Section 40. Review of applications

A. Completed applications will be reviewed and a decision made within 90 days.

B. Applicants will be notified that their application has been received, whether it is complete, what materials will be needed, and when a decision can be expected.

C. Applicants may be required to provide additional information in support of their applications. Such additional information may include, but is not limited to, the following:

1. Updated information on financial operations, including review of the applicant's financial records by commission staff or their agents.

2. Additional information on Virginia operations (precise manufacturing procedures, exposure to industrial chemicals, potential occupational disease exposures, loss control efforts).

3. Detailed information on accidents or diseases, including review of the applicant's accident and safety records by commission staff or their agents.

D. Applicants will be reviewed for their financial solvency, efficiency, profitability, stability, and future prospects. The review will be based on the materials submitted by the applicant and on third-party analyses and ratings of the applicant's financial operations (including ratings of its credit). Critical financial issues, indicators, and ratios include, but are not limited to, those listed below. Analysis will be in terms of the applicant's current situation, any trends over the past three years, and comparison with other employers in the same or similar industries.

1. Net worth (tangible and intangible).

2. Operating results and working capital.

3. Nature and proportion of assets and liabilities.

4. Level and nature of debt, and overall relation of debt to equity.

5. Independent credit ratings.

6. Profitability in relation to sales, assets, and net worth.

E. Applicants will also be reviewed in terms of their existing claims experience and their possible future exposure. To the extent possible, the analysis will be based on comparisons with other employers in the same or similar industries. Issues for review include, but are not limited to, the following:

1. Total number of accidents over the past three years compared to national and state rates.

2. Number of lost-time accidents over the past three years compared to national and state rates.

3. Distribution of accidents by type and severity, including amputations, fatalities, and total incapacity.

4. Claims costs over the past three years compared to national and state rates.

5. Particular hazards to the employee in terms of both continuous and catastrophic exposures.

6. Any other indications of increase or unpredictability in accidents, lost-time accidents, and aggregate or per-capita claims costs.

F. Applicants will also be reviewed in terms of their proposed management of workers' compensation claims. Elements that will be considered include, but are not limited to, the following:

1. Demonstration of clear corporate responsibility for managing workers' compensation claims, procedures, policies, and reserves.

2. Reasonableness of proposals for maintaining excess coverage (proposed carrier, retention and limits for specific coverage, retention and limits for aggregate coverage).

3. Feasibility of proposed plan for managing claims (including specification of a third-party administrator or description of in-house claims management operations).

4. Existence of loss control programs, demonstrable effectiveness of such programs, and feasibility of any proposed improvements to such programs.

Historical Notes

Derived from VR405-20-01 § 4, eff. January 13, 1993.

Statutory Authority

§§ 65.2-201 and 65.2-801 of the Code of Virginia.