The North Carolina Department of Insurance requires self-insurers to hold a Self-Insurer Workers’ Compensation Bond as a licensing requirement. The bond must be in a minimum amount of $500,000 but in an amount not less than 100% of the total undiscounted outstanding claims liability from the previous fiscal year.
The Self-Insurer Workers’ Compensation Bond is required for self-insurers who are not part of the Associate Aggregate Security System (AASS) as a way to hold workers’ compensation liabilities under General Statutes 97-133. Generally, a self-insurer will participate in the AASS unless they have done any of the following:
If a self-insurer has engaged in these actions, they are excluded from the AASS and must carry a Self Insured Workers’ Compensation Bond. The bond helps guarantee that a worker that has been injured on the job will receive compensation while they are unable to work.
The Self-Insurer Workers’ Compensation Bond is required by the North Carolina Department of Insurance to ensure that the self-insurer will not withhold due compensation, adding financial injury to a worker’s physical injury. This also prevents the self-insurer from acting unethically or engaging in fraud, which is the Department’s duty to the citizens of North Carolina.
A self-insurer is obligated to comply with licensing regulations, including the payment of workers’ compensation liabilities under the NC General Statutes Chapter 97. Claims on the bond come from the failure to pay such liabilities to injured workers and will be filed by the Commissioner of the North Carolina Department of Insurance.
If a claim is proved valid, the surety company will pay the claim up to the full limit of the bond within 30 days of a written demand, as well as an additional 15% of the bond limit for the reimbursement of legal fees. However, the self-insurer is still ultimately responsible for failing to pay owed compensation and must reimburse the surety in the amount that was paid out by the claim.