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DWD 80.60 Exemption from duty to insure (self-insurance).
(1) Definitions. In this section:
(a) "Applicant" means a business entity applying for self-insurance.
(b) "Divided-insurance" means consent to the issuance of 2 or more
policies, as provided in s. 102.31 (1), Stats.
(c) "Employer" means a business entity or its parent guaranteeing
(d) "Excess insurance" means catastrophic insurance for employers
granted self-insurance, and is not full-insurance, self-insurance,
partial-insurance or divided-insurance.
(e) "Full-insurance" means the insurance of all liability by one
policy, as required in s. 102.31 (1) (a), Stats.
(f) "Partial-insurance" means self-insurance of a part of the
liability and consent to the issuance of one or more policies on the
remainder of the liability, as provided in ss. 102.28 (2) (b) and
102.31 (1), Stats.
(g) "Self-insurance" means exemption from the duty to insure, as
provided in s. 102.28 (2) (b), Stats.
(2) Excess insurance. Excess insurance may be carried without
further order of the department or may be required by order of the
department as set forth in sub. (4) (d) 3. and 7.
(3) Requirements for the state and its political subdivisions.
(a) The state and its political subdivisions may self-insure without
further order of the department, if they are not partially-insured or
fully-insured, or to the extent they are not partially-insured by
written order under s. 102.31 (1), Stats., under one or more
policies, and if they agree to report faithfully all compensable
injuries and agree to comply with ch. 102, Stats., and the rules of
the department. However, any such employer desiring partial-insurance
or divided-insurance must submit an application to the department and
be given special consent as described in s. DWD 80.61.
1. Any political subdivision or taxing authority of the state
electing to self-insure shall notify the department in writing of the
election before undertaking self-insurance, every 3 years after the
initial notice, and 30 days before withdrawing from the self-
2. The notice of election to self-insure shall be accompanied by a
resolution, adopted by the governing body and signed by the elected
or appointed chief executive of the applying political subdivision or
taxing authority, stating its intent and agreement by the governing
body to self-insure its worker's compensation liability and an
agreement to faithfully report all compensable injuries and to comply
with ch. 102, Stats., and the rules of the department in accordance
with s. 102.28 (2) (b) and (c), Stats.
(c) Self-insurance granted under par. (a) is subject to revocation
under s. 102.28 (2) (c), Stats. Once the privilege of self-insurance
is revoked, further self-insurance may be authorized only under the
procedures set forth in sub. (4).
(4) Requirements for other employers.
(a) Employers other than those specified in sub. (3), but including
those specified in sub. (3) (c), desiring self-insurance shall submit
an application on a form available from the department. A non-
refundable fee, determined by the department as described in par.
(ag), per employer, shall accompany the initial application. If the
application is approved, the department shall permit self-insurance
by written order. Every 3 years, a self-insured employer shall submit
an application to renew self-insurance at least 60 days before the
expiration date specified in the department's order. Each quarter, or
more often if requested by the department, a self-insured employer
shall submit the most current financial statements to the department.
Each year, a self-insured employer shall report work-injury claims
payments to the department and other information related to worker's
compensation liability requested by the department. A self-insured
employer shall immediately report to the department in writing any
change in organizational structure that differs from the information
provided in the annual report submitted to the department, including
mergers, acquisitions, company name changes, consolidation, sale, or
divestiture of divisions or subsidiaries. After a change in
organizational structure, the department may revoke or modify the
exemption from the duty to insure by providing reasonable written
notice to the self-insured employer. If these changes result in the
creation of a new parent or subsidiary, the department may waive or
modify the requirement in par. (b) 1. to submit 5 years of audited
financial statements. A fee of $200, per employer, and the assessment
surcharge described in par. (am) may be billed by the department at
the same time as the annual assessment under s. 102.75 (1), Stats.
Self-insurance shall expire on the day specified by the department in
its order. Unless the context indicates otherwise, all information
submitted to the department to comply with this section shall be
submitted on the latest version of a department approved form.
Note: For information regarding forms contact the worker's
compensation division, bureau of insurance programs, 201 East
Washington Avenue, P.O. Box 7901, Madison, Wisconsin 53707.
(ag) In addition to any fee-for-service costs under par. (ax), the
department shall charge each initial applicant for self-insurance a
flat fee which the department estimates is the average cost for
department employees to review the application for self-insurance,
including employee salary and fringe benefits, supplies services and
administrative costs, and information technology charges. The
department shall review and, if necessary, modify the fee at least
every 2 years.
(am) In addition to any fee-for-service costs under par. (ax), each
year the department shall assess each self-insured employer except
those specified in sub. (3), but including those specified in sub.
(3) (c), a $200 fee and a proportionate share of the department's
remaining costs to administer the self-insurance program after
deducting the total amount estimated to be collected from the $200
fees and the fees charged under par. (ag) for initial applications.
The department shall determine the assessment amount under this
paragraph in the same manner as costs and expenses are apportioned in
s. 102.75 (1), Stats.
(ax) To assist the department in evaluating an initial application
or a renewal application for self-insurance, the department may
contract for financial, loss control or other fee-for-service
expertise or it may direct the applicant to provide the necessary
information. The department shall charge the applicant for self-
insurance the full cost of any fee-for-service expenses which the
department incurs in evaluating the application for self-insurance.
If these charges are related to an application for renewal of self-
insurance, the department may bill the employer at the same time as
the annual assessment under s. 102.75 (1), Stats.
(b) The minimum requirements necessary for initial consideration for
self-insurance are set forth in this paragraph. References in this
paragraph to "board of directors" and "stockholders of the
corporation" apply only to corporations but an equivalent requirement
as determined by the department shall be applied to sole
proprietorships, partnerships and other forms of business ownership.
1. The applicant, when submitting an initial request for self-
insurance, shall submit audited financial statements (which includes
the opinion of a certified public accountant) for a minimum of the
latest five. Except as authorized by the department, employers self-
insured under this subsection shall submit to the department audited
or unaudited financial statements each quarter and audited financial
statements each year.
2. If the employer is a corporation or a partnership which is a
majority or wholly owned subsidiary, it shall submit to the
department a guaranty of payments by the ultimate or top parent
company on a department form and a certified copy of the resolution
adopted by the board of directors of the parent corporation.
3. If the employer is a corporation, it shall submit a certified
copy of the resolution adopted by the board of directors authorizing
the execution of the initial application:
a. Applications by organizations other than corporations shall be
signed by one or more persons possessing authority to execute such
b. Partnerships must submit a consent by all the partners that all
individuals executing the application have the authority to act for
the applicant partnership.
4. Corporations, limited partnerships and limited liability
companies shall be registered in the office of the department of
5. The employer shall submit a copy of its current safety and loss
(c) The following criteria may be considered by the department in
evaluating the qualifications of an applicant for the initial
application or renewal of self-insurance status:
1. The financial strength and liquidity of the employer to include:
profit and loss history; financial and performance ratios;
characteristics and trends for the employer or the consolidated group
of employers to which the employer belongs; characteristics and
trends for other employers of the same or the most similar industry
in which the employer or the employer's consolidated group is involved;
2. The employer's organizational structure, management background,
kind of business, length of time in business, and any intended or
newly implemented reorganization including but not limited to merger,
consolidation, acquisition of new business, divesting or spinning off
of assets or other changes;
3. The nature and extent of the employer's business operations and
assets in the state of Wisconsin;
4. The employer's bond or other business ratings;
5. The number of employer's employees, payroll and hours worked in
6. The employer's performance indicators under ch. 102, Stats.,
including, but not limited to, promptness or time taken in making
first indemnity payments, promptness or time taken in submitting
first reports, and injury and illness incidence and severity rates;
7. The existing or proposed claims administration, occupational
health, safety, and loss control programs to be maintained by the
employer. The department may require certification of the
occupational safety and health program by state or independently
8. The worker's compensation loss history, experience modification
factor, reported losses, loss reserves and worker's compensation
premium of the employer; and
9. Excess insurance, surety bond, cash deposit or pledges of the
employer, guaranty by the parent company, or other guarantees or
pledges acceptable to the department.
(d) The required minimum bond, minimum amount of cash, letter of
credit or securities deposits, minimum acceptable excess insurance
upper limit, maximum excess insurance retention, or other security
satisfactory to the department, shall be determined after the
application has been reviewed and analyzed by the department. The
employer and the employer's surety or other agent providing security
shall use the latest version of any forms required by the department.
All surety bonds and excess policies shall be written on standard
forms approved by the Wisconsin compensation rating bureau or the
commissioner of insurance, or both. Any change in the language used
in the approved standard form is not accepted unless the department
approves it in writing. The following conditions shall also apply to
1. Surety bonds shall be written by companies authorized to transact
surety business in Wisconsin and acceptable to the department.
2. Cash or equivalent securities shall be deposited with banks or
trust companies authorized to exercise trust powers in Wisconsin and
acceptable to the department. These securities shall be negotiable
and converted into cash at anytime by the depository at the request
of the department.
3. If excess insurance is required by the department, it shall be
procured from a licensed excess insurance carrier and written on the
basis of rates and policy form filed with and approved by the state
of Wisconsin commissioner of insurance. The policy for the required
excess insurance shall be filed with and approved by the Wisconsin
compensation rating bureau.
4. Each self-insured employer shall provide security of at least
$500,000. The department may increase the minimum required security
amount after considering the criteria in par. (c).
5. If the self-insured employer provides a surety bond, the surety
company shall pay worker's compensation liabilities of the employer
up to the aggregate amount of the bond without deducting any of its
costs for investigating, paying, defending against, or providing
other services related to the worker's compensation claims. If a self-
insured employer has more than one surety bond, the surety company
whose bond is in effect on the date of injury is liable for claims
related to that injury.
6. If the self-insured employer provides security in any form other
than a surety bond, the department shall add 30 percent to the
minimum amount in subd. 4.
7. Each employer self-insured under this subsection shall obtain a
specific per occurrence excess insurance policy with retention and
maximum limits approved by the department and in a form approved by
the Wisconsin compensation rating bureau under ch. 626, Stats. In
determining the limits the department shall consider, among other
things, the criteria in par. (c).
(dm) The department may call and use any security provided by an
employer under par. (d) to pay that employer's worker's compensation
liabilities and to administer that employer's worker's compensation
claims if the department has a reasonable basis to believe that the
employer is not able or will not be able to timely pay the worker's
compensation liabilities incurred during the period for which that
employer was authorized to be self-insured. The department may
contract with a third-party administrator or other agent to
administer payments. The employer is responsible for any unpaid
liabilities. Within 2 working days of receiving written notice from
the department, the employer whose security was called shall provide
the department with the names and addresses of all present and former
employees of the employer during the most recent 3 years in which the
employer was self-insured. Within 30 days of receiving written notice
from the department, the employer whose security was called shall
provide the department with copies of any worker's compensation,
medical or employment files requested by the department or summary
information related to those files in a format requested by the
Note: In addition to a demonstrated failure to make timely worker's
compensation payments, "a reasonable basis to believe that an
employer...will not be able to timely pay worker's compensation
liabilities" is intended to include such things as proceedings before
bankruptcy court which may have an adverse financial impact on the
employer or credible reports that an employer is preparing to seek
some form of shelter in bankruptcy or receivership.
(dx) A surety or bonding company shall provide the department with a
written plan acceptable to the department for the review and payment
of any worker's compensation liability of the self-insured employer
within 15 days after the department notifies the surety or bonding
company that it is calling the bond. When the department approves the
plan the surety or bonding company may contract with a third-party
administrator or other agent to pay worker's compensation benefits
and other liabilities.
(e) Whenever the department has reason to believe that an employer
currently or previously granted self-insurance for its parent or
subsidiary company is liquidating and distributing its assets to its
owners, or is selling or is about to sell the tangible property it
owns and maintains in Wisconsin and the employer or its parent or
subsidiary company is moving or is about to move its operations out
of Wisconsin, without providing for the payment under the terms of
the agreement in the self-insurance application or guaranty form it
has executed and submitted to the department, the department may,
through the attorney general, cause a petition to be filed to enjoin
and restrain the employer from engaging in such action until such
time as all obligations of self-insurance meet the satisfaction of
the department. Whenever an employer exits self-insurance status the
department may require such employer to provide all available
information regarding past or outstanding worker's compensation
claims or liability and may require securities sufficient to provide
payment for those claims or liabilities.
(f) The department may require a self-insured employer to update the
information provided in pars. (b) to (e) at any time.
History: Cr. Register, September, 1982, No. 321, eff. 10-1-82; am.
(3), (4) (a), (b) (intro.) and (c) (intro.), cr. (4) (b) 11.,
Register, September, 1986, No. 369, eff. 10-1-86; emerg. r. (4) (b)
1., renum. (4) (b) 2. to 11. to be 1. to 10., eff. 3-22-88; am, (4)
(b) (intro), r. (4) (b) 1., renum. (4) (b) 2. to 11. to be 1. to 10.,
Register, August, 1988, No. 392, eff. 9-1-88; am. (1), (2), (3) (b)
and (4), Register, April, 1990, No. 412, eff. 5-1-90; am. (4) (a),
cr. (4) (ag) to (ax), (f), Register, July, 1996, No. 487, eff. 8-1-
96; am. (2), (3) (b), (4) (a), (am), (4) (b) 1. and 4., (4) (d)
(intro.), cr. (4) (d) 4. to 7., (dm) and (dx), Register, November,
1998, No. 515, eff. 12-1-98.