North Carolina Self Insurance Security Association

“Third party services provided by kevin walsh and kfw consulting, llc as disclosed in schedule l, part iv, the association has entered into a management agreement with a former director to perform executive director management services.”

“The board of directors governs the association in accordance with n.c. Gen. Stat. 97-132 and the association plan of operation, which provides the board shall consist of eleven (11) persons who are representatives, owners, employees, or officers of association member self-insurers and are elected by the member self-insurers for staggered terms of three (3) years so that the terms of all directors shall not expire in the same year.”

“The board annually appoints a nominating committee to evaluate and nominate candidates for election to the board of directors at the association annual meeting in july of each year. The board may fill vacancies between annual meetings by a majoity vote of the remaining directors. Member self-insurers may submit candidates to the nominating committee which provides its report to all member self-insurers in the notice of the annual meeting.”

“Review of financial statements and form 990: the board of directors receives the audited financial statements and form 990. The audit and investment committee of the board of directors reviews and approves the audited financial statements before they are filed with the north carolina department of insurance. The audit and investment committee considers, reviews, and recommends that the board of directors authorize filing the form 990 with the irs.”

“Conflict of interest policy: the board of directors has adopted a conflict-of-interest policy which is reviewed annually, and each director executes an annual form providing they have reviewed the policy and acknowledge that they have no conflict of interest beyond the inherent conflict of interest that they are employed by a member self-insurer of the association.”

“Compensation determination for executive director services: the board of directors reviewed form 990's of similar organizations for levels of compensation paid to other executive directors to determine a reasonable amount to be paid for executive director management services.”

“Public inspection: the association's plan of operation and summary financial statements are posted on the association's website (ncsisa.org). The association's conflict of interest policy is available for inspection upon request.”

“The association was established in 1986 by the north carolina general assembly and is authorized under article 4, chapter 97 of the north carolina general statutes and is a tax exempt unincorporated legal entity that provides the mechanism for the payment of covered workers' compensation claims incurred against insolvent member self-insurers. The association is tax-exempt under section 501(c)(6) of the internal revenue code and serves a unique role as the statutory safety net for injured workers of insolvent current or former self-insurers. Member self-insurers are defined by north carolina law as individual employers or groups of two or more employers that have pooled their liabilities under applicable insurance law and have been licensed by the north carolina department of insurance. All licensed individual and group self-insurers must demonstrate the requisite financial strength to secure their respective workers' compensation obligations and are required by statute to be members of the association. Individual self-insurers must participate in the annual association aggregate security system (aass). If an individual licensed self-insurer is excluded from the aass, it must post a statutory deposit with the north carolina department of insurance. The association is authorized to monitor and assess the financial condition of all individual member self-insurers that participate in the aass. The association serves as a resource for all member self-insurers, the north carolina department of insurance and the north carolina industrial commission. The association pays covered workers' compensation claims of injured workers from its security fund which has been created by member self-insurer assessments and statutory or terminating deposits previously posted by member self-insurers. Aggregate security including instruments such as financial guarantees, insurance or reinsurance is also purchased by the association to protect member self-insurers, the security fund. The proceeds of the security fund are invested and administered by investment advisors in accordance with an investment policy, which is approved annually by the north carolina state treasurer.”

“Independent contractors - additional description of services: stuart law firm, pllc advises the executive director and prepares reports for quarterly board meetings, analyzes insurance regulatory requests from the north carolina department of insurance and member self-insurers, engages in legislative analysis and ongoing interpretation of the association statutory mandate including the implementation of the association aggregate security system, and the determination of covered claims. It is involved in insurance regulatory and bankruptcy litigation, coverage analysis, worker's compensation defense as well as analysis and negotiation of all business, corporate, surety, securities and bankruptcy transactions involving the association. Marsh usa provides consulting and placement services for the association aggregate security system.”