OhioBWC - Basics: (Policy library) - File

Self-Insured Employer Securitization Requirements


Policy Name:


Policy #:


Code/Rule Reference

Ohio Revised Code (ORC) 4123.35(B) and 4123.351(E); Ohio Administrative Code (OAC) 4123-17-15.5, 4123-19-03, and 4123-19-03.1

Effective Date:



Winnie Warren


Self-Insured Department/Employer Services


All previous versions of this policy


New Policy August 1, 2015

Review Date:




I.      Policy Purpose


The Bureau of Workers’ Compensation (BWC) requires security for any self-insuring employer that presents a default risk based on the securitization matrix.


II.    Applicability


This policy applies to self-insuring employers, self-insured professional employer organizations, and the Self-Insured Department.


III.   Definitions

A.    Actuarial Review:  An assessment performed by a professional actuary that uses mathematical and statistical methods to assess risk and determine the probable financial implications of future events.

B.    Letter of Credit:  A document obtained by an employer from a bank for a predetermined dollar amount that serves as a guarantee for required payments. For purposes of this policy, an LOC is security posted by an employer to obtain or maintain its self-insuring employer status.  BWC is the beneficiary on the LOC, and the amount of the LOC is determined by BWC.

C.   Securitization Matrix:  The chart BWC uses to determine security requirements for an employer to obtain or maintain the privilege of self-insurance.  The security requirements identify the potential risk that the employer may present to the Self-Insuring employers’ Guaranty Fund (SIEGF) in the event of default.

D.   SI-40:  Required annual report of paid compensation and case reserves.

E.    Self-Insuring (SI) Employer:  An employer that BWC has granted the privilege of paying compensation and benefits directly.

F.    Self-Insured Professional Employer Organization (SI-PEO):  A professional employer organization that BWC has granted the privilege to pay workers compensation and benefits directly.

IV.  Policy

A.    Security Requirements:

1.    BWC will Evaluate the amount of security required by an SI employer annually as part of the self-insured renewal process and at any other time BWC determines is necessary.

2.    BWC may require an SI employer to provide additional security based on a financial analysis which may include an independent actuarial review.

3.    If BWC requires an SI employer to provide additional security, the minimum-security amount required will be $150,000.00.

4.    The LOC’s security amount must be in U.S. dollars.  No security in foreign currency is permitted.

5.    All security must be provided in the form of an LOC.  The SI Department will not accept a surety bond.

6.    The issuer of the LOC;

a.    must be a financial institution with a physical location in the United States of America;

b.    may not be an entity affiliated with the SI employer; and

c.     must use the specified language in the LOC as provided by BWC.

7.    SI PEOs are required to provide security:

a.    The security requirements for an SI PEO are evaluated quarterly and may be adjusted at the time based on the SI PEO’s quarterly claims and client reports.

b.    BWC determines the SI PEO security amount required based on independent actuarial reviews, which are required, at minimum, every two years.

c.     See the Self-Insured Professional Employer Organization Client and Claims Reporting Requirements Policy for additional requirements regarding SI PEOs.


B.    If another or parent corporation or entity owns fifty percent or more of the stock of an SI employer, or employer applicant for self-insurance, BWC requires the employer to furnish a contract of guaranty executed by the ultimate domestic parent corporation or entity.  SI employers that do not provide this parental guaranty, which is through a properly submitted Contract of Guaranty SI-38, shall provide additional security.

1.    The additional security must be provided in the form of an LOC as provided in Section IV.A.3 through Section IV.A.6 above.

2.    The security amount required will be a minimum of 200% of the case reserves as self-reported by the employer on the SI-40.


V.    Resolution of Complaints


A.    Any 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 Employer Dispute/Protest Policy.


Ohio Bureau of Workers’ Compensation

Self-Insured Department

30 W. Sprint St., 22nd Floor

Columbus, Ohio 43215-2256

Email: siinq@bwc.state.oh.us


B.    The SI employer may file a written appeal of the SI Department’s decision to the Self-Insured Review Panel (SIRP).