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State of Arizona Department of Insurance

Financial Affairs Division

2910 North 44th Street, Suite 210

Phoenix, Arizona 85018-7256

(602) 912-8420 / Fax: (602) 912-8421

Trust Deposit Unit (602) 912-8427

INSTRUCTIONS FOR WORKERS’ COMPENSATION DEPOSIT AND

ANNUAL ARIZONA SPECIAL SCHEDULE P FILING

Workers’ Compensation Insurance Deposit Requirement: A.R.S. § 23-961(C) states:

Before transacting such business, the corporation or association and the state compensation fund shall deposit with

the state treasurer, through the director of insurance, cash or securities in an amount equal to the greater of the

following amounts:

One hundred thousand ($100,000) dollars.

The sum of subdivisions (a) and (b) of this paragraph less credits for approved reinsurance computed as of

the preceding December 31 for workers’ compensation insurance written subject to the laws of this state:

The aggregate of the present values at six percent (6%) interest of the determined and estimated

future direct reported loss and loss expense payments on compensation claims incurred more than

three (3) years immediately before the preceding December 31.

The aggregate of the amounts determined for each of the three (3) years immediately before the

preceding December 31 which equals the greater of the following:

Sixty-five percent (65%) of the earned premiums for the year less all direct reported loss and

loss expense payments made on compensation claims incurred in the corresponding year.

ii.

The present value at six percent (6%) interest of the determined and estimated future direct

reported loss and loss expense payments on compensation claims incurred in that year.

A.R.S. § 23-961(D) states “securities deposited pursuant to subsection C (of A.R.S. § 23-961) are subject to

approval by the director of insurance at all times.” Workers’ compensation deposits will be required to include

additional securities to sufficiently absorb market value fluctuation.

Insurers who elect to furnish a bond in lieu of cash or securities, pursuant to A.R.S. § 23-961(D) must contact the

Arizona Industrial Commission directly at (602) 542-1836 for prior approval and the prescribed bond form.

Annual Filings: Arizona Special Schedule P Form E478 and Form EWCA

Annual Requirement:

Workers’ compensation insurers must annually calculate their deposit or bond requirement by

completing and filing the most current edition of Form E478 and Form EWCA. Check the lower left

corner of the Forms for a recent month/year revision date, as outdated editions will not be accepted.

Actuarial analysis and supporting documentation must be provided to support factors other than those

prescribed in Column 5 of Form E478.

When a negative figure results in Parts I, II, or III of Form E478, convert the figure to zero (0) prior to

entering a total in columns six (6)(A) and (B) and nine (9)(C) before computing the deposit required.

The total deposit required must equal the current deposit or bond amount, at the LOWER OF

MARKET OR PAR VALUE.

Reserve discounting is subject to approval. Provide a copy of company’s request to domiciliary state,

and its approval granted, for consideration.

Form EWCA must be completed for amounts payable on Arizona compensation unpaid losses and loss

expenses assumed from each insurer for each year reported.

Due Date: The Form E478 and Form EWCA filings are due annually by April 15th. The Department will

review the filings and issue a notice of its findings. Instructions to apply for reduction of surety bond or

deposit will be provided at that time, if applicable. See Form EXSAPP for further information.

Mail all Forms To: “Attention: Trust Deposit Unit” at the address shown above.

DO NOT file Form E478 or Form EWCA with the Insurer’s Annual Statement.

Form E478I (Rev. 06/00)

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Form E478i - Instructions For Workers' Compensation Deposit And Annual Arizona Special Schedule P Filing

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