1. (1) Each Employer shall establish and maintain adequate loss reserves for, as determined by a qualified actuary:

   1. (a) Known claims and expenses associated therewith; and
   2. (b) Claims incurred but not reported and expenses associated therewith.

2. (2) In addition to the minimum requirements for reserves set out in this Chapter, the Commissioner may require, after notice and opportunity for hearing, additional amounts so that an Employer’s reserves are reasonable in relation to the Employer’s outstanding workers’ compensation liabilities and adequate to meet an Employer’s financial needs. For purposes of this Rule, in determining whether an Employer’s reserves are adequate, the following factors, among others, shall be considered:

   1. (a) The size of the Employer as measured by its assets, capital and surplus, reserves, and other appropriate criteria;
   2. (b) The classes of risks in which the Employer is self-insuring and the experience of losses for such classes;
   3. (c) The loss history of the Employer;
   4. (d) The nature and extent of the Employer’s excess insurance coverage;
   5. (e) The quality, diversification and liquidity of the Employer’s investment portfolio; and
   6. (f) The recent past and projected future trend in the size of the Employer’s investment portfolio.

Authority: T.C.A. §§ 50-6-405(a)(2), 50-6-405(b)(1), 50-6-405(b)(8), and 50-6-405(h). Administrative History: Original rule filed August 11, 2005; effective October 25, 2005.