number of factors, including:
a. An assessment of
information from the most recent Generally Accepted Accounting Principles (GAAP)
certified financial statements, including a review of the auditor’s notes to
those statements. Considerations include, but are not limited to:
b. The expected
default frequency (EDF) rating using Moody’s analytics models.
c. Bond issuer ratings
from Moody’s and S&P.
d. Any other
pertinent information that may impact financial performance.
e. Claims liability
identified by an independent actuarial study.
f. Any other
information related to open claims associated with the employer.
D. The amount of
security required is calculated using the above claim and credit analysis in
combination with the SI security matrix, which can be referenced at www.bwc.ohio.gov/downloads/blankpdf/SIEGFUpdate.pdf.
to OAC 4123-19-03 (H), a SI
employer that does not provide a SI-38 parental
guarantee from its ultimate U.S. parent shall provide an additional form of
The additional security must be provided in the form of a Letter
of Credit, unless otherwise approved by the SI department.
2. The security
amount required will be 100% of case reserves as self-reported by the employer
on the SI-40.
the determination that additional security is required, or a change in the
current security amount is appropriate, a formal written request will be made
by the SI department.
1. An employer will
have thirty (30) days from the receipt of the notice to supply the requested
2. If the requested
security is not received timely, the SI department may seek non-renewal of
3. If it is
determined that the current security amount should be reduced, a formal written
notice approving this reduction will be sent to the employer by the SI department.
4. If it is
determined that the current security amount should be released in full, the
original security along with a formal written notice approving the cancellation
of the security will be sent directly to the issuer by the SI department and a
copy of the written notice will be sent to the SI employer.
complaints or disputes related to this policy must be submitted in writing to
the SI department via mail or email as detailed in the Self-Insured
Resolution of Complaints Policy.
of Workers’ Compensation
30 W. Spring
St., 22nd Floor
SI department will issue a formal written response to any complaint. If the
complaint is not resolved as a result of the formal response issued by the SI department,
a written request that the issue be referred to the Self-Insured Review Panel
(SIRP) may be submitted by the SI employer or SI-PEO.