(1) The Department may decline to approve an application for self insurance if the applicant is unable to demonstrate that it will be able to meet all obligations and requirements of M.G.L. c.152 and 452 CMR 5.00. The following factors shall be used in determining if the applicant can meet these obligations:

(a) Ratio of tangible net worth to annual self insurance retention;

(b) Ratio of current assets to current liabilities;

(c) Ratio of debt to tangible net worth;

(d) Profit and loss history;

(e) Organizational structure and management background;

(f) Compensation loss history and proposed excess insurance coverage;

(g) Source and reliability of financial information;

(h) Ratio of net worth to annual compensation premium;

(i) Number of employees;

(j) Excess reinsurance;

(k) Guarantee by parent company;

(l) Surety bond or other security;

(m) Claims administration arrangements and

(n) SEC Form 10K or 10Q, where applicable

(2) In addition to the requirements of 452 CMR 5.04(1), every new applicant for the privilege of self insurance in Massachusetts must:



(a) have been in business for at least five years (where a company formed through merger, acquisition or reorganization has been in business for less than five years, the period of time the former corporate entities have been in business may be taken into account);

(b) have 300 or more employees; however, the Commissioner may waive this requirement for good cause;

(c) have an unmodified manual premium of $750,000 or more; however the Commissioner may waive this requirement for good cause;

(d) provide to the Department a financial study and cash flow analysis (at applicant's expense) if an available Standard & Poor's or Moody's rating is below AA,A1 or Aa,aa respectively, or if the Dun & Bradstreet rating is below 5A1;

(e) provide to the Department an actuarial study and risk management study (at applicant's expense) showing trending and a plan for corrective action if the inter or intra state experience modification factor is 1.25 or higher as determined by a duly authorized rating bureau;

(f) demonstrate profitability in each of three most recent years, (or, if a non profit institution, an excess of revenues over operating expenses in each of the three most recent years), provided that where a company or institution formed through merger, acquisition or reorganization has been in business for less than five years, the past history of profitability of the former entities may be taken into account, and provided further that the Commissioner may waive this requirement, in whole or in part, for good cause;

(g) have not been declared insolvent or discharged from federal bankruptcy proceedings in the past five years.