                                 CODE OF VIRGINIA

INSURANCE OR PROOF OF FINANCIAL ABILITY TO PAY REQUIRED (§ 65.2-801)

A. Every employer subject to this title shall secure his liability thereunder by
one of the following methods:

   1. Insuring and keeping insured his liability in an insurer authorized to
   transact the business of workers&#8217; compensation insurance in this
   Commonwealth;

   2. Receiving a certificate pursuant to &#xA7; 65.2-808 from the Workers&#8217;
   Compensation Commission authorizing such employer to be an individual
   self-insurer;

   3. Being a member in good standing of a group self-insurance association
   licensed by the State Corporation Commission;

   4. Being a member in good standing of a local government group self-insurance
   pool licensed by the State Corporation Commission pursuant to &#xA7; 15.2-2706
   to offer workers&#8217; compensation coverage; or

   5. Entering into an agreement with a professional employer organization for
   professional employer services which includes voluntary market workers&#8217;
   compensation insurance for coemployees of the professional employer
   organization and the client company procured from an insurer authorized to
   transact the business of workers&#8217; compensation insurance in this
   Commonwealth. A professional employer organization may obtain voluntary market
   workers&#8217; compensation insurance in its own name for all coemployees
   which it shares or which are assigned or allocated to it pursuant to the
   agreement between the professional employer organization and the client
   company. The client company shall maintain separate voluntary market
   workers&#8217; compensation insurance insuring any and all employees of the
   client company not insured through the policy obtained by the professional
   employer organization.

B. An employer who satisfies the requirements of this section shall be certified
by the Workers&#8217; Compensation Commission as an individual self-insurer and
permitted to pay direct the compensation in the amount and manner and when due
as provided for in this title. The Commission shall not certify an employer as a
self-insurer unless it receives in such form as it requires satisfactory proof
of the solvency of such employer, the financial ability of the employer to meet
his obligations and the ability of the employer to pay or cause to be paid the
compensation in the amount and manner and when due as provided for in this
title. The Commission shall establish reasonable requirements and standards for
approval of an employer as a self-insurer including, without limitation, the
quality and amount of security deposits, bonds or indemnity, the amount of
advance payments and reserves required, the investment of such funds, and the
form and content of financial information to be submitted by the employer and
the frequency of such submissions. For the purposes of any debt/equity ratio
(total liabilities to net worth) minimum standard, a ratio of less than 2.2:1
shall be deemed satisfactory. The Commission shall, after notice and hearing,
embody such requirements and standards and such other requirements as may be
reasonably necessary for the purposes of this section in regulations. The Bureau
of Insurance of the State Corporation Commission shall, at the request of the
Commission, assist the Commission in establishing the reasonable requirements
and standards for approval and certification of an employer as a self-insurer.
The Workers&#8217; Compensation Commission may in its discretion require the
deposit of a financial instrument of a specified amount from an entity approved
by the Workers&#8217; Compensation Commission to secure the payment of
compensation liabilities as they are incurred. The form of the instrument to be
deposited shall be selected by the employer from the following list of
acceptable financial instruments and may include any combination thereof so long
as the amount specified by the Workers&#8217; Compensation Commission is
deposited and the actual value thereof maintained: corporate surety bonds,
certificates of deposit, United States government obligations, letters of
credit, and cash.

C. The State Treasurer shall be the custodian of securities deposited by the
employer under the requirements of this section, or under &#xA7; 65.2-802, and
for such services he shall receive a compensation of one-tenth of one percent
per year of the amount of securities deposited with him, payable by or on behalf
of such employers.

HISTORY: Code 1950, § 65-100; 1968, c. 660, § 65.1-104.1; 1973, c. 173; 1979,
c. 463; 1991, c. 355; 1992, c. 816; 1996, c. 181; 2000, cc. 624, 718; 2004, cc.
44, 173; 2006, c. 265; 2009, cc. 285, 336.